1.1 Introduction

1.2 History of the Banking Industry

The History of Banking began at about 2000BC of the ancient world when merchants made

grain loans to farmers and traders started carrying goods between cities within the areas of

Assyria and Babylonia. The Code of Hammurabi, dating back to about 1772 BC, is one of the

oldest deciphered writings of significant length in the world that deals with matters of contract

and set the terms of a transaction. This code also included standardized procedures for

handling loans, interest, and guarantees.

Later on, in ancient Greece and during the Roman Empire, lenders based in temples made

loans and started accepting of deposits. Banking activities in Greece are more varied and

sophisticated than in any previous society. They took deposits, made loans, changed money

from one currency to another and tested coins for weight and purity. They even engaged in

book transactions. Moneylenders can be found who will accept payment in one Greek city and

arrange for credit in another, avoiding the need for the customer to transport or transfer large

numbers of coins.

Banking, in the modern sense of the word, can be traced to medieval and early Renaissance

Italy, to the rich cities in the north such as Florence, Venice and Genoa. The development of

banking spread through Europe and a number of important innovations took place in

Amsterdam during the Dutch Republic in the 16th century and in London in the 17th century.

Some of the earlier systems that facilitated trading/exchange of goods were barter system and

gift economies.

In the past, Barter System was the well known method, that was adopted by people to

exchange their goods and services. This system was used for centuries, before the invention of

money. After it, gift economy (or gift culture) is introduced During the 20th century, developments

in telecommunications and computing resulting in major changes to the way banks operated

and allowed them to dramatically increase in size and geographic spread. Today the banking

industry at its peak. It has become much easier and convenient for the clients as well for the

employees. Now they offer so many banking products and services which were unimaginable in

the past.

1.3 An overview of Standard Chartered Bank (SCB):

Standard Chartered Bank (SCB) is an international bank, which primarily focuses its activities in

Asia, Africa, and Middle East. This bank plays an invigorating role in linking the world’s

developed economies with emerging markets and provides personal banking, corporate baking,

institutional banking consumer finance and custodial services. The act of the bank is to provide

the most efficient, consistent and timely services and to be the bank of choice in its principal

territories.

SCB is a multinational bank and financial services group that is incorporated in the U.K. with a

unique international network. It now spans in the developed and emerging economies of the

world, after been built over 140 years.

The group operates through more than 600 offices in over 48 countries and has over 25,000

people managing assets of over 47 billion pounds. In asset size the group was ranked 94 th in

the world in 1997. The group has its long past history showing its huge growth worldwide.

1.4 SCBs Current position in Bangladesh

The Chartered Bank opened its operation in Chittagong in 1947 that was, at that time the

eastern region of the newly created Pakistan. The branch opened mainly to facilitate the post

war re-establishment and expansion in South East Asia. The bank opened its first branch in

Dhaka in 1966 and shifted it’s headquarter from Chittagong to Dhaka after the birth of the

Republic of Bangladesh in 1971 the bank increasingly invested in people, technology and

premises as its business grew in relation to the country’s thriving economy. SCB acquired ANZ

Grindlays Bank for 1.34 billion dollars in the year 2000. The new venture is named as Standard

Chartered Grindlays Bank. Now it is known as Standard Chartered Bank.

Extensive knowledge of the market and essential expertise in wide financial services underline

SCB’s strength to build business opportunities and institutional clients at home and abroad.

Continuous upgrading of technology and control system has enabled the bank to offer new

services, which include unique ATM and Phone Banking on a 24 hour basis.

1.5 Categories of Services Provided

Consumer Banking: Comprehensive Consumer banking service offer through 14 branches

in Dhaka, Chittagong and Sylhet, the three largest urban centers. ATM networks, Phone

Banking Services, I- banking and sms banking services are also available.

Corporate Banking: Corporate banking offers a wide range of trade related services and

lending to local and foreign corporate entities.

Treasury: The treasury operation in Bangladesh participates in foreign currency dealing

and money market operations

Institutional Banking: Institutional banking offers correspondent banking services to a large

number of local public and private sector banks in Bangladesh

1.6 Objectives

Standard Chartered has come up with few objectives, which they believe will help them reach

their desired destination. They are:

Gaining a larger market share:

Provide technologically advanced services

Making banking comfortable and convenient for customers

Ensuring customer satisfaction

To make quality investment

To ensure human resource development to meet the challenges of the time.

1.7 SCB’s Competitive Position with other multi-nationals

Total Deposits in Different FCBs

Source: Schedule Bank Statistics, 2004

Among the FCBs , in here we can see the scenario of deposit condition. Above

Picture Shows that SCB holds 44% deposit among the different FCBs. It proves

that SCB has the leading position in Bangladesh.

Percentage of Advances Made by Different FCBs

In the case of advances made, SCB also performed the higher position than the

other FCBs. In here we see that SCB performed 40% among the other.

2.1 External Analysis

A business converts inputs into outputs in order to make a profit. However, the business does

not exist in a vacuum; it exists within an external environment consisting of the actions of other

players who are outside the business. These external factors have great impact on the mission

and vision of business organization. These will affect the main internal function of the business

and possibly the objectives of the business and its strategies. That’s why it is very important to

conduct an external analysis of a business firm. The external environment includes-

- The macro-environment/General environment

- Industry structure

- Strategic group mapping

- Competitor analysis

- Critical success factors

- Economic system

- Social system

- Monetary system

- Political/legal system

-

There are so many banks operating in the competitive market. There is a stiff competition in the

banking industry. To survive in the market SCB has to conduct an external analysis. That is

necessary for SCB to know the external factors which will help to make easy for decision

making.

2.2 Macro Environment Analysis

2.2.1 Theoretical

The condition that exists in the economy as whole, rather than in a particular sector or a region

is called macro environment. In general, the macro environment includes gross domestic

product, inflation, employment, spending, and monetary and fiscal policy. It is closely linked to

the general business cycle. The macro environment in which a company or sector operates will

influence its performance, and the amount of the influence will depend on how much of the

company’s business is dependent on the health of the overall economy. The macro environment

analysis is a review of all the factors that a company is unable to control. Companies conduct

this analysis to stay abreast of the issues in the current business environment. The macro

environment consists of

Economic environment

Political/Legal environment

Technological environment

Global environment

Demographic environment

Socio-cultural environment

The banking industry is an open system. It gets resources from the environment and supplies its

goods and services to the environment. Macro environment is largely external to the business

enterprise. Its factors are uncontrollable and beyond the direct influence and control of the

organization. Its factors are powerfully influence to its functions.

2.2.2 Practical

Standard Chartered Bank is a renowned multinational bank in Bangladesh. It faces several

external/macro environmental challenges in the banking industry. There are so many Multi

National banks operating in the market. SCB scrutinizes all the other FCBs and their operation,

strategies which act as its core competitors. SCB analyze other competing banks to know their

technological, economical strength to operate parallel manner. It also analyze the other factors

such as, economic factor, political/legal factor, socio-cultural factor, demographic factor and

considering all these they form strategies for their business.

SCB collects all relevant data from different models and information systems for analyzing risks.

It reviews market condition and take precautionary measures towards facing abnormal market

situation and vulnerability in the investment of the bank. It analyzes the banks own ability or

resilience capacity towards facing economic difficulties and challenges. Take necessary steps to

bring in a position from where it can face the political problem. It exercises the banking

operation according to the socio-cultural manner and the demographic needs.

2.2.3 Findings: External Environment is so important for any company. Analysis of external

environment is badly necessary to stay in the market. Standard Chartered Bank conducts this to

become a successful bank in this sector.

2.3 Porter’s Five Forces Analysis

2.3.1 Theoretical

Michael Porter provided a framework that models an industry as being influenced by five forces.

The strategic business manager seeking to develop an edge over rival firms can use this model

to better understand the industry context in which the firm operates.

Porters Five Forces Model

An industry that produces goods requires raw materials. This leads to buyer-supplier

relationships between the industry and the firms that provide the raw materials. The powers of

buyers describe the impact customers have on the industry. The buyer has the most influence in

determining the price, but there is often a connection between an industry and buyers that

determines where power lies. To mitigate the power of buyers, sellers can seek buyers with less

power to negotiate, switch suppliers, or develop superior offers that strong buyers cannot

refuse.

When industry profits increase, one would expect firms to enter the market to take advantage.

Barriers to entry reduce the rate of entry of new firms and, therefore, maintain a level of profits

for current industry competitors.Firms strive to secure a competitive advantage over their rivals.

The intensity of rivalry varies within each industry and these differences can be important in the

development of strategy.

2.3.2 Practical

If there is one industry that has the stigma of being old and boring, it would have to be banking;

however, a global trend of deregulation has opened up many new businesses to the banks.

Coupling that with technological developments like internet banking and ATMs, the banking

industry is obviously trying its hardest to shed its lackluster image. There is no question that

bank stocks are among the hardest to analyze. Many banks hold billions of dollars in assets and

have several subsidiaries in different industries. Running a bank is just as difficult as analyzing it

for investment purposes. A bank's management must look at the following criteria before it

decides how many loans to extend, to whom the loans can be given, what rates to set, and so

on

The banking industry is highly competitive. The financial services industry has been around for

hundreds of years, and just about everyone who needs banking services already has them.

Because of this, banks must attempt to lure clients away from competitor bank. They do this by

offering lower financing, preferred rates and investment services. The banking sector is in a

race to see who can offer both the best and fastest services.

2.3.3 Findings: The banking industry is highly competitive sector. Their main competitors are

Foreign Banks & financial institutions. Five Porter’s Analysis helps the banking industry to

consider the power of buyers, suppliers, substitutes, potentials entrants and rivals.

3.1 Internal Analysis

The ultimate purpose of an internal analysis is to use the information for strategic planning,

meaning the company's plan for furthering growth, success, and leadership in the marketplace.

Determining the business's strengths and weaknesses translates into the steps necessary for

achieving goals. An internal company analysis is a business term strongly associated with a

"SWOT" (strengths, weaknesses, opportunities, threats) analysis. An internal company analysis

is an evaluation of a company's current position from the combined perspectives of marketing,

operations, and finance for strategic use.

Environmental analysis comprises scanning, monitoring, analyzing, and forecasting the

business situation. Scanning is to get the relevant information from the information overload. It

is to focus on the most relevant information. Monitoring is to check the nature of the

environmental factors. Analyzing requires data collection and use of different required tools and

techniques. Forecasting is to find the future possibilities based on the past results and present

scenario.

The components of internal analysis: Resources, Capabilities, Core competencies, Competitive

advantage, Strategic competitiveness.

3.2 Core Competencies

3.2.1 Theoretical

Core competencies are a company's strengths within their market. The strengths could be of

any or all of the following: products and services offered customer relationship management,

product development and technological innovation, or financial position and pricing, among

others. These strengths are the business muscles that keep the company in the game with

competition.

Core Competencies are not seen as being fixed. Core Competencies should change in

response to changes in the company's environment. They are flexible and evolve over time. As

a business evolves and adapts to new circumstances and opportunities, so its Core

Competencies will have to adapt and change.

There are three tests useful for identifying a core competence. A core competence should:

-Provide access to a wide variety of markets

-Contribute significantly to the end-product benefits

-Be difficult for competitors to imitate

Core competencies tend to be rooted in the ability to integrate and coordinate various groups in

the organization.

3.2.2 Practical:

SCB’s Banking Experience for more than 40 years provides SCB the strength of being the

market leader in the foreign banking sector. This strength of SCB is totally unmatched by any

other multinational bank in Bangladesh, as the long term success of a bank heavily depends on

its reputation while dealing with every sensitive commodity like money. SCB is the first bank in

Bangladesh to issue Money link (ATM) card as well as ‘Best Bank’ for Corporate Social

Responsibility for 2006 by Bankers’ Forum. Best Retail Bank in Bangladesh’ award in The Asian

Banker Excellence in Retail Financial Services programme for its performance in 2007.‘National

Best Corporate’ Award 2007 by Institute of Cost Management Accountants “Best IT Use Award

2007" by Bangladesh Association of Software & Information Services (BASIS) ‘Best Employer of

IBA Graduates’ in 2008 by IBA Alumni Association “Best Foreign Commercial Bank in

Bangladesh" by Finance Asia in 2009 & 2010

As the market leader, they showed the most substantial corporate strength among the foreign

banks by grabbing the opportunity that exists in the market. In Bangladesh SCB has wide range

of customer base and is operating efficiently in this country. SCB has a bulk of qualified,

experienced and dedicated human resources. SCB has the reputation of being the provider of

good quality services to its potential customers.

3.2.3 Findings: Above all core competencies of SCBs, these are all their strengths, On the

basis of the result they form their objectives, rules and regulation and make the prospective

future bright.

3.3 SWOT Analysis3.3.1 Theoretical

A tool that identifies the strengths, weaknesses, opportunities and threats of an organization.

Specifically, SWOT is a basic, straightforward model that assesses what an organization can

and cannot do as well as its potential opportunities and threats. The method of SWOT analysis

is to take the information from an environmental analysis and separate it into internal (strengths

and weaknesses) and external issues (opportunities and threats). Once this is completed,

SWOT analysis determines what may assist the firm in accomplishing its objectives, and what

obstacles must be overcome or minimized to achieve desired results.

3.3.2 Practical

SWOT analysis is equally important for all companies as well as Standard Chartered Bank. SCB conducted

SWOT analysis to know their ability, inability and future prospects of the bank. The current position of

SCB according to Strength, Weakness, Opportunity, and Threat are as follows.

Strength: SCB is the first bank in Bangladesh to issue Money link (ATM) card, it has wide range

of customer base, , effective transaction system, strong capital market, expertise in banking

activities, SCB has a bulk of qualified, experienced and dedicated human resources. SCB has

the reputation of being the provider of good quality services to its potential customers.

Weakness: Less number of branches, little number of ATM booth and has problem with market

share as ATM machines. Customers often complain that the ATMs are out of order & SCB

hasn’t that much good market share as other multinational bank.

Opportunities: several investment opportunities, The activity in the secondary financial market

has direct impact on the primary financial market, Bangladesh has a huge consumer base for

maintaining several accounts. So SCB has the opportunity to keep these customers by reducing

its current fees and charges.

Threats: In today’s economy, substantial amount is remaining idle and currently the investment

in the secondary market by foreign is relatively low. These economic situations of the country

indicate political threats. On the other hand Increased competition by other foreign banks is also

another threat to SCB.

3.3.3 Findings: The structures planning of SWOT analysis helps the SCBs to find out their

strength, weakness, opportunities and threat. On the basis of the result they form their

objectives, rules and regulation and make the prospective future bright.

4.1 Competitive Strategy

4.1.1 Theoretical

It is a Long-term action plan that is devised to help a company gain a competitive advantage

over its rival. This type of strategy is often used in advertising campaigns by somehow

discrediting the competition's product or service. Competitive strategies are essential to

companies competing in markets that are heavily saturated with alternatives for consumers.

The development of a corporate strategy involves establishing the purpose and scope of the

organization's activities and the nature of the business it is in, taking the environment in which it

operates, its position in the marketplace, and the competition it faces into consideration; most

times analyzed through a SWOT analysis.

Corporate strategy is based on knowing

-Where your organization is today

-Where you want it to be

-How you want to get there

Cost leadership, differentiation, goals or objectives and risk management are a few basic

business strategy characteristics. Cost leadership allows business owners to produce consumer

goods or services at the lowest cost in an industry. Differentiation is the process companies use

to separate their company & products from all others in the economic marketplace. Goals and

objectives represent specific targets business-level strategies should achieve. Risk

management ensures each strategy does not present significant disadvantages for the

company.

4.1.2 Practical:

In the banking industry, rivalry among the competing banks is moderate to high due to the following reasons:

Major rivals are equal or close to in size and capability (revenue and volume). Exit barriers are high. New private banks are snatching share from the NCBs and each other’s

customers by providing extra benefits.

Slow market growth due to the sluggish economy. Depositor’s cost of switching banks is low.

There are substitute financial institutions that do many of the activities and transactions of a

bank in the leasing field but these financial and leasing institutions are too small in size. These

institutions can shrink the profit margin of banks. Industrial Leasing and Development Company

Ltd. (IDLC), Industrial Promotion and Development Corporation (IPDC), United Leasing

Company are the key players. They provide industrial leasing to many companies in the

country.

Depositors are considered to be the suppliers of the banks. Big amount depositors have strong

powers in determining interest rate of their deposits.

Creditors are considered to be the buyers of the banks. Big amount creditors have strong

powers in determining interest rate of their credit amounts. Banks distinguish their prime

customers from others by setting a prime interest rate for them.

4.1.3 Findings: Business strategies help companies create a competitive advantage in the

marketplace. Corporate, department and business-level strategies are commonly used by

business owners to create a competitive advantage. Corporate strategies provide direction

when the company enters new economic markets. SCB did all possible tasks to sustain in the

market and applied all the possible strategies to become a market leader.

4.2 Implementation Strategy

4.2.1 Theoretical

Strategy implementation is the translation of chosen strategy into organizational action so as to

achieve strategic goals and objectives. Strategy implementation is also defined as the manner in

which an organization should develop, utilize, and amalgamate organizational structure, control

systems, and culture to follow strategies that lead to competitive advantage and a better

performance. Organizational structure allocates special value developing tasks and roles to the

employees and states how these tasks and roles can be correlated so as maximize efficiency,

quality, and customer satisfaction-the pillars of competitive advantage. But, organizational

structure is not sufficient in itself to motivate the employees.

4.2.2 Practical

SCB believes in the practice of Market-Oriented Strategic Planning, developing and maintaining

a viable fit between the organization’s objectives, skills and resources. The aim of such

approach is to shape and reshape the bank’s businesses and services so that they yield target

profits and growth. SCB involves the developments of corporate policy and the resulting

business strategy, culminating in strategic and tactical decisions on every aspect of the

business. it includes product mix, advertising, credit standards, operation scheduling, expansion

of capacity, research and development and dividend policy. The effect of policy, strategy and

activity is highly realistic, influenced as it is by economic reality, competition strategy, and the

value of internal decisions. Of particular learning value is the effect of one decision on the other

areas of the bank.

4.2.3 Findings: SCB implements their strategies cautiously and attentively. Their target is to

achieve the goal by applying those strategies to build future growth without making any risks.

5. Corporate Social Responsibility (CSR) at Standard Chartered Bank, Bangladesh

At Standard Chartered, in addition to contributing to economic growth through core business

activities, they have a broader positive impact on the communities of markets; the bank is

committed globally to uphold high standards of Corporate Social Responsibility. There are

numerous ways we are striving to be a force for good; globally as well as in Bangladesh.

Under our ‘Seeing is Believing’ Project, Standard Chartered helps restore eyesight of the

underprivileged. The fourth phase of Seeing is Believing – A New Vision aims to raise

USD 20 million to develop comprehensive, sustainable eye care for 20 million people in

less advantaged areas of 20 cities across the world, including Dhaka.

Through our ‘Living with HIV’ programme they help educate not only our staff but the

youth in our communities about HIV and its prevention. They have organized eighteen

seminars titled “Confronting AIDS Challenge in the 21st Century” in different universities

and cities to spread awareness about HIV /AIDS amongst the younger generation in

Bangladesh.

They have also focused on efforts in the areas of history, culture and art, seeking to

make a difference and surface little known events and artwork. Recent works have

included publications of books such as ‘Dhaka alias Jahangirnagar: 400 years’; ‘Street

Traders of Bangladesh’; ‘Ekush’; and “Rare Photographs of East Bengal 1880-1940.”

SCB also encourage development of youth through education scholarships and sports

sponsorships.

SCB also encourage all corporate bodies in Bangladesh to uphold high standards of

social responsibility. We recognize exemplary work in the field of CSR through Standard

Chartered - Financial Express Corporate Social Responsibility Award.

With a presence in Bangladesh that spans over 100 years they believe Standard

Chartered is very much a part of the heritage. Standard Chartered has been a partner in

progress for the nation and its people

6. Recommendation and Future Challenges

In evaluating the performance of the clients, there must be some set standards to

be used as a scale for better comparison. There may be a range of standards to

cover a wide area.

Develop a credit scoring system such as- Applicant type, Business type, Banking

Relationship, Security Ratio, Purpose< Personal Status etc.

Change in Evaluation Process.

Maintain Relationship with the Credit Bureau of Bangladesh Bank.

Take Legal Measures against Fraud.

Expertise from the industry (other entrepreneurs) should be involved in the

process of forecasting future prospect of the projects.

Agricultural sector must get greater priority as, still a huge number of people of

Bangladesh are involved in this profession.

Opportunities of financing in the new sectors like real estate, IT etc. should be

explored out.

Loans should not be provided only on the basis of inter-personal relationship with

the clients.

Physical and technological facilities should be increased in evaluating credit

proposals and also in monitoring the recovery of advances.

Experienced and expert personnel should be kept within the bank by considering

the goal congruence, which will lead to a quality selection of clients in lending

money.

There are several indication that the banking sector will face challenges as well as SCB. The

ongoing liquidity crisis in the banking sector is a big concern for all that banks in Bangladesh.

The year 2013 might be a very crucial and challenging for SCB. It has adopted appropriate

strategies for its different business and set clear and concise target considering the external

business environment and present realities. SCB will continue by hard working to achieve the

business target as well as to realize the corporate objectives.

7. References

1. http://www.standardchartered.com.bd/about-us/en/

2. http://www.standardchartered.com/en/sustainability/index.html

3. http://speedycsr.blogspot.com/2012/07/standard-chartered-banks-corporate.html

4. http://www.ns2.syraa.com/blogs/4501/Porters-Five-Forces-Analysis--The-Banking-Industry-

Case-Study.html

5. http://www.quickmba.com/strategy/porter.shtml

6. http://www.ehow.com/facts_5944023_internal-company-analysis_.html

7. http://www.tutor2u.net/business/strategy/core_competencies.htm

8. http://www.investopedia.com/terms/s/swot.asp

9. http://www.dailytimes.com.pk/default.asp?page=2009\02\17\story_17-2-2009_pg5_11

10. http://www.managementstudyguide.com/strategy-implementation.htm