A Management Report: Standard Chartered Bank 1Share Executive Summary Standard Chartereds principal activity is providing banking and other financial services. The Groups operation are carried out through two divisions, Consumer banking provides credit cards, personal loans, mortgages, deposit takin g and wealth management services to individuals and small and medium-sized enter prises. Wholesale Banking provides corporate and institutional clients with serv ices in trade finance, cash management, lending, custody, foreign exchange, debt capital markets and corporate finance. Standard faces different changes in the political, economic, social and technological spheres that affect its businesses. In the political arena, St andard Chartered face changes in government regulations and policies in countrie s where it operates. The economic downturn that is being experienced worldwide a lso affects the company. Changing consumer demands because of changes in demogra phy and lifestyle affect the organization. Technological developments make busin ess operations more efficient.
Introduction Standard Chartered PLC, listed in both the London and Hong Kong stoc k exchanges, ranks among the top 25 companies in the FTSE 100 by market capitali zation. The Bank has grown substantially in recent years, primarily as a result of organic growth, supplemented by acquisitions. Standard Chartered aspires to b e the best international bank for its customers. The Bank derives more than 90 p ercent of its operating income and profits from Asia, Africa and the Middle East , generated from its Wholesale and Consumer Banking Business. The Group has over 1,600 branches and outlets located in over 70 countries. The report presents an analysis of the external and internal environ ments of Standard Chartered Bank. The aim of the report is to analyze the differ ent environmental factors that affect the companys businesses and the companys str engths and weaknesses. The opportunities and threats that the company faces will be discussed. Recommendations for strengthening the Groups marketing will also b e presented. Effective marketing will enable the Group to reach and communicate to the customers.
External Analysis The external analysis pinpoints major opportunities and threats pose d by the environment. It analyzes those factors that is beyond the control of th e organization but which affect its ability to achieve strategic objectives (Mer cer 1991). The environmental analysis is important as it makes the organization aware of what is happening inside and outside that might affect it.
PEST Analysis A PEST analysis looks at the Political, Economic, Social and Technol ogical drivers of a particular industry. PEST are external factors that must be
analyzed and understood in order for an organization to succeed. The PEST analys is focuses on the external forces that affects the organization. It is most usef ul when used together with other tools such as the SWOT analysis. o Political Factors may have direct or indirect impact on the organizations ope ration. Decisions made by the government may have an effect on the business. The political arena has a big influence on how organizations operate, the purchasin g power of the customers and other businesses. o Economic Factors the organization is affected by economic factors. Economy a lso affects the purchasing power and behavior of the consumers. o Sociological Factors include the demography, lifestyle, cultural aspects of the consumers. These factors have a big influence on the consumer needs and want s. Sociological factors also affect the size of potential markets. o Technological Factors technological change plays an important role in shapin g how organizations operate. Technological factors are important in gaining comp etitive advantage. Technological innovations can improve production efficiency, quality and speed. New technology is changing how organizations operate. Internal Analysis The internal analysis provides an objective understanding of the con trollable factors in the organizations internal environment, identifying those wi th the greatest long-term impact on the organizations position. The objective of this analysis is to identify the organizations major strengths and weaknesses wit h respect to its overall mission. The importance of the internal analysis depend s on objectivity and completeness and identifies strengths and weaknesses of the organization as it attempts to implement strategic plans, goals and objectives, and its overall mission.
SWOT Analysis SWOT (Strengths and Weaknesses, and Opportunities and Threats) is a basic analytical tool in management that has become popular in recent years. SWO T analysis is often used by strategic planners and top management in developing competitive strategies. It is typically used to decide corporate strategies and to make product or market level analyses (Reddy 1994). SWOT is a widely used thi nking framework for identifying Strengths, Weaknesses, Opportunities and Threats . It enables key factors to be visibly recorded as a high-level summary of a bus iness. SWOT analysis is a summary that is simple but powerful. The technique is commonly used by consultants to document the key factors arising from the review of a particular project or business. The use of SWOT enables an assessment to b e made of the overall internal state of a business and the direction in which it is heading, through looking at its Strengths and Weaknesses. It also enables a judgment to be made about aspects of the external business environment, which ca n affect the performance of the business, through looking at the Opportunities a nd Threats it faces in the wider world (Elkin 1998). The SWOT analysis on its ow n is not a strategy. It is merely a tool that helps an organization in making in formed decisions. The SWOT analysis is primarily used to identify and analyze th e strengths and weaknesses of the organization, as well as the opportunities and threats exposed by the information collected of the external environment. The S WOT analysis is a simple yet useful tool in analyzing both the internal and exte rnal environments of the organization. SWOT analysis together with other tools s uch as PEST (Political, Economic, Social, and Technological) analysis can be use d as a basis for the analysis of business and environmental factors.
Strengths One of the strengths of Standard Chartered is its quality customer s ervice. The company has a relationship focused strategy that serves as its great est strength and a source of sustainable competitive advantage. Through the hig h quality service that the staff renders to the customers, the company achieved high customer satisfaction and advocacy. The company is notable for its ability to build long-term relationships with its customers. The company has a strong cu stomer focus and it continues to enhance product capabilities and to improve pro cessing efficiency. Another strength is the companys employees who are the source of competitive advantage for the company. The company through its investments o n the training, development and rewards of the employees have high employee enga gement scores and strong sales performance. 1. Strong Customer Franchises Standard Chartered focuses on being differentiated in the creation of customer value to win a bigger share of its customers total f inancial services spend. Strong franchises depend on having highly motivated emp loyees. Motivated employees, combined with investments in improving service, hel p to build customer satisfaction. 2. Continuous Productivity Improvement in recent years, the Group has been build ing a set of capabilities in six sigma (error reduction), lean manufacturing (operat ions efficiency) and procurement. Alongside those capabilities, the Group applie s an income growth must exceed cost growth discipline in setting goals for each bu siness, requiring a wider gap between income growth and cost growth for lower gr owth/return businesses than for higher growth/return businesses. Finally, the Gr oup has been simplifying management structures, aiming to reduce layers of manag ement and increase spans of control. 3. Capita Efficiency Standard Chartered has developed a framework to be able to measure economic equity requirements across all its businesses, taking into acco unt market, credit, insurance, business and operational risk. Using economic pro fit as a key performance measure enables the Group to understand which strategie s, products, channels and customer segments are destroying value and which are c reating the most value and to make better capital allocation decisions as a resu lt. Weaknesses The company recognizes operational risks and that its operation may have weaknesses that may endanger the company. Operational risks, through inadeq uate or failed internal processes or from people related or external events, are present in Groups businesses. The Groups businesses are dependent on their abilit y to process accurately and efficiently a high volume of complex transactions ac ross numerous and diverse products and services, in different currencies and sub ject to a number of different legal and regulatory regimes. The Group s systems an d processes are designed to ensure that the operational risks associated with it s activities are appropriately controlled, but the Group realizes that any weakn ess in these systems could have a negative impact on its results of operations d uring the affected period. Opportunities The company in the year 2007 has tapped many business opportunities that are expected to lead to success in the future. In the year 2007, the compan y was able to achieve a strong financial performance that strengthens the compan ys position in the financial services sector in China, India, the Middle East and Africa. The companys strong customer focus is expected to result in growth and s
uccess for the company despite the unpredictable economic condition. Threats 1. Macroeconomic Conditions in Footprints Countries One of the biggest threats to the company is the uncertainties that arise from slowing economic growth in the major countries in its footprint and t he various uncertainties surrounding global financial markets in 2009. The Group operates in many countries and is affected by the prevailing economic condition s in each. Macroeconomic conditions have an impact in personal expenditure and c onsumption; demand for business products and services; the general availability of credit and retail and corporate borrowers; and the availability of capital an d liquidity funding for the Group. All these factors may impact the performance of the Group. 2. Changes in Government and Regulatory Policy Another source of threats for the Group is the regulatory and policy measures that governments will take in order to adjust to unstable economic con dition around the world. Changes in government policies and regulations may be w ide-ranging and influence the volatility and liquidity of financial markets, as well as the ability and willingness of customers to repay their loans. These eff ects may directly or indirectly impact the Groups financial performance. 3. Instability in the Financial Services Industry The availability of liquidity and capital to financial institutions represent a material counterparty risk. Availability depends on the underlying s trength and performance of each institution and, just as importantly, on the mar ket perception of that institution at any given point in time. 4. Exchange Rates Changes in exchange rates affect, among other things, the value of t he Groups assets and liabilities denominated in foreign currencies, as well as th e earnings reported by the Groups non-US dollar denominated branches and subsidia ries. Competitive Advantages of the Company Competitive advantage can be considered as a condition, which facili tates more efficient operation and higher quality products and/or services for a n organization. Michael Porter considers an organization where earning exceeds c ost as an organization that achieved competitive advantage. Competitive advantag e in Porters perspective is being able increase earnings despite the competitive pressures.
1. Strong Liquidity and Diversification The bank has a strong liquidity, a well-diversified retail funding b ase and a conservative balance sheet. The bank has a healthy A/D ration the rela tion of customer loans to customer deposits at 86 percent; and 24 percent of its assets are highly liquid. The Groups capital ratios are well above the target ra nges, reflecting deliberate and effective management of the capital base. 2. Innovation and Transformation
Standard Chartered remains competitive amidst the uncertainties in t he business environment because of its ability to innovate and transform. Standa rd Chartered operates in some of the worlds fastest-growing and most dynamic mark ets in Asia, Africa, and the Middle East. To improve performance in these market s, the Group continues to innovate and diversify to meet the needs of its custom ers and clients. Consumer Banking has diversified by building wealth management, personal loans, services for small and medium enterprises (SMEs) and consumer f inance onto its traditional mortgage and credit card product range. Innovative S ME products that helped drive Consumer Bankings performance the XtraSaver savings account. Wholesale Banking has been transformed in recent years by adding more sophisticated, higher-value services such as credit derivatives and corporate ad visory to its long-standing cash management and lending business. 3. Growth Strategies (Acquisitions) Standard Chartered continues to become competitive because of its su ccessful growth strategies particularly its acquisition strategies. The Group s st rong franchise, built mainly through years of organic growth has positioned it t o take advantage of the next upturn in the global economy. The Bank supplemented this strength with selective acquisitions in 2008, which provided the businesse s with specialist capabilities in key markets. The acquisition of AEB, which was competed in February 2008, was one such addition which added both scale to the Private Bank as well as boosting the Groups transaction banking capabilities. The Groups other acquisitions in 2008 included a majority stake in UTI Securities, a n Indian retail brokerage; Yeahreum Mutual Savings Bank in Korea; Asia Trust and Investment Corporation, a bank in Taiwan; Lehman Brothers Brazilian franchise; a nd JPMorgan Cazenoves Asian brokerage operations, which completed in 2009. These acquisitions were made in response to customers seeking specialized services. Th ey help diversify the Groups revenue-generating capabilities and position the Who lesale Banking and Consumer banking businesses to acquire new customers and seek a bigger share of business form their best customers. 4. Strategic Human Resource Management Standard Chartered considers its people as a source of competitive a dvantage. Standard Chartered employs almost 60,000 people in over 50 countries a nd territories, Demographic changes, competition and its own rapid growth mean t hat the Groups ability to attract, develop and engage its talent is firmly on the Groups agenda. The build the Groups capability to attract and develop people, a g lobal, systematic approach to talent management was set up. In 2006, the Group f ocused on identifying and developing talent at a junior level to build the skill s it needs for the future. The Group has increase the number of less experienced high-potential employees by 47 percent and held one-day career development work shops for high-potential employees across the Group. The Group believes that the key to high performance is ensuring employees know what is expected of them. Th e Group rewards employees competitively for their contribution to the Group s perf ormance. As part of the total reward philosophy, the Group offers employee the o pportunity to share in the Groups success. Recommendation Direct Marketing One recommendation for the company in order for them to reach new cu stomers and to increase their turnover is to employ a direct marketing strategy. Direct marketing according to Bradley (2003) is an approach to marketing that i nvolves the company knowing precisely who its customers are, understanding that not everybody is a customer, communicating in relevant ways with the customers a nd prospects, enhancing and refining the relevance of the communications and doi ng all of the above through a database (Bradley 2003). According to Kitchen and
De Pelsmacker (2004) direct ree dialogue which uses one behavioural response at any eveloping an ongoing direct customers individually.
marketing is a system of personal and intermediary-f or more communications media to effect a measurable location, forming a basis for creating and further d relationship between an organization and each of its
Standard Chartered focuses on building strong relationships with its customers. The company strives to understand the needs of the customers and dev elop its products and services to meet those needs. Employing a direct marketing strategy in addition to the existing marketing tools of the company can help th e Standard Chartered to achieve its goal of building stronger and lasting relati onships with the customers.
The principal benefits of any direct marketing technique are the acc uracy with which the customers can be reached due to the targeting involved base d on computer databases, the measurable effect direct marketing allowing the com pany to determine its impact in the short term; the quality of message due to th e ability to provide sophisticated copy appropriately printed; and the low cost of the delivered message, especially compared with advertising. The key element of direct marketing is the development and maintenance of a detailed customer da tabase outlining historical buying behavior that can be statistically manipulate d to produce market segments which can be directly served by a customized market ing package (Bradley 2003). Direct marketing can be an effective strategy in rea ching the customers and influencing their behavior. The aim of direct marketing is to create one-to-one personalized and persuasive interaction with customers a nd potential customers. Direct marketing can also be used by the company to buil d long-term customer relationships. Direct marketing is a communication tool that is best suited to buil d the relationship between the customers and the brand. Because it is individual ized, it can be very persuasive. It allows personalized interactive communicatio n, and it easily leads to behavioural response, especially in the marketing of b usiness-to-business and higher involvement consumer products. The customer recei ves convenience, time utility and satisfaction, and an improved quality and spee d of service. When built upon a powerful database, it allows flexible and precis e targeting of customer segments and it can therefore avoid waste.
References Bradley, F 2003, Strategic Marketing: In the Customer Driven Organization, Wiley , Hoboken, NJ.
Elkin, P 1998, Mastering Business Planning and Strategy: The Power of Strategic Thinking, Thorogood, London.
Kitchen, P J and De Pelsmacker, P 2004, Integrated Marketing Communications: A P rimer, Routledge, New York.
Mercer, J L 1991, Strategic Planning for Public Managers, Quorum Books, New York.
Reddy, A C 1994, Total Quality Marketing: The Key to Regaining Market Shares, Quorum Books, Westport CT. Read more: http://ivythesis.typepad.com/term_paper_topics/2011/03/a-management-r eport-standard-chartered-bank.html#ixzz1OZhr0TXn
