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STRATEGY ANALYSIS OF IDLC

FINANCE LIMITED

Course: W-615 Strategic Management


Submission Date: June 12, 2014

Submitted to:
Dr. A.K.M. Saiful Majid
Professor
IBA, University of Dhaka

Submitted by:
Muhammad Hasibur Rashid Chowdhury
Student ID: ZR-1201002
EMBA, Batch No.: 12

Institute of Business Administration


University of Dhaka

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June 12, 2014


Professor Dr. A.K.M Saiful Majid
Course Teacher
Strategic Management (W-615)
Institute of Business Administration
University of Dhaka
Subject: Letter of Transmittal
Dear Sir,
Ive prepared the term paper titled Strategy Analysis of IDLC Finance Limited as per the
valuable guidelines and advice provided by you. As an employee of IDLC I am bound to
maintain confidentiality of different issues of the organization. Moreover, as a non-banking
financial institute IDLC has to comply with immense rules and regulations which restrict the
availability of data. Despite the facts I have tried to make the report extensive as much as
possible.
Preparing this paper helps me a lot to get exposure of strategic management issues with
practical situation. I am personally thankful to you for giving me such an opportunity and
also providing your thoughtful guidelines to prepare this report.
For any additional information or assistance apart from this report if required so, please
contact me at hasib@idlc.com or +8801730319914
Sincerely yours,
__________________________________
Muhammad Hasibur Rashid Chowdhury
Roll No: ZR-1201002
EMBA 12th Batch, IBA
F

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f
ACKNOWLWDGEMENT

This report is prepared as per the requirements of the Strategic Management (W-615)
course under the Executive MBA program of IBA. To provide this opportunity and
thoughtful guidelines I am grateful to the course teacher Professor Dr. A.K.M Saiful Majid
sir.
I would also like to thank some colleagues who have extended their cooperation to me for
preparing this mammoth task. I would like to thank Mr. Mir Tariquzzaman, GM & CTO
(IT) whom I have consultant several times on different issues. I would also like to thank
Ms. Bilquis Jahan, DGM & Head of HR for her patience and time she had provided to me.

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Table of Contents
Executive Summary....i
Chapter 1: Introduction..................................................................................................................... 10
1 Introduction................................................................................................................................ 10
1.1

Origin of the Report............................................................................................................. 10

1.2 Objective................................................................................................................................. 10
1.3 Scope...................................................................................................................................... 10
1.4 Methodology............................................................................................................................. 11
1.5 Limitations............................................................................................................................... 11
Chapter 2: Company Profile IDLC Finance Limited............................................................................... 12
2.1 IDLC at a Glance....................................................................................................................... 12
2.2 Shareholding Structure................................................................................................................. 12
2.3 Organizational Hierarchy.............................................................................................................. 13
2.4 Products and Services.................................................................................................................. 14
2.4.1 For Large Local and Multinational Corporate Houses..................................................................... 14
2.4.2 For Small and Medium Enterprises............................................................................................ 14
2.4.3 For Retail Clients................................................................................................................. 15
2.4.4 For Capital Market Clients...................................................................................................... 15
2.5 Board of Directors...................................................................................................................... 15
2.6 Management Committee............................................................................................................... 16
2.7 Memberships............................................................................................................................. 17
2.8 Key Financials:.......................................................................................................................... 17
2.9 Geographic Coverage.................................................................................................................. 19
Chapter 3: Organizational Strategy Analysis IDLC Finance Limited............................................................20
3.1 Critical Analysis of Strategy Making Hierarchy of IDLC.......................................................................20
3.2 Vision Statement........................................................................................................................ 21
3.2.1 Critical Analysis of IDLCs Vision Statement............................................................................... 21
3.3 Mission Statement...................................................................................................................... 22
3.3.1 Critical Analysis of IDLCs Mission Statement............................................................................. 22
3.4 Strategic Objectives.................................................................................................................... 23

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3.5 Core values............................................................................................................................... 23


3. 6 Employee Code of Conduct and Ethics............................................................................................ 24
Chapter 4: Strategic Group Mapping..................................................................................................... 25
4.1 Strategic Group Mapping.............................................................................................................. 25
4.2 Analysis of Strategic Groups.......................................................................................................... 27
4.3 Basic and complementary strategies designed and being implemented to match market situations.....................32
4.3.1 Corporate Business............................................................................................................... 32
4.3.2 Small and Medium Business.................................................................................................... 33
4.3.3 Consumer Business................................................................................................................... 33
Chapter 5: Environmental Factors Analysis............................................................................................ 34
5.1 PESTEL Analysis....................................................................................................................... 34
5.1.1 POLITICAL FACTORS:........................................................................................................ 34
5.1.2 ECONOMIC FACTORS:....................................................................................................... 34
5.1.3 SOCIO-CULTURAL FACTORS:............................................................................................. 35
5.1.4 TECHNOLOGICAL FACTORS:.............................................................................................. 35
5.1.5 ENVIRONMENTAL FACTORS:............................................................................................. 36
5.1.6 LEGAL FACTORS:.............................................................................................................. 37
5.2 Five-Forces Model of Competition.................................................................................................. 37
5.2.1 Competition among Rival Companies........................................................................................ 39
5.2.2 Threats of New Entrants......................................................................................................... 40
5.2.3 Power of Suppliers............................................................................................................... 40
5.2.4 Bargaining Power of Client Groups........................................................................................... 40
5.2.5 Competitive Pressure from Substitute Products.............................................................................41
Chapter 6: SWOT Analysis................................................................................................................ 42
6.1 SWOT Analysis......................................................................................................................... 42
Chapter 7: Analysis on Overall Banking Industry..................................................................................... 43
7.1 Industry Life Cycle............................................................................................................... 43
7.1.1 Countrys Total credit growth all banks.................................................................................... 43
7.1.2 Countrys Total Deposits Growth.............................................................................................. 44
7.1.3 Countrys Overall Export growth............................................................................................ 44
7.1.4 Countrys Import Scenario.................................................................................................... 45
7.1.5 GDP Sectoral Growth rate in %...................................................................................... 45

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7.2 Dominant Traits of the Industry...................................................................................................... 46


7.3 Drivers of Industry Change........................................................................................................... 48
7.4 Key Success Factors.................................................................................................................... 49
Chapter 8: Recommendations and Conclusion......................................................................................... 50
8.1 Recommendations and Conclusion.................................................................................................. 50

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Executive Summary
IDLC Finance Limited is one of the leading non-bank financial institutions in Bangladesh.
Established in 1985 as the pioneering leasing company in Bangladesh, IDLC now offers a
wide range of products ranging from Corporate Finance, SME Finance, Consumer
Finance, to Capital Market solutions, through its presence across the country with 26
branches and over 600 permanent employees. Over the year, IDLC has developed a strong
strategic management process that clearly dictates organizational policy-making, strategy
development & execution, and overall organizational management in an efficient manner.
Both IDLCs Board of Directors and top management personnel are integrally involved in
leading this strategic management process in the most efficient manner by ensuring a good
strategic plan for the organization, remaining updated on organizational and industry
scenario, putting constructive pressure to achieve desired outcomes, taking corrective
measures for better strategic management, developing stronger competencies and
capabilities, and portraying strong corporate governance, ethics and CSR.
IDLC has always been well-regarded in the financial sector of Bangladesh for its corporate
governance practices, ethical integrity and transparency. Maintenance of an effective
Corporate Governance process remains a key priority of the Board of IDLC. Moreover,
IDLC has a strong Human Resource management system in place that focuses on key
areas such as maintaining a favorable work environment by embracing diversity and
inclusion; exercising non-discrimination and maintaining gender balance across all spheres
of IDLC; providing opportunities to employees and fresh graduates for both their personal
and professional development in the form of training programs, job rotation, succession
planning and internship opportunities; ensuring health and safety standards across all
branches of the IDLC Group while offering major benefit schemes and company
contributions to employees; and helping employees maintain proper work-life balance
throughout their stay at IDLC. These practices help IDLC attract and retain the best
professionals in the industry.
Based on the strategies adopted by its competitors and changing market scenario across
different business segments, IDLCs business units also differ from one another in terms of

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core strategies and focus areas. In response to a more mature market, IDLCs Corporate
business is mainly focused on service quality and efficiency, higher ticket size, and
improved portfolio quality, while its SME business is more focused on rapid product
innovation and increased presence through expanded geographic coverage to leverage the
most from the fast-growing SME sector in Bangladesh.
The major factors of IDLCs external, and immediate industry and competitive
environment, and their subsequent influence on its operations, have been identified
through PESTEL analysis and Porters Five Forces Model of Competition. PESTEL
analysis reveals major political, economic, socio-cultural, technological, environmental
and legal factors that influence IDLCs performance and strategic decisions. Major factors
include, but are not limited to, budgetary measures and various policies and regulatory
measures by the Government and Bangladesh Bank; changing demographics of the
population; greater reliance on technology to offer more customized financial solutions
and better services.
The Five Forces Model of Competition reveals strong market competition and rivalry in
the industry, low threats of new entrants due to high regulatory restrictions, high
bargaining power of both industry suppliers and customers due to intense competition
among rival companies and competing product offerings, and almost zero threat from
substitute products from another industry.
SWOT Analysis of IDLC reveals its core strengths in the areas of effective strategic
decision-making and execution, strong corporate governance, competent management
team, strong financials, diversified product portfolio and a prestigious customer base,
professional workforce combined with strong HR Management, strong technology
platform, superior customer service, and growing CSR commitment, thus leading to a
strong brand image.
In light of the above analysis, we may safely conclude that IDLC holds a strong position in
the banking and financial services sector of Bangladesh. By focusing more on balanced
strategic objectives; strong management leading to efficient strategy development and
execution; revising business models and strategies in a timely manner will provide better
results and competitive advantage.

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Chapter 1: Introduction
1 Introduction
In this report we will analyze the strategy of IDLC Finance Limited in terms of various
parameters. Those parameters are companys current strategies, what is the strategic
group, their impact of the different environmental factors such as five forces, PESTEL. We
will also go through the detail analysis on SWOT of IDLC.

1.1 Origin of the Report


As part of our Strategic Management course of Executive MBA program, our honorable
teacher Professor Dr. Saiful Majid has given us an assignment to perform an analysis on
the strategic management process of my own company and recommend course of actions
to strengthen in light of the learning from the course. As per our teachers instruction we
have made this report.

1.2 Objective
Our main objective is to analyze the strategy implemented by IDLC both basic and
complementary, its strategic groups, different external factors such as five forces,
PESTEL, SWOT, banking industry life cycle, dominant traits of the whole industry, key
success factors and finally come up with recommendations so that IDLC Finance Limited
can do even better in the competitive market.

1.3 Scope
The report attempts to analyze the strategic management process of IDLC Finance
Limited, focusing on IDLCs strategic objectives, polices and guidelines developed and
executed by its Board and Management, and followed by its staff. To identify IDLCs
competition market position and major opportunities for the future, and accordingly
recommend required measures, a number of strategic management tools were applied,
including detailed analysis of IDLCs vision, mission and strategic objectives; strategic
group mapping of IDLC; PESTEL analysis and applying Porters Five Forces Model of
Competition to highlight influence of major factors related to IDLCs external
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environment and immediate industry and competitive environment; and SWOT Analysis
of IDLC. Accordingly recommendations have been provided in this report that may
contribute to further growth and improvement of IDLC.

1.4 Methodology
The report has been prepared by reviewing various policies, guidelines and reports of
IDLC. Moreover, references have been made from IDLCs Annual Financial Report and
Annual Sustainability Report, while key personnel from Corporate, SME, Consumer,
Capital Markets and Human Resources were interviewed for their opinion on various
issues related to IDLCs strategic management process.

1.5 Limitations
Due to confidentiality and sensitivity of certain information, detailed strategies, policies
and guidelines could not be enclosed with this report.

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Chapter 2: Company Profile IDLC


Finance Limited
2.1 IDLC at a Glance
IDLC Finance Limited, Bangladeshs pioneering leasing company, was established in
Dhaka in 1985. IDLC was formed through the collaboration of International Finance
Corporation (IFC), German Investment and Development Company (DEG), Kookmin
Bank, Korea Development Financing Corporation, The Aga Khan Fund for Economic
Development, The City Bank Limited, IPDC of Bangladesh Limited and Sadharan Bima
Corporation.
Today, IDLC Finance is the leading multi-product Non-Banking Financial Institution in
Bangladesh with 26 branches and 2 SME booths, and over 600 permanent staff across the
Group. IDLC offers a wide range of loan and deposit products to its Corporate, Consumer
and SME client segments, while operating in the Capital Markets through its two whollyowned subsidiaries IDLC Investments Limited, providing Merchant Banking services,
and IDLC Securities Limited, providing Brokerage services.
The IDLC Group has always been a standard bearer for the financial sector in terms of
corporate governance, statutory compliance and ethical business practices. The Group is
also highly regarded for its professional pool of resources and progressive work
environment

2.2 Shareholding Structure

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2.3 Organizational Hierarchy

CEO &
Managing
Director
DMD
DMD

Asst.
Asst.
Manag
Manag
er
er
Sr.
Sr.
Exec.
Exec.
Officer
Officer

GM
GM

DGM
DGM

Managerial
Hierarchy

AGM
AGM

Sr.
Sr.
Manag
Manag
er
er
Manag
Manag
er
er
Asst.
Asst.
Manag
Manag
er
er
Mgt.
Mgt.
Traine
Traine
ee

NonManagerial
Hierarchy

Execut
Execut
ive
ive
Officer
Officer
Prob.
Prob.
Officer
Officer
Senior
Senior
Officer
Officer
Officer
Officer

Suppo
Suppo
rtrt
Officer
Officer
Junior
Junior
Officer
Officer

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2.4 Products and Services


IDLC has extensive knowledge, expertise and experience to offer a range of financial
solutions in response to the needs of a broad spectrum of clientele. These are discussed in
the following sections:

2.4.1 For Large Local and Multinational Corporate Houses


IDLC has many some products for the large local and multinational corporate houses such
as:
-

Term Loan
Lease Finance
Working Capital Finance
Project Finance
Refinancing and Special Funds
Corporate Advisory Services

Structured Finance division offers the following Solutions:


-

Fund-raising through Loan/Lease/Private


Placement of Equity/Preference Shares/Bond
Foreign-currency Loan/Refinancing of Special Funds
Project/Infrastructure Finance
Advisory Services
Securitization of Assets
Structured Solutions

2.4.2 For Small and Medium Enterprises


Small Enterprise Finance in the forms of:
- SME Loan
- Abashan Loan
- Seasonal Loan
- Revolving Shortterm Loan
- SME Sachal Loan
Medium Enterprise Finance in the forms of:
- Term Loan
- Lease Finance
- Working Capital Finance
- Project Finance
- Specialized Products
Other facilities include:
- Supplier Finance
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Women Entrepreneur Loan


Commercial Vehicle Loan

2.4.3 For Retail Clients


-

Deposit Schemes (Cumulative Term Deposit, Monthly/Quarterly/Annual Earner


Deposit, Double/Triple Money Deposit, Short-term Deposit)
Home Loan
Car Loan
Personal Loan

2.4.4 For Capital Market Clients


-

Portfolio Management (MAXCAP - Discretionary Portfolio Management known


as MAXCAP, Cap Invest - Margin Lending)
Investment Banking (IPO, RPO, Bond Issuance, Rights Shares Offering, Corporate
Advisory etc.)
Research
Brokerage Services

2.5 Board of Directors


The Board of IDLC comprises of eleven Non-executive Directors, including two
Independent Directors, and one Executive Director, i.e. the CEO and Managing Director
of IDLC:
1. Mr. Anwarul Huq, Chairman-nominated by Reliance Insurance Limited
2. Mr. Rubel Aziz, Director-nominated by The City Bank Limited
3. Mr. Md. Kamrul Hassan, Director-nominated by Transcom Group of Companies
4. Mr. Aziz Al Kaiser, Director-nominated by The City Bank Limited
5. Mr. Hossain Mehmood, Director-nominated by The City Bank Limited
6. Mrs. Meherun Haque, Director-nominated by The City Bank Limited
7. Mr. Kazi Mahmood Sattar, Director-nominated by The City Bank Limited
8. Mr. Md. Rezaul Karim, Director-nominated by Sadharan Bima Corporation (SBC)
9. Alhaj Akram Hussain (Humayun), Director-nominated by Mercantile Bank
Limited

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10. Mr. Farooq Sobhan, Independent Director


11. Mr. Syed Abu Naser Bukhtear Ahmed, Independent Director
12. Mr. Selim R. F. Hussain, Ex-Officio
All Non-executive Directors, other than the Independent Directors, are nominated by their
respective organizations, and the elected Directors nominate two Independent Directors
for the Board. The Directors are then appointed by the shareholders in the Annual General
Meeting (AGM).
The CEO and Managing Director of IDLC is also appointed by the Board subject to
consent of the shareholders in the AGM. Any change in the Board members requires
intimation to the Bangladesh Bank, all scheduled banks and financial institutions,
Bangladesh Securities and Exchange Commission (BSEC), and stock exchanges.

2.6 Management Committee

Mr. Selim R.F. Hussain, CEO and Managing Director

Mr. H.M. Ziaul Hoque Khan, Deputy Managing Director

Mr. Asif Saad Bin Shams, GM and Head of Credit and Collection

Mr. M. Jamal Uddin, GM and Head of Corporate and Structured Finance

Mr. Zahid Ibne Hai, GM and Head of SME Division

Mr. Irteza A. Khan, DGM and Head of Consumer Division

Ms. Bilquis Jahan, DGM and Head of Human Resources

Mr. Mir Tariquzzaman, GM and Chief Technology Officer

Mr. M. Ataur Rahman Chowdhury, AGM and Head of Operations

Mr. Mustaq Ahammed, AGM and Head of Internal Control and Compliance

Mr. Md. Moniruzzaman, Managing Director, IDLC Investments Limited (subsidiary),


and

Mr. Md. Saifuddin, Managing Director, IDLC Securities Limited (subsidiary)

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2.7 Memberships
Association
Bangladesh Leasing and Finance Companies Association | Asian Financial Services
Association | Bangladesh Merchant Bankers Association | Bangladesh Association of
Publicly Listed Companies
Institute
The Institute of Bankers, Bangladesh
Chambers of Commerce and Industry
International Chamber of Commerce Bangladesh | Metropolitan Chamber of Commerce
and Industry | Dhaka Chamber of Commerce and Industry | Bangladesh German Chamber
of Commerce and Industry | The Federation of Bangladesh Chambers of Commerce and
Industry
International Memberships
International Factors Group (IFG) - an international association of factoring companies |
Small Business Banking Network (SBBN) - a global initiative to improve access to
financial services by small businesses
Sustainability Memberships
United Nations Global Compact | United Nations Environment Programme Finance
Initiative | CSR Centre of Bangladesh

2.8 Key Financials:

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2.9 Geographic Coverage

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Chapter 3: Organizational Strategy


Analysis IDLC Finance Limited
3.1 Critical Analysis of Strategy Making Hierarchy of IDLC

Corporate Strategy
Across the IDLC Group, i.e., IDLC Finance
Limited, and its two subsidiaries, IDLCIL
and IDLCSL

Developed by the Board of


Directors, and the CEO and
Managing Director of IDLC

Business Strategy
Developed for each individual business activity
of the company, namely Corporate, SME,
Consumer and Capital Market Operations

Developed by the Head of


different Business Lines, in
consultation with Functional
Heads

Functional Strategy
Developing specific strategies and objectives
for each individual functions under major
Business areas, in line with the
organizations overall Corporate Strategy

Developed by the Functional


Heads, in collaboration with
key company personnel

Operating Strategy

Developed by Managers of
major geographic units &
strategically important
activities, such as human
resource management,
marketing & promotion etc.

These strategies complete the execution and


achievement of major Business and
Functional strategies, while provide a basis
for managing down-the-ladder activities

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3.2 Vision Statement


We will be the best financial brand in the country

3.2.1 Critical Analysis of IDLCs Vision Statement


IDLCs vision statement contains the following characteristics of a good vision statement:
Graphic: The vision statement gives a clear indication that the management of
IDLC is trying to develop a company that provides the best financial services,
while holding the leading market position in the financial sector of Bangladesh.

Flexible: The statement is flexible, giving management to option to change their


strategic course in response to evolving product, market or technological
situations, to become the best financial brand in the country.

Feasible: The vision statement shows a position that IDLC can


expect to achieve in the future, with carefully crafted strategies,
followed by proper and timely execution.

Desirable: The direction provided to the company by the vision statement is


desirable to IDLCs stakeholders in the long run, since it shows better returns in
future.

Easy to communicate: The vision statement is very easy to communicate, since


it is brief, precise and memorable.

In spite of the above characteristics, the vision statement also has some major
shortcomings that should be addressed:

Not too focused: The vision statement does not provide a specific tangible goal to the
management to set their strategies and allocate resources accordingly. Also it does not
indicate what the company is doing to prepare for the future.

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Not distinctive: The vision statement fails to create a unique identity for IDLC. It
could be applicable to any other rival company competing in the industry.

Too reliant on superlatives: The vision statement only states that IDLC desires to be
the Best Financial Brand in country; however, it does not indicate any specific
strategic course of the company.

Hence it can be safely presumed that IDLCs vision is a moderately well-drafted


statement, although there is room for much improvement.

3.3 Mission Statement


We will focus on quality growth, superior customer experience and sustainable business
practices

Quality
Growth

Superior
Customer
Experience

Sustainable
Business
Practices

3.3.1 Critical Analysis of IDLCs Mission Statement


The mission statement of IDLC clearly specifies the areas the company will focus on to
achieve its vision of becoming the best financial brand in the country. It specifically
mentions:

Stakeholder desire of Quality growth,

Customer desire of Superior customer experience, and

Core objective of IDLCs existence and operation, that is, Sustainable business
practices.

In that regard, it is a fairly effective mission statement.

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3.4 Strategic Objectives


The strategic objectives of a company serve as the performance targets, that is, results and
outcomes desirable by the company management. Usually such objectives are set to ensure
that the company at its full potential and delivers the best possible results to work towards
achieving its vision.
The strategic objectives for IDLC include:

Grow and develop our talent pool;

Fully leverage new core banking platform;

Optimize distribution points;

Grow and diversify funding sources;

Grow sales and service capabilities in Consumer Division;

Aggressively grow SME portfolio;

Focus on top-tier clients in Corporate;

Consolidate capital market operations and enhance capabilities;

3.5 Core values


The core values of IDLC portrays the beliefs, traits and behavioral norms its employees
are expected to display in carrying out their daily responsibilities and pursuing the
companys strategic vision and strategies.
The core values of IDLC comprise of seven behavioral attributes expected from its
employees:

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Integrit
y
Simplici
ty

Passion

Custom
er Focus

Core
Values
of
IDLC

Ecofriendly

Trust &
Respect

Equal
Opportu
nity

3. 6 Employee Code of Conduct and Ethics


IDLC employees shall:

Act with integrity, competence, dignity and in an ethical manner when dealing with customers,
prospects, colleagues, agencies and public;

Act and encourage others to behave in a professional and ethical manner that will reflect
positively on IDLC employees, their profession and on IDLC, at large;

Strive to maintain and improve the competence of all in the business;

Use reasonable care and exercise independent professional judgment;

Not restrain others from performing their professional obligations;

Maintain knowledge of and comply with all applicable laws, rules and regulations;

Disclose all conflicts of interest;

Deliver professional services in accordance with IDLC policies and relevant technical and
professional standards;

Respect the confidentiality and privacy of customers, people and others with whom they do
business; and

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Chapter 4: Strategic Group Mapping


4.1 Strategic Group Mapping
Strategic Group Mapping is a concept used in strategic management that groups
companies within an industry that have similar business models or similar combinations of
strategies. Such grouping aims to identify organizations with similar strategic
characteristics, following similar strategies, or competing on similar bases. This also helps
the organization identify its position, in respect to its main competitors, within the
industry.
Strategic Group Mapping delivers the following benefits to an organization:

It helps a company identify its direct and indirect competitors, and/or possible partners
within the industry;

It illustrates the ease or difficulty of moving from one strategic group to another;

It often helps identify future opportunities and/or strategic problems to the company;
and

It ensures the company takes into account views of its major stakeholders while
developing or assessing its strategies;

In consideration of the value chain components of the banking and financial sectors
industry, IDLCs close competitors include a combination of the following banks and
NBFIs:

Organization

Type

BRAC Bank Limited

Bank

The City Bank Limited

Bank

Eastern Bank Limited

Bank

IPDC of Bangladesh Limited

NBFI

United Leasing Company Limited

NBFI

Uttara Finance and Investments Limited

NBFI

The relative positions of IDLC in terms of its key financials have been provided below:

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Bank/NBFI

BRAC Bank Limited


The City Bank Limited
Eastern Bank Limited
IDLC Finance Limited
IPDC of Bangladesh Limited
United Leasing Company
Limited
Uttara Finance and
Investments Limited

Total
Assets

Operating Profit
Income
after
Tax

NPL
Ratio

180,396

5,406

700

10.00

130,314

4,620

794

7.48

147,044

5,731

2,393

3.17

37,784

2,403

713

1.63

7,115

208

129

3.98

11,817

384

229

3.50

19,365

1,142

815

2.90

Comparative position based on Total assets (in BDT Million) and NPL ratio:

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4.2 Analysis of Strategic Groups


The number of groups within an industry and their composition depends on the
dimensions used to define the groups. For IDLC, the following characteristics were
considered as the bases of competition with its immediate peer banks and NBFIs:

Product and Service Diversity

Geographic Coverage

Market Segments Served

Brand Image and investments in Marketing Communications

Product and Service Quality, and

Pricing Policy

In light of the above, the following tables summarize the comparative position and
strength of competition among IDLC, BRAC Bank Limited (BRAC), The City Bank
Limited (CBL), Eastern Bank Limited (EBL), IPDC of Bangladesh Limited (IPDC),
United Leasing Company Limited (ULC) and Uttara Finance and Investments Limited
(UFIL).

Table 1 - Comparison of Strategic issues (Products, coverage and market segments)

Organizations

Product and Service


Diversity

Geographic
Coverage

Market Segments
Served

IDLC

Wide range of products


offered under Corporate,
Consumer (Deposit and
Loan products), SME and
Capital Markets segments

26 branches and 2 sales


centres across Dhaka,
Chittagong, Sylhet, Bogra,
Comilla and Jessore
regions.

Caters to local and


multinational corporate
houses; small and medium
enterprises (excluding micro
enterprises); individual
deposit clients; individual
borrowers of Consumer loan
products; capital market
investors; and NRB clients.

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BRAC Bank

Wide range of products


offered under Corporate,
Consumer (Deposit and
Loan products) and SME
Banking segments.

Much wider geographic


coverage with over 100
branches across Dhaka,
Chittagong, Khulna,
Jessore, Rajshahi, Rangpur
and Sylhet regions.

Caters to local and


multinational corporate
houses; micro, small and
medium enterprises;
individual deposit clients;
individual borrowers of
Consumer loan products; and
NRB clients.
Hence BRAC is a direct
competition for IDLC across
these market segments.

City Bank

Eastern Bank

Hence BRAC is a direct


competition for IDLC in
terms of product
offerings.

Hence BRAC is in a much


better competitive position
compared to IDLC in
terms of geographic
coverage.

Wide range of products


offered under Corporate,
Consumer (Deposit and
Loan products), SME and
Islamic Banking
segments.

Much wider geographic


coverage with around 100
branches across Dhaka,
Chittagong, Sylhet,
Khulna, Rajshahi, Comilla,
Rangpur and Barishal
regions.

Caters to local and


multinational corporate
houses; micro, small and
medium enterprises;
individual deposit clients;
individual borrowers of
Consumer loan products; and
NRB clients.

Hence CBL is a direct


competition for IDLC in
terms of product
offerings.

Hence CBL is in a much


better competitive position
compared to IDLC in
terms of geographic
coverage.

Hence CBL is a direct


competition for IDLC across
these market segments.

Wide range of products


offered under Corporate,
Consumer (Deposit and
Loan products), SME and
Investment Banking
segments.

Much wider geographic


coverage with over 70
branches across Dhaka,
Chittagong, Sylhet,
Khulna, Rajshahi, Rangpur
and Barishal regions.

Caters to local and


multinational corporate
houses; small and medium
enterprises (excluding micro
enterprises); individual
deposit clients; individual
borrowers of Consumer loan
products; capital market
investors; and NRB clients.

Hence EBL is a direct


competition for IDLC in
terms of product
offerings.

Hence EBL is in a much


better competitive position
compared to IDLC in
terms of geographic
coverage.

Hence EBL is a direct


competition for IDLC across
these market segments.

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IPDC

ULC

UFIL

Select products offered


under Corporate and
Consumer (Deposit and
Loan products) segments.

5 branches located in
Dhaka, Chittagong and
Sylhet.

Caters to select clients


segments such as local and
multinational corporate
houses, and individual
depositors and Consumer
loan clients.

Hence IDLC is in a much


stronger position in terms
of its product and service
portfolio compared to
IPDC.

Hence IDLC is in a much


stronger position compared
to IPDC in terms of its
geographic coverage.

Hence IPDC competes with


IDLC only in these select
market segments.

Select products offered


under Corporate Finance
(only Syndication and
lease facilities), SME
Finance (only Supplier
Finance facilities), and
Consumer (Deposit and
Loan products) segments.

17 branches across Dhaka,


Chittagong, Barishal,
Khulna, Rajshahi, Rangpur
and Sylhet regions.

Caters to select client


segments such as Syndication
and Lease clients constituting
of large local and
multinational corporate
houses; Supplier Finance
clients constituting of small
and medium enterprises; and
individual depositors and
Consumer loan clients.

Hence IDLC is in a much


stronger position in terms
of its product and service
portfolio compared to
ULC.

Hence ULC has a


geographic coverage
comparable to that of
IDLC.

Hence ULC competes with


IDLC only in these select
market segments.

Select products offered


under Corporate, SME
and Consumer (Deposit
and Loan products)
segments.

5 branches across Dhaka,


Chittagong and Bogra.

Caters to corporate houses;


small and medium
enterprises; and individual
depositors and Consumer
loan clients.

Hence IDLC is in a much


stronger position in terms
of its product and service
portfolio compared to
UFIL.

Hence IDLC is in a much


stronger position compared
to UFIL in terms of its
geographic coverage.

Hence UFIL competes with


IDLC only in these select
market segments.

The competition is
particularly strong in the
Supplier Finance segment
considering ULCs strong
service capability in offering
this product.

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Table 2 Comparison of Strategic issues (Brand image, service quality and pricing policy)
Organizations

Brand Image and


investments in
Marketing
Communications

Product and
Service Quality

Pricing Policy

IDLC

Strong brand image; however,


investment in marketing
communications is gradually
increasing, though the budget
is significantly low compared
to banks.

High product and


service quality ensured
at all times

Higher lending rates


compared to banks,
considering deposit
base and bankborrowing as major
source of funds

BRAC Bank

Strong brand image and


extensive investment in
marketing communications
initiatives, compared to
IDLC.

High product and


service quality.

Much lower cost of


funds, resulting is
lower lending rates
offered to clients,
compared to NBFIs.

Hence BRAC is a
direct competition for
IDLC in this regard.

Hence although IDLC has a


strong brand, BRAC is in a
much better position
compared to IDLC in terms
of marketing communications
activities.

City Bank

Hence it is difficult for


IDLC to compete with
BRAC in terms of its
pricing policy.

Strong brand image and


extensive investment in
marketing communications
initiatives, compared to
IDLC.

High product and


service quality.

Much lower cost of


funds, resulting is
lower lending rates
offered to clients,
compared to NBFIs.

Hence although IDLC has a


strong brand, CBL is in a
much better position
compared to IDLC in terms
of marketing communications
activities.

Hence CBL is a direct


competition for IDLC
in this regard.

Hence it is difficult for


IDLC to compete with
CBL in terms of its
pricing policy.

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Eastern Bank

IPDC

ULC

Strong brand image and


extensive investment in
marketing communications
initiatives, compared to
IDLC.

High product and


service quality.

Much lower cost of


funds, resulting is
lower lending rates
offered to clients,
compared to NBFIs.

Hence although IDLC has a


strong brand, EBL is in a
much better position
compared to IDLC in terms
of marketing communications
activities.
Significantly low investment
in terms of brand building
and marketing
communications activities,
compared to IDLC.

Hence EBL is a direct


competition for IDLC
in this regard.

Hence it is difficult for


IDLC to compete with
EBL in terms of its
pricing policy.

Sufficiently strong
product and service
quality.

Similar pricing policy


is followed by all
NBFIs, considering
deposit and bank
borrowings as major
source of funds.

Hence IDLC is in a much


better position compared to
IPDC in terms of brand image
and marketing
communications.

Hence IPDC is a direct


competition for IDLC
in this regard.

Hence IDLC competes


directly with IPDC in
terms of its pricing
policy.

Significantly low investment


in terms of brand building
and marketing
communications activities,
compared to IDLC.

Sufficiently strong
product and service
quality.

Similar pricing policy


is followed by all
NBFIs, considering
deposit and bank
borrowings as major
source of funds.

Hence IDLC is in a much


better position compared to
ULC in terms of brand image
and marketing
communications.

Hence ULC is a direct


competition for IDLC
in this regard.

Hence IDLC competes


directly with IPDC in
terms of its pricing
policy.

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UFIL

Significantly low investment


in terms of brand building
and marketing
communications activities,
compared to IDLC.

Sufficiently strong
product and service
quality.

Hence IDLC is in a much


better position compared to
UFIL in terms of brand image
and marketing
communications.

Hence UFIL is a direct


competition for IDLC
in this regard.

Similar pricing policy


is followed by all
NBFIs, considering
deposit and bank
borrowings as major
source of funds.
Hence IDLC competes
directly with UFIL in
terms of its pricing
policy.

4.3 Basic and complementary strategies designed and being


implemented to match market situations
The market scenario of IDLC varies along with its business functions, and accordingly strategies
are crafted at organizational and functional levels to cope with the changing market situations, as
well as relevant strategies adopted by its major competitors.

4.3.1 Corporate Business


To remain competitive in corporate business, IDLCs specific strategic measures include:

Improved efficiency across the value chain, by striving to lower funding costs to offer
attractive rates, design flexible credit terms, and improving overall service quality and
timeliness to attract more customers;

Increasing ticket size to existing customers;

Booking leading Corporate houses to improve quality of the portfolio, and ensure
continuous flow of business in future;

Developing new service capacities to offer better and unique financial solutions to
clients;

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Restricting the size of the Corporate team by not hiring for any new positions and
leveraging more from the existing ones; and

Zero / Slow expansion of physical presence through additional outlets or new branches
for Corporate and Consumer Divisions respectively;

4.3.2 Small and Medium Business


IDLCs SME Team is focusing on the following aspects:

Rapid product innovation and customization, incorporating attributes appealing to a


growing number of customers;

Capacity development of entrepreneurs, in terms of better planning, business and human


resource management, improved ICT platform, accounting and book-keeping practices,
developing networking capacities etc., and thus create new opportunities for IDLC;

Increased presence through additional distribution channels and sales outlets. In addition
to having SME presence across all branches of IDLC, SME has two dedicated Sales Centers in
Dhaka as well to attend to walk-in clients.

Expansion of geographic coverage by opening new branches in locations outside Dhaka with
flourishing SME business. At present, IDLC is contemplating opening of a branch in Khulna,
and another branch in North Bengal, which is currently taken care of by Bogra branch only.

4.3.3 Consumer Business


, IDLCs specific strategy measures include:

More focus on strengthening the deposit base, thus having a source of low-cost fund
and competitive advantage in terms of lending activities;

Booking high net-worth deposit customers to improve quality of the portfolio, and
ensure continuous flow of business in future;

Developing new service capacities to offer better and unique financial solutions to
clients;

Restricting the size of the Consumer team, excepting Deposit mobilization team, by
not hiring for any new positions and leveraging more from the existing ones; however, for
deposit, the size of the sales team has increased in the last couple of years to allow greater
sourcing of deposits at IDLC; and

Engaging in CSR initiatives involving Consumer clients, thus becoming a preferred


service-provider for the clients.

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Chapter 5: Environmental Factors


Analysis
5.1 PESTEL Analysis
External environmental factors, as outlined in the diagram above and their possible
impacts on IDLCs strategic decision-making process have been analyzed below through
PESTEL analysis.
-

Political Factors

Economic Factors

Socio-Cultural Factors

Technological Factors

Environmental Factors

Legal Factors

5.1.1 POLITICAL FACTORS:


Major political factors affecting IDLCs performance include:

Budgetary measures, dictating short, medium and long-term strategies by setting


sectoral priorities, as per policy changes every fiscal year;

Corporate tax policies, affecting overall profitability of the company and its clients;

Tariff policy and trade restrictions, directly affecting business performance of IDLC
corporate clients involved in foreign trading;

FDI policies, dictating growth opportunities for both existing and new business;

Environmental regulations and labor laws, requiring greater compliance by clients and
higher due diligence by IDLC while making credit decisions;

Political stability of the country, dictated by the government and opposition parties,
greatly affecting the overall economic performance of the country and subsequently the
performance across all industries. And due to bad business spells suffered by clients,
IDLCs business performance also suffer negative consequences.

5.1.2 ECONOMIC FACTORS:


Major economic factors affecting IDLCs performance include:

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Repo and reverse rates, as declared by Bangladesh Bank, influencing inter-bank


lending activities, thus affecting commercial lending;

Provisioning requirements, as a safety measure against lending activities, greatly


affecting business performance of IDLC;

Favorable savings policies, boosting deposits in IDLC, thus allowing higher lending
activities;

Restrictive policy measures by Bangladesh Bank to control money supply and inflation
determines lending rates for banks and FIs, ultimately affecting overall organizational
performance.

5.1.3 SOCIO-CULTURAL FACTORS:


Major socio-cultural factors affecting IDLCs performance include:

Population growth generates more demand for financial services, resulting in opening
of new branches and geographic expansion;

Increasing literacy rates brings more people under the umbrella of formal banking and
financial services;

Lifestyle changes leading to the introduction of new and innovative products and
services to suit unique and ever-changing needs of the diverse client groups;

Greater women empowerment, resulting in more female participation across the


organization and thus adding a new dimension in the strategic decision making process
of IDLC, while giving rise to demand of specialized products, such as Women
Entrepreneur Loan offered by IDLCs SME Department; and

More involvement in community empowerment activities through IDLCs CSR


activities in the areas of better education, healthcare and skills development of the
underprivileged.

5.1.4 TECHNOLOGICAL FACTORS:


Major technological breakthroughs of IDLC over the past years include:

Adoption of Oracle Flexcube Universal Banking Solution (FCUBS), the new Core
Banking Platform that became operational across IDLC in January 2012, making
IDLC the first non-banking financial institution to use this platform. This system has
enabled creation of a number of satellite systems to further enhance IDLCs

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operational efficiency and MIS generation, and we are on our way to complete two
years of efficient operation on this platform.

Unified communication network, linking all branches and employees of IDLC across
various geographic locations;

Continuous upgrade and adoption of environment-friendly technologies, with the


ultimate objective of capacity maximization, cost minimization and reduced negative
impact on the environment. Major achievements in this regard include gradual process
of server virtualization, and video conferencing facilities connecting major branches
and saving physical travel by employees, thus saving over 200,000 kWh of electricity
and around 120 tons of CO2 emission per year.

HR Automation project to manage growing number of employees and relevant HR


issues more efficiently across the IDLC Group. The implementation is taking place in
two phases: Phase I includes Payroll Management and has already been launched in
January 2013; and Phase II includes other core aspects such as Employee Profiles,
Performance Management, Training Management etc., and is scheduled to be launched
by the end of 2013.

5.1.5 ENVIRONMENTAL FACTORS:


Major issues affecting IDLCs business strategies in recent years include:

Environmental Risk Management Guidelines issued by Bangladesh Bank in 2011,


requiring all banks and FIs to conduct strong due diligence while taking credit
decisions. Moreover, strong monitoring during the credit terms and joint collaboration
with the clients to address and resolve environmental issues are also required as per this
guideline;

New business opportunities arising through various policies and regulation issued by
the government. For example, mandatory installation and use of ETP (Effluent
Treatment Plants) in sectors such as textiles provides a new financing opportunity for
IDLC for this purpose. Moreover, attempt of the Government to make brick fields more
environment-friendly also offers a significant prospect for IDLC to extend financing in
a new sector;

Green Banking activities and guidelines issued by the Bangladesh Bank not only
requires all banks and FIs to focus more on environmentally sustainable projects and
sectors for commercial lending, but also to streamline its internal operations and

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premises to make those more environment-friendly. Such regulations are reflected in


the strategic decisions of IDLC for the short and longer terms;

Environmental Principles of UN Global Compact and UN Environment Programme


Finance Initiative, regulating IDLCs overall operations and lending processes in line
with globally acceptable standards and practices.

5.1.6 LEGAL FACTORS:


The functions of IDLC are regulated by Bangladesh Bank and Securities and Exchange
Commission for its Capital Market operations.
Major legal factors affecting IDLC include the followings:

Being a non-banking financial institution, IDLC is regulated by the Financial


Institutions Act, 1993. Any changes in this act will be applicable for IDLC as well, and
accordingly will be reflected in its periodic strategies;

Interventions by the Bangladesh Bank and Securities and Exchange Commission, the
two regulatory bodies of IDLC, influence the strategic decision process of the
organization;

Being an NBFI, IDLC is not authorized to perform current and foreign currency
transactions.

5.2 Five-Forces Model of Competition

Factors related to the immediate industry and competitive environment of IDLC, as


outlined in the diagram below, and their possible impacts in strategic decision making
have been analyzed below through the Porters Five Forces Model of Competition.

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Substitute
Products from
other
Industries

Supplie
rs of
Resour
ce
Inputs

Rivalry among
Competing
Sellers

Buyers
/
Clients

Potential New
Entrants

The following chart summarizes strength of the impact of these five forces, and their
probable influence on IDLC:

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Details of these factors have been described below:

5.2.1 Competition among Rival Companies


For IDLC, the competitive environment from rival companies is clearly differentiated into
two scenarios:

Competition from other NBFIs

Competition from commercial banks

If the competitive environment is analyzed considering only competition NBFIs, the


threats of rival companies will be low in light of the following factors:

Majority of the NBFIs in Bangladesh offer specialized products and services. IDLC is
one of the very few leading NBFIs offering a diversified portfolio of products and
services covering all branches of financial services. Hence IDLC is in a stronger
position compared to majority of the market players in the NBFI segment.

IDLC retains the strongest professionals in the market graduating from leading local
and international universities, which is a major competitive advantage over its NBFI
competitors.

However, if the competitive environment is analyzed considering major commercial banks


as IDLCs competitors, the threats of rival companies will be comparatively higher due to
the following factors:

IDLC, being an NBFI, cannot offer trade services such as opening of LCs, overdraft
and other working capital facilities, as well as dealing with foreign currencies. This is
a significant disadvantage for IDLC considering other competing commercial banks,
many of which are dependent of these services for their revenue stream.

Being an NBFI, IDLC has to borrow funds from other banks which are then markedup and channeled to clients as term lending. Hence by nature IDLCs lending rates are
higher compared to rival banks, which is another significant disadvantage.

There market players offer closely standardized products and services. This mainly
results from the high regulatory requirements in launching new products and services.
Hence clients can easily switch between brands, thus raising the competition.

The leading players in the market are regularly coming up with innovative products
and new marketing strategies to attract and retain more customers, and thus capture a
greater share of the market. Hence regular strategic revisions are mandatory to remain
profitable in the market.

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5.2.2 Threats of New Entrants

The threat of new entrants is low for IDLC considering the following factors:

The banking and financial sector is a highly regulated market, with large initial
investment requirements. This significantly raises the entry barriers, thus weakening
threats from new entrants for the existing market players.

In the backdrop of the lingering effects of the past financial crisis, and major scandals
like that of the Hallmark Group, many public and privately owned banks and FIs are
struggling to make a profit, or even remain in the business. This reduces the likelihood
of new companies entering this market in the near future.

In the present financial situation of the country, investment is at a declining rate, while
clients are more cautious in availing facilities from banks and financial institutions.
Thus demand at present is declining, making it more difficult for new companies to
enter the market.

The leading market players strongly capture a significant portion of the market. Hence
it will be difficult for new entrants to lure away customers and gain a considerable
market share.

5.2.3 Power of Suppliers


For financial institutions, the major supplier groups are those offering the required fund
that can be utilized for lending purposes. And major fund sources and their influence on
IDLC have been mentioned below:

Rival banks and financial institutions, in the form of inter-bank exchange, which is
mostly determined by market forces;

Individual and institutional clients, in the form of term deposits. Owing to high
competition in the market, deposit clients are more rate-sensitive and hence have a
greater bargaining power over IDLC, requiring higher interest rates on their term
deposits; and

Refinancing facilities of Bangladesh Bank and foreign funds from many development
organizations, having considerable influence over IDLCs performance and
compliance process to consider it eligible for availing those funds.

5.2.4 Bargaining Power of Client Groups


The financial sector faces high bargaining power from the consumer groups attributable
mainly to the following factors:

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Low switching cost for the consumer groups due to largely standardized products and
services offered by the competing companies;

For Corporate Financing products, banks and FIs opt to add the leading large local and
multinational corporate houses in their portfolio, not only in considering of large
business volumes but also to increase the quality and brand value of their overall
portfolio. Hence this provides significant bargaining power to the client groups.

5.2.5 Competitive Pressure from Substitute Products


Threats of substitutes refer to products offered by players outside the industry that can
offer similar benefits at similar prices to the consumer groups.

For the banking and financial sector, hence, threat from Substitute Products is almost
non-existent considering the nature of its products and services.

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Chapter 6: SWOT Analysis


6.1 SWOT Analysis
The following table summarizes major points concerning IDLCs competitive analysis, in
terms of its Core Strengths, Limitations, Market Opportunities and Threats to Future
Growth. Each of these points has been elaborated below.

Strengths

Effective Strategic Decision and Execution


Corporate Governance

Competent Management Team


Strong Financial Position
Diversified product portfolio, allowing
one-stop solutions
Prestigious customer base
Professional Workforce
Strong HR Management
Technology Platform
Superior Customer Services
CSR Commitment, and
Strong Brand Image

Opportunities

Focus on Green Financing activities


Robust SME Lending
Priority Team Formation under Consumer
Finance
Financial Literacy for Stakeholders
Leveraging on Marketing Communications
Highly Competitive Industry, and
Expanding Branch Network

Weaknesses

Higher lending rates


Unauthorized to perform certain
business functions

Threats

Greater Customer Bargaining Power


Highly Rate Sensitive Clients

Political and Economic Situations

Regulatory Restrictions

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Chapter 7: Analysis on Overall


Banking Industry
7.1 Industry Life Cycle
To know which stage the banking industry of Bangladesh is in now, we need to analyze
many financial parameters. In my report, I have investigated the following parameters to
get an understanding of life cycle of Bangladeshs overall banking industry:
1) Countrys Total credit growth all banks
2) Countrys Total Deposits growth all banks
3) Countrys Overall Export growth
4) Countrys Import Scenario
5) Sectoral GDP growth

7.1.1 Countrys Total credit growth all banks

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7.1.2 Countrys Total Deposits Growth

7.1.3 Countrys Overall Export growth

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7.1.4 Countrys Import Scenario

7.1.5 GDP Sectoral Growth rate in %

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Considering all the above facts, we see that Bangladeshs banking industry is still in
growth stage.

Figure: The life cycle curve shows in which stage Bangladeshs banking industry is in

7.2 Dominant Traits of the Industry


The analysis of the immediate industry and competitive environment begins with an
analysis of the dominant features of the industry, thus gaining a comprehensive overview
of the industry landscape.
Major economic features of the financial services industry include:

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Market Size
&
Growth Rate

No of
Industry Rivals

Technological
Changes

Bargaining
Power of
Customers

Product and
Service
Differentiation

Demand-Supply
Conditions

The following section presents a brief on each of these economic features:

Market Size and Growth Rate: The market size and growth rate is an important
indicator of future business prospects of the market players, showing level of product
and service innovations required for the future, and strategic measures needed to secure
existing market position and capture new market share.

Number of Rival Companies in the Market: The financial services sector is


characterized by high level of competition among the rival companies to maintain
existing market position while trying to capture more market share. Moreover, market
is dominated by a few top market players having gained competitive advantage over
rival companies in terms of product offering, service standards, technological
competitiveness and strong pool of human resources.

Bargaining Power of the Customers: This industry is characterized by high


bargaining power of the customers, owing to intense competition among the rival
companies resulting in low switching cost for the customers from one service provider
to the next.

Degree of Product and Service Differentiation: There is not much scope of high
product differentiation in the financial services industry, which leads to heightened
competition in terms service quality and pricing strategy among the competitors.

Demand-supply Condition: A significant share of the countrys population is still


beyond the reach of the formal banking and financial services sector, thus posing a

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significant opportunity for the existing market players to expand their business, and for
new entrants in the industry.

Pace of Technological Changes: Technology plays a major role in advancing the


industry by allowing new product and service standard innovations, thus allowing more
sophisticated service delivery to the clients.

7.3 Drivers of Industry Change


The Driving Forces of an industry are the major underlying causes of changing industry
and competitive conditions by influencing customers, competitors and suppliers to alter
their strategies and actions. Such forces are the biggest influences on how the industry
landscape will alter.
The major industry driving forces include:

Increasing
Globalization

Changes in
Customer Profile

Product
Innovation

Technological
Changes

Regulatory
Influences

Government
Policy Changes

Changing
Societal
Concerns and
Lifestyles

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The following section identifies impact of each of these driving forces in shaping the
industry, while offering an insight into the external environmental factors affecting the
industry:

Increasing Globalization, making competition more intense through increasing


involvement of multinational and overseas companies in the financial sector;

Changes in Customer Profile, requiring continuous innovation in terms of product


and service features to match their changing needs and requirements;

Product Innovation, which should be a continuous process to tap different market


segments, client groups and geographic locations with customized products, product
mixes and financial solutions;

Technological Changes, which is crucial in todays world to provide faster and more
efficient service, also customized as per client needs;

Regulatory Influences, which is a significant driving force for banks and FIs. This
being a highly regulated sector, banks and FIs must be fully compliant to the policies
and regulations of the Bangladesh Bank, and the Securities and Exchange Commission
in terms of capital market operations;

Government Policy Changes is another major industry force, since it affects not only
the operations of the banks and FIs, but also those of their clients from different
industries, which results in change of strategies for banks and FIs; and

Changing societal concerns and lifestyles, raising demands for more sophisticated
savings and loan products and complete financial solutions for both individual and
institutional clients.

7.4 Key Success Factors


- Better customer service
- Area coverage / presence (onsite / internet / mobile)
- Low lending rates
- Sector focus

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Chapter 8: Recommendation and


Conclusion
8.1 Recommendation and Conclusion
In light of the discussion and analysis of various factors influencing IDLCs performance
and the industry as a whole, we can draw the conclusion that IDLC holds a strong position
in the banking and financial services sector of Bangladesh. This has been achieved over
the years through a combination of strong and properly balanced strategic objectives;
strong management leading to efficient strategy development and execution; revising
business models and strategies in a timely manner in response to changing market scenario
and competitor moves; and analyzing factors of the external environment and the
immediate industry and competitive environment and accordingly taking measures to
engage those in IDLCs favor.
However, IDLC believes in continuing its pursuit for further growth and improvement,
and consideration of the following factors is strongly recommended to achieve that
objective:

Update the vision statement to add more specific and tangible goals and targets;

Improve gender balance and thus add a new dimension to the strategic decision-making
process;

Continuously update its strategic group mapping to have clear understanding about its
market position and close competitors, and accordingly develop or revise strategies to
respond to strategic moves of its competitors;

Focus more on SME financing activities and capacity development of small and
medium entrepreneurs to leverage more from a growing sector and create new client
groups;

Continue investment to upgrade its technological platform to be the best in terms of


quality of product and service delivery;

Leverage on environmental regulations by identifying new business opportunities, as


well as investment in green financing activities in line with the requirements of
Bangladesh Bank;

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Use intense market competition as a driving force for greater innovation in terms of
product and service delivery, quality, and financial solutions;

Improve its core strengths even further to continue holding a strong competitive
position in the market;

Leverage on the market opportunities identified through SWOT Analysis, such as green
financing, growth in SME lending, priority team formation under Consumer Division,
financial literacy for stakeholders to create new client groups, leveraging more from
marketing communications activities, and expanding its geographic coverage through
increased branch network;

Engage in more CSR activities benefiting its major stakeholders, environment and the
community, and thus create a unique brand position for IDLC

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