Icici Bank Final Management Strategy Final Report 1

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Management Strategy

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EXECUTIVE SUMMARY

ICICI BANK LTD. is one of the Indian private bank and has global presence also. It has a

market share of 8.2% which is second largest after SBI. Our report talks about the strategies

adopted by the bank to make it successful. We are also giving some recommendations at last

which bank should follow to continue its success.

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INTRODUCTION

ICICI Bank was established in 1994 by the Industrial Credit and Investment Corporation ofIndia, an Indian financial institution, as a wholly owned subsidiary and in 2001 ICICI merged

with ICICI bank.

ICICI Bank Ltd. is an Indian diversified financial services company headquartered in Mumbai,

Maharashtra. It is the second largest bank in India by assets and third largest by market

capitalization. It offers a wide range of banking products and financial services to corporate andretail customers through a variety of delivery channels and through its specialized subsidiaries in

the areas of investment banking, life and non-life insurance, venture capital and asset

management.

The Bank has a network of 2,575 branches and 8003 ATMs in India, and has a presence in 19

countries, including India.

ICICI Bank is one of the Big Four banks of India, along with State Bank of India, PunjabNational Bankand HDFC Bankits main competitors

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock

Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the NewYork Stock Exchange (NYSE).

Vision

To be the leading provider of financial services in India and a major global bank.Mission:

We will leverage our people, technology, speed and financial capital to

be the banker of first choice for our customers by delivering high quality, world-classproducts and services

Expand the frontiers of our business globally Play a proactive role in the full realization of India's potential Maintain a healthy financial profile and diversify our earnings across businessman and

geographies.

Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which we operate Create value for our stakeholders

(icicibank.com)

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COMPETITVE ADVANTAGE

ICICI Bank has a competitive advantage of its

Size and global presence across the world vis a vis the private sector banks.

With respect to the public sector banks, the competitive advantage is more on account ofthe technological platforms and the responsive staff and faster service.

It has already retained number 1 bank amongst the private sector banks business wise. The sustainable competitive advantage over its competitors is based on their

technological platforms which requires constant up gradations and investments to make

it robust and sustainable.

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PESTEL ANALYSIS

(oppapers.com)

Economical

GDP Monsoon Inflation Savings and accounts Agriculture credit Interest rates Raising living standard Disposable income

Socio cultural

Changes in life style Literacy rate Demographic of large

population

Shift toward the nuclear

Legal

Reserve bank of INDIAact

Banking regulation act

Political

Government policyand budget

Budget measures Monitory policy FDI limit

Technical

Technology in banks Core banking solutions (CBS) ATM Internet IT services and mobile banking

ICICI

BANK

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VALUE CHAIN FOR ICICI BANK

Firm

Infrastructure

Branch Network ATM Net Banking Mobile Banking Call Centre

Foreign Subsidiaries Foreign Branches

Human

Resource

Management

Develop Appropriate Simulation Training E Learning Program

Performance based

Client FacingIncentive

Employees

Technology

Development

Net Banking, Safe & Secure trading Portals Money2india.com Core

Banking Solution

Call centre, Mobile Banking, ATMs, Data Analytics, Plastic Cards

Source of

Revenue /Deposits

CASA Time Deposit Borrowings from the RBI, Market

Higher Fee Based Income through Forex dealings, Guarantees, LCs, privatebanking and cross selling of Insurance products.Increased NIM through high CASA share and high CD ratio ( Through

Borrowings)

Convenience to the

customers ( Khayaal

Aapka)

Higher Quality Loans

exposure to industry

based on anticipatedeconomic and Market

trends

Structured finance

Customized to thecorporate

requirements

Global Branches

Global Subsidiaries

Technological

platforms

Direct Sales Persons

Technological , nonbranch channels

Different subsidiariessupported by the

direct sales team

Better customer service

Phone Banking facility

E Mail Query

Operations Logistics Marketing & Sales After Sales Service

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PORTERS FIVE FORCES

(docstoc.com)

BARGAINING POWER OF

SUPPLIERS

-Low supplier bargaining power

-Few alternatives available

-Subject to RBI Rules and Regulations

-Not concentrated

-Forward integration

-Nature of suppliers

BARGAINING POWER OF

CUSTOMERS

-High bargaining power

-Low switching cost

-Large no. of alternatives

-Homogeneous service by banks

-Full information available with customers

INDUSTRY RIVARLY

Intense competition

Many private, public,

Co-operative, foreignbanks

THREAT OF NEW

ENTRANT

HIGH-Low barriers to entry

-Government policies are

supportive

-Globalization and

liberalization policy

-High exit barriers

THREAT OF

SUBSTITUTES

Low threat from substitutes

As of now, no alternative to

100% banking

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CRITICAL SUCCESS FACTORS

The CSF of the Banks depends on the Business strategy adopted by the Bank.

ICICI Bank has been in the market since 1990s and can be classified under Analyzer and

defender The CSF required for following these strategiesis,

S No CSF Weight Age

1 Ability of bank operation management 35%

2 Ability of bank marketing 40%

3 Ability of developing bank trademarks 10%

4 Ability of financial market management 15%

The First 3 include success items, which the bank can control, such as computerization, speed ofhandling business, and staff politeness and kindness, etc. However, the fourth factor includes

certain items, which the bank can control, such as the quantity and contents of service items; butothers, such

(Chen, 1999)

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SWOT ANALYSIS

(researchandmarkets.com)

STRENGTHS

BRAND NAME MARKET SHARE HUGE NETWORK DIVERSIFIED PORTFOLIO SALARY ACCOUNT WORKING HOURS TREASURY DEPARTMENT TECHNOLOGY AGGRESSIVE MARKETING ADVANCED

INFRASTRUCTURE ONLINE SERVICES

Weakness

TRANSACTION COST FOCUS ONLY ON HIGH END

CUSTOMERS

DEFENSIVE APPROACH INLENDING

LITTLE PRESENCE OUTSIDEINDIA

POOR CUSTOMERCARE/SERVICE

LESS CREDIT PERIOD

OPPORTUNITIES

Fast growing insurance business inthe country.

Untapped rural markets. An applied research centre to create

opportunities for developing

techniques to provide added-value

services.

Deregulation of Interest rates Increasing individual income Remittances

THREATS

Loss of market share tocommercial banks and HFCs

Higher than expected increase infunding cost Risk of fraud and NPA Lack of infrastructure in rural

areas could constrain investment.

High volume/low cost market isintensely competitive.

Very high competition prevailingin the industry

Threat from credit cardcollections dept.

Unlike Government Banks, anaccount needs a minimum balance

of Rs.10,000

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MARKET ANALYSIS

The total assets of all scheduled commercial banks by end-March 2010 is estimated at `40,90,000 crores. That will comprise about 65 per cent of GDP at current market prices.

There are about 67,000 branches of Scheduled banks spread across India. ICICI has US$91 billion assets and more than 2500 branches. Market share of ICICI bank is 8.2%, HDFC bank is 6.8%, SBI is 21.6

COMPETITOR POSITION MATRIX

In comparison to its competitors, ICICI Bank has a higher total weighted score of 2.94 which is

higher than HDFC (2.84) and Axis (2.16). This implies that ICICI bank is on a better position as

compared to its competitors.

EFE MATRIX

Based on the opportunities and threats to the company the weighted score evaluation was found

to be as 2.81 which is good for the bank.

BCG matrix

This matrix helps to analyze the current position of the SBU with respect to its market share and

relative growth. ICICI bank currently is financially strong. In fact its market share recently

increased to 8.2% and the industry growth rate is also high. Thus Bank can be placed under the

first quadrant in the matrix known as cash Stars.

Diversification

ICICI bank made diversification in 8 areas by making subsidiaries :

ICICI LOMBARD: - the largest leading private general insurance company. ICICI Prudential life insurance Company Ltd:-one of the fastest growing Life

Insurance Company.

ICICI Securities Ltd.:-Provide capital to corporate sector including large, medium andsmall enterprises.

ICICI Prudential asset management Company Ltd. ICICI Venture:-Most successful and one of the largest private equity firms which focus

on area like private equity, takeovers and real estate.

ICICI Home Finance :One of the leading Home loan financing company ICICI direct.com:-Deals in equity, mutual Funds, Life Insurance. ICICI Foundation: Deals with education empowerment. (moneycontrol.com)

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Mergers &Acquisitions

ICICI bank made all horizontal mergers & acquisitions:

2001: Bank of Madurai(Merger with swap ratio 1:2) 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank 2007: Sangli Bank 2010: Bank of Rajasthan

Global Expansion

In 2001 in order to achieve growth, the Board of ICICI Bank decided to expand into international

markets with a focus on the international remittance business. ICICI Bank plans to enter the

global markets through a mix of subsidiaries, offshore branches and representative offices.

Subsidiaries:

ICICI Bank UK PLC(The company's UK subsidiary has established branches in Belgium andGermany)

ICICI Bank Canada ICICI Bank Eurasia LLCBranches

United States Singapore Bahrain Hong Kong Sri Lanka Qatar

Representative offices

United Arab Emirates China, South Africa Bangladesh Thailand Malaysia and Indonesia

(moneycontrol.com)

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Corporate Social responsibility

Corporate Social Responsibility programmes for Elementary Education

Read to Lead Phase I

Read to Lead is an initiative of ICICI Bank to facilitate access to elementary education for

underprivileged children in the age group of 314 years including girls and tribal children fromthe remote rural areas.

Read to Lead Phase II

In Phase II of the Read to Lead programme, ICICI Bank has supported the establishment of 63libraries that will reach out to approximately 7,200 children in the rural areas of Jagdalpur block

of Bastar district in Chhattisgarh. The programme includes building libraries, sourcing books and

conducting various interactive activities to make the library a dynamic centre for learning.

Go Green Initiative

The Go Green Initiative is an organization wide initiative that moves beyond moving people,

processes and customers to cost effective automated channels to build awareness andconsciousness of our environment, our nation and our society.

Green products and services

Instabanking

It is the platform that brings together all alternate channels under one umbrella and gives

customers the option of banking through Internet banking, i-Mobile banking, IVR Banking. This

reduces the carbon footprint of the customers by ensuring they do not have to resort to physicalstatements or travel to their branches.

Vehicle Finance

As an initiative towards more environment friendly way of life, Auto loans offer 50% waiver onprocessing fee on car models which uses alternate mode of energy.

Carbon Footprint Calculator

Inputs include region, user input of the distance traveled in a particular medium of transport

daily, electricity consumed per month and LPG cylinder/piped natural gas used per month. It

calculates the net carbon footprint to create awareness and sensitize people about theenvironment. It also shows the world's and India's average carbon footprint.

Corporate governance

Group Anti Money Laundering Policy

The ICICI Group AML Policy establishes the standards of AML compliance and is applicable toall activities.

Code of Conduct

ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and

employees

(economictimes.com)

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CONCLUSION

ICICI Bank has a competitive advantage of its size and global presence across the world vis a vis

the private sector banks. With respect to the public sector banks, the competitive advantage is

more on account of the technological platforms and the responsive staff and faster service.

It has already retained number 1 bank amongst the private sector banks business wise. If ICICI

Bank diligently follows the strategy they have defined for companys growth, ICICI should be

able to maintain long term sustainable competitive advantage over its competitors by

continuously innovating its Business Model.

The sustainable competitive advantage over its competitors is based on their technological

platforms which requires constant up gradations and investments to make it robust and

sustainable.

ICICI Bank being analyzer and defender should also focus much on its critical success factors of

marketing and increasing the efficiency and the effectiveness of the bank operations. The staffs

are to be well trained and succession path should be clear

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BIBLIOGRAPHY

Retrieved February Sunday, 2012, from icicibank.com: www.icicibank.com/aboutus/about-us.html

Retrieved February Monday, 2012, from oppapers.com: www.oppapers.com/subjects/pest-analysis-of-

icici-bank-page1.html

Retrieved February Saturday, 2012, from moneycontrol.com: www.moneycontrol.com BANKS -

PRIVATE SECTOR

Retrieved from researchandmarkets.com:

www.researchandmarkets.com/.../icici_bank_limited_swot_analysis.p.

Chen, T.-y. (1999). Babk Marketing , 83.

docstoc.com.. Retrieved from www.docstoc.com/docs/.../Porter-5-Forces-of-Indian-Banking-Indust..

economictimes.com. (n.d.). Retrieved February Friday, 2012, from economictimes.indiatimes.com ...

Stock Quotes ICICI Bank Ltd.

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