Sm project gp6

STRATEGIC
MANAGEMENT
GROUP PROJECT
Submitted to:-
Prof. M.A. Sanjeev
Submitted by: - Group 6
14609021..... Deshna Garg
14609031..... Jasmeet Singh
14609095 .... Tarun Sharma
14609116 .... Aishwarya Alagh
14609141 .... Vaibhav Sharma

Canara Bank : Environmental Analysis report Page 1
Strategic Management Group Project:
2014-16 Batch
Introduction
Banking in India originated in the last decades of the 18th century. The oldest bank in existence in
India is the State Bank of India, a government-owned bank that traces its origins back to June1806
and that is the largest commercial bank in the country. Central banking is the responsibility of the
Reserve Bank of India, which in 1935 formally took over these responsibilities from the then
Imperial Bank of India, relegating it to commercial banking functions. After India's independence in
1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government
nationalized the 14 largest commercial banks; the government nationalized the six next largest in
1980.
Indian banking can be broadly categorized into nationalized (government owned), private banks
and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring
any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the
public sector banks or the nationalized banks have acquired a place of prominence and has since
then have achieved tremendous progress. The need to become highly customer focused has forced
the slow-moving public sector banks to adopt a fast track approach .Conservative banking practices
allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now
quoting all higher valuation when compared to banks in other Asian countries (viz. Hong Kong,
Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs)
and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient
branch networks focus primarily on the high revenue niche retail segments.
Today the Indian banking sector has emerged as one of the strongest drivers of India’s economic
growth. The Indian banking industry (US$ 1.48 trillion- 2015) has made outstanding advancement in
last few years, even during the times when the rest of the world was struggling with financial
meltdown. India's economic development and financial sector liberalization have led to a
transformation of the Indian banking sector over the past two decades. Today Indian Banking is at
the crossroads of an invisible revolution. The sector has undergone significant developments and
investments in the recent past. Most of banks provide various services such as Mobile banking, SMS
Banking, Net banking and ATMs to their clients.
According to the Reserve Bank of India (RBI), the banking sector in India is sound, adequately
capitalized and well-regulated. Indian financial and economic conditions are much better than in

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many other countries of the world. Credit, market and liquidity risk studies show that Indian banks
are generally resilient and have withstood the global downturn well.
The Indian banking sector is fragmented, with 46 commercial banks jostling for business with
dozens of foreign banks as well as rural and co-operative lenders. State banks control 80 percent of
the market, leaving relatively small shares for private rivals.
At the end of February (2015), 13.7 crore accounts had been opened under Pradhanmantri Jan
Dhan Yojna (PMJDY) and 12.2 crore RuPay debit cards were issued. These new accounts have
mobilised deposits of Rs 12,694 crore (US$ 2.01 billion).Standard & Poor’s estimates that credit
growth in India’s banking sector would improve to 12-13 per cent in FY16 from less than 10% in the
second half of CY14.
Today India has outpaced China to become Asia’s fastest growing economy in Q1 2015 (See Figure
1). Concerted policy actions from a reform-minded government and the Reserve Bank of India have
substantially improved the country’s macro stability and activity momentum (See Figure 2).
Considering all these current situations whether the current strategies of Private Banks will
benefit them or harm them? Should they change their strategy or stick to its old one? How can
they grab the opportunities & plan for the threats so as to survive in the Banking Industry
environment. These are some of the questions we’ll try to answer in this report in contrast to
“Canara Bank”, by doing its environmental analysis & formulate the SWOT & TWOS for the
same.

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About Canara Bank
History
Widely known for customer centricity, Canara Bank was founded by Shri Ammembal Subba Rao Pai,
a great visionary and philanthropist, in July 1906, at Mangalore, then a small port town in
Karnataka. The Bank has gone through the various phases of its growth trajectory over hundred
years of its existence. Growth of Canara Bank was
phenomenal, especially after nationalization in the year
1969, attaining the status of a national level player in terms
of geographical reach and clientele segments. Eighties was
characterized by business diversification for the Bank. In June
2006, the Bank completed a century of operation in the
Indian banking industry. The eventful journey of the Bank
has been characterized by several memorable milestones.
Today, Canara Bank occupies a premier position in the comity of Indian banks. With an unbroken
record of profits since its inception, Canara Bank has several firsts to its credit. These include:
 Launching of Inter-City ATM Network
 Obtaining ISO Certification for a Branch
 Articulation of ‘Good Banking’ – Bank’s Citizen Charter
 Commissioning of Exclusive Mahila Banking Branch
 Launching of Exclusive Subsidiary for IT Consultancy
 Issuing credit card for farmers
 Providing Agricultural Consultancy Services
Over the years, the Bank has been scaling up its market position to emerge as a major 'Financial
Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and
abroad. As at June 2015, the Bank has further expanded its domestic presence, with 5708 branches
spread across all geographical segments. Having successfully developed over the years as a major
financial conglomerate of the country Canara Bank today holds an unmatched reputation especially

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in South India. Known for its diverse product portfolio and excellent services and facilities Canara
Bank has achieved several milestones in the financial sector in India.
Some of the important functions provided by Canara bank are as follows:
1. Personal Banking
Canara Bank India provides the following services under the Personal Banking section:-
 Loans
 Home Loan
 Life Insurance
 Canara Global credit Cardsv
 Canara champ deposit scheme
 Personal Loan
 Loan against Property
 General Insurance
 Canara premium current account
 SB gold scheme
 Canara super savings salary account scheme
 CANARA ROBECO Mutual Fund Products
 Overdrafts
2. Corporate Banking
Canara Bank provides par excellence services in Corporate Banking as well. These include,
 Syndication Services
 IPO Monitoring Activity
 Merchant Banking Services
 Accounts & Deposits
 Cash Management Services
 Loans & Advances
 TUF Schemes
 Canara electronic Tax

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3. NRI Banking
 Canbank remit money scheme
 Rupee drawing arrangement
 Swift
 Bank-western union remittances scheme
4. Priority & SME Credit
The following facilities are listed under this service:-
 Priority Credit
 SME Business
 SME Marketing Desk
 Regional Rural Banks
 Consultancy Services related to agriculture
 Agri-Business Marketing Desk
 Rural Development
 Entrepreneurship Development for women
 Social Banking
5. Bank Deposits
 Savings Bank Deposits
 Canara Super Savings Salary A/c
 Canara Flexi A/c
 Current Account
 Savings Bank Gold A/c
 Canara Saral
 Canara Champ
 Can Premium Current Account
6. Loans & Advances
 Housing Loan
 Loan for Personal Needs
 Loan for Personal needs of Teaching/Non- Teaching Staff
 Loan for Pensioners

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 Loan against Security of Mortgage of Property
 Loan against approved Shares/Debentures/Mutual Funds
7. Canara Bank Loans
Canara Bank provides all conventional banking facilities and various contemporary banking
products. The various types of Canara Bank Loans, which are offered to the customers include:
 Personal Loan
 Home Loan
 Consumer Loan
 Vehicle Loan
 Educational Loan
 CEMAT Facilities
 Agricultural Loan
Vision& Mission
Vision
“To emerge as a ‘Preferred Bank’ by pursuing global benchmarks in profitability, operational
efficiency, asset quality, risk management and expanding the global reach.”
 The Vision Statement focuses on the future; it is a source of inspiration and motivation.
Often it describes not just the future of the organization but the future of the industry or
society in which the organization hopes to effect change. A Vision statement outlines
WHERE you want to be, communicates both the purpose and values of your business.
Mission
“To provide quality banking services with good customer care, create value for all stakeholders and
continue as a responsive corporate social citizen.”
 The Mission Statement concentrates on the present; it defines the customer(s), critical
processes and it informs you about the desired level of performance. A Mission statement
talks about HOW you will get to where you want to be. Defines the purpose and primary
objectives related to your customer needs and team values.

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3. Strategic Management: Environmental Analysis
3.1 External Environment Analysis
The Indian banking has finally worked up to the competitive dynamics of the new Indian market
and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks
that employ IT solutions are perceived to be futuristic and proactive players capable of meeting the
multifarious requirements of the large customer’s base. Private Banks have been fast on the uptake
and are reorienting their strategies using the internet as a medium.
3.1.1. Socio-cultural Environment Analysis:
 PESTLE ANALYSIS
1. Political Factors
a) Monetary Policy & Operations:
Monetary policy is the process by which monetary authority of a country, generally a
central bank (such as RBI in India) controls the supply of money in the economy by its
control over interest rates in order to maintain price stability and achieve high economic
growth. Monetary operations involve monetary techniques which operate on monetary
magnitudes such as money supply, interest rates and availability of credit aimed to
maintain Price Stability, Stable exchange rate, Healthy Balance of Payment, Financial
stability, Economic growth. RBI, the apex institute of India which monitors and regulates
the monetary policy of the country stabilizes the price by controlling Inflation. RBI takes
into account the following monetary policies:
 Open Market Operations
 Cash Reserve Ratio
 Statutory Liquidity Ratio
 Bank Rate Policy
 Credit Ceiling
 Credit Authorization Scheme
 Moral Suasion
 Repo Rate and Reverse Repo Rate

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b) Government Regulation:
The expected integration of various intermediaries in the financial system would require
a strong regulatory framework. It would also require a number of legislative changes to
enable the banking system to remain contemporary and competitive.
c) FDI & Portfolio limits:
In the private banking sector of India, FDI is allowed up to a maximum limit of 74 % of
the paid-up capital of the bank in 2015. The Government has also permitted foreign
banks to set up wholly owned subsidiaries in India. This will negatively impact the
nationalized banks (such as Canara Bank) as the private banks would become more
competitive against nationalized banks.
d) Budget & Budget measures:
The budget 2014-15 allowed for banks to raise capital by selling government stake and
hiked the foreign direct investment limit in the insurance sector to 49%. It also allowed
banks to raise long-term funds for lending to the infrastructure sector with minimum
regulatory obligations such as CRR, SLR and PSL.
 This will help banks raise funds more easily for infrastructure projects and reduce
financial burden.
Table1 : Key Indicators (Jun 2015)
Source: allbankingsolutions.com/data.htm
Indicator Current rate Previous
Inflation 8.0%
Decreasedfromlastyear& isestimatedtodrop
infuture as well.
Bank rate 8.25%
Decreased from8.50% whichwascontinuing
since 04/03/2015
CRR (CashReserve
Ratio)
4.00%
Decreasedfrom4.25%whichwascontinuing
since 30/10/2012
SLR (Statutory
LiquidityRatio)
21.50%
Decreasedfrom22.00% whichwascontinuing
since 09/08/2014
Reporate 7.25%
since 04/03/2015
Reverse reporate 6.25%
since 04/03/2015
Marginal Standing
facilityrate
8.25%
since 04/03/2015

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 Increase in tax exemptions on investments too could see funds flowing to the
financial sector through increased savings.
 However, the hike in the target of credit flow to the farmers from Rs 7.0 trillion
in FY14 to Rs 8.0 trillion in FY15 could have a negative impact on PSU banks as
they may be forced to lend more.
2. Economic Factors
a) Inflation rate:
"Inflation is an important determinant of bank efficiency. According to Boyd et al. (2001)
and Ben Naceur and Ghazouani (2005), high levels of inflation potentially can adversely
affect economic growth and the financial sector performance. This is because economic
growth positively affects the financial sector performance (Barro, 1995). "
b) GDP & GDP per capita:
GDP is one of the primary indicators used to gauge the health of a country's economy. In
any case increase in GDP would positively affect the growth of banking sector
considering the GDP per capita is also increased. Below is past yearly data of Indian GDP
showing gradual growth since 2013.
Figure3: India’s GDP in past few years (Source: statista.com)
c) Interest rates
Banks usually make most of their money on the spread, or difference, between the rates
of interest they pay savers and the one they charge the borrowers. An increase in
interest rates would fatten net interest margins at those banks where the rates they

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charge borrowers rise more quickly than their own cost of funding. Higher interest rates
on loans tend to slow down economic growth as well as the bank’s growth. Borrowing is
more expensive therefore, firms will invest less and consumers will spend less. Because
higher rates lead to lower growth, companies will make lower profits and therefore pay
less dividends.
(Source:www.global-rates.com)
d) Savings & Investments
Higher interest rates on savings tend to reduce banks’ profit margin. It also contributes
to more savings hence more capital is raised for lending.
3. Socio-cultural factors
It includes cultural aspects and health consciousness, population growth rate, age
distribution, career attitudes and emphasis on safety. This could be classified into:
a) Traditional Mahajan Pratha:
Before the birth of the banks, people of India were used to borrow money local money
lenders, shahukars, shroffs. They were used to charge higher interest and also mortgage
land and house. But after emergence of banks attitude of people was changed and they
have started lending from the banks.
b) Change in life style:
Life style of India is changing rapidly. They are demanding high class products. They have
become more advanced. People needs and wants are increasing day by day. And this has
6.50
7.00
7.50
8.00
8.00
7.75
7.50
7.25
7.50
7.75
8.00
7.75
7.50
7.25
Figure 4: RBI latest interestratechanges
Percentage Repo rate

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this has opened opportunities for banking sector to tap this change. This has made
things available easily to everyone.
c) Population:
Increase in population is one of the important factors which affect the private sector
banks. Banks would open their branches after looking into the population demographics
of the area. Newer branches are coming to serve the increasing population. This
incentive to banks comes on the back of the continuing need to open more branches in
these States in order to ensure more uniform spatial distribution.
d) Literacy rate:
Literacy rate in India is very low compared to developed countries. Illiterate people
hesitate to transact with banks. So, this impacts negatively on banks. But there is
positive side of this as well i.e. illiterate people trust more on banks to deposit their
money, they do not have market information. Opportunities in stocks or mutual funds
are low if the Literacy rate is low.
4. Technological Factors
Technology plays a very important role in bank’s internal control mechanisms as well as
services offered by them. Through the use of technology new products and service are
introduced. It includes technological aspects such as R&D activity, automation,
technology incentives and the rate of technological change. Some of the technological
changes which brought radical changes in banking industry are described below:
a) Auto Teller Machine:
The latest developments in terms of technology in computer and telecommunication
have encouraged the bankers to change the concept of branch banking to anywhere
banking. The use of ATM and Internet banking has allowed “anytime- anywhere
banking” facilities.
b) Credit card facility:
Credit card facility has encouraged an era of cashless society. The banks have now
started issuing smartcards or debit cards to be used for making payments. These are also
called as electronic purse.

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Some of the banks have also started home banking through telecommunication facilities
and computer technology by using terminals installed at customers home and they can
make the balance inquiry, get the statement of accounts, give instructions for fund
transfers, etc
c) Automatic Voice recorder:
Automatic voice recorders now answer simple queries, currency accounting machines
makes the job easier and self-service counters are now encouraged.
d) IT services and Mobile banking :
Today banks are also using SMS and Internet as major tool of promotions and giving
great utility to its customers. For example SMS functions through simple text messages
sent from your mobile.
Technology advancement has changed the face of traditional banking systems.
Technology advancement has offer 24X7 banking even giving faster and secured service.
e) Big Data Analytics:
The big data revolution happening in and around 21st century has found a resonance
with banking firms, considering the valuable data they’ve been storing since many
decades. This data has now unlocked secrets of money movements, helped prevent
major disasters and thefts and understand consumer behavior. Banks reap the most
benefits from big data as they now can extract good information quickly and easily from
their data and convert it into meaningful benefits for themselves and their customers.
5. Legal Factors
There are two major factors determining the legal aspects of the Banking Industry:
a) Banking regulation act:
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of
India (RBI) "to regulate, control, and inspect the banks in India.
The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors.

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b) Intervention by RBI
The Reserve Bank of India (RBI) will intervene to smooth sharp movements in the rupee
and prevent a downward spiral in its value, but will balance this with the need to retain
reserves in an event of prolonged turbulence.
6. Environmental Factor
a) Indian economy has registered a high growth for last few years and is expected to
maintain robust growth rate as compared to the developed and developing countries.
Banking industry is directly related to the growth of the economy. The Growth rate of
different industries were :
Agriculture: 18.5%
Industry : 26.3%
Services : 55.2%
Earlier it was agriculture which mainly contributed to the Indian GDP. This increases the
avenues of investment by the industrial sector.
This would further increase the borrowings by the industry’s leading to the banking
Industry. In regards with the service sector, as the income of the people will increase,
lending and savings will increase leading to increased business for the banks.
Also the MAKE IN INDIA initiative is expected to boost the Industrialization in India.
b) Unseasonal Rains or drought:
According to India Ratings and Research (Ind-Ra), agricultural loans grew 16 percent in
FY15 and have contributed 25 percent to incremental credit growth since March 2014.
The Unseasonal rains damages the crop & hence impact the farmers big. In such cases
the agricultural loans lend by the banks to the affected farmers’ increases.
c) Net Export
Net Exports directly contributes to the GDP. If the export increases then the Banks will
lend more money as the exporters’ would require more capital to produce goods &
trade them in foreign countries.
 Issues Priority Matrix
• It is used to identify and analyze developments in the external environment factors or
External strategic factors which are key environmental trends that are judged to have both a

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medium to high probability of occurrence and a medium to high probability of impact on the
corporation
ProbableImpact on Canara Bank
ProbabilityofOccurrence
High Medium Low
High
 Monetary Policy &
Operations
 Auto Teller Machine
 Credit card facility
 IT services and
Mobile banking
 Industrial Growth rate
 Literacy rate
 Budget & Budget
measures
 Automatic Voice
recorder
 Population growth
 Change in life style
Medium
 Savings & Investments
 Government
Regulation
 Interest rates (loan)
 Banking regulation act
 Increase in Net Export
 FDI & Portfolio limits
 Intervention by RBI
 GDP & GDP per capita
 Big Data Analytics
Low
 Inflation rate  Unseasonal Rains or
droughts
 Traditional Mahajan
Pratha
Figure 5: IssuesPriority Matrix
(Source:Self/Group 6)
 High Priority External Strategic Factors:
 Monetary Policy & Operations
 Auto Teller Machine
 Credit card facility
 IT services and Mobile banking
 Industrial Growth rate
 Literacy rate
 Budget & Budget measures
 Savings & Investments
 Government Regulation
 Interest rates (loan)
 Banking regulation act
HIGHPRIORITY
MEDIUMPRIORITY
LOWPROIRITY

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3.1.2. Task Environment Analysis:
 Porter’s Five Forces Model
Figure6: Porter’sFiveForceModel
Looking at all of the above points in figure-6 individually:
a) Rivalry among the industry: Rivalry in banking industry is very high. There are so many private,
public, co-operative and non-financial institutions operating in the industry. They are fighting
for same customers. Due to government liberalization and globalization policy, banking sector
became open for everybody. So, newer and newer private and foreign firms are opening their
branches in India. This has intensified the competition. The factors that have contributed to
increase in rivalry are:
Industry Rivalry (High)
 Intense competition, many
private, public, co-operative,
foreign banks
Threat of new
Entrant (Low)
 Low barriers to entry
 Government policies are
supportive
Bargaining power of suppliers (Low)
 Low supplier bargaining power
 Few alternatives available
 Subject to RBI Rules and Regulations
Threat of
Substitutes
(High)
 High threat from
substitutes like
mutual funds, T-
bills, Government
securities
Bargaining power of customers (High)
 High bargaining power
 Low switching cost
 Large no. of alternatives
 Homogeneous service by banks
 Full information available with customers
Relative Power of other
Stakeholders (High)
 Control of RBI
 Loan Insurance policies

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 Number of players: There are so many banks and non-financial institutions fighting for
the same pie which has intensified competition.
 High market growth rate: India is seen as one of the biggest market place and growth
rate in Indian banking industry is also very high. This has ignited the competition.
 Low switching cost: Customer switching cost is very low. They can easily switch from
one bank to another bank and very little loyalty exists.
 Undifferentiated services: Almost every bank provides similar services. No
differentiation exists. Every bank tries to copy each other’s services and technology,
which increases the level of competition.
 Low government regulations: There are low regulations to start a new business due to
the LPG policy adopted by
b) Bargaining power of suppliers: Suppliers of banks are depositors. These are those people who
have excess money and prefer regular income and safety. In banking industry suppliers have
low bargaining power. Following are the reasons for low bargaining power of suppliers:
 Nature of suppliers: Suppliers of banks are generally those people who prefer low risk
and those who need regular income and safety as well. Bank is best place for them to
deposit their surplus money. They believe that banks are safer than other investment
alternatives. So, they do not consider other alternatives very seriously, which lowers
their bargaining power.
 Few alternatives: Suppliers are risk averters and want regular income. So, they have few
alternatives available with them to invest like Treasury bills, government bonds. So, few
alternatives lower their bargaining power.
 RBI Rules and Regulations: Banks are subject to RBI rules and regulations. Banks have
to behave in the way that RBI wants. So, RBI takes all decisions relating to interest rates.
This reduces suppliers bargaining power.
 Suppliers are not concentrated: Banking industry’s suppliers are not concentrated.
There are numerous suppliers with negligible portion to offer. So, this reduces their
bargaining power. If they were concentrated then they can bargain with banks or can
collectively invest in other non risky projects.

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 Forward integration: Forward integration is possible like mutual funds, but only few
people now about this. Only educated people can forwardly integrate where as a large
number of suppliers are unaware about these alternatives.
c) Bargaining power of customers: Customers of the banks are those who take loans, advances
and use services of banks. Customers have high bargaining power. Following are the reasons for
high bargaining power of customers:
 Large number of players: Customers have very large number of alternatives. There are
so many banks, which fight for the same pie. There are many non-financial institutions
which have also jumped into this business. There are foreign banks, private banks,
cooperative banks and development banks together with the specialized financial
companies that provide finance to customers. These all increase preferences for
customers.
 Low switching cost: Cost of switching from one bank to another is low. Banks are also
providing zero balance account and other types of facilities. They are free to select any
bank’s service. Switching costs are becoming lower with internet banking gaining
momentum and as a result consumers‟ loyalties are harder to retain.
 Undifferentiated service: Banks provide merely similar services. There is not much
difference in services provided by different banks. So, bargaining power of customers
increases. They cannot be charged for differentiation.
 Full information about the market: Customers have full information about the market.
Internet has increased the customer’s access to information. So, banks have to be more
competitive and customer friendly to serve them.
d) Threat of substitutes: Competition from the non-banking financial sector is increasing rapidly.
The threat of substitute products is very high. These new products include credit unions and
investment houses. One feature of using an investment house is that the fees that the
investment house charges are tax deductible, whereas for a bank it is considered a personal
expense, which is not tax deductible. The rate of return with using investment houses is greater
than a bank. There are other substitutes as well for banks like mutual funds, stocks (shares),
government securities, debentures, gold, real estate etc. so, there is a high threat from
substitutes.

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e) Threat of new entrant: Barriers to entry in banking industry no longer exist. So, lots of private
and foreign banks are entering in the market. Product differentiation is low and exit is difficult.
So, every bank strives to survive in highly competitive market. So, we see intense competition
and mergers and acquisitions.
f) Relative Power of other Stakeholders: RBI regulates the Indian banking and financial system by
issuing broad guidelines and instructions. Also there are now insurance covers to take care of
the EMIs or of the outstanding loan amount.
 Industry Matrix: Key success factors
Industry matrix summarizes the key success factors within a particular industry. Key success
factors are variables that can significantly affect the overall competitive positions of companies
within an industry.
 Assumptions:
 The weights are given within a range of 0 (not important) to 1 (Utmost important), on the
basis of their importance for a company’s success. Sumof all weights is equal to 1.
 Rating is given on a scale of 5, on a comparative basis, where 5 = Is Strongest, 4 = Near to
the Strongest, ……….. & 1 = Least strong.
KeySuccessFactors Wt. Rating
(CanaraBank)
Score Rating
(BOI)
Score
Receivables turnover 0.2 5 1 2 0.4
BrandImage 0.1 4 0.4 5 0.5
Marketing 0.2 4 0.8 5 1
IT&virtualbanking 0.2 5 1 4 0.8
CustomerService&satisfaction 0.2 4 0.8 5 1
ROA 0.1 5 0.5 4 0.4
1 27 4.5 25 4.1
Table 2: Industry Matrix forCompetitive Analysis
(Referredfrom: http://banks.findthebest.in/compare/645-672/Bank-of-India-vs-Canara-Bank)
 Hence Canara bank has better probability to grow in the market as compared to its
competitors. The Critical success factors for Canara bank are as follows:
1. Receivablesturn over: Canara bank is better able to convert its receivables into cash as
compared to its competitors.
2. IT & Mobile technology: Canara bank has more number of ATM’s & better online
experience for the customers.
3. ROA: Canara bank is better able to utilize its assets for profit making as compared to
its rivals.

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3.1.3. External Factor Analysis Summary (EFAS)
 Assumptions:
 Weights are assigned to each factor depending upon the probable impact they have
on the strategic position of the firm.
 The weights are given within a range of 0 (not important) to 1 (most important).
 Total weights of both Opportunities & threats sum to 1.
 Rating is given on a scale of 1 to 4, on the basis of company’s response to the factor.
Here 1= poor response, 2= Below average response , 3= Above average response
& 4= Superior response.
 Table 3: EFAS Matrix
External Factors Weights Rating
Wt.
Score
Comments
Opportunities
1. Rural and social banking 0.05 4 0.2 PMJDY
2. Agriculture based consultancy 0.03 3 0.09 606 farmer clubs
3. Increasing GDP per Capita 0.05 2 0.1 attracting young generations
4. Increase in FDI 0.08 3 0.24 Developing new strategies
5. Big Data Analytics 0.03 1 0.03 Not doing much
6. Increasing Literacy rate 0.03 2 0.06 CSR initiatives
7. Increasing trend of virtual & mobile banking 0.08 4 0.32 Canara M-wallet
8. Increasing Industrial growth: Make in India 0.15 4 0.6 Building Brand position
Threats
1. Weak monsoon likely to impact rural credit
off-take
0.05 2 0.1
Insulated investment
portfolio
2. Declining exports likely to subdue trade
financing demand in India
0.08 2 0.16
Insulated investment
portfolio
3. Intensifying competition likely to check
growth opportunities
0.08 3 0.24
Ranked no.1 public sector
bank
4. Economic Crises
0.15 3 0.45
Installed Proactive Risk
manager Software
5. Changing government and adverse RBI
policies
0.08 3 0.24
Engaging in JV’s & Insulated
investment portfolio
6. Low barriers to entry in the Sector.
0.05 2 0.1
Diversified sources of
income.
TOTAL SCORE 1.00 2.93
 The total weighted score is above average hence we can say that Canara bank‘s
Strategies are effective and they are taking advantage of the existing opportunities
while minimizing the effects of potential threats.

2014-16 Batch
3.2 Internal Environment Analysis
Internal Environment analysis is concerned with identifying and developing an organization’s
resources and competencies. It also identifies internal strategic factors/ resources that can be
critical S/W in an organizations performance
3.2.1 Product & Services
 Investment Banking
 Consumer Banking
 Commercial Banking
 Retail Banking
 Private Banking
 Asset Management
 Pensions
 Mortgages
 Credit Cards
3.2.2. Major Financial Highlights (Mar 2015)
 Net profit at Rs. 2703 crore, up by 10.8% y.o.y.
 Gross profit at Rs. 6950 crore, up by 2.3% y.o.y.
 Total provisions at Rs. 4248 crore compared to Rs. 4358 crore in FY14
 Non-interest income for FY15 at Rs. 4550 crore, up by 15.7% y-o-y.
 ROAA for FY15 at 0.55%, up from 0.54% last year.
 ROE for FY15 at 11.06%, up from 10.59% last year.
 NIM (Domestic) at 2.36% and NIM(Global) at 2.25%.
 Net profit for Q4 FY15 at Rs. 613 crore.
 Gross-profit for Q4 FY 15 at Rs. 1733 crore.
 Total Provisions for Q4 FY15 at Rs. 1120 crore.
 Non-interest income for Q4 FY15 at Rs. 1326 crore, up by 23.9% y-o-y.
 Total Business at Rs. 8.04 lakh crore, up by 11.4% y.o.y.
 Total Deposits at Rs. 4.74 lakh crore, up by 12.6% y-o-y.
 Advances (net) at Rs. 3.30 lakh crore, up by 9.6% y-o-y.

2014-16 Batch
3.2.3 Major Competencies
 3rd largest public sector bank in terms of domestic business.
 Among the top 5 public banks in terms of sector assets.
 Consistent track record of profitability since establishment 105 years ago.
 Leading infrastructure lender to the infrastructure sector benefitting from India’s economic
growth.
 Pan-India network of over 3,000 branches and over 2,000 ATMs serving over 37 million clients.
 Technology focused bank with 100% coverage of branches under Core Banking System.
 Subsidiaries, joint ventures and associates in non-traditional banking, including insurance and
asset management.
 One of the highest Government shareholding amongst public sector banks at 73.2%.
 100 % Core Banking System integrated with solutions such as:
 Internet banking
 Customer relationship management
 Securities trading
 Real Time Gross Settlement System and National Electronic Funds Transfer enabled at all
branches.
 Taken steps to initiate a data warehouse for credit risk management.
 High Receivables turn over: The Bank performed relatively well in Non–Performing Assets (NPA)
management and made record cash recoveries, despite continued stress at the industry level.
With a gross NPA level of Rs.13040 crore, the gross NPA ratio has increased to 3.89% from
2.49% (as at March 2014). With a Net NPA of Rs.8740 crore, the net NPA ratio increased to
2.65% from 1.98% a year ago.
3.2.4 Major Awards & Achievements (2014-15)
 Golden Peacock Business Excellence Award 2015 by the Institutes of Directors, India.
 "MSME Banking Excellence Awards-2014" organized by Chamber of Indian Micro, Small and
Medium Enterprises (CIMSME) at New Delhi. The Bank has been adjudged as the "Best Bank
Award-Winner" among other awards.

2014-16 Batch
 “SKOCH Renaissance Award 2014” under India's Best Projects 2014 Category for Rural Self
Employment Training Institute, Institute for Artisans, Institute for information Technology,
Community Development and Women Empowerment.
 Canara bank made a partnership with UNEP to initiate a successful solar loan programme.
 Secured 1st Position in mobilizing new Demat Accounts for the second consecutive year and
also adjudged Best Performer in Account Growth Rate by NSDL Star Performer Awards 2014.
 Ranked 1st among Public Sector Banks in an article on India's Best Companies for CSR
published in the "Corporate Dossier" of Economic Times.
 Awarded ‘Best Inspiring Place to Work (Public Sector)’ by Banking Frontiers partnering with
M/s.Deloitte in an effort to recognize the HR efforts of the BFSI sector.
3.2.5. Internal Factor Analysis Summary (IFAS)
 Assumptions:
 Weights are assigned to each factor depending upon the probable impact they have on
the strategic position of the firm.
 The weights are given within a range of 0 (not important) to 1 (most important).
 Total weights of both Opportunities & threats sum to 1.
 Rating is given on a scale of 1 to 4, on the basis of company’s response to the factor.
Here 1= major weakness, 2= minor weakness , 3= minor strength & 4= major Strength
 Table 4: IFAS Matrix
Internal Factors Weights Rating
Wt.
Score
Comments
Strengths
1. Technological advancement 0.1 4 0.4
Data warehouse for Credit risk
management
2. Extensive network 0.12 3 0.36 PAN- India
3. Partnerships & JVs 0.05 4 0.2 Solar loan programme
4. Diversified sourcesof income 0.1 4 0.4
Strong growth in non interest
income
5. Innovative schemes 0.08 3 0.24
Credit card for farmers&
ExclusiveMahila Banking Branch
6. Leadership in Karnataka & Kerala 0.05 3 0.15 outreachto interiormarkets
Weaknesses
1. Inadequate Publicity/ marketing 0.15 1 0.15
Low investment on
Advertising

2014-16 Batch
2. Low International presence 0.08 2 0.16 Trying to expand
3. Weak Customer service 0.15 1 0.15
Customer satisfaction is Low
(source://banks.findthebest.in)
4. Low POS (Point of Sale) 0.12 2 0.24
POS are almost half compared
to BOI
TOTAL
1.00 2.45
 The total weighted score is below average which indicates that Canara bank is
weak internally. It needs to overcome its weaknesses & utilize their strengths more
effectively.
4. Strategic Factor Analysis Summary (SFAS)
 SFAS summarizes an organization’s strategic factors by combining the external factors from
the EFAS Table 3 with the internal factors from the IFAS Table 4.
 Assumptions:
o The weights are given within a range of 0 (not important) to 1 (most important).
o Total weights of both Opportunities & threats sum to 1.
o Rating is given on a scale of 1 to 5, on the basis of company’s response to the factor.
Here 1= Poor, & 5 = Outstanding
 Table 5: SFAS Matrix
Strategic Factors Weights Rating
Wt.
Score
Duration
Comments
S1
Technological
advancement
0.1 4 0.4 L
Data warehouse forCreditrisk
management
S2 Extensive network 0.1 5 0.5 L PAN- India
S4
Diversified sourcesof
income
0.1 4 0.4 S + I
Stronggrowth innon interest
income
W1
Inadequate Publicity/
marketing
0.1 2 0.2 S+I Low investmenton Advertising
W3 Weak Customer Service 0.1 3 0.3 S
CustomersatisfactionisLow
(source://banks.findthebest.in)
O4 Increase in FDI 0.1 3 0.3 I Developingnew strategies
O7 Virtual & mobile banking 0.1 5 0.5 I+L Canara M-wallet
O8
Industrial growth: Make
in India
0.1 4 0.4 I+L BuildingBrandposition
T2 Declining exports 0.1 3 0.3 S+I Insulatedinvestmentportfolio
T4 Economic Crises 0.1 4 0.4 I+L
InstalledProactiveRisk
managerSoftware
TOTAL 1.00 3.7 = 74%

2014-16 Batch
5. SWOT & TOWS
5.1 SWOT ANALYSIS
 From the SFAS we have derived the SWOT matrix as shown below:
STRENGTHS
 Technological advancement
 Extensive network
 Diversified sourcesof income
WEAKNESSES
 Inadequate Publicity/ marketing
 Weak Customer Service
OPPORTUNITIES
 Increase in FDI
 Virtual & mobile banking
 Industrial growth: Make in India
THREATS
 Decliningexports
 EconomicCrises
Figure7: SWOTMatrix
5.2 TWOS Matrix
 TOWS matrix illustrates how the external opportunities and threats can be matched with
internal strengths and weaknesses to result in four possible strategic alternatives.
IAFS
EFAS
STRENGTHS (S)
 Technological advancement
 Extensive network
 Diversifiedsourcesof income
WEAKNESSES (W)
 Inadequate Publicity/ marketing
 Weak Customer Service
OPPORTUNITIES (O)
 Increase in FDI
 Virtual & mobile
banking
 Industrial growth:
Make in India
S O-STRATEGIES
 Increaseinternational footprint and
thereby enhancetheshareofoverseas
businessintotalbusinessofthe bank
 Focus onleveragingtechnology for
improved customerserviceandbusiness
growth.
 Leveragethe Bank’sSubsidiariesto
emergeasaFinancialSupermarket.
 Focus ongrowth through expansionof
domesticdelivery channels.
W O-STRATEGIES
 IntensePromoting asacustomer
oriented bank withvibrant products &
servicesforeveryone.
 RepositiontheBank'sbrand toattract
young generationthrough effective
useofe-channelsandbranch
transformation models.

2014-16 Batch
THREATS (T)
 Decliningexports
 EconomicCrises
S T-STRATEGIES
 Generate Portfolios formore secure
Investments
 UseERPsystemsforforecasting&other
Riskmanagement applications.
W T-STRATEGIES
 Greaterthrust onimproving feebased
income through crosssellingof
financialproducts &servicesand
through ancillarybusiness

2014-16 Batch
Bibliography
 canara bankpersentation . (nov2010). canara bank.
 Deoda, S. (2014). Indian Banking Industry: Challenges and Opportunities. Journal of Research in
Business,EconomicsandManagement.
 Foundation,I.B.(AUGUST 2015). FINANCIALSERVICES. IBEF.
 idef. (2015, August). Indian Brand Equity Foundation. Retrieved from
http://www.ibef.org/industry/banking-india.aspx
 India Banking Watch Foreign BankPerformanceIn India. (23 oct 2013). bbva research.
 Indian banking sectorcredit growthhasgrown ata healthy pace. (2015). ibef.
 performancehighlight. (march2015). cnara bank.
 PRESSRELEASE. (August05, 2015). canara bank.
 RaghavendraShanabhogara, B. S. (September 2014 ). Banking Sector Reforms and Development of
Banking Industry in India. AsianJournal of MultidisciplinaryStudies.
 Singh*,D. P.(15 april 2012). Banking in India:An AnalyticalStudy on Trends and. rkgit.edu.mba.

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