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Strategy - OCBC
- 1. OCBC CASE NOTE#1 GUN AND ROSESSSSS
- 2. INTRODUCTION • Industry :Finance (Banking) • Time Period : 1999 – 2015 (After MAS - 1999 Liberalization formed) • Business Model: Combination of B2B and B2C • Competitors identified : DBS, UOB, and foreign banks
- 3. PESTEL Description Opportunity / Threats Political1999 Liberalization Program by MAS Opportunity / Threat Economic Size denotes strength of Bank - Consolidation of local banks Opportunity / Threat Socio-Cultural Change in educational level, income level and higher expectation of lifestyle Opportunity Technological Technology advancement and new delivery channel Threat Environmental n.a. n.a. Legal Introduction of Basel Accord Opportunity / Threat
- 4. PORTER’S FIVE FORCESANALYSIS Explanation Threat Level (High, Medium, Low) 1st Force – Threat of New Entrants • Highly Regulated by Authority • Economic of scale is crucial • Limited differentiator in products and services deters entry LOW 2nd Force – Threat of Substitutes: i.e. Singtel, AliPay • Increasingly adoption of mode in payment for small ticket items like through Singtel mobile and from non-financial company MEDIUM 3rd Force – Power of Buyers i.e. Individual consumers • Low difference in products and services deters entry • Low switching costs depending products acquired HIGH 4th Force – Power of Suppliers i.e. Mortgage deposit, loans from other banks • Low switching cost – depending on interests/payout offered • Suppliers may decide if they want to work with OCBC; and if OCBC depends on them, then high threat. HIGH 5th Force – Competitive Rivalry • Generally the banks (local) are on par in terms of financial strength and offers. • Asia exceptional growth rate – encouraged foreign banks to come into Singapore HIGH
- 5. STRATEGIC CAPABILITIES Strategic CapabilityAnalysis Bundled Resources + Competences = Strategic Capability 1. Technological 2. Organizational 3. Human Resources 4. Organizational Culture Facilitate cross functional training for efficiency and personal growth Encouraged growth in across functions within organization to ensure efficiency and enable reinforcement when needed 1. Technological 2. Financial 3. Innovation 4. Management and Leadership 5. Organizational Culture 6. Reputation Identify consumer’s needs before they realized they require it Ability to identify and grow new market with cutting-edge solution before anyone else
- 6. V.R.I.O Strategic Capability VRIOCriteria Results Valuable Rare Inimitable Organization Support Encouraged growth in across functions within organization to ensure efficiency and enable reinforcement when needed Y X - - COMPETITIVE PARITY (CP) Ability to identify and grow new market with cutting-edge solution before anyone else Y Y Y Y Sustainable Competitive Advantage (SCA)
- 7. S.W.O.T Explanation Strengths • Abilityto pre-empt market trends and keep up with relevant solutions to support the market needs. • Willing to invest into untapped market before getting profit or payback • Stay constant relevant and willing to listen to their customers to understand what they want Weaknesses • Low level of differentiated products and services Opportunities • Expansion internationally to emerging economic e.g. China and Myanmar • Merger: financial portfolio also enable cross-selling hence increase coverage and customer value Threats • Political policy impact growth: Basel Requirement, 1999 Liberalization Program
- 8. ISSUES • How canOCBC developed a products or services that is almost impossible to imitate? • How can OCBC gain market share with the increase in competition from both financial industry and non-financial sectors