Bank of China - Consumer Behavior, Macro and Micro Factors Affecting the Company - Case Study Example

Name Institution Course Tutor Date Bank of China Table of Content Summary: ………………………………………………………… 2 Consumers and consumer behavior: ……………………………… 3 Target market: …………………………………………………….. 4 Market mix: ………………………………………………………. 5 Macro and micro factors affecting the company: ………………… 7 Conclusion: ………………………………………………………. 8 Reference: ………………………………………………………….9 Summary The Bank of China was founded in February 1912 after Dr. Sun Yat-sen approved it. It served as the nation’s central bank for 37 years from 1912 to 1949. It offered services such as international exchange bank and majorly specialized on international trade bank. This fulfilled its assurance to serve the citizens and it became the leading institution in financial services sector in China, hence it was able to maintain a leading position in financial industry and established a good foundation in the international financial markets, although it had various setbacks and hardships. After 1949, the bank had gained enough experience in specialized trade and foreign exchange, thus it started managing Chinese foreign exchange operations and also provided vital support to the country’s foreign trade and economic infrastructure development by offering overseas fund transfer, international trade settlement, and all other services that are not related to foreign exchange. During this period, the Bank of China seized the crucial historic opportunity that had been presented by the Chinese government's strategy to capitalize on advanced technologies and foreign funds to boost economic development, hence it became the ‘nation’s only foreign financing channel by capitalizing on its competitive benefits in foreign exchange field. In 1994, it was transformed into a commercial bank wholly owned by the state. In August 2004, the Bank of China Limited was established. In June 2006 and July 2006, the Bank became Hong Kong Stock Exchange and Shanghai Stock Exchange respectively, therefore becoming the first commercial bank to launch a H-Share and an A-Share in initial public and offered a dual listing in the two markets. The Bank of China was again enrolled as a Global Systemically Important Bank in 2013, thus becoming the only financial institution from a range of emerging economies to become enrolled for three years consistently (Bank of China, 2012). Consumers and consumer behavior This being China's international and diversified bank, it offers a wide range of financial services to its people across the Chinese nation including Hong Kong, Taiwan, Macau, and other Thirty-seven countries. In addition, the main business of the bank is commercial banking, which includes corporate banking, financial markets, and personal banking services. Bank of china International Holdings Limited owned subsidiary is the investment banking section of the bank. The Insurance Company Limited and Group Insurance Company Limited owned by the bank are subsidiaries that assist in running the Bank's insurance operations. The Bank of China Group Investment Limited undertakes the direct investment of the Bank and investment management operations. Bank of China Investment Management Company Limited is a controlled subsidiary that operates the funds management business of the bank. Bank of China embraces the spirit of pursuing success and excellence throughout it’s over a hundred year history. The Bank of China adores the nation’s integrity as its backbone and soul, and innovation and reform as its way forward. It also believes in giving people the best services as the organization’s guiding principle. Consequently, the Bank has built a good brand image widely recognized by the customers and within the banking industry. The bank faces new historic opportunities, and it vows to strive for excellence, meet its social functions, and make more contributions to achieve the country’s Dream and ensure great rejuvenation of all sectors in Chinese nation. The bank of China like any other bank is targeting countries like Australia, Europe and the Pacific nations. Therefore, Asian banks especially Japanese and Chinese accounted for approximately 21 percent of the newly allocated loan issuance programs in Australia, hence according to the information from American Bank of Merrill Lynch, this growth has been contributed by European lenders, who have given the best to the bank depending on their experience, exposure and researches (Bank of China, 2012). Australia is one of the most important markets for the Bank of China because Australia is the largest lender in the world by market value. Moreover, it is now developing more on various bilateral relations and lends directly to all corporate customers. Further, Loans that are usually syndicated requires banks to provide any amount of capital, thus they are the most banks are the source of finance for large scale energy and mining projects in Australia. Furthermore, China accounts for approximately more than sixty per cent exports by Australia of mainly coal and iron ore and is the largest nation’s trading partner worldwide, although Chinese banks take this as a good opportunity to venture in to a market that has been traditionally dominated by European and local rivals. Therefore, Bank of China increases its advances and gross loans by about a quarter to over $5.12 billion of every financial year. The Australian bank says it is going to provide syndicated loans to all market leaders as a sign of appreciating their good work, Bank of China has already given loans to major Australian companies such as telecommunications companies, miner Rio Tinto, operator Telstra Corp, and Origin Energy (Morrison, 1996, P4) Target market Online banking is another basic commodity that has enabled the Bank of China to reach many customers .It is apparent that online service or the e-service is the web-based service delivered over the internet or using mobile phones which is different from traditional service delivering which involved going to the bank personally. In other words, the delivering of online service depends on the information which is first gathered from consumers and then analyzed by providers (Rhowel, 2012). As such, the needed and customized service can be offered. With the rapid development of information technology, online banking service offering has already changed the behavior and habit of people in their daily life, especially means of communication between firms and consumers. The main attraction of online service offering is not only because of its key roles played in determining the success or failure of e-commerce from providers’ perspective, but also as a result of its provision of excellent experience for consumers in terms of information flow interaction. According to Ghosh et al. (2004), online service is defined as an interactive information service. As known to us all, e-service delivery is not face-to face interaction between firms and consumers, but interactive information flow via technology which plays the role as a mediator, e.g. websites. As such, online service offering between service providers and consumers have to be fully dependent on the information technology (Yang et al., 2001; Santos, 2003). Marketing mix Marketing mix describes the program that marketing activities are going to follow. These needs are the set of marketing tools that a company employs to achieve its objectives. They include: Price, Place, Product, and Promotion. Further, the product in service marketing operations mix is not tangible in nature the products cannot be measured. Banking, education industry and tourism industry can be a good example for this. A product is anything offered to a market for acquisition, attention, use or consumption in order to satisfy a want or need (Kotler, 2007). In the banking sector it offers several services to the consumers and it is vital for it to be strategic on how to offer them. Pricing of services is usually more challenging than when dealing with products. Moreover, pricing policy refers to the guiding philosophy or course of action that assists a business firm to make reasonable pricing decisions perfectly and smoothly. According to Philip kotler (2007) pricing of banking services is the cost of delivering, producing, and promoting products charged by the bank only. Consumers can help in choosing a price in the banking industry because it is important to define itinerary price and value for money so that customers can further participate in banking functions. Therefore, pricing of products and services is the key to a successful marketing strategy and its act as a weapon to beat competitors, hence ensuring that the enterprise survives for long. Pricing of services is the main factor in determining where the service or the product will be located. Philip kotler (2007) argues that place or distribution may be determined by the customers’ potentiality and security. He identifies a variety of marketing strategies for set up of an effective marketing distribution mix and marketing activities for various banking agencies. Additionally, in the research by Adamu (2011), he attempts to develop a stronger relationship for the study of bank distribution through presentation of a generalized model that emphasizes on the needs of consumers and the general functions required to solve them. Furthermore, other factors such as social facilities, a resting room with coffee or tea, and security Promotions have also become critical factors in the service marketing mix. In addition, Marketing Communication Mix Promotion Mix has different blends of personal selling, advertising, public relations, sales promotion, and direct marketing strategies that the organization uses to achieve its marketing and advertising objective. Kotler (2007) suggests that sales of banking industry are carried out through surveys, forecast analysis of the market, packaging and pricing, and banking hall design. Further, services and products promotions, documents and transfer service, and trading techniques via value-added upgrade are employed to expand, explore, and meet all customers’ needs. People are a key element of service marketing mix. This is because a person defines a service. Thus, People define the human resource in all banking sectors. It plays a key role in quality control, behaving, and personal selling in all banking sectors (Kotler, 2007).Yu Wang (2006) observed some four and five star banks in Chinese major cities that offered training and development services from Western human resource and skills development perspective. Then, he compares the results between the Sino-foreign joint ventures and Chinese state ownership by using multiple case studies. Consequently, the results showed that the western ways of training and development might not be necessary to achieve superior training impacts in the Chinese context compared to those used by different state owned banks. In addition, this process shows various ways in which particular actions are carried out. Advertising and marketing strategies must include all the procedures, mechanisms, schedules, routines, and activities that are employed when the banking. The processes utilized form a key part of service delivery systems, therefore customers often fail to differentiate between products and processes. For example, if customers wait for an undue long period of time to get information from a given bank office, they remain dissatisfied even if they get all the necessary information after the delay. Also, physical evidence is the one that can be associated with products needed by the customer. Therefore, because the banking service is intangible, people, the décor, the place, and anything else in the banking department might be related to the experiences in store (Adamu, 2011, P.49) Macro and Micro environmental forces affecting the company The macro and micro environmental factors include; demographic, economic, social-cultural, natural, political legal and technological factors while micro are within an organization and may be divided into internal and external. This report has tried to examine the macro and micro economic aspects of pursing a new investment strategy in China focuses on the Bank of China. This has described the increased growth potential of this investment while balancing the involved risks coming from these factors. Thus, it will go deeper the fundamentals that most often make us to pursue markets in some parts and go for to China’s many comparative advantages when measured comparing to the rest of the world and particularly the developing countries which also offer better rates of return. The China’s currency rates have been utilized in the past, use of tax and lower wages to export cheaper materials for starting a new business making it affordable comparing to other nations. There are certain things that lead us to this conclusion. The major one is the huge undiscovered local market, the definite raise of the Yuan in the long run and dollar has gone down, and the unreliable inherent in China’s present reserve policy. Bank of China’s control of its exchange rate by depending to the dollar has come under greater watch. People argue that appreciation against the dollar and other currencies will raise the chances of its rapid inflation, a lot of domestic credit, and rising commodity prices all of which may be a threat to future economic growth. Making their services less competitive would shift the focus of local producers toward local demand, which is the only suitable means for continued growth. In a period of four years from July 2005 to July 2008, the central bank of China allowed the Chinese currency to appreciate against the dollar by about 21%. Once the effects of the global economic crisis began to become clear, they allowed appreciation of the Chinese currency in an effort to limit job losses in companies dependent on trade (Kotler, 2007, P.60)  Conclusion In conclusion it is recommendable that the management should encourage online banking to attract more customers and educate them that they can bank from their homes or places of work. These will also help have a good knowledge of who their customers are and what they pay more attention to and where they are located. This knowledge would lay a good foundation for further research on relationship between customer satisfaction and service quality and further help to target the group that is more accurate and profitable. In addition, such knowledge would help to recognize what services should be improved according to the real needs of the customers. In other words, certain services that customers do not care are no need to be paid more attention to otherwise it is a waste of time and money. Then the second recommendation for management is to learn that there is a need to establish the feedback system for online banking and any other type of banking service and it will enable quality measurement, especially from part of open question. If this is not put to consideration, it will always take the management more time to collect the information of service quality from the customers and what they need improved. On the other hand, doing data collection randomly is not always easy and it consumes a lot of time and you may not get to reach to everyone. However, if banks could consider establishing this kind of feedback system, it is not only time saving and more accurate, but also updated continually following the changes of users’ needs (Rhowell, 2012). Reference List Adamu, P. (2011). The Behavioral Consequences of PC Banking International Journal of Bank Marketing, Vol.16, No.5, pp.195–201. Bank of China (2012). History of bank of china, vol, 3: 1-12 http://pic.bankofchina.com/bocappd/report/201104/P020110427561564499932.pdf Ghosh et al (2004) Sustainable development. http://www.amazon.com/s?ie=UTF8&field-author=GHOSH%20(A.)%20et%20al&page=1&rh=n%3A283155%2Cp_27%3AGHOSH%20(A.)%20et%20al Kotler, P. (2007). Measuring Perceived Service Quality Using Integrated Conjoint Experiments International Journal of Bank Marketing, Vol. 18, No. 4, pp. 54-169. Morrision (1996). Understanding Customer Satisfaction with Technology-based Service Encounters”, The Journal of Marketing, Vol. 64, pp. 50-64. http://epub.lib.aalto.fi/en/ethesis/pdf/13374/hse_ethesis_13374.pdf Rhowell, A. (2012). Customer Perception on Service Quality in Retail Banking in Developing Countries - A Case Study, International Journal of Marketing Studies. Vol. 4, No. 1, pp.116. Yang et al., 2001; Santos, 2003). “A Conceptual Model of Service. Quality and Its Implications for Future Research”, Journal of Marketing. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEkQFjAF&url=http%3A%2F%2Fiiste.org%2FJournals%2Findex.php%2FEJBM%2Farticle%2Fdownload%2F1835%2F1788&ei=S_95U97qJuLX7Aa-4ICgBg&usg=AFQjCNEbBuMexu8ydC0WxxEu7jRoAHgcbA&bvm=bv.66917471,d.ZGU Read More