Strategic Choice, Management, and Evaluation - Assignment Example

?Strategic Management & Evaluation of Table of Contents Overview of Davivienda Bank 3 Alternative Growth Strategies & its Significance for Davivienda Bank 4 Grand Strategy 5 Generic Strategy 7 Best Value Discipline Approach 8 Recommendations of Strategies for the Improvement in Davivienda 8 Conclusion 9 References 10 Introduction Business growth can be referred as the increase in the business capacity, sales volume annually, production capacity, employment and various other business opportunities. The increase in business opportunities can not only be applicable to the existing organizations, but also to the novice companies. Factors that is instrumental for growth in the organization has a direct impact on the economy and to its direct and indirect competitors (Sabharwal, n.d.). Every business organization requires growth for its sustainability, profitability retention and increase in the market share. Growth strategies need to be constantly formulated for the retention of the organization in the existing market and also for its survival. The author of the study will deal with the various facets of growth strategies, which affect the survival of the business enterprises. It will deal specifically with the growth strategies to be recommended for Davivienda bank, which is one of the most esteemed banks of Colombo. The study will also highlight the various alternative growth strategies that have the potentiality of generating huge amount of revenue and also maintain its goodwill in the banking industry. Finally, the studies will conclude with recommendations, which provide the bank an opportunity to expand on a large scale without having to implement time consuming and expensive methods. Overview of Davivienda Bank Being one of the most esteemed and well established banks of Colombo, Davivienda has been able to create a niche for itself in the banking industry and also gain the trust of the customers at the same moment (Davivienda, 2013a). Davivienda is a Colombian bank, which was established in the year 1972 and is known for providing credit to the individuals, organization and also in the rural sector (Davivienda, 2013b). It is regarded as a mortgage and saving banks, which has diversified its business of credit card portfolio and also retail banking services (Davivienda, 2013c). The essence of the bank is that, it provides banking services to the rural sectors and to various other corporate organizations for the betterment of the entire society. Presently, it has more than 21 percent of markets share in the banking industry in the credit card portfolio section. It is also regarded as the third largest financial institutions in Colombia itself. Alternative Growth Strategies & its Significance for Davivienda Bank The decline in the sudden growth rates of the varied banking organizations in Colombo has had a dampening effect on the Colombian economy and also on the neighboring countries. The sudden decline in the growth rate of the Columbian banks has led to decline in the export –import growth rates also simultaneously. Therefore, growth strategies have become essential for the implementation and expansion of the banks on a large scale and offering tailor made financial products for each of the crisis and situations (Perkowski, 2007).The sales of financial products have been declining worldwide because of the sudden economic slowdown, which has made the customers cautious about investing and dealing in securitization, mortgage portfolio etc. To combat the ill effects of the economic slowdown, Davivienda banks need to adopt certain marketing strategies, which had been instrumental for the growth of other banking institutions. Firstly, the need of the growth strategies needs to be identified with the current situational analysis of the internal and external environment (Mills, 2001). After the assessment of the external and internal environmental analysis, the various forms and needs of the alternative growth strategies of the banks need to be identified and evaluated (Rice & Turner, 2008). After the situational analysis has been performed, the three aspects of the alternative growth strategies need to be developed. These strategies with different focus need to be formulated, which must be internally consistent. It should help in the construction of a strong positive organizational structure and a well formed hierarchy (Bank of England, 2012). Figure 1: Alternative Growth Strategies (Source: Author’s Creation) Grand Strategy These are also called master level strategies that help in achieving long term goals of an organization which provides basic direction for specified strategic actions. This could include expansion of in varied other industries, product line, customer group actions and also combination of several group action. There are four grand strategies to recommend from like stability, group, combination and retrenchment. Among these, the perfect grand strategy would be a blend, which would include a combination of growth and stability strategies. The current banking expansion strategies need to be evaluated, reviewed and considered. The analyst would be performing a review, which would lay emphasis on the current performing and non performing assets. The non performing assets would be considered for retrenchment and strategies would be formulated to maintain stability within the organization (Liabotis, 2007). Presently, the evaluation of financial service would include the analysis of current portfolio of financial products. It would also include allocating budget for introducing the newly added financial product to the entire range. After analyzing the current state of performing and non performing assets; managerial decisions related to expansion, downsizing, diversification would be taken. In this stage, special emphasis would be given to the integration of various lines of business (Moriarty & Franzen, 2008). Corporate Level Strategy This is concerned with the boarder and wider decisions related to the organization, which can improve the scope and direction of the organization. Broader changes should be made within the organization, which helps in improving the organization and management decisions pertaining to the functioning of the bank (Suttle, 2013). Firstly, the management of Daviviend needs to decide upon the growth and directional strategy, which will help in degrees of growth and the bank also needs to take certain measures in order to regain stability in the market. The growth and directional strategies need to comply with the banking regulation and guidelines to improve their current financial situation. Generic Strategy As per this strategy, the profitability of the banking industry would be decided. The cost advantage and differentiation element fall under cost leadership, differentiation and focus. They would be applied at the business level units. These strategies are not business or industry segment. In this context, the management of Davivienda bank would follow Focus Strategy (Differentiation). This allows the bank to concentrate on a narrow segment and attempts to accomplish either differentiation or cost advantage. If the banking group utilizes this strategy then it would have lesser complexity related to managerial problems. Firstly, the management will evaluate the different types of investment and core banking products, which could be introduced for a certain category of customers as per their needs and requirements. These risk focus strategies would require the imitation and changes for the target customer segments. Best Value Discipline Approach This concept lays emphasis on the improvement in operational excellence of the organization and also acquiring product leadership opportunity. This also includes the customer intimacy approach, which focuses on a specific target market. To simplify the value discipline approach, the banking manager needs to select a wide range of investment banking products, which cater to the needs and requirements of the customers. To attain product leadership it would choose the investment and perform a fundamental analysis through the use of varied marketing implementation techniques and strategies. To attain value discipline the bank need to lay emphasis on the delivery of the cash issued by the central bank. The process needs to be carried out effectively and it should be ensured that safety measures are implemented. This would require the development of strategies, which would be based on the local and short term horizons, which would deal with each and every functional area of the department. This would help in the maximization of resources and implementation of policies, which would assist in increasing resource productivity (Peel, 2002). Thus, it is observed that the all of these strategies are required for the current product portfolio evaluation and analysis. Analysis would include assessment which product would be best suited for the customers who do not want to invest heavily in corporate, government bonds, brokerage services, equity instruments etc. Recommendations of Strategies for the Improvement in Davivienda It has been observed as per the results of the situational analysis that the weak economic situation in the Colombian economy has affected the functionality of the Davivienda bank to a large extent. The bank is finding it difficult to cope up with the fluctuating rates of foreign exchange mechanisms. This has led to difficulty in designing of the financial products which are not price sensitive. Thus, after careful and thorough analysis the recommendations have been provided to improve the current situation of the bank. The implementation of alternative growth strategies would require huge investment. Development of these strategies would include core strategic alliance through merger, acquisitions and other factors. At the present moment, Davivienda provides financial products, which are limited to housing loans, credit cards and wireless money transfers. The bank needs to opt for diversification in financial products and operate simultaneously in varied locations. The bank can opt for introduction of varied financial products, which are related to investment banking. The target customers would include corporate and individual. Thus, the recommended alternative growth strategy would include the unrelated diversification, which would not only include the introduction of new line of investment related products, but also help in the risk reduction and development of outstanding core competencies. Although, the transfer of non related products is quite expensive, in this case the financial product diversification would lead to the increase in the organizational outcome. Conclusion Thus, it has been observed that growth strategies can range from aggressive growth to retrenchment policies which would help in the deciding upon the fundamental strategies which will help in accomplishment of the goals of the organization. The alternative growth strategies would not only help in achievement of the goal and objective of the bank but would also lead to the introduction of varied financial products. This would help in improvement of the current situation of the banking industry. References Bank of England. (2012). Resolving globally active, systemically important, financial institutions. Retrieved from http://www.fdic.gov/about/srac/2012/gsifi.pdf Davivienda. (2013a). Initiation. Retrieved from https://www.davivienda.com/wps/portal/personas/davivienda/contenido/personas/inicio/!ut/p/b1/hc69DoIwAATgJzK9khbi2FCltbUW_MMuhsGYJgIOxucXDKty2yXfJUcCqUnomne8N6_Yd81j7CG9njjKjSkodrZi0LJ02XolKAwfwGUA-BGBuf2ZhC_RKvd-JEXOJPTBWHArqefpBPw-UenWM0AtM2h7VKxyjgLJHMAE_px0qm9v5NnWiHohPvaKl6Q!/dl4/d5/L2dBISEvZ0FBIS9nQSEh/ . Davivienda. (2013b). About us. Retrieved from https://www.davivienda.com/wps/portal/inversionistasespanol/inversionistas/AcercaBanco/quienes_somos/davivienda/ . Davivienda. (2013c). Quarterly results. Retrieved from https://www.davivienda.com/wps/wcm/connect/edb06df3-2836-41e2-a596-33e55e80beda/Reporte+Davivienda+2T13.pdf?MOD=AJPERES&CACHEID=edb06df3-2836-41e2-a596-33e55e80beda . Liabotis, B. (2007). Three strategies for achieving and sustaining growth. Retrieved from http://iveybusinessjournal.com/topics/strategy/three-strategies-for-achieving-and-sustaining-growth#.Ui_0KNLWWZA . Mills, G. (2001). Marketing strategies, tactics, and techniques: A Handbook for Practitioners. Connecticut: Greenwood Publishing Group. Moriarty, S.E., & Franzen, G. (2008). The Science and art of branding. New York: M.E. Sharpe. Peel, J. (2002). CRM: Redefining customer relationship management. New York: Digital Press. Perkowski, F. (2007). Alternative strategies key to growth in mature North American paper markets. Retrieved from http://www.paperage.com/issues/july_aug2004/07_2004growth.pdf . Rice, M., & Turner, S. (2008). Crunch mode: Centering on strengths in corporate and institutional banking. Retrieved from http://www.novantas.com/articlepdf/70.pdf Sabharwal, S. (n.d.). Alternative growth strategies for small business. Retrieved from http://www.du.ac.in/fileadmin/DU/Academics/course_material/EP_10.pdf . Suttle, R. (2013). Growth strategies in business. Retrieved from http://smallbusiness.chron.com/growth-strategies-business-4510.html . Read More