Strategic Choice and Evaluation - Columbian Davivienda Bank - Assignment Example

? Strategic Choice and Evaluation of the of the Contents Implementation Plan 3 Objectives 4 Functional Tactics 5 Action items 5 Tasks and task ownership 8 Resource allocation 8 Organizational Strategic Changes to Enhance Implementation Planning 10 Key Success Factors 10 Budget 11 Forecasted Financials 12 Break-Even Chart 17 Risk Management Plan 17 Contingent Plan for Identified Risks 18 References 19 Implementation Plan The essay attempts to set a successful implementation plan for the Columbian Davivienda Bank. The Davivienda bank was founded long back in 1972; it renders services to not only the individuals and companies, but also tries to uplift the rural sector of the nation. Analysts and researchers may model and evaluate many strategies to improve the working of the Davivienda Bank, but without the help of a good implementation plan, it is almost impossible to execute the desired objectives. An appropriate implementation plan of Davivienda bank will help it to transform the developed planned projects into actual service provision (Jeffes, 2008). Figure 1: Implementation and Planning (Source: Standard bank, 2011). The above chart shows the various activities that encompass the planning and implementation of an organization. Thus, it becomes highly rational to analyze and set an efficient implementation plan for the Davivienda bank of Columbia. Objectives The recessionary trails in the contemporary world have reduced velocity of circulation of money in many economies. It has been estimated that the scope of banking activities have reduced in Sri Lanka and that has not only affected the economy of the nation, but has also negatively influenced the neighboring economies. The essay has previously incorporated certain growth strategies that would help to reduce the economic crisis in Sri Lank by expanding the scale of banking business. This part of the essay will frame the implementation plan with the help of these strategies (DPMC, 2012). The primary objectives to be studied in the implementation plan of Davivienda bank are:- Allocate substantial finances to incorporate the growth strategies. Reduce crisis in the economy by offering varied financial products in different regions of the economy. Introducing financial products that focus on investment banking. Increase the speculative transactions in the economy. Reducing the risks in the transactions of the bank. Facilitating the growth of other banking institutions. Incorporating a strong organizational structure and hierarchy in the bank. Focusing in financial products differentiation. Functional Tactics The functional tactics adopted by the officials of the Davivienda bank are all the small tasks that must be accomplished to implement the desired growth strategies. The functional tactics that are to be executed in the implementation plan are:- Time Horizon: the bank must set an appropriate time span within which it would target to achieve its desired goals and objectives. Resources: only evaluating the required time is not enough, the bank must try to estimate the required resources that would be necessary to execute the implementation plan. Money: the most important resource that is required for completion of any task is money, the Davivienda bank must analyze the gross liquidity required to execute the desired objectives. Strategies: finally the bank must be clear about the core competences and strategies to be incorporated in the implementation plan (Pinson, 2008). Action items The following table explains the action items of the Davivienda bank that are requisites for launching the implementation program. Activities Objectives Implementation Allocate sufficient finance to incorporate the growth strategies. To increase the scale and scope of banking operations and consequently reduce the crisis in the economy. Mobilize maximum possible funds that may be allocated in the expansionary policies. Offering varied and differentiated financial products. Encouraging individuals to participate in the banking activities. Set a team of officials, who would try to introduce feasible and fruitful financial products on behalf of the bank in the market. Facilitate less risky speculative investment. To make the stake holding market attractive in the economy where recession is extensive. Keeping provisions for mutual fund and bond investments for the depositors. Facilitate growth of other banks. To change the recessionary trails of the economy. Engaging in more clearing house functions. Make its organizational framework strong. To perform with greater efficiency and expertise. Introduce some facilities managers who would enhance the overall quality of the workplace (Abrams, 2003). Milestones and a deadline The following timeline chart would help the bank integrate and execute its implementation program within most feasible time limits. Month Activities 1 2 3 4 5 6 7 8 9 10 11 12 Allocate sufficient finance to incorporate the growth strategies. Offering varied and differentiated financial products. Facilitate less risky speculative investment. Facilitate growth of other banks. Make its organizational framework strong. It is obvious that the banks would offer varied as well as differentiated products and facilitate less risky investments only after it has made its organizational framework strong and mobilized enough funds. Tasks and task ownership It is crucial for the bank to specify its required tasks to accurate officials, so that it may make the workplace well coordinated and organized. The bank can never enhance its scale and scope of operations if it has malpractices in its workplaces. The schedule given below will enumerate the knowledge about the different divisions and officials responsible for different activities in the implementation plan (Blacwell, 2011). Tasks Task Owner Mobilizing finances Financial manager Handling the financial products Sales and marketing executives Facilitate investments Investment bankers Assist the escalation of other banks Financial analysts Make the association well coordinated Facilities managers If the bank allocates tasks to specific employees, who have considerable skills in the respective domains, then it would surely be able to accomplish the desired goals in the most cost and time economic mode. Resource allocation Human wants are unlimited and individuals in the economy demand for varied types of final goods and services. However, the resources available to produce varied products and services in the economy are scarce. Appropriate method of resource allocation has always been the pivotal issue of discussion for any economy. Davivienda bank should allocate the resources in the economy in a way that will successfully help to augment the aggregate well being of the society. The resource allocation program of the bank should try to transfer capital from entities that enjoy economic surplus to entities that exhibit deficit. The Davivienda bank may introduce a series of mutual funds that may help to mobilize fund and provide finances for productive purposes in the economy. If the above mention resource allocation steps are followed by the Davivienda bank, then it would surely contribute a lot in reducing the recessionary phase of the Columbian economy in the long run. Organizational Strategic Changes to Enhance Implementation Planning The organization must try to maintain excellent working ambiance in its workplace to enhance the implementation program. Figure 2: Ways to Enhance the Implementation Plan (Source: Stutely, 2002). The above mentioned diagram shows the numerous ways by which the Davivienda bank may introduce strategic changes in its workplace that would ultimately help the organization to enhance its implementation plan (Gonzalez & Jose, 2007). Key Success Factors The Davivienda bank should upgrade its working by enhancing its business and financial expertise and its banking operations should adopt the most modern technological means. The bank should access to the potential markets in the economy and should try to accumulate wholesome amounts of liquid capital. These four major steps will surely help the Davivienda bank improve its working efficiency (Finch, 2013). Figure 3: Key Success Factors of Davivienda Bank (Source: Reading, 2002) Budget The Davivienda bank must introduce an efficient budget before it starts to execute the implementation plan. Tasks Funds Allotted Mobilizing finances 43473041 Peso Handling the financial products 33789701 Peso Facilitate investments 32848489 Peso Assist the escalation of other banks 27747033 Peso Make the association well coordinated 10108383 Peso Forecasted Financials The essay will consider cash flow statement for setting the appropriate budget for the bank (Yahoo Finance, 2013). Cash Flow Periods 2013 2014 2015 Operating Activities Depreciation 2038000 2117000 1954000 Net Income Adjustments (25511000) (8800000) (7802000) Liability Changes 15069000 16234000 21054000 Operating Activities Changes 6632000 2751100 4534000 Total cash flow from working Activities 22744000 14277530 1305621 Investing Activities Investments 4569000 3457888 (1000233) Capital Expenditures 6000 (1207000) 897000 Cash flows from investment activities 2376000 1537000 9359000 Total cash from activities of investment 6951000 4867888 9255767 Financing Activities Purchase of sales stock 557000 2000000 - 50060600 Net borrowings (27711000) (3456000) (1003000) Dividend paid (1890000) 1737000 1662000 Cash flows from financing activities 62469000 72564000 26656000 Total cash flows from financing activities 33425000 72845000 71982000 Effect due to changes in exchange rates (631000) (3450000) 7180000 Cash and cash equivalent 62489000 88540418 89461388 In order to show the forecasted financial of Davivienda bank the essay will consider the balance sheet and income statement of the bank. Balance Sheet Period 2013 2014 2015 Assets Net Receivables 71456000 82398000 90772620 Cash equivalent and cash 837201000 835024000 922883000 Goodwill 67543000 69867000 73761000 Intangible assets 6784000 8121000 9823000 Other assets 145786000 164550000 189124000 Long term investment 1267447000 1336014000 1544515000 Total assets 2,396,217,000 2,495,974,000 2,830,878,620 Liabilities Short and long term debts 325990000 306321000 256562000 Other current liabilities 1100430000 1000261000 999345624 Accounts payable 155579000 145580000 122049000 Long term debts 814218000 1043812000 2717240992 Total Liabilities 2,396,217,000 2,495,974,000 2,830,878,620 Stockholders’ Equity Common stock 151905000 157621000 218142000 Preferred stock 15562000 173397000 18778000 Retained earnings 59849000 61849000 63843000 Other stock holder equity (69000) (5837000) (5944000) Total Stockholder equity 227,247,000 387,030,000 294,819,000 Break-Even Chart Considering the total revenue and cost along with the cumulative figures for three years, it has been forecasted that the Davivienda bank would achieve its breakeven in few months after the implementation of the desired strategies (GAO, 1995). (Source: Athors Creation) The above graph shows the breakeven point of the bank. Risk Management Plan The Davivienda bank should plan to reduce its operational, liquidity, credit and market risks via its risk management plan. Operational Risks: Bureaucracies and internal collusions among the workers Market Risks: Sudden changes in the exchange rates or sudden recessionary trails in the market Liquidity Risks: Sudden fall in the interest rate forcing individuals to withdraw their invested or deposited finds. Credit Risks: Large number of defaulters Contingent Plan for Identified Risks The bank should have a proper contingency plan that would enable it to overcome the sudden economic shocks and catastrophe mentioned above. Operational Risks: Appoint a team of efficient human resource and facilities management team. Market Risks: Park enough cash and non cash reserves like foreign currencies. Liquidity Risks: Upkeep provision of reverse repo transaction in case of emergencies. Credit Risks: Scrutinize the paying back capacity of the debtors (Brown & Gutterman, 2009). References Abrams, R. (2003). The successful business plan: Secrets and strategies. California: The Planning shop. Blacwell, E. (2011). How to prepare a business plan. London: Kogan Page Limited. Brown, R & Gutterman, A. (2009). International business plan. California: World Trade Press. DPMC. (2012). Guide to Implementation Planning. Retrieved from http://www.dpmc.gov.au/implementation/docs/implementation_guidelines.pdf . Finch, B. (2013). How to write business plan. London: Kogan Page Limited. GAO. (1995). District of Columbia: Improved Financial Information and Controls Are Essential to Address the Financial Crisis. Retrieved from http://www.gao.gov/products/T-AIMD-95-176. Gonzalez, G. & Jose, E. (2007). Bank failure: Evidence from the Colombian financial crisis. Retrieved from http://www.occ.gov/publications/publications-by-type/economics-working-papers/2008-2000/wp2007-2.pdf. Jeffes, C. (2008). Strategic management. London: Sage. Pinson, L. (2008). Anatomy of business plan. California: Out of the Mind…And into the Marketplace. Reading, C. (2002). Strategic business plan. London: Kogan Page Limited. Standard bank. (2011). Procurement Annual Supplier Summit Prepared. Retrieved from http://www.standardbank.co.za/pdfs/procurement/Procurement_annual_supplier_summit.pdf . Stutely, R. (2002). Definition of business plan. New Jersey: Pearson Education. Yahoo Finance. (2013). Bank of America Corporation (BAC). Retrieved from http://finance.yahoo.com/q/cf?s=BAC+Cash+Flow&annual. Read More