A Strategic management paper on Standard Chartered (Philippines)

• Main Author: Bulanadi, Avigaile T.
• Format: text
• Language: English
• Published: Animo Repository 2006
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/4509
• Institution: De La Salle University

The Standard Chartered Group was formed in 1969 with the merger of The Standard Bank (founded in 1853). The Chartered Bank of India, Australia and China opened the first branches in Bombay, Calcutta, and Shanghai in 1853 followed by Hong Kong and Singapore a year later. It financed trade in various commodities such as cotton, sugar, rice, tobacco and silk throughout the Asian region. The Standard Bank of British, South Africa was founded in Cape Province in 1862 and was prominent in the financing of the Kimberly diamond fields, later extending northwards to Johannesburg as gold was discovered in 1865. In the following 100 years both banks prospered, extending their reach and acquiring other smaller banks. Recognizing the complimentary nature of their respective networks, the two banks agreed to merge. Today, Standard Chartered Bank (SCB) is an international bank with 740 branches in 55 countries worldwide. It currently employs over 33,000 full time staff, It trains and develops people and exercises community responsibility. In this way, it will grow and add shareholder value. SCB has established markets in Asia, the Middle East, Africa, Europe and Latin America. Its headquarters is located at 1 Aldermanbury Square, London, England. Standard Chartered is focused on the emerging markets in Asia, Africa, the Middle East, the sub-continent and Latin America. It aims to be the leading international bank in its principal markets and concentrate on business it understands. It provides high quality products supported by proven delivery systems and excellent customer service. Standard Chartered began its operations in the Philippines in 1872. It is the longest established foreign bank and the second longest established bank, with six branches in Makati, Cebu, Ayala Alabang, Ortigas Centre, Quezon City, and Caloocan fully operational. The Philippines head office is strategically located at 6788 Ayala Avenue, Makati City. SCB Philippines belongs to the financial services industry. The industry addresses the needs of individuals and/or corporations for fiscal services-money banking, and credit. It is comprised of finance companies and non-bank financial institutions such as commercial banks, savings banks, mortgage banks, development banks, rural banks, stock and non-stock savings and loan associations, branches and agencies in the Philippines of foreign banks, insurance companies, investment houses, trust companies, building and loan associations, financial intermediaries, pawnshops, and other companies and/or people engage in providing similar products and services performing quasi-banking and non-quasi banking functions. With this dynamic increasingly challenging business environment, this paper aims to apply analytical frameworks in order to assess the capability of SCB Philippines to face these challenges, by crafting and executing strategies based on industry opportunities and threats, as well as on SCB's strengths and weaknesses. It begins at studying the macro-environment and analyzing the potential changes in the six macro-environment segments namely, economic, political, social, technological, ecological and institutional. The potential changes in the macro environment are then related to the task environment of SCB. This paper analyzes the financial services industry where SCB belongs to by using Porter's Five Forces of Competition. The threats to the industry seen are rising interest rates, inflation, development of the Philippine capital market, rising unemployment rate, lifestyle becoming more fast-paced, and setting up of E-centers in the country by DOTC. On the other hand, opportunities seen are increasing GDP and GNP, peso appreciation, implementation of Anti-Money Laundering Law, increasing personal consumption expenditure and remittances of OFWs, the growing use of the Internet and the supporting technologies, and newly completed infrastructure projects. To determine SCB's strengths and weaknesses, the financial condition of the company was analyzed. The value chain activities were also considered to find the company's sources of advantage to assess in which activities it add value to its customers. Among its strengths are the capability of its HRD in selecting competent and skilled manpower, customer service relationship, centralized operational processes at the head office, strong support system from SCB Group, knowledge based management system, quality management system and compliance, asset management and financial strength of the company based from the computed capital adequacy ratios. However, its weaknesses include succession planning and implementation, limited product range and advertising, limited branch network, existing system flexibility/limitation, and financial profitability. Proposed strategies are to widen the range of its product and service offerings to their specific target market and continuous process reengineering by maximizing the capability of their new web-based banking systems. The entire analytical process presented in this paper is geared towards achieving three corporate objectives: 1.) To achieve a return on equity of at least 20% within the next five years with an ROE target of 16%, 17%, 18%, 19%, 20% in 2005-2009 respectively. 2.) Outserve the competitors and improve on customer service in the next five years. 3.) To strengthen customer loyalty in its target market in the next six to eight years. This paper illustrates how a logical, analytical process facilitates the formulation of corporate-level strategies, towards the end goal of achieving corporate objectives. Lastly, financial projections were made on the assumption that the proposed objectives and strategies were met.