Public Bank Group : strategy and analysis

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Executive Summary

The title of this assignment is Public Bank Group and it consists of a total of three sections in this assignment. The first section explains about the strategy and mission statement that practiced by Public Bank, and the linkage between strategy and mission statement of Public Bank.

The second section of the assignment explains about the organization structure design of Public Bank and what is the importance and specialty of the structure that applied by Public Bank.

The last section of the assignment contains of the competition arise between Public Bank, Maybank, and CIMB Bank. Besides that, I would choose SWOT analysis to analyze the competition arise between its competitors in order to know whose is better.

Various methods have been used to research for findings such as interview, e-brary, internet, and books.

Table of Contents

Executive Summary

Table of Contents

1.0 Introduction

2.0 Mission Statement and Strategy of Public Bank

2.1 Mission of Public Bank Group

2.2 The linkage between Mission of and Strategy of the Public Bank Group

2.3 Summary

3.0 Organization Structure Design of the Public Bank Group

3.1 Interviewee Statement

3.2 Divisional Structure of Public Bank Jalan Yang Kalsom

3.3 Summary

4.0 Competition Arise between Public Bank, Maybank and CIMB Bank

4.1 Identify the Public Bank Group’s Competitors

4.2 SWOT Analysis

4.3 Summary

5.0 Conclusion and Recommendations

6.0 References

7.0 Appendix

1.0 Introduction

Strategic management is a set of managerial decisions and actions that determine the long run performance of a corporation as stated in Strategic management and business policy (Wheelen and Hunger, 2012).

The assignment title is about Public Bank Group in Malaysia. Public Bank Group is the third largest banking group in Malaysia by asset size with total assets of RM305.73 billion as at the end of 2013, and is ranked second among all the public listed companies on Bursa Malaysia Securities in terms of market capitalization.

There are total of three sections in the assignment. Section one will be covering the strategy and mission statement that practiced by Public Bank Group. Moreover, section two will be covering the organization structure design that applied by Public Bank Group while section three will be covering the competition arise between Public Bank Group and its competitors which is CIMB Bank and Maybank.

2.0 Mission Statement and Strategy of Public Bank

Based on the Idaho National Laboratory (Inlportal.inl.gov, 2014), Mission Definition consists of those actions taken to define the mission for a system and the environment that affects its execution. The mission statement must define the existing condition that justifies the program or project need, the desired end state or product(s), and the performance expectation.

2.1 Mission of Public Bank Group

According to the annual report of Public Bank Group (Public Bank Berhad, 2013), the corporate mission of Public Bank Group is to sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia. To achieve the corporate mission, Public Bank Group will have a corporate strategy that sets out what its long-term objectives are in terms of what business it plans to be involved and business strategy that sets out how the organization plans to succeed in a given business area.

2.2 The linkage between Mission of and Strategy of the Public Bank Group

As we mentioned earlier, Public Bank Group adopts corporate strategy that focused on consistent growth strategy, which is to pursue organic growth in the retail banking business focusing on the broad-based retail consumers and small-and medium-sized enterprises ("SMEs"), and strives to further increase its leadership in the retail banking market as stated in official website of Public Bank Group (Pbebank.com, n.d.).

A recent article(Nickols, 2011), stated that a strategy or general plan of action might be formulated for broad, long-term, corporate goals and objectives, for more specific business unit goals and objectives, or for a functional unit, even one as small as a cost center. There are different levels of strategy within an organization which is corporate strategy, business strategy and functional strategy.

Corporate strategy (Yunizal Arief, 2014), is a strategy of corporate that requires the company’s top managers and decision addressed to the satisfaction of the stakeholders of the company. The managers at the corporate level generally decide what kind of business to be conducted to generate long-term profit maximization and improve the company’s revenue shareholders. Moreover, corporate strategy can aim for growth, stability or renewal. The Unlocking the business environment (Brinkman, 2010), published that a growth strategy aims to increase the amount of business undertaken by expanding the range of products or services, and the markets it serves.

As defined in Strategic management (Dess and Miller, 1993), business strategy is all about how firms compete, and in business, competition is all about value: creating it and capturing it.

From the information above, we can conclude that the strategies that practiced by Public Bank Group are able to achieve their mission statement because the strategies and mission statement are interrelated. Therefore, to achieve the position of being the most profitable, Public Bank Group adopts corporate strategy that focused on consistent growth strategy. According to Ivey Business Journal (Liabotis, 2007), far too many companies fail to achieve their growth targets in revenue and profitability. However, the probability of achieving profitable growth is heightened whenever an organization has a clear growth strategy and strong execution infrastructure. One without the other impairs the probability of success.

Moreover, to sustain the position of being the most efficient, Public Bank Group adopts business strategy that focused on the Group's retail banking business continues to target retail consumer and commercial loans and financing, deposits and fee-based businesses. Besides that, to drive business growth and increase its market share in retail banking, the Public Bank Group leverages on its well-established customer service infrastructure, processes and practices to deliver prompt and consistent service to meet the needs of its customers. As stated by The Boston Group (Leichtfuss et al., 2010), Banks should take steps to ingrain cost efficiency by industrializing processes, establishing central or regional processing centers, and developing IT and operations platforms. Therefore, all banks will be forced to improve their process efficiency in the coming years, not only to reduce costs but also improve customer service.

2.3 Summary

By analyzing the Public Bank Group’s strategy through the annual report 2013, we could conclude that Public Bank Group able to achieve the mission statement as mentioned above.

3.0 Organization Structure Design of the Public Bank Group

Based on Unlocking the business environment (Brinkman, 2010), the way an organization organizes itself in terms of who does want, and who reports to whom, is basically what organizational structure is concerned with.

The structure of an organization needs to ensure that it is able to achieve its mission and objectives in an effective and efficient manner. In other words, an organization needs to be structured in an appropriate way to get things done, while also enabling a degree of flexibility that will enable it to meet what can often be fast paced changes in the external business environment.

Sometimes, management may decide that the structure of an organization needs to change, and this is referred to as organizational design.

3.1 Interviewee Statement

Name: Sarah Choong Suet Yee

Position: Senior Financial Executive

  1. What is the organizational structure of this branch?
  • One branch manager
  • One Business Managers (loan and mortgage)
  • Assistant branch manager (operation)

Departments:

  • SOO- Senior Operation Officer
  • OO- Operation Officer
  • OIC- Officer in Charge
  1. What are the categories of department in this branch?
  • Investment – insurance & unit trust
  • Credit Card - credit card &safety box
  • Customer Service – Customer service representatives (CSR)
  • Operations (teller, under control of OO)

3.2 Divisional Structure of Public Bank Jalan Yang Kalsom

As stated by Strategic Management (Miller and Dess, 1998), a divisional or strategic business unit (SBU) is a structure covers a set of relatively autonomous entities governed by a central administration.

According to Miss Choong the Senior Financial Executive of Public Bank Group in Ipoh Jalan Yang Kalsom Branch, the organization structure that applied by Public Bank is one branch manager, one business mangers (loan and mortgage) and assistant branch manager (operation). Hence, I assumed that the organization structure that applied by Public Bank Group is divisional structure.

https://fbcdn-sphotos-h-a.akamaihd.net/hphotos-ak-xpf1/v/t34.0-12/10718961_375166605968388_1244668134_n.jpg?oh=6e2bc69f47fe032cf3e59d2cf0f51b6f&oe=543D0634&__gda__=1413261924_80e88c1bfbcab82ce2783c5f18546ec8Figure 1: Organization structure of Public Bank Branch at Jalan Yang Kalsom (Own Adaptation, 2014)

As the figure above, branch manager is ranked highest position in the Public Bank Branch Jalan Yang Kalsom. The branch manager of Public Bank Jalan Yang Kalsom will decide the final decision of all the planning and directions. After that, the business manger and the assistant branch manager will be in-charge on the loan and mortgage unit. Moreover, the assistant branch manager will be in-charge on the customer service unit, investment unit, operation unit and credit card unit. For example, a customer is facing account problems so the customer will be served by the officer at customer service unit.

The divisional structure is important to the Public Bank Group because it helps organization to avoid many problems typically found in organizations structured by function. Moreover, managers can more concentrate on their own particular product lines and markets, and they have access to resources and staff functional specialists. Delegating decision making to lower managerial levels moves decisions closer to products and markets, which facilitates faster decisions from those who are more specialized and knowledgeable in the product area. This allows a high degree of emphasis to be placed on products and markets. Besides that, it also improves a firm’s ability to adapt during rapid environmental change.

3.3 Summary

In short, the organization structure design is very important to all the organizations especially Public Bank Group. The divisional structure helps Public Bank Group to avoid many problems typically found in organization structured by function.

4.0 Competition Arise between Public Bank, Maybank and CIMB Bank

When there is competition arise between Public Bank, Maybank, and CIMB Bank, Public Bank needs to find out about its competitors. The first step is competitor analysis which is the process of identifying key competitors; assessing their objectives, strategies, strengths, and weaknesses. In this way, the company would be able to find areas of potential competitive advantages and disadvantages as stated in the Principles of Marketing (Kotler and Armstrong, 1991).

4.2 SWOT Analysis

In this section, I will use SWOT analysis to analyze the competition arise between Public Bank, Maybank, and CIMB Bank. Based on The Principles of Marketing (Kotler and Armstrong, 1991), SWOT analysis is an overall evaluation of the company’s strengths, weaknesses, opportunities, and threats. Strengths include internal capabilities, resources, and positive stuational factors that may help the company to serve its customers and achieve its objectives. Weaknesses include internal limitations and negative stituational factors that may interfere with the company’s performance. Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage. And threats are unfavorable external factors or trends that may present challenges to performance.

4.3 Summary

As the illustrated on Table 1, I’m assume that the strategy used by Public Bank is better than Maybank and CIMB Bank because Public Bank has the core competencies with the higher annual returns increasing annually and unbroken profit track record of their group. According to the Pubic Bank Investor Presentation Citi ASEAN Investor Conference 2014 Singapore (Public Bank Berhad, 2014), Public Bank has 47 years of unbroken profitability and healthy profit growth in the past 5 years.

5.0 Conclusion and Recommendations

Strategic management is a set of managerial decisions and actions that determine the long-run performance of a corporation as stated in Strategic management and business policy (Wheelen and Hunger, 2012).

In section 1, Public Bank Group has adopts the growth strategy and business strategy in order to achieve the corporate mission “To sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia”.

In section 2, the divisional structure has brings a lot of benefit to all the organization especially Public Bank Group where it helps the organization to avoid many problems typically found in organizations structured by function.

In section 3, Public Bank is much better after compared with its competitors which is Maybank and CIMB Bank through the SWOT analysis.

Last but not least, the recommendation for the Public Bank Group is to keep put more efforts on their development in order to achieve and sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia.

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