Iba_term_paper.docx

Strategic analysis of IBA

19th November, 2014

Term Paper on “Strategic analysis of IBA”

Prepared for Prof. Dr. A.K.M. Saiful Majid Course Instructor Course Title: Business Strategy (W650)

Prepared by AvijitMallik ID: ZR 47, Batch: 49D

MithilaSanhitaMajumder ID: RK 49, Batch: 49D

Suman Saha ID ZR 08 ,Batch 47E

Institute of Business Administration University of Dhaka

November 19, 2014

November 19, 2014 Dr. A.K.M. Saiful Majid Professor Institute of Business Administration University of Dhaka Dhaka – 1000

Dear Sir, Subject: Submission of proposal of term paper This is our privilege to submit the term paper entitled “Strategic analysis of IBA” to you. This is prepared as per the requirement of the course Business Strategy (w650) of Masters of Business Administration (MBA) program. In this paper, it is briefly discussed that how the research for the term paper will be conducted. We have given all of our sincere effort in the preparation of this proposal and will appreciate if you suggest for any kind of rectification.

Sincerely yours,

Avijit Mallik Mithila Sanhita Majumder

Suman Saha

Table of Contents Executive Summary.....................................................................................................................................5 1. Introduction.............................................................................................................................................6 1.1 Objectives..........................................................................................................................................6 1.2 Scope.................................................................................................................................................6 1.3 Limitations.........................................................................................................................................6 2. Methodology...........................................................................................................................................7 3. Strategic Analysis of IBA...........................................................................................................................8 3.1. PESTEL Analysis.................................................................................................................................8 3.1.1. Political Factors.........................................................................................................................8 3.1.2 Economic Situation.....................................................................................................................9 3.1.3 Socio-Cultural Factors................................................................................................................9 3.1.4 Technological Factors...............................................................................................................10 3.1.5 Environmental Factors..............................................................................................................10 3.1.6 Legal Factors............................................................................................................................11 3.2. SWOT Analysis................................................................................................................................12 4. Process of Executing Strategy of IBA.....................................................................................................13 4.1 Vision...............................................................................................................................................13 4.2 Mission............................................................................................................................................13 4.3 Values..............................................................................................................................................13 4.4 Balanced Scorecard..........................................................................................................................14 5 Strategic Group Mapping......................................................................................................................14 6 Drivers of Industry Change in Tertiary Education Industry of Bangladesh...............................................15 7 Dominant Traits of Tertiary Education Industry in Bangladesh................................................................17 8 Conclusion..............................................................................................................................................18

Executive Summary The Institute of Business Administration (IBA), University of Dhaka, is the leading business school in Bangladesh. The objective of this study was to analyze the external environment and strategy of IBA. The study was focused on mission & vision formation, balanced scorecard, situational analysis, competitor analysis & strategic group mapping of IBA, Dhaka University. The methodology was a combination of primary research & secondary research. Relevant persons were interviewed & related documents were gathered from credible sources to conduct the study. IBA has positioned itself as a pinnacle of business study in Bangladesh. Currently it does not have any vision, mission or values. So in this report we tried to formulate vision, mission and values of IBA.We also tried to make a balance scorecard for IBA by bringing balance between learning & growth perspective, business process perspective, customer perspective & financial perspective. As an institute of public university IBA has to maintain certain Govt. rules. Political instability sometimes hampers regular process but IBA has maintained a strict timeline to complete sessions in time. Bangladesh is an emerging economy & increased economic activity is creating more demand for degrees of IBA. IBA is incorporating technological changes gradually.Major Legal issues regarding business in Bangladesh are regularly updated in the course curriculum of IBA. Increased urbanization & literacy is creating more demand for business degrees from IBA. IBA needs to include more & more environment related issue in its course curriculum. IBA has more green space for activities which makes it an eco-friendly institute.Its vision should focus to be a leading university in Southeast Asia and remain as a top center of excellence in higher education and research. As per our study, its mission is to provide excellence in business education with a focus on career orientation as the country’s top business school. Values of IBA should be integrity, excellence, quality business education, new initiatives and talent management. Its major strength is brand value, unique curriculum, rigorous admission process, effective teaching method & faculties with versatile knowledge base, strong intent for research & development, strong alumni association and timely completion of every term. IBA is unparalleled in terms of delivering quality business education and seemingly far ahead from other competitors.Drivers of industry change in tertiary education industry of Bangladesh are: democratization of knowledge and access, Government regulations, digital technologies, global mobility, integration with industry, variety of degrees anddemand for tertiary education. In the last part we have several recommendations for further progress of IBA.

In this study, we have tried to apply the learning of our ‘Business Strategy’ course. It was very much helpful to apply our theoretical knowledge in practical aspects.

1. Introduction The Institute of Business Administration (IBA), University of Dhaka, is the pioneer in rendering business education in Bangladesh. It is also the leading business school in the country.IBA was founded in 1966 in collaboration with Indiana University, Bloomington, USA, under a Ford Foundation Financial Assistance Program with the objective of providing professional training to create future business leaders. The founder-director of IBA is Professor M. Shafiullah. IBA began its journey by launching its flagship MBA program. In the 1970s, the MPhil and PhD programs were introduced. In response to the growing demand for business education at the undergraduate level, the BBA program was started in 1993. In 2007, the Executive MBA program was launched to cater to the growing demand for quality education among mid-career executives. In the report there will be an extensive analysis of the strategy and external environment of IBA.

1.1 Objectives   

To evaluate the external environment of IBA. To assess the vision, mission, values, balanced scorecard and objectives of IBA. To evaluate drivers of industry change, dominant industry traits & strategic group for IBA

1.2 Scope The report will only cover the external environment of IBA. Most importantly the research will be conducted with a focus ontertiary education sector of Bangladesh.

1.3 Limitations Following were the limitations of the study  

Inadequate research and statistics are available related to this particular education sector. Lack of access to expert

Though these limitations were present while conducting study but the best effort was given to make it a meaningful research.

2. Methodology To explore the objectives of this studymixed approach of research was followed. In-depth interviewwas the crucial qualitative research instruments. This study was conducted following the descriptive method of research. This method of research was employed to gather information about the existing condition of a particular issue. Describing a phenomenon rather than on judging or interpreting it was emphasized. Moreover, this method allowed a flexible approach, thus, when important new issues and questions arose during the duration of the study, further investigation was conducted. In-depth interview was employed to grab primary source qualitative data from the stakeholders The entire information for the study were collected from two sources:  

Primary source Secondary source

So there were two types of data: Primary data and secondary data. At first the data were collected and then they were analyzed. Then everything was discussed in terms on economics. And finally there was a conclusion. So the steps in the study were    

Data collection Data Analysis Discussion on the basis of tools of economics Drawing conclusion

3.Strategic Analysis of IBA 3.1.PESTEL Analysis PESTEL analysis is a tool for external analysis of an organization. It involves collection & portrayal of information about external factors which might have impact on the business of the organization. PESTEL analysis is useful to identify current external factors affecting the

organization and the external factors that might change in the future. It also helps to modify the business strategy to cope with changes in the external factors. Macro-environmental factors included in PESTEL analysis are as depicted in the following figure:

Figure: PESTEL Analysis The findings of PESTEL analysis is used to identify opportunities and threats of the organization in SWOT analysis. PESTEL analysis helps to break unconscious assumptions and helps to adapt the realities of real business environment.

3.1.1. Political Factors In 2013 &Q1 of 2014, there were severe political unrest in Bangladesh regarding general election and some other factors. There were numerous strikes in both local& national level. In case of political unrest or strikes, classes can’t be held at IBA. It hampers the academic process of IBA. IBA is an institute of a public university. It has to rely on the Govt. funds. Govt. funding is not so high for IBA compared to the income of the comparable private universities or foreign institutes.

3.1.2Economic Situation

In recent years Bangladesh is having a stable around 6% growth in its gross national product. Govt. expenditure on education as a percentage of total national budgets has been hovering around 15% for last 10-12 years [www.worldbank.org]. However private expenditure on education in recent days has increased. People are willing to expend more for quality education. Inflation rate in Bangladesh is around 7%. Due to this inflation IBA has to increase its different program fees every year by a certain percentage. Disposable income in Bangladesh is growing at an

impressive

rate

(from

BDT

19619

in

12004

to

BDT

31080

in

2013)

[www.tradingeconomics.com]. It would translate into increased expenditure in education sector. With booming of economy, many multinationals of different sectors like FMCG (e.g. Unilever), banking (e.g. HSBC, CiTi, SCB), telecom (e.g. Telenor, Orascom, Axiata) and domestic firms like readymade garments (e.g. Viyellatex), FMCG (e.g. PRAN), banks & NBFIs (e.g. EBL, MTBL, IDLC), NGOs (e.g. BRAC) are expanding their business which requires more & more top quality business graduates from top business schools like IBA.

3.1.3 Socio-Cultural Factors In Bangladesh rural population is gradually shifting in urban area. Currently 35% people live in urban area with a yearly increment rate of 3% [data.worldbank.org]. Urban people are more interested in quality business education than rural people. Also 23% of the total population is at the age range of 20-39 [www.indexmundi.com]. This age group is more likely to pursue a degree in IBA. In 1991 Bangladesh had a literacy rate of 38% which has jumped to 78.5% in 2010. More and more people are getting into higher level education which also increases the demand of degrees from IBA.

3.1.4 Technological Factors Bangladesh is going through a change towards digital era. The main focus of the Government is to enhance efficiency of the daily process by introducing digital equipment & services. People are getting more and more used to internet. They are using internet regularly in the daily life. Up to date IT technology has been introduced in different manufacturing& service sectors.Major

corporate organizations are using enterprise resource planning (ERP), supply chain management system (SCM), management information system (MIS). In this scenario, business graduates are also required to be tech savvy. Business schools like IBA need to incorporate these technology related courses in the syllabus. High end computer systems are required to be installed to ensure students are getting access to digital educational resources. Way of delivering education system is also changing. Digital audio visual system is replacing legacy chalk & board system. Access to information is easier now through internet. Both faculties & students can access required academic resources through internet. The admission system of IBA has been renovated by introducing form fill-up using internet, payment using mobile phone& script checking using OMR machines. So, education system is incorporating technology in almost all the aspects.

3.1.5 Environmental Factors Environmental issues are gaining more and more focus day by day & business schools like IBA also need to pay attention on this. Almost all the industries are required to follow certain guidelines regarding environmental policies. So business graduates are required to have a thorough knowledge on environmental issues. Business schools need to incorporate more environmental issues in their course outlines. Public business schools like IBA have adequate green space available for activities whereas private business schools lack in this area. Most of the regular activities in IBA are paper based which use significant amount of toner and paper to produce printed information. IBA needs to shift towards a paperless culture which will help to reduce carbon emission. Certain guidelines regarding usage of light, fan, AC, computers can be devised which might reduce the power consumption in IBA as well as carbon emission.

3.1.6 Legal Factors The University Grants Commission (UGC) of Bangladesh was established under the President's Order (P.O.) No. 10 of 1973 which was deemed to have come into force with effect from 16 December 1972.The UGC is the apex and statutory body of the universities of Bangladesh including the private universities.UGC receives funds from the Government and allocate and

disburse, out of such funds, grants to the public universities for their maintenance and development. Since IBA is an institute of Dhaka University, its funds/budgets is derived from the grants of UGC. An important legal factor for the business schools like IBA is the prevailing laws related to business. Major laws related to business in Bangladesh falls under following category [Board of Investment Bangladesh]: 

Taxation, Customs & Revenue Laws



Investment Related Laws



Banking & Financial Institution Laws



Insurance Laws



Trade, Companies, Commercial or Mercantile Laws



Securities & Exchange Laws



Imports-Exports & Shipping Laws



Labor and Industrial Laws



Consumer Laws



Foreign Trade & Foreign Exchange Laws

A business graduate needs to have knowledge of the laws which fall under aforementioned categories. In IBA there is a course regarding legal environment of business which covers major laws like: Labor Act (2006), Company Act (1994), Negotiable Instrument Act (1881),Partnership Act (1932) etc.

3.2. SWOT Analysis Strengths

Weaknesses

• • •

Superior Brand Value

• Lack of industrial attachment

Rigorous Admission Process

• Lack of collaboration with foreign universities

Unique curriculum in line with global & local business requirement

•

• Major courses on technology & operations, entrepreneurship, information systems,

Effective teaching method& faculties

management are not offered

with versatile knowledge base •



Strong intent for research & development •

•

Strong alumni association

Dependence on Govt. funds



Overall system is not digitalized



No central digital repository of documents, research works and

Timely completion of every term

academic resources Opportunities

Threats

• More specialized programs like AFNA,

• Financial prowess of private business

ACBA, DBA

schools

• Starting online & distance learning courses

• More business graduates from other business schools than IBA

• More attachment with domestic & foreign industry

• Less number of faculties are being recruited

• Offering degrees for foreign students

in recent times than before • Political instability

4.Process of Executing Strategy of IBA 4.1 Vision To become a leading university in SoutheastAsia and remain as a top center of excellence in higher education and research.

4.2 Mission To provide excellence in business education with a focus on career orientation as the country’s top business school.

4.3 Values 

Integrity: In all our academic activities



Excellence: In everything we do.



Quality business education: Total commitment to this.



New initiatives: Thinking ahead.



Talent Management: Valuing and inspiring talents by providing research facility.

4.4 Balanced Scorecard Strategic Objective

Financial Objective

     

Improve quality of academic programs Increase Student learning Improve quality of students Attract/keep talented faculty staffs Faculty Development Increase educational innovation

Internal Business Objectives    

Improve faculty productivity Improve recruitment/advertisement Improve staff productivity Maintain responsibilities towards communities

  

Improve budget performance Improve school operations efficiency Improve management/leadership

Stakeholder’s Perspective    

Quality of faculty Student centeredness Alumni Satisfaction Value for money

5 Strategic Group Mapping Strategic groups are set of organizations emphasizing similar strategic dimensions and using a similar strategy. They can be useful for analyzing an industry’s competitive structure. These groups can also be helpful in diagnosing competition and positioning of organizations’s within an industry. An important competitive edge has been quality of education, such that it is perceived by the students as well as the recruiters of different industry. Providing quality education at comparable cost has led to the increase of brand value of IBA in the job market.

Figure: Strategic Group Mapping of IBA IBA remains at top if quality of education is compared. No other business school is at per with IBA, Dhaka University. Even cost is also the lowest in IBA, DU. Faculty of Business Studies (FBS), Dhaka University comes next to IBA with comparable cost. North South University & BRAC University provides nearly similar quality of FBS, DU but with much higher cost

6 Drivers of Industry Change in Tertiary Education Industry of Bangladesh The world changes quickly, in ways that we can’t really imagine today and our strategy must be designed to be futures ready – to be ready for many possible futures. Our research and industry discussions highlighted a number of major forces impacting the higher education sector in Bangladesh and internationally. These forces coalesced around the following key drivers of change. 1. Democratization of knowledge and access

The massive increase in the availability of ‘knowledge’ online and the mass expansion of access to university education in developed and developing markets will mean a fundamental change in the role of universities as originators and keepers of knowledge. 2. Government Regulations Competition of students, in Bangladesh and abroad, is reaching new levels of intensity with the increasing number of GPA-5 every year, at the same time as governments face very tight situation as students are increasing than the University’s capacity. Universities will need to both maintain quality and face Government regulations as never before. 3. Digital technologies Digital technologies have transformed media, retail, entertainment and many other industries – higher education is next. Campuses will remain, but digital technologies will transform the way education is delivered and accessed, and the way ‘value’ is created by higher education providers, public and private alike. Once projector and computer were unthinkable in a classroom but now it has become a part and parcel. To compete with the quality of education abroad, the Universities will need to upgrade their digital technologies. 4. Global mobility Global mobility will grow for students, academics, and university brands. This will not only intensify competition, but also create opportunities for much deeper global partnerships and broader access to student and academic talent. 5. Integration with industry Universities will need to build significantly deeper relationships with industry in the decade ahead – to differentiate teaching and learning programs, support the funding and application of research, and reinforce the role of universities as drivers of innovation and growth. 6. Variety of Degrees Higher education, especially Business education is now multidimensional. Even in Bangladesh a no. of degrees are offered like CIMA, ACCA, CMA, CA, CFA, Specialization is everywhere. So

Universities must cope with these trending degrees as these are considered as substitute product of the Graduate and Post Graduate degrees that Universities provide in general. 7. Demand for tertiary education Tertiary education is referred to as the third stage or post-secondary education. Higher education is taken to include undergraduate and postgraduate education. IBA as a business school provides tertiary education. So demand of tertiary education is a driving force for the business of IBA. In recent days demand for tertiary education is increasing at a higher rate. More and more people are trying to get a BBA degree. Demand for MBA degree has also increased by a certain level. As a result IBA is getting more & more applicants for its MBA & BBA admission. To better serve different needs of tertiary education, IBA has also introduced different short term program like: Accounting for non-accountants (AFNA), Management Development Programs (MDP), Advanced Certificate in Business Administration (ACBA) etc.

7 Dominant Traits of Tertiary Education Industry in Bangladesh Strong Regulatory Monitoring: Tertiary education industry is highly regulated in Bangladesh. Government has its control in many cases through University Grants Commission (UGC). Research & Development: Faculties & students in tertiary education industry in Bangladesh are highly involved in research & development. Research outcomes are highly valued & have industry usability in Bangladesh. Standards & Conformity: In tertiary education industry, course curriculum is very much standard. Due to industry acceptance almost all the business schools follow similar type of curriculum for business degrees.

8 Conclusion Due to its quality of education, IBA, Dhaka University has become the role model in business study of Bangladesh. Most of the graduates of IBA are in the top notch positions in different industry. Due to its quality of education, the degree of IBA is valued in both domestic & international level. By studying the whole lot scenario, we offer the following recommendation for IBA, Dhaka University: 1. Introduce more & more technology in pedagogy & regular work processes 2. Increase industry attachment 3. Offer more short term & diverse degrees to meet the increasing needs of a quality education for executives of domestic industry.

Bibliography www.iba-du.edu www. Wikipedia.org www.worldbank.org www.indexmundi.com www.boi.gov.bd Thompson, A. Crafting and Executing Strategy. Tata Mcgraw-Hill.