Marketing Assgn

Morris Kitua 046263 Take Home Assignment Business: Chase Bank Kenya Ltd Brief History Chase Bank (K) Ltd is a local premium bank in Kenya’s banking industry. It was previously known as United Bank. Initially, the bank was based in Kisumu and run by a politically connected family with no banking experience, eventually it was placed under Central Bank Statutory Management. In 1995, it changed its name to Chase Bank under new management and relocated to Nairobi in 1997. Question 1 Conduct a SWOT analysis and illustrate how the variables have impacted on the business operations Strengths Bank’s Management The bank’s board of directors comprises of high net worth individuals of integrity and extensively experienced in business management with executive directors from international banking institutions that has embedded global standards of professionalism at a local level who are committed to making the institution a premier corporate bank. Percentage of Stock The Bank has good shareholding ratios that give the local management relative autonomy from the foreign shareholders when it comes to decision-making. The foreign investors however are quite well established firms in their respective countries and hence give the bank a reliable and stable image. Shareholder Local Shareholding Osman Murgian Sadolin Group James Gachui Senior Management Foreign shareholding Winton Asset Management Giuseppe Family (Shipping business) Total

Country Kenya Kenya Kenya Kenya

Percentage 75%

25% UK. Italy. 100%

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Morris Kitua 046263 Organizational structure Chase Bank’s present structure is an open plan approach, which makes the organization responsive, flexible and ensuring that customers are always in contact with the bank. The bank has an open plan policy. All staff, including senior management and directors sit in open areas. This has contributed immensely to the flow of information in both directions. Decision-Making Decision-making is consultative and policy is driven by committee decisions. Through various committees, the bank’s decision-making process is systematic and well thought out. These committees cover all the crucial facets of the bank, including operations, information technology, human resource, treasury, customer service and marketing Team building The board of directors, management and staff of Chase bank work as a team to fulfill their mission as a bank and to satisfy the financial needs of their clientele as well as to provide corporate social responsibility. Degree of autonomy As a result of Kenya’s banking law and the regulations of Central Bank of Kenya that govern the banking industry, Chase Bank’s independence to fully make its own decisions is restricted. In addition the bank’s constitution restricts it from acting beyond its powers. Empowerment Empowerment at Chase is through the following ways: in-house and external training, seminars, conferences, study leaves and so on for both management and staff. Culture There are a few well defined or emerging culture composed of shared beliefs, expectations and values. The bank believes that no employee should be discriminated upon in terms of race, sex, religion and HIV status and for this reason, a potential employee is not required to submit a health report on his/her HIV status. Secondly, there is a belief in the bank that a phone should not ring more than three times without being answered whether it’s a landline or cell phone. Thirdly the bank treasures its clientele and therefore believes that a customer should not queue in the banking hall for at most 20 minutes whether he/she is banking money, depositing a cheque or waiting for statements and so on. It’s also a tradition at the bank that every department holds a meeting on a bi-weekly basis to review its progresses. And lastly, Chase Bank thinks of itself as one small family, which is a source of support to achieving its mission/strategy. Product The breadth of the product line is broad enough but it can be broadened. Its products include:

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Current Account

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Amortized Loans

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Savings Account

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Local Bills

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Foreign Currency Account

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Overdrafts

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Fixed Deposit Account

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Letters of Credit

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Call Deposit Account

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Bank Guarantees

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Overdraft Account

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Term Loans

Chase Bank also offers International banking i.e. Telegraphic Transfers: Chase Bank facilitates import related and other payments by doing telegraphic transfers in almost all major currencies of the world. It also issues Demand Drafts in foreign currency in almost all major currencies of the world and local FCY demand drafts in three currencies (USD, GBP & EURO). All outward remittances are done in adherence to the CBK guidelines. Treasury Services: The bank’s treasury department has established itself as a market leader in the forex market in Kenya. It offers the most competitive forex rates and has a team of specialists who can advise on forex requirements. Pricing flexibility: Chase bank is relatively expensive compared to its competitors. For example, a banker’s cheque for an account holder goes for Kshs300/= while equity bank’s is Kshs150/=. However, Chase Bank’s products and services are exquisite making the price worthy. Many of the bank’s customers have no problem with the pricing. Place (Distribution system): Chase Bank’s clients cut across most sectors including other banking, insurance and stock broking institutions as well as individuals and professionals whose personal accounts make up the bulk of the bank’s burgeoning deposit volumes. Promotional efforts Chase Bank spends less on its advertising because it uses its marketing department to promote the products of the bank and the bank as a whole. The bank occasionally uses the local newspaper to advertise the promotion or appointment of managers and directors of the bank. It also uses brochures to at times which is not a very expensive means of advertising. Weaknesses Management has failed to ensure the long-term survival of this firm in the area of Organization of General Management. This means that a formal long-term strategic planning system is lacking in

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Morris Kitua 046263 the bank. There is no clear cut formal forum under which the bank identifies its current position and where it would like to be in the medium term and maps out plans on how to get there. Currently the bank works on annual budget plans. Opportunities Small and Medium sized business The bank is well positioned to cater for this segment of the market. As the big volume banks pursue the multi-nationals and other large companies, they may not give the small and medium sized companies the same attention. This then creates opportunities for Chase to forge stronger ties with this segment. Professional people No one in the market has a program specifically tailor-made for professional people. Information Technology Due to technological advances it is not necessary to open branches all over. Out-sourcing of branch networks via the networks of the big four banks is a strategy that should be pursued vigorously. Name and branding The bank should use a new name as an advantage, to improve the its image and make the market more aware of its presence. The name should capture the essence of Chase and what it wants to give to its customers.

Threats Economic •

Future exchange controls may hinder treasury activity

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Fluctuating interest rates may hamper long term planning

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If the Donde bill eventually succeeds it will interfere with profitability goals

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Donor view of the country

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Privatization of parastatals

Political and Legal •

Change in economic policies, laws and regulations especially due to new governments

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Development of COMESA and East African Community will change client needs.

Social •

Change in standard of living will force the bank to redefine products and markets

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Change in demography will influence niches and products

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Public is more aware about the banking industry and will shop around for the best deal.

Technological •

Enhancement in national infrastructure will affect bank expansion plans

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IT development will influence products, distribution channels and marketing techniques

Task Environment One of Porter’s five forces that are currently affecting Chase Bank is the issue of rivalry among existing competitors. As a local bank, Chase Bank is faced by many competitors, composed of other local banks, all of which are competing for the same market. Some of its competitors are CFC bank Ltd, City Finance Bank Ltd, K-Rep bank, Imperial Bank Ltd, I&M Bank, Equity bank and so on. They are all concentrated in the same place i.e. around Kenyatta Avenue Nairobi and the immediate places and most of their clients are other business firms that surround them. This brings about rivalry. Question 2 Strategies Used to survive and sustain growth Current Strategy Basing the current strategy on Porter’s three generic strategies, the bank seeks to achieve its overall mission through the following: Customer Service Chase Bank seeks to: 

Understand its clients and their banking needs.

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Provide impeccable service to its customers.

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Constantly create innovative products.

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Cross- sell products.

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Minimise operational problems that might cause any unwarranted delays.

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Offer responsive service to its clients.

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Shift customers to cost effective delivery channels.

Financial Management 1. Improve returns – the bank seeks to constantly improve its return on equity thereby increasing shareholders returns, confidence in the bank and its success. 2. The bank also seeks to broaden its revenue mix. This would be a prudent move since it would diversify both risks and returns. 3. The bank also seeks to be cost efficient in its operations. The efficiency ratio would be an indicator of how efficiently it uses its resources to generate income for the bank. Human Resources The bank acknowledges that its human resources are the most important amongst all its resources. If the bank takes care of its staff, they will in turn deliver impeccable service expected by all its clientele, who will in turn reward the bank with the profitability necessary to secure the banks future and growth. Corporate Social Responsibility To play its role in the social development of the community in which it operates under. Question 3 Importance of the Business Plan in the Operations of the Business Venture •

Help develop goals and set targets, short term, mid term and long term.

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The company is able to assess its progress by reflecting on its initial plans and comparing them to current situation.

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Attract investors; a well-documented business plan can help an entrepreneur solicit for funds from potential investors.

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Motivate the workforce, if the workforce knows where the company is headed in the future, they will have a sense of trust and will feel motivated to work for the company.

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Win trust of the stakeholders

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To mobilize and utilize resources

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A business plan can help managers define strategies for growth, survival and profitability

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A business plan provides proper documentation of an organization’s activities for legal purposes that is, when the company is being registered, details of its activities are a prerequisite.

Question 4 The Essential Skills that characterize successful entrepreneurs •

Risk taking

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Good Management Skills

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Flexible and Dynamic

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Able to forecast and hence organize and plan effectively

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Team Players

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Good at building and maintaining relationships with customers, financiers and business partners

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Are good at communicating and provide cogent arguments to justify their cause.

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Exhibit creative and innovative skills

Question 5 The Role the enterprise plays in the economic development of the country •

Creates opportunities for employment in the country.

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Enables the entrepreneur to create wealth.

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The business venture is an avenue for creating even wealth distribution.

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Enterprises encourage the work force to develop skills either through self training or through enterprise funded training for employees

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Enterprises assist the government in providing essential services for the populace.

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Entrepreneurs help a country make use of idle resources.

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They also nurture creativity and innovation.

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They foster relationships between countries, for instance Chase Bank has investors in UK and Italy.

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Encourage a country and its people to be self-reliant.

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