Competitive rivalry the competition in the banking

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Competitive Rivalry The competition in the banking sector is very high , considering the number of players in the industry and low turnover rate of the customers. The entry of private sector and possible foreign players also makes the situation worse. This leads to lowering lending rates and increasing interest rates, which has resulted in increase in NPAs for some players. To overcome these problems, government backed mergers and acquisitions are the likely solutions. 20 | P a g e Institute of Management Nirma University Ayush Dadhania
SWOT analysis Strength Large capital inflow backed by large promoters Wide range of products, nearly all financial services are in-house Experienced in Indian Financial System (as HDFC Ltd.) Great brand image Wider distribution compared to other private banks Lower response time Constructive use of technology front-end and back-end Lower response time Skilled workforce aiming to make long term career Experienced top management Weakness Not positioned correctly in customers’ mind Low motivation at sales staff Some day-to-day systems are not up to the current industry standards Gaps in product portfolio in certain catchments Opportunities Growing Indian Financial sector Expansion possibilities in rural segment Overseas market Aim for one-stop financial solution Expansion of workforce in non-banking financial services as people are moving towards stock market and mutual funds Threats Increasing NPAs Increasing and aggressive competition Ex. Bandhan Bank Foreign Investments Legislation uncertainty can impact its business Vulnerable to reactive attacks 21 | P a g e Institute of Management Nirma University Ayush Dadhania
Shared Value Strategy Structure System Staff Style System McKinsey’s 7-S Framework Fig 3: McKinsey’s 7-S Framework The McKinsey’s 7-S Framework is an analytical tool to ensure all parts of the organization works in harmony or not. The model has seven parameters, which can be divided in two parts: 1. Hard Elements 1.1. Strategy 1.2. Structure 1.3. System 2. Soft Elements 2.1. Shared Values 2.2. Skills 2.3. Style 2.4. Staff The analysis of the HDFC Bank is as follows: 22 | P a g e Institute of Management Nirma University Ayush Dadhania
Structure The structure of the HDFC bank is explained before. Based on that, we can see that the structure is developed in such a manner that the division of responsibility is clear and the mistakes are corrected during the process in the branch and the sales process is followed to the last stage of the hierarchy. Also, division of the responsibilities by client profitability also ensures better service to premium clients. Strategy HDFC bank uses differentiator strategy for their business. They do heavily focus on quality, not quantity. The service provided also differentiates themselves from the competition like Axis Bank and ICICI Bank. Plus maintaining relationship with high net worth individuals by providing them door step services is also helping them to acquire high worth individuals.

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