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Report On Importance of Strategic Decision Making and Its Steps in IBBL-With MBO
Report On Importance of Strategic Decision Making and Its Steps in IBBL-With MBO
1.0 Introduction
This report is based on the printed assignment for Strategic Management course. In this course, I have learned about the strategic management and its content like strategic leadership, External environment opportunities, Business level strategy, corporate level strategy, international strategy, strategic Entrepreneurship, MBO strategic decision, planning process, etc. As a part of my course, I was assigned by my course instructor to prepare this final report about Importance and steps of strategic decision-making, concept of MBO and its success and failure in an organization. To discuss about importance of strategic decision-making and its steps, to observe the success and failure of MBO and concepts of MBO I have chosen Islami bank Bangladesh Limited (IBBL). 1.1 Origin of the Report Based on my practical experience as well as theoretical knowledge, I have completed the report regarding Importance and steps of strategic decisionmaking, concept of MBO and its success and failure of Islami Bank Bangladesh limited. The focus of my study is to analyze the overall strategy of importance and its steps of making strategic decision which is the core philosophy of Islamic Bank. Islami Bank does not lend money or issue securities with fixed interest. Instead it finance in various schemes approved by Shariah Board to achieve its goal. 1.2 Objective To familiar with the Importance and steps of strategic decision-making, concept of MBO and some of the success and failure associated with MBO for Islami Bank Bangladesh limited. To find out the overall pictures about the Importance and steps of strategic decision-making, concept of MBO and some of the success and failure of MBO for Islami Bank Bangladesh limited. 1.3 Methodology The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature. The methodology is mentioned below: 1.3.1 Primary Method: At first, I have collected information by visiting the both organization and asked them some question. 1.3.2 Secondary method: The secondary sources of data collection were books of strategic management (Johnson G and schools, Pearce and Robinson; strategic management, McGraw Hill USA/India) annual report, prospectus and websites of the company.
Strategic Decision Making Process and MBO concepts applied in IBBL 1.4 Limitations From the beginning to end, the study has been conducted with the intention of making it as a complete and truthful one. However, many problems appeared in the way of conducting the study. All the branches of the sample bank were not physically visited. Lack of in-depth knowledge and analytical ability for writing such report. Difficulties to collect all the relevant data primarily. Lack of experience.
Effective strategic decision is an important fact to sustain in this competitive world. Strategic decision-making is an important organizational phase that often defines a business firm's success. It is one of the most common denominators of successful business ventures. Needless to say, it is extremely difficult for a person to succeed without a plan for success. Giving below some importance that a strategic decision can bring an organization on the top and those are: Strategic decision can serve as a business firms road map to success: Strategic decision can serve as a business firms road map to success. A strategic plan lists some of the possible situations a business firm will likely face. It also details the business firms strengths, weaknesses, opportunities and threats (SWOT.) It serves as a source of inspiration: Part of strategic decision-making is identifying the goals and purposes. Moreover, these goals and purposes
Strategic Decision Making Process and MBO concepts applied in IBBL serve as a great source of inspiration. A strategic plan is used by entrepreneurs to measure success. It gives entrepreneurs and personnel an idea of where they are and where they want to be. It identifies risks and competition: Risk and competition play an important role in a business firms success, or in some occasions, failure. Nevertheless, strategic planning aims to identify such risks and helps devise measures to avoid or counteract such risks. The in-depth knowledge gained from strategic planning is a great weapon against competition. It guides management in decision-making: Strategic decision making also plays a crucial role in the decision making process of the business firm. A strategic plan details the current financial standing and capacity of the business. It also provides entrepreneurs invaluable information regarding external factors that affect the business firm. It gives an overview of the market condition: Another major importance of strategic decision is that it gives us an overview of the market condition. The market condition is critical in determining a business firms success. More so, it gives entrepreneurs and managers an idea of when and where to place marketing efforts and funds.
Strategic decision making is highly important not just in business but as well as in other aspects of life. Combined with substantial amount of resources and quality work force, it can spearhead a business firm to success beyond measure. 2.2 Steps of strategic decision-making process:
Small business owners and managers make decisions on a daily basis, addressing everything from day-to-day operational issues to long-range strategic planning. The decision-making process of a manager can be broken down into six distinct steps. Although each step can be examined at length, managers often run through all of the steps quickly when making decisions. Understanding the process of managerial decision-making can improve your decision-making effectiveness. Identify / Define the Problem Seek Information Brainstorm Solution Implement the Plan Evaluate outcomes
Strategic Decision Making Process and MBO concepts applied in IBBL are not made arbitrarily; they result from an attempt to address a specific problem, need or opportunity. Supervisor of IBBL realize that he has too many employees on the floor compared with the day's current sales volume, for example, requiring him to make a decision to keep costs under control. Steps 2: Seek Information In this stage IBBL managers seek out a range of information to clarify their options once they have identified an issue that requires a decision. Managers may seek to determine potential causes of a problem, the people and processes involved in the issue and any constraints placed on the decision-making process. Step 3: Brainstorm Solution Having a more complete understanding of the issue at hand, IBBL managers move on to make a list of potential solutions. This step can involve anything from a few seconds of thought to a few months or more of formal collaborative planning, depending on the nature of the decision. Step 4: Choose an Alternative Managers of IBBL weigh the pros and cons of each potential solution, seek additional information if needed and select the option they feel has the best chance of success at the least cost. Consider seeking outside advice if you have gone through all the previous steps on your own; asking for a second opinion can provide a new perspective on the problem and your potential solutions Step 5: Implement the Plan There is no time to second guess yourself when you put your decision into action. Once you have committed to putting a specific solution in place, get all of your employees on board and put the decision into action with conviction. That is not to say that a managerial decision cannot change after it has been enacted; savvy managers put monitoring systems in place to evaluate the outcomes of their decisions. IBBL managers are always trying to implement each plan very carefully. Step 6: Evaluate Outcomes Even the most experienced business owners can learn from their mistakes. In this stage IBBL managers always monitor the results of strategic decisions, be ready to adapt their plan as necessary, or to switch to another potential solution if their chosen solution does not work out the way you expected.
Strategic Decision Making Process and MBO concepts applied in IBBL crucial role in the decision making process of the business firm. A strategic plan details the current financial standing and capacity of the business. It also provides entrepreneurs invaluable information regarding external factors that affect the business firm. So if Islami bank Bangladesh limited (IBBL) could maintain and follow all kinds of necessary steps of decision-making process then IBBL might be improved easily.
Strategic Decision Making Process and MBO concepts applied in IBBL implement and achieve their plans, which automatically achieve those of the organization.
Strategic Decision Making Process and MBO concepts applied in IBBL The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be advantageous.
Strategic Decision Making Process and MBO concepts applied in IBBL IBBL will also try to encourage investment particularly in projects, which are more likely to higher employment.
8.3 Historical Background of Islami Bangladesh limited (IBBL). In August 1974, Bangladesh signed the Charter of Islamic Development Bank and committed itself to reorganize its economic and financial system as per Islamic Shariah. In January 1981, Late President Ziaur Rahman while addressing the 3rd Islamic Summit Conference held at Macca and Taif suggested. "The Islamic countries should develop a separate banking system of their own in order to facilitate their trade and commerce". This statement of Late President Ziaur Rahman indicated favorable attitude of the Government of the People's Republic of Bangladesh towards establishing Islamic banks and financial institutions in the country. Earlier in November 1982, Bangladesh Bank, the country's Central Bank, sent a representative to study the working of several Islamic Banks abroad. 8.4 Strategic Objectives of Islami Bank Bangladesh Limited (IBBL) To ensure customers' satisfaction. To ensure welfare oriented banking. To establish a set of managerial succession and adopting technological changes to ensure successful development of an Islamic Bank as a stable financial institution. To prioritize the clients welfare. To emerge as a healthier & stronger bank at the top of the banking sector and continue stable positions in ratings, based on the volume of quality assets. To ensure diversification by Sector, Size, Economic purpose & geographical location wise Investment and expansion need based Retail and SME/Women entrepreneur financing. To invest in the thrust and priority sectors of the economy. To strive hard to become a employer of choice and nurturing & developing talent in a performance-driven culture. To pay more importance in human resources as well as financial capital. To ensure lucrative career path, attractive facilities and excellent working environment. To ensure zero tolerance on negligence in compliance issues both Shariah and regulatory issues. To train & develop human resources continuously & provide adequate logistics to satisfy customers need. To be excellent in serving the cause of least developed community and area. To motivate team members to take the ownership of every job. To ensure development of devoted and satisfied human resources. To encourage sound and pro-active future generation. To achieve global standard.
Strategic Decision Making Process and MBO concepts applied in IBBL To strengthen corporate culture. To ensure Corporate Social Responsibilities (CSR) through all activities. To promote using solar energy and green banking culture and ecological balancing.
8.5 Special Features of IBBL: Islami Bank Bangladesh Limited (IBBL) was incorporated on13.03.1983 as a public company with limited liability under the companies act, 1913. The bank started functioning with effect from 30.03.1983 as the first Shariah based interest-free bank in South-East Asia. The bank is committed to run all its activities as per Islamic Shariah. IBBL through its steady progress and continuous success has, by now, earned the reputation of being one of the leading private sector banks of the country. The distinguishing features of IBBL are as under: All its activities are conducted on interest-free system according to Islamic Shariah. Investment is made through different modes permitted under Islamic Shariah. Investment income of the bank is shared with the Mudaraba depositors according to a ratio to ensure a reasonably fair rate of return on their deposits. Its aims are to introduce a welfare-oriented banking system and to establish equity and justice in the field of all economic activities. It extends Socio-economic and financial services to the poor, helpless and low-income group of the people for their economic enlistment particularly in the rural areas. It plays a vital role in human resource development and employment generation particularly for the unemployed youths. Its aim is to achieve balance growth & equitable development of the country through diversified investment operations particularly in the priority sectors and in the less developed areas.
8.6 Functions of IBBL: The operation of Islamic Bank Bangladesh limited can be divided into three (3) major categories: 8.6.1General Banking: It includes a. Mobilization of deposits b. Receipts and payment of cash. c. Handling transfer transaction.
Strategic Decision Making Process and MBO concepts applied in IBBL d. Operations of clearing house e. Maintenance of accounts with Bangladesh bank and other bank. f. Collection of cheques and bill. g. Issue and payment of Demand Draft, telegraphic transfer and payment order. h. Executing customers standing instructions. i. Maintenance of safe deposit lockers. j. Maintenance of internal accounts of the bank. While doing all the above noted work IBBL issue cheques-book, Deposit account operating form, SS card, Ledgers, Cash book, Deposit account ledgers, preparation statement of accounts, Pass book, Balance of different accounts and calculates profits. Islami Bank Bangladesh limited offers to open the following account to the depositors: 1. Al-Wadeah Current Account. 2. Mudaraba Savings Account.-MSA 3. Mudaraba term deposit Receipt. (3 month / 6 month / 12 month / 36 months term)-MTDR 4. Mudaraba Special Scheme-MSS 5. Mudaraba Hajj Savings Account (1 year to 25 year term)-MHSA 6. Mudaraba Special short notice Account.-MSNA 7. Mudaraba Savings bond (5 year & 8 year term)-MSB 8. Mudaraba Foreign Currency Deposit.-MFC 9. Mudaraba Monthly profit Distribution scheme.-MMPDS 10. Mudaraba Moharana Account.-MMS 11. Mudaraba (wakf) cash Account.-MWCA. 8.7 Investment: IBBL invests its money in various sectors of the economy through different modes permitted by shariah and approved by Bangladesh Bank. The different modes of investment are as follows:
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a) Mudaraba b) Musharaka
8.8 Foreign Exchange Business Foreign Exchange Business plays a vital role in providing substantial revenue in the bank income pool. Like all modern Banks IBBL operates in the area of the foreign Exchange business. IBBL performs the following tasks: Opening letter of credit (LC) against commission for importing industrial, agricultural and other permissible items under Islamic Shariah and Import policy. Opening letter of credit on the principle of Mudaraba sale, on the principle of Musharaka sale and under wage earner scheme. Handling of export/import document. Negotiation of export / import document when discrepancy occurs.
9.0 Findings:
Effective strategic decision is an important fact to sustain in this competitive world. Strategic decision-making is an important organizational phase that often defines a business firm's success. It is one of the most common denominators of successful business ventures which is taken by Islami Bank Bangladesh Limited (IBBL). In my findings part I have presented the importance of strategic decisionmaking, and the steps that management takes for strategic decision making of the organization named Islami Bank Bangladesh Limited (IBBL). At the time of decision making process with MBO concepts it has some success including Motivation, better co-ordination and communication. Otherwise Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
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Strategic Decision Making Process and MBO concepts applied in IBBL MBO has some failures that noticed by IBBL those cause It overemphasizes the setting of goals over the working of a plan as a driver of outcomes. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders.
10.0 Conclusion
At the end of this report, we can say that strategic decision-making is very important for any organization. By setting strategic decision organizations can know their strength and weakness as well as can be successful in maintaining their business. Thats why strategic decision making is very important in an organization. If the organizations follow the steps of making strategic decision properly than any problem can be solved easily. If they use these decision making steps decision making process, they will make more informed decisions and will be more comfortable with decision making under uncertainty On the other hand, Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. There can be both success and failure in implementing MBO, but organizations have to look at the successes and go ahead. By adapting these two factors, organizations can perform their duties perfectly and can achieve their goal easily.
10.0 References
Islami Bank Bangladesh Limited Web site (www.Islamibankbd.com) Annual Reports of Islami Bank Bangladesh Limited. Several Booklets from Islami Bank Bangladesh Limited. Several Newsletters from Islami Bank Bangladesh Limited. Training materials of IBTRA.
11.0 Bibliography:
Books of strategic Management (Johnson G and schools) Strategic management (Pearce and Robinson, McGraw Hill USA/India)
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