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strategies like LANKA BANGLA gives some attractive loans in SME division Their products are strongly different from those of rivals. Some firms have strong advertising and promotion. Some firms have attractive customer base. Weakness: No clear strategic decision of few firms. No well developed or proven core competencies. Some have weak balance sheet, too much of debt. Some have weak image or reputation. Some have too narrow a product line relative to rivals. Potential Market opportunities: Some have opening to win market share from rivals. Sharply rising buyers demand for industries product. Some are expanding to new geographic markets. Some sell their product online. External threats: Increasing competition, as banks are trying to capture this market. Slowdown in market growth Loss of sell to substitute [products] Costly new regulation requirement
and nonfinancial businesses in viable horizontally and vertically integrated linkages with micro and small enterprises.Vertical/Horizontal There are instances of successful business models around the world which embrace low-income poor as their new customer bases in socially and environmentally responsible manner. Such innovative partnership models developed in other AFI members can help others in emulating similar kind of initiatives appropriate to their own countries. in sustained viable relationships.Other Strategic Issues Alliances: Some institutes are making alliances to other to gain some advantages like To collaborate on technology development or new product development To fill gaps in technical or manufacturing expertise To acquire new competencies To improve supply chain efficiency To gain economies of scale in production and/or marketing To acquire or improve market access via joint marketing agreements Integration. But for renowned companies like LANKA BANGLA they follow defensive strategy because this is used to protect competitive advantage (rarely used to create advantage) . they now need to focus on extending these linkages to socially and environmentally responsible non-financial businesses. OFFENSIVE AND DEFENSIVE STRATEGIES For new entrants like Agrani SME Financing Company Limited and Bangladesh Infrastructure Finance Fund Limited (BIFFL) they follow offensive strategy because this is used to build new or stronger market position and/or create competitive advantage. BRAC is a major success example in engaging formal bank. Grameen Bank has also developed some similar linkages between its micro/small enterprise clients and larger nonfinancial businesses. In Bangladesh. Many other MFIs have forged linkages with banks. MFIs (microfinance institutions).
Brick-and-Click Strategies Sell directly to consumers and Use traditional wholesale/retail channels For using this strategy this industry opens SME division to sell directly to individual customers. Proprietary technology No Lack of consensus regarding which of several competing technologies will win out It does not have Low entry barriers Buyers are first-time users and marketing involves inducing initial purchase and overcoming customer concerns So it‘s not emerging industry. High-VELOCITY MARKETS The features are: Rapid-fire technological change Short product life-cycles Entry of important new rivals Frequent launches of new competitive moves Rapidly evolving customer expectations . But these advantages will shortly lose due to copying of others. First-MOVER ADVANTAGES In this industry firms are getting more and more first mover advantages. Whether it is an emerging Industry? This is not new and unproven market.
What people seek in a bank is truthfulness. If the standards applied by banks begin to raise questions. shatters the people's .It don‘t cope with this features and thus it is not belongs to this group. thus putting many companies across the world in same market arena Exploding technologies force firms to specialize just to keep up in their area of expertise Industry is young and crowded with aspiring contenders. Whether this industry stands on maturity or not? Slowing demand breeds stiffer competition More sophisticated buyers demand bargains Greater emphasis on cost and service Topping out‖ problem in adding production capacity Product innovation and new end uses harder to come by International competition increases Industry profitability falls This belongs to this group as it fulfilled those features. Whether this industry is fragmented industry or not? Absence of market leaders with large market shares Buyer demand is so diverse and geographically scattered that many firms are required to satisfy buyer needs Low entry barriers Absence of scale economies Buyers require small amounts of customized or made-to-order products Market for industry‘s product/service may be globalizing. Ethical Issues Ethics in banking: Everyone expects the banks to be fair. with no firm having yet developed recognition to command a large market share This industry is a fragmented industry since many criteria match with upper features. it would undermine public confidence. trustworthiness and fidelity.
bribery. And when banks begin to do things which threaten either stability or trust. not the small amount of capital infused by the directors and shareholders but the unalloyed public trust. of a bank which lost public trust and ran into immeasurable difficulties before the central bank stepped in to close its doors for a long time before resuscitating it at great costs to the economy and its clientele. not very long ago. There is no other industry where ethics would be more important than in banking. banks can affect. Being so closely tied to the society. A banker touches many things in our lives. the owners' capital in a bank represents a small percentage of its total assets. The remaining amount is collected from numerous depositors. the way the society sees itself. Unlike other businesses where owners' equity constitutes a bulk of the capital. and corruption from the operation of commercial banks. A bank that is not seen as trustworthy will quickly find itself shunned by customers and may even see a big queue of worried depositors across its payment counters. positively or negatively. We have an instance. The application of ethical principles contributes to the attainment of financial success and elimination of criminal acts like frauds. .expectations and endanger the financial systems. The important capital of a bank is. therefore. partly because financial institutions are a crucial part of the infrastructure of the entire economy. it creates a tremendous sense of uneasiness.
Ethical standard in Bangladesh: Ethical standard in Bangladesh is not exactly what one likes it to be. it also makes sound business sense. and ensuring its long-term business survival. they are vital aspects of protecting and enhancing the bank's brand image.A failure to comply with ethical principles results in increased costs and reduced competitive capacity of a banking system. Behaving ethically is not only the right thing for banks to do. since it affects its reputation in business environment. The following are some of the instances of unethical practices on the part of the regulatory authorities. Rather. the government and owners and staff of the banks. High ethical standards in banks are neither a luxury nor an abstract ideal. .
and this deduction was deemed to be final discharge of tax liability. IPDC launched first asset backed securities in 2004 as an alternative source of funding. The core attraction of this scheme was the tax benefit made available to investors at the rate of 10 percent at the time of credit of such interest or at the time of payment thereof. altogether the earning capability as well as the earning possibilities for these companies is decreasing. This new instrument emerged as an important tool and added a new dimension in the financial market.Recommendations The present issues the overall market situation for the financial institutions seems to be a bit critical. . In order to get out of the situation some strict steps must be taken. So. Another innovative and promising source of funds may be the securitization of assets. Securitization is the process whereby the ownership of a large number of receivables (Leases/Loans) is transferred to a securitization company to form a pool of such receivables and a trustee to manage the issue of bonds against the receivables. Lanka Bangla in Bangladesh may also explore the possibilities of gaining access to new sources of funds like issuance of commercial paper and discounting or sale of lease receivables. whichever is earlier. The bonds will be purchased by investors and traded in the secondary market but initially banks. In this connection. Ultimately the lessee/borrower will pay their dues to the Securitization Company which will in turn make payment to the investors. But changes in taxation policy in 2005 by the government have made the future of this instrument less attractive for the concerned financial institutions. Finding new sources of fund The finance and leasing companies across the world are using different sources for collecting funds. insurance companies and other financial institutions may purchase the instruments. Not only these institutions are competing in a very highly competitive industry but also they have to compete with the banking sector to survive.
which matches more with their asset-liability management. some are also diversifying into other lines of business like merchant banking. As complementary institutions both banks and Lanka Bangla should follow some ethical and technical norms. which is essentially a core operation of Lanka Bangla. for a healthy growth of the capital market.Product diversification Lanka Bangla is primarily engaged in leasing. banks can concentrate on working capital finance and foreign exchange operations. the machineries will remain under the ownership of leasing companies. which puts the former in an advantageous position. Currently. no doubt. Leasing. who will have absolute authority and control on their assets. banks have access to lower cost funds compared to Lanka Bangla. factoring. should do so through opening subsidiaries (Like Prime bank & Prime Finance) so that a level playing field for Lanka Bangla can be maintained. presents a good alternative form of term financing but Lanka Bangla should also venture into diversified use of their funds such as merchant banking. Lanka Bangla specialize in lease financing. Reducing Cost of Fund As from the earlier discussion. . Banks wishing to enter in the leasing business. Long term investment like financing capital machineries can be done by Lanka Bangla and in the event when banks want to engage in such activities they can place their funds with an NBFI to extend lease facility for those machineries. over invoicing or under invoicing may be averted and thereby more transparency will be ensured and tax evasion may be plugged. Lanka Bangla are permitted to undertake a wide array of activities and therefore should not confine themselves to one or two types of product only. banks can go for joint financing under syndication arrangements with leasing companies on any project proposal. Alternatively. Though banks and Lanka Bangla compete with each other they can also perform complementary functions. This will be beneficiary for two reasons In case of lease facility. Machineries will be imported in the name of a leasing company and letter of credit will be opened against its name. Market Segmentation Besides. etc. Again. venture capital financing. equity financing etc. The competition for Lanka Bangla is even more challenging as they have to compete with banks. The arena of work for these companies must be well distinguished. So. there must be exact law for these companies. Developing ethical and technical norms Lanka Bangla in Bangladesh are operating in a highly competitive environment.
and only one is a portfolio manager. Lanka Bangla through their merchant banking wing can act in this regard. But their activities in the capital market are rather limited (Financial Sector Review. Bangladesh Bank. A total of 31 companies are now listed as merchant banks in Bangladesh. Only nine Lanka Bangla have registered with SEC for performing merchant banking activities. .Increasing Capital Market Activity Lanka Bangla around the world carry out a significant role in the development of the capital market. The success of merchant banking operations is largely linked to the development of the security market. of which 23 are fullfledged. So Lanka Bangla should focus more on their opportunities in the capital market. Active involvement of merchant banks is essential to accelerate the capital market activities which can expedite the economic growth of the country. Strong institutional support is necessary for a lively capital market which is the core of economic development in any market based economic system. 2009). 6 are issue managers.
. So. Sylhet etc.Market Expansion Our financial institutions are competing within the group as well as across the group in a very small market. Most of the companies are Dhaka concentrated having some branches in some divisional cities like Chittagong. Whereas the banks have spread its branches throughout the country Lanka Bangla are dealing with some negligible number of branches. in order to survive financial institutions should spread its wings further and develop customized product to serve the urban and rural people.
NBFIs of Bangladesh have already passed more than three decades of operation. households and the public sector all rely on the banking system for a wide range of financial products to meet their financial needs. by providing additional and alternative financial services. However. . especially in the moments of economic distress. Through their operation NBFIs can assemble long-term funds necessary for the development of equity and corporate debt markets. An efficient NBFI sector also acts as a systemic risk remover and contributes to the overall goal of financial stability in the economy. Given appropriate support. NBFIs will be able to play a more significant role in the economic development of the country. In spite of quite a few constraints. Banks usually control the financial system in most countries because businesses. It is important to term NBFIs as a catalyst for economic growth and to provide necessary support for their development. leasing. which is often a face up to to the banking sector and on the other hand the growth of NBFIs widens the range of products presented for individuals and institutions with resources to invest. NBFIs have already gained considerable popularity both in developed and developing countries. the industry has performed remarkably well and their role in the economy should be duly acknowledged. And now in 2012 the number of companies goes up to thirty one. The journey started in 1981 holding the hand of Industrial Promotion & Development Company of Bangladesh Limited (IPDC). Another important role which NBFIs play in an economy is to act as a buffer. A long term approach by all concerned for the development of NBFIs is necessary. factoring and venture capital.Conclusion Banks and Non-Bank Financial Institutions are both fundamental elements of a sound and steady financial system. In one hand these institutions help to smooth the progress of long-term investment and financing.
Various Issues Bangladesh Bank (2006). ―Financial Sector Review‖.1. Vol. Pearson Education Asia. No.213-214 &402-403 . Annual Report (Various Issues) Bangladesh Bank. LANKA BANGLA Finance Limited. Economic Trends (Various Issues) Monthly Business Review. pp.Bibliography Bangladesh Bank. Thompson South-western corporation. Jeff (2008). Madura.1 May. Research Department.15 Growth and development of leasing business in Bangladesh: An evaluation Khulna University Studies 1(2): 311-317. Policy Analysis Unit. ―Financial Markets and Institutions‖ eighth edition. pp. Foundations of Financial Markets and Institutions‖ 3rd edition.