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Airtel Marketing Strategy

Bharti has spent a considerable amount on advertising its mobile phone service, Airtel. Besides print advertising, the company had
put up large no of hoardings and kiosks in and around Delhi. The objective behind designing a promotion campaign for the ‘Airtel’
services is to promote the brand awareness and to build brand preferences.
It is trying to set up a thematic campaign to build a stronger brand equity for Airtel. Since the cellular phone category itself is too
restricted, also the fact that a Cellular phone is a high involvement product, price doesn't qualify as an effective differentiator. The
image of the service provider counts a great deal. Given the Cell phone category, it is the network efficiency and the quality of
service that becomes important. What now the buyer is looking at is to get the optimum price-performance package. This also
serves as an effective differentiator
Brand awareness

Commercialization of Microfinance in Bangladesh
S M Rahman
Director, CDF
Dhaka, Bangladesh


The emergence of the microfinance industry in Bangladesh presents a
tremendous opportunity to extend financial services to the vast majority of the
poor people. Indeed, about 50% of a 128 million population are reckoned to
live below the poverty line. Ironically, commercial banks in the country
typically serve no more than sixteen percent of the population. The remaining
populace historically does not have access to formal financial services, yet this
non-traditional market is enormous. In the last twenty years or so, the NGO-
MFIs have greatly modified the Grameen Bank's methodology and devised
appropriate financial service technologies to serve the poor people. Among
them, a few organizations demonstrated splendid success and have become
known worldwide.

Market, Products and Prices

The microfinance industry in Bangladesh consists of NGOs, cooperatives,
public sector programs and the Grameen Bank. The country is now teeming
with more than 1000 microfinance NGOs. Each and every NGO has taken up
microfinance as a core activity. The NGO led market consists of segmented
markets and is seemingly characterized with monopolistic competition with a
few large actors having preponderance. In essence, these are captive markets as
the buyers of services remain in the domain of a particular NGO and find it
difficult to exercise their free choices due to methodological reasons. Many
people maintain that there is a need to review whether microfinance programs

should be separated from other development programs and conducted
independently. Again, if we critically look at the supply side, we see that the
donors' grant money is on the wane. Banks are moving at snail's pace though a
little bit faster than in the past. PKSF being a major funding agency does not
also find it easy sailing with the small NGO-MFIs. In fact, the savers deposit is
playing a considerable role in augmenting the volume of credit. It is proven that
the poor people are willing to save more and are indeed saving in a number of
ways. But what has been lacking as of now, is the opportunity to allow the
microclients to save in a way that will help them to meet their current needs
and at the same time to save for tomorrow. Savings is growing over time and
clearly there is a huge savings potential. But the clients need quality saving
services and dependable organizations to save with. On the other hand, demand
for money to provide as credit is also increasing. Against this backdrop, many
NGO-MFIs having been mature, will eventually feel the need to enter the
formal financial system to fund their growth and provide diversified financial
services as demanded by their target markets. The NGOs are now in a state of
uncertainty in the absence of a regulation and fear to take any new risk of
providing the needed services. A microfinance friendly regulation is, therefore,
required to facilitate these services.

Available statistical data up to December 1999 posit that, currently all
microfinance programs cover 100% poor households, representing about 13
million in the country. The NGOs have saved Tk. 6,922 million and have loans
outstanding of Tk 18,692 million. The Bangladesh Rural Development Board
(BRDB) and the Ministry of Youth sponsored programs have outstanding loans
of Tk 2,337 million. The Grameen Bank clients have accumulated savings of
Tk 9,676 million and have outstanding loans of Tk 13,724 million. While the
aggregate picture shows that microsavings constitutes 3% of the total sectoral
savings and microcredit contributes to 6% of total sectoral advances made in
the financial sector. It is gathered that huge overlapping is occurring,
particularly among the big microfinance NGOs as well as the Grameen Bank.
Overlapping is said to occur, when an NGO client receives loan from more than
one source. No one really knows its extent. There are a number of factors why
it occurs. Inadequacy of loans is learnt to be a significant factor that compels a
client to go beyond the periphery of an institution for hunting larger loans. Who
is to blame? Have we ever seriously thought over this issue? In fact, none
should be blamed. One of the reasons may mean that the financial needs of the
clients and the capacity of the creditors is a mismatch and is, therefore,
resulting in a gap. Overlapping, therefore, may have inflated the outreach figure
so high. In reality, the coverage of poor households will be much less.

Albeit, there are no remarkable promotional measures for boosting
microfinance, efforts are seen ever stronger than in the past in mobilizing local
resources by bringing in various savings and credit products. The savings
products of NGOs now include daily savings, mandatory savings, voluntary
savings, forced savings, contractual savings, and time deposits. The NGOs are
also trying to become more responsive to the demand for credit facilities. Over
time, the credit products have been diversified. Today there exists more than 15
credit products including daily credit, leasing loans, housing loans etc.
Normally, the loan ranges from Tk 1000 -15,000 for one year. The average loan
size is Tk 3500 ($70). Organizations providing loans above Tk 3000 is very
few. Only a handful of organizations can adequately support the real needs of
their clients. The clients opine that the money that is given as credit falls far
short of the actual need. This means that the market can absorb more.
Microfinance is supposed to play an upbeat role by undertaking various income
generating activities. Field experience, however, suggests that 30-40% of loans
given for income generating activities are not used for actual purposes rather
these were used for consumption needs. It transpires that microfinance tends to
play the role of traditional financial service instead of being an effective tool of
poverty alleviation. This may be substantiated by the findings of a recent study
(a sample of 1798 households) that 1% of the population can lift itself from
poverty each year through microfinance programs. Insurance product is also
available in the market that appears in various names and has different mode of
applications. Technicalities in designing the product are not taken into account.
Mere rule of thumb is being used in premium setting. It covers mostly the risk
factor due to death of a client. In some cases, livestock is insured and claims
are partly met for the death of animals. According to a sample of 524 NGOs
surveyed shows that 15% NGOs have some kind of insurance practices.

Again, the NGO-MFIs practically do not determine product costing judiciously
be it savings, credit or insurance. They just set the prices on the basis of on-
going prices and practices without looking at its cost of operations, cost of fund
and other germane factors. Statistical data shows that about 52% NGOs provide
interest on savings @ 6-7%, which is a little less than the commercial banks do.
There are, however, a few who provide more. There are also some, who
promise to provide interest on normal savings, if the clients do not withdraw
money before a specified period of time. But if they do, they are denied any
interest. The loans carry interest @ 11-15% in flat method. About 81% NGOs
apply this method. Some experts uphold the view that loans to the informal
sector require interest rates at least 7-10% higher than the standard commercial
rates, as they think the cost of operations to be higher due to inherent nature of
microfinance program.

what is imperative is that the market has to be expanded in terms of business volume by bringing a larger number of people within its fold through competitive services. NGO-MFIs have both social mission and commercial motive. The role of marketing in microfinance institutions is one such vital issue that had been ignored hitherto. they will have to pursue commercial strategy meaning covering full cost recovery with a desired capitalization. which will plausibly lead to sharing of the limited market. risk fund. this practice is not wholesome as it goes contrary to their interest. While doing these. They tend to remain within the bounds of social objectives . As a matter of fact. Social mission of NGO-MFIs also means. This circumstance suggests that customer service indeed should be the motto of all NGO-MFIs and therefore underscores the necessity to maintain the probity of this service in the industry. Social Mission and Commercial Strategy NGO-MFIs in Bangladesh are not professionally very cost-conscious and hardly cast their eyes on the matter. there seems to have a strong necessity for reversing the practice and making it customer-oriented to cater to their needs. group fund etc. Social mission assumes that more and more poor people should be covered and continuity of the service should be maintained through plough back of the recovered fund. is also that these tiny clients' innocence and indigence should not be taken as advantage in raising fund. which are scarcely refunded. they will go to the doorstep of the poor people with appropriate financial services with a view to eradicating poverty. contribution to GDP and export earnings) as well as commercial objectives. According to the clients. In fact. very little circumspect effort has been put into this subject. Financial data of these organizations are not readily available as these are seldom produced and analyzed. As microfinance industry in the country is growing and evolving. new issues are constantly coming to the fore. levy. Given the present circumstances.a kind of complacence. Indeed. however. . among many. a desirable situation. For a microfinance program each complements the other. This may not be. They too are working for the welfare of the people satisfying their needs regardless of who are rich or who are poor.Clients of many NGO-MFIs are heard to grumble that they seize poor people's savings in the name of insurance. which is being seen among many. A general feeling. Mere increase in the number of NGO-MFIs will only bring about throat-cut competition among them. the NGO-MFIs should follow the aforesaid two things by striking a balance for having the desired outreach and sustainability. While the focus of so many institutions has always been to give loans and get them back. The commercial sector producing goods and services has also socio-economic mission (in terms of employment generation.

enterprise loans. Commercialization of Microfinance In view of the foregoing. between the grants and soft loans recipients. the article attempts to focus on the issues of microfinance NGOs. The fact is amply manifest in the evolving microcredit theme. This will consequently invigorate commercialization and help expand the microfinance market. Anyway. People are indeed willing to pay full cost for a service they value. maximum number of NGOs will enjoy a very thin spread. microfinance is considered as a business and there is every justification to look at it from commercial angle. huge uncalled for consumption loans. Notably. It conceives the microfinance market not as segmented markets but as the integral of part of the country's total monetary system. The term "commercialization" in the microfinance industry of Bangladesh is relatively a nascent idea and has understandably wide ramifications. however. As a result. the donors should ponder to review their policy of providing grants. forty percent of a large sample of 533 NGO-MFIs surveyed recently shows that they have received grants from various donors for operating microfinance programs. delivery of financial services will never improve and the needs of the poor clients will always remain unmet. In fact. unless there is any fair competition. Of the aforesaid figure. individual loans. is not perceived favorably by many small potential organizations in the country as it distorts market competition. savings collection from non-members and . Chiefly. On the other hand. It takes into view of healthy competition through product differentiation that encompasses the practice of marketing by launching new products. overlapping. about thirty five percent has also received concessionary loans. Market Competition The present chemistry of microfinance technology reveals that it is poised for a transformation. This commercial approach also argues for the delivery of services at a scale and cost commensurate with the needs and ability of the market for which it is intended. grant money that has zero cost.However. This concept is also gradually gaining ground in some other developing countries of the world. There may be a commonality. strategic emphasis should be given on commercialization by the NGO-MFIs. This is the universal text of value in market- based economy. product diversification. Under the circumstances. if the grants and soft loan culture continues. The donors may rather come up with alternative ways of financing. it tends to treat the poor as clients rather than as beneficiaries. This advantage of grants and soft loans received by a segment of organizations may put the majority NGOs in a precarious position in pricing their loans.

then the cutting edge of the NGOs may be lost. which generates an interest amount. Other competitors may be competing for the same customers with need satisfying marketing programs. in other words. compared to the flat method applied by the NGO-MFIs for their microclients. Compared to many places in the world. Competition here refers to the vying for market share among the financial intermediaries that are targeting a market comprising customers having similar needs or wants. But a marketing strategy must also meet another. promotion and channeling of services with its close competitors. As things stand today. if the banks become more enthusiastic in lending to the microclients directly (a possibility that cannot be ruled out) through a superior methodology. In fact. Clearly. microfinance NGOs seem to be driven by mere social commitment to combat poverty and generally they overlook the necessity to develop a progressive financial sector. which tell us that the situation is moving somewhere. All these are clear syndromes. is to build an edge against the competition. Despite this fact. They are regulated institutions. our banks are lagging behind. The system does not any longer like to follow the traditional discipline. prices. almost half.highest frequency of prevailing interest rates. An organization should constantly compare its products. In fact. the scale and performance of the microfinance sector is slowly approaching the banking system. It therefore necessitates these institutions to be looked at in a more market-oriented perspective. to be successful. Many have extensive physical infrastructure from which to expand and reach out to a substantial number of microfinance clients. Everybody knows that banks charge interest on declining method. There is no alternative to commercialization as it is the crux of competition. The organization must effectively position itself against competition within the industry. the banks have certain advantages as well. Understanding of one's customers is not always enough. the organization's marketing strategy must meet the customers' requirements. often more difficult challenge. Meeting customers' needs is not always sufficient to perform well in the market. The bankers after all will not require much time to acquire mastery over microfinance. Knowing one's competitors is critical to effective marketing planning. if they really choose to do so. On the contrary. Their philosophy seems to be deeply rooted in traditions of social mobilization. the effectiveness of marketing programs depends on the reaction of both customers and competitors. This. Nevertheless. microfinance practitioners are not seemingly prepared for commercialization but the situation is pushing them towards it. Banks have well established internal controls and administrative and accounting . beyond their knowledge. Thus the essence of planning a marketing strategy is to find ways of effectively positioning one's organization against competition in the mindset of the customers.

This means that BRAC and ASA are both losing market share (net savings) despite an increase of membership. .3% to to track large number of transactions. deposits and equity capital and do not have to depend on scarce and volatile donor resources. ASA has slightly gained from 16.3% in 1999 and 12. Proshika is losing market in portfolio and making a slight gain in savings. cost- effectiveness and profitability. Macro level economic factors viz.3%. The NGO-MFIs will henceforth have to bear in mind that they will not merely compete with themselves but also with other significant actors in the whole industry. While this picture is a little bit different in respect of Proshika.9% to 19. There is no doubt that the coming days ahead will be tough days for survival.5% in 1999. While. Competitors can be a resource rather than a threat.4% to 17. The performance reveals that both BRAC and Proshika are losing markets.5% to 36% and 21.91% during this time. and technology change can also create a demand for new products. Market Share of Three Leading NGO-MFIs An analysis of some selected statistical data of last three years of three large NGO-MFIs viz. It registered a slight rise from 9% in 1998 to 10.8% in 1999 respectively. ASA also registered a slight fall from 21. demographic trends as for instance urbanization.4% during this period. Competitiveness is a pre-requisite to remain in business. In fine. all of which will lead to sustainability. unless prepared beforehand to face the reality. None should be afraid of competition. Bank ownership structures that include private capital tend to encourage sound governance structures.6% in 1997 to 38. high inflation. Proshika and ASA reveal that BRAC and ASA have increased their market share (in terms of active membership) that rose from 36. They can offer a complete line of products.7% to 41. Banks can rely on their resources of funds. which implies an increase in its market share. The picture shows that increase in membership did not have any bearing on the volume of savings and credit of these organizations. which are in principle attractive to a microfinance clientele. The absence of a marketing drive is indeed conspicuous from this little scenario.4% in 1997 to 14. environment factors such as natural disasters. BRAC. ASA is losing market in savings and making a slight gain in portfolio. This simple analysis tells us that performance of the three bigs has begun oscillating. In terms of portfolio (the largest current asset).2% in case of Proshika. It is noticed that the market share (in terms of net savings) of BRAC has plummeted from 51.7% from 1997 to1999 respectively. an NGO-MFI can adapt and /or improve on a competitor's product.4% to 18. BRAC is losing markets in savings as well as portfolio. BRAC and Proshika both experienced decline from 38. While this figure has slightly fallen from 22.

It is essentially an evaluation of where the service provider's marketing function stands at the present time. policies. Product testing is used to gauze the perception of the customers on the suitability of the new products. More importantly. In fact. This means that the financial services offered by an MFI must be designed in response to the needs and capacities of the clientele. marketing research has to be pursued and new product ideas should be explored surveying customer needs. reacting to demands from clients. Conclusion . This practice is yet to be popular among the financial intermediaries in our country.Customers' Feedback and Analysis Becoming more tuned and responsive to the client needs is a critical part of an NGO. Terms and conditions of loan. By designing products to the evolving needs of clients. This is the basis of drawing a marketing plan and should be the way of serving the microclients. Customers can voice their demand in the form of direct feedback to credit supervisors or field workers or during group meetings. Realistically. New Product Development and Testing The poor people who are the customers should be treated well and perceived as king. Because of the rapid changes in the marketing environment. trying to deal with such problems bog down credit managers to the point where they neglect other important responsibilities. each organization needs to assess periodically its marketing effectiveness through a control instrument called marketing audit. products should be tested before launching in the market.MFI's methodological evolution. competitors and overall environment in which the NGO-MFI operates. strategies and programs is a constant possibility. where rapid obsolescence of objectives. Marketing audit is an in-depth assessment of marketing function. For these reasons. an organization can build client loyalty through customer service and thereby increase its profit. The Need for Marketing Audit A financial intermediary may find that performance problems recur regularly. financial viability. An NGO-MFI can harness new opportunities through signals from the market about customers. marketing is one of the major areas. or actions taken by competitors. savings and other products should respond to the particular needs of the client group. institutional soundness and social impact.

the clients should be allowed to exercise their free choices. customer satisfaction and commercialization should be the driving force for survival and growth. Hari Srinivas . terms and conditions . While. Some of the defining criteria used include. and suited to the local conditions of the community. and the activities that went into organizing the event. allowing them to care for themselves and their families. noun. of course.hsrinivas@gdrc.microenterpreneurs and low-income households utilization . Source : The Virtual Library on Microcredit What is Microcredit ? September. The definition of microcredit that was adopted there was: Microcredit (mI-[*]Kro'kre-dit). but also for community use (health/education) etc. The microfinance regulation in the country is now underway. improve access to finance. integrate microfinance with formal financial system and pave the way for commercialization of microfinance sector. To reap the benefits of commercialization.size - loans are micro. and enterprise development. the financial intermediaries will require mandate for providing a wide range of financial operations. help protect depositors. preserve the innovations and variety.the use of funds . In a competitive environment. which will provide a legal basis and streamline the current and future MFI activities. from country to country. They should be granted liberty to do their own financial management in order to increase their net worth. programmes extend small loans to very poor people for self- employment projects that generate income. Definitions deffer. 2010 . or very small in size target users .org Return to the Bangladesh Page Return to the Virtual Library on Microcredit What is Microcredit? Much of the current interest in microcredit stems from the Microcredit Summit (2-4 February 1997). It is expected that the ensuing regulation will promote good governance and prudential management in NGO- MFIs.The foregoing points suggest that real customer service through commercialization should be the bottom line for moving forward.most terms and conditions for microcredit loans are flexible and easy to understand.for income generation.

formulating right policies. under each of these categories. balance of savings. I am arguing that we must discontinue using the term "microcredit" or "microfinance" without identifying its category. etc. tontin. etc. Let me suggest a broad classification of microcredit : A) Traditional informal microcredit (such as. In the process. and globally. or rural credit. We find them useful. etc. fisheries credit. credit union. This is a very quick attempt at classification of microcredit just to make a point. loan outstanding. H) Grameen type microcredit or Grameen credit. moneylender's credit. I think this is creating a lot of misunderstanding and confusion in the discussion about microcredit. We really don't know who is talking about what. E) Cooperative microcredit (cooperative credit. or a hundred year history. savings and loan associations. or consumer credit. Then we can prepare another set of important information — number of poor borrowers. Classification can also be made in the context of the issue under discussion. or from credit unions. designing appropriate institutions and methodologies. No one now gets shocked if somebody uses the term "microcredit" to mean agricultural credit. etc. I am proposing that we put labels to various types of microcredit so that we can clarify at the beginning of our discussion which microcredit we are talking about. regionwise. Instead of just saying "microcredit" we should specify which category of microcredit. .) F) Consumer microcredit. loan disbursed. I propose that while publishing these data we identify the category or categories of microcredit each organization provides. This is very important for arriving at clear conclusions. agricultural credit. credit from the savings and loan associations. handloom credit. ROSCA. loans from friends and relatives.) 20 C) Activity-based microcredit through conventional or specialised banks (such as. The point is — every time we use the word "microcredit" we should make it clear which type (or cluster of types) of microcredit we are talking about. J) Other types of non-NGO non-collateralized microcredit. I) Other types of NGO microcredit. or from money lenders.The word "microcredit" did not exist before the seventies. Otherwise we'll continue to create endless confusion in our discussion. We can refine this to allow better understanding and better policy decisions. countrywise. Microcredit data are compiled and published by different organizations. When someone claims microcredit has a thousand year history.) D) Rural credit through specialised banks. livestock credit. savings banks. the word has been imputed to mean everything to everybody. etc. consumer credit in informal market. nobody finds it as an exciting piece of historical information. G) Bank-NGO partnership based microcredit. and their gender composition. or cooperative credit. Now it has become a buzz-word among the development practitioners. Needless to say that the classification I have suggested is only tentative. su su. pawn shops.) B) Microcredit based on traditional informal groups (such as.

I urge Microcredit Summit Campaign secretariat to present the information that they already collect on number of clients. number of the poorest among them. For policy-maters this will be enormously helpful. number of clients that have crossed the poverty line—broken down for each of the categories of microcredit. g) In order to obtain loans a borrower must join a group of borrowers. As a result it rejected the basic methodology of the conventional banking and created its own methodology. For analysis purpose this will make a world of difference. more support can go in their direction. f) It provides service at the door-step of the poor based on the principle that the people should not go to the bank. their gender break-up. l) Generally these loans are given through non-profit organizations or through institutions owned primarily by the borrowers. their growth during a year or a period. loans disbursed. Some programmes are strong in some of the features. This will help donors to select the categories they would like to support. Not every Grameen type programme has all these features present in the programme. If it is done through for-profit institutions not owned by the borrowers. b) Its mission is to help the poor families to help themselves to overcome poverty. Let me list below the distinguishing features of Grameencredit. The categories which are doing better. particularly poor women. not on legal procedures and system. Grameen credit Whenever I use the word "microcredit" I actually have in mind Grameen type microcredit or Grameencredit. savings. k) It comes with both obligatory and voluntary savings programmes for the borrowers. The categories which are doing poorly may be helped to improve their performance. d) It is offered for creating self-employment for income-generating activities and housing for the poor. . It is based on "trust". or legally enforceable contracts. while others are strong in some other features. But on the whole they display a general convergence to some basic features on the basis of which they introduce themselves as Grameen replication programmes or Grameen type programmes. loans outstanding. as opposed to consumption. c) Most distinctive feature of Grameencredit is that it is not based on any collateral. h) Loans can be received in a continuous sequence. j) Simultaneously more than one loan can be received by a borrower. bank should go to the people. General features of Grameencredit are : a) It promotes credit as a human right. New loan becomes available to a borrower if her previous loan is repaid. as well as the policymakers. number of poorest clients that are women. etc. e) It was initiated as a challenge to the conventional banking which rejected the poor by classifying them to be "not creditworthy". This sorting out is very important for the donors. or bi-weekly). But if the person I am talking to understands it as some other category of microcredit my arguments will not make any sense to him. It is targeted to the poor.These sets of information will tell us which category of microcredit is serving how many poor borrowers. i) All loans are to be paid back in instalments (weekly. This is an exhaustive list of such features.

such as real estate . savings or investment that could be used to repay debt if income should be unavailable. Unleashing of energy and creativity in each human being is the answer to poverty. provides scholarships and student loans for higher education. like mobile phones. and encourage them to take these decisions seriously and implement them. something similar to the "sixteen decisions". It creates dependency and takes away individual's initiative to break through the wall of poverty. it undertakes a process of intensive discussion among the borrowers. without sacrificing sustain-ability. It must reach sustainability as soon as possible. Capital: means current available assets of the borrower. It gives special emphasis on the formation of human capital and concern for protecting environment. . and created access to credit on reasonable term enabling the poor to build on their existing skill to earn a better income in each cycle of loans. Grameen believes that the poverty is not created by the poor. In fixing the interest rate market interest rate is taken as the reference rate. Reaching sustainability is a directional goal. it is created by the institutions and policies which surround them. is bound to be devoid of focus and sharpness. It is definitely not the lack of skills which make poor people poor. It is promoted through formation of groups and centres. developing leadership quality through annual election of group and centre leaders. electing board members when the institution is owned by the borrowers. Income streams are analyzed and any legal obligations looked into. prevailing in the commercial banking sector. For formation of human capital it makes efforts to bring technology. efforts are made to keep the interest rate at a level which is close to a level commensurate with sustainability of the programme rather than bringing attractive return for the investors. and promote mechanical power to replace manual power. In order to eliminate poverty all we need to do is to make appropriate changes in the institutions and policies. rather than the moneylenders' rate. It only helps poverty to continue. the people who pleaded that they did not know how to invest money and earn an income. honesty and reliability of the borrower to pay credit debts is determined. Capacity: means how much debt a borrower can comfortably handle. which could interfere in repayment. Three C's of Credit Character: means how a person has handled past debt obligations: From credit history and personal background. women. To develop a social agenda owned by the borrowers. If donors can frame category wise micro credit policies they may overcome some of their discomforts. Grameencredit's thumb-rule is to keep the interest rate as close to the market rate. Grameen believes that charity is not an answer to poverty. Grameen brought credit to the poor. m) Grameencredit gives high priority on building social capital. the illiterate. so that it can expand its outreach without fund constraints. and/or create new ones. Grameencredit is based on the premise that the poor have skills which remain unutilised or under-utilised. Reaching the poor is its non-negotiable mission. solar power. Grameen created a methodology and an institution around the financial needs of the poor. It monitors children's education. as possible. General policy for microcredit in its wider sense.

Grameen Bank branches are located in the rural areas. Grameen looks at the potential that is waiting to be unleashed in a person. It makes sure that the ownership of the houses built with Grameen Bank loans remain with the borrowers. Grameen gives high priority to women. the more you can get. Grameen believes that all human beings. Grameen Bank's objective is to bring financial services to the poor.. In other words. Conventional banking is based on collateral. First . if you have little or nothing. are endowed with endless potential. Conventional banks look at what has already been acquired by a person. Conventional banks focus on men. Grameen methodology is not based on assessing the material possession of a person. Overarching objective of the conventional banks is to maximize 2010 Grameen Bank methodology is almost the reverse of the conventional banking methodology. you get nothing. Grameen system is collateral. Grameen Bank is owned by poor women. particularly women and the poorest — to help them fight poverty. more than half the population of the world is deprived of the financial services of the conventional banks. 97 per cent of Grameen Bank's borrowers are women. As a result. Grameen Bank starts with the belief that credit should be accepted as a human right. Grameen Bank works to raise the status of poor women in their families by giving them ownership of assets. coming out of social and economic visions. Conventional banking is based on the principle that the more you have. i. and builds a system where one who does not possess anything gets the highest priority in getting a loan. it is based on the potential of a person. It is a composite objective. generally men. stay profitable and financially sound. Conventional banks are owned by the rich. including the poorest.Source : The Virtual Library on Microcredit Is Grameen Bank Different Is Grameen Bank Different From Conventional Banks ? September. the women. unlike the branches of conventional banks which try to locate themselves as close as possible to the business districts and urban centers.e.

and make all efforts to recover the money. and their coping capacity for meeting disasters and emergency situations. housing. while all interests are simple interests in Grameen Bank. No interest is charged after the interest amount equals the principal. in such cases. Grameen system pays a lot of attention to monitoring the education of the children (Grameen Bank routinely gives them scholarships and student loans). .) When a client gets into difficulty. Conventional banks do not pay attention to what happens to the borrowers' families as results of taking loans from the banks. Grameen system. every week. no matter how long the loan remains unrepaid. There is no stipulation that a client will be taken to the court of law to recover the loan. unlike in the conventional system. depending on the length of the loan period.principle of Grameen banking is that the clients should not go to the bank. In conventional banks charging interest does not stop unless specific exception is made to a particular defaulted loan. but it is a lot convenient for the borrowers. There is no legal instrument between the lender and the borrower in the Grameen methodology. works extra hard to assist the borrower in difficulty. There is no provision in the methodology to enforce a contract by any external intervention. Interest charged on a loan can be multiple of the principal. including taking over the collateral. Interest on conventional bank loans are generally compounded quarterly. under no circumstances total interest on a loan can exceed the amount of the loan. it is the bank which should go to the people instead.372 villages spread out all over Bangladesh. Repayment of Grameen loans is also made very easy by splitting the loan amount in tiny weekly installments. conventional banks get worried about their money. and deliver bank's service. sanitation. Grameen methodology allows such borrowers to reschedule their loans without making them feel that they have done anything wrong (indeed. access to clean drinking water. Grameen system helps the borrowers to build their own pension funds. They call these borrowers "defaulters". they have not done anything wrong. Grameen Bank's 22. Doing business this way means a lot of work for the bank.449 staff meet 8. In Grameen Bank. Conventional banks go into 'punishment' mode when a borrower is taking more time in repaying the loan than it was agreed upon.32 million borrowers at their door-step in 81. and makes all efforts to help her regain her strength and overcome her difficulties. and other types of savings.

No liability is transferred to the family. planting trees. eating vegetables to combat night-blindness among children. These are knows as "Sixteen Decisions" (no dowry. They are given only the "flower-pots" to grow on. especially to the poor women without any collateral. It is only because the seed has been denied of the real base to grow on. Grameen's effort is to move them from the "flower-pot" to the real soil of the society. A beggar comes under a campaign from Grameen Bank which is designed to persuade him/her to join Grameen programme. sanitary latrine.In case of death of a borrower. with the aim to bring some of Monsanto's agricultural technology to poor and low-income families in the villages. Grameen Bank is known worldwide for its micro-credit lending to the poor families. After lots of protests from the environmental groups and individuals Grameen called off the deal on 27th July. We'll have a poverty-free world The MONSANTO Innitiative: Promoting Herbicides Through Micro-credit Institutions In late June of 1998 Monsanto. It lends credit to . education for children. If a healthy seed of a giant tree is planted in a flower-pot. If we can succeed in doing that there will be no human "bonsai" in the world. Grameen system does not require the family of the deceased to pay back the loan. Such a programme would not be a part of a conventional bank's work. Grameen's idea is to graduate her to a dignified livelihood rather than continue with begging.). the giant US agri-business company announced that it was forming a partnership with Bangladesh's Grameen Bank. we see the poor people as human "bonsai". arranging clean drinking water. 1998. Grameen system encourages the borrowers to adopt some goals in social. In Grameen Bank even a beggar gets special attention. It is not because of any fault in the seed. the tree that will grow will be a miniature version of the giant tree. because there is no fault in the seed. In Grameen. or she can display some merchandise by her side when she is begging in a fixed place. People are poor because society has denied them the real social and economic base to grow on. There is a built-in insurance programme which pays off the entire outstanding amount with interest. Conventional banks do not see this as their business. The bank explains to her how she can carry some merchandise with her when she goes out to beg from door to door and earn money. educational and health areas. etc.

Grameen's activity to expand the monetary circuit of global capital to the poor local communities impressed the elites of the world. The aggressive Monsanto drive in Europe raised lots of controversies. and Robert Shapiro.3 million borrowers in 38. since seventies. Monsanto Chairman and CEO announced this. Money circulated through the poor communities self-expanded often to 130 percent appropriating the remaining resources of poor in the form of interest. Muhammad Yunus. mainly the US corporations. Yunus became the most favourite not only to the financial elites but also to the transnational companies. founder and Managing Director of the Grameen Bank. Grameen became an easy access to the poorer families in Bangladesh for the introduction of technologies. It is understandable. But Monsanto was trying to grab the world for its commodities. Headed by Prof. the news about Monsanto- Grameen deal came as a shock to development and environmental activists worldwide. No wonder why ''micro-credit" became very popular in the United States and other developed countries. which people often ignore. This is a specific feature of the present phase of globalization. unique partnership between the Grameen Bank of Bangladesh and Monsanto Company'. It came at a time when the US Company Monsanto was running a $1. now. . This is profoundly an ingenious role invented by elites who manage global capital. Although Prof. as the result of a 'new. to promote cellular mobile phones. that is the financial capital mediated through development agencies and the banks for the ''poor" like Grameen. health care. it is the poor. Organizations involved in the people's movement around the world increasingly becoming active opponents of the push toward genetically engineered crops. Professor Muhammad Yunus. and who must shoulder the burden to keep the system in order. It's not the rich who should salvage the crisis of global capital. Indebting the poor has become the new game of development and swept the development discourse and the practice.Yunus has made several other deals with transnational companies such as Telenor.over 2. They claimed that new technologies in agriculture and nutrition. According to the company sources.6b European advertising campaign to further the case for food biotechnology. that include President Clinton and the first lady.551 villages spread all over the country at a high interest rate of over 20% and with a system of weekly mandatory repayment. the governments are failing to pay back the loan and increasingly becoming defaulters. or do not notice for the rhetoric of the ''poor" and the glory songs of "micro-credit" Getting a whole hearted support from the First lady Hillary Rodham Clinton. the poor were lauded for their disciplined submission to the rule of credit money. the Monsanto-Grameen deal was to set up Grameen Monsanto Center for Environment-Friendly Technologies in Dhaka. While. and water sanitation would be available to poor people in Bangladesh.

No one has ever done any study what is the implication for this to poverty situation in general and in the lives of the rural families for the introduction of hi-tech technologies which in essence an absurd surrealistic scenario. women took the money as credit with high interest rates. For example. Yunus after working with the poor for so many years unfortunately could see the welfare . manufacturing. It's good that the strong alliance between transnationals and microcredit is now open and visible. can transform peoples' lives. But the Grameen provided the money. The immanent nature of ''micro-credit" as a globalizing phenomenon of capital and its inherent alliance with the transnational corporation came into full circle through these shameless statements and actions by people who until today ceaselessly uses the rhetoric of the ''poor"" and the ''poverty alleviation".'' Yunus. This poor women ended up not only paying for the phone. Grameen is already engaged in a significant initiative to provide cellular phones in the villages of Bangladesh through the inter-mediation of Grameen women. A hungry poor women calling long distance with cellular phones. on the other hand. even in an experimental way. We are willing to do it. Monsanto was to provide initial funding and a variety of its technologies. This is ''empowering of women". No one ever asked the poor families whether they wanted such credits and technologies.The partnership was to provide access to technology to very low-income people in order to help them leap from traditional technologies and allow their utilization of appropriate. Poor women of Bangladesh could never think of using cellular phones. and through the intermediation a market for cellular phone in a poor rural community was created. marketing. to try out an idea's business potential. 'The Grameen Monsanto Center will provide the opportunity to demonstrate how sustainable technologies. computer software. He said. The deal actually meant that Grameen was to provide access to the poor households for Monsanto technologies. Any private sector company can build similar bridges through Grameen in the areas such as health. but also the interest for the capital she was advanced as ''credit". Grameen and Monsanto were supposed to share equal ownership of the Center. and their profile as the friend to the ''poor". combined with microcredit. Grameen will provide access networks so that the poor can ''directly benefit"" from new technologies. This was a good model for Monsanto to follow. State- of-the-art technologies can be made available to those in need in a shape and size designed to snugly fit their needs. The Monsanto-Grameen collaboration is an excellent example. data processing. Robert Shapiro was too enthusiastic. was equally enthusiastic. He said. Internet services. which were never thought achievable. environmentally-sensitive methods to benefit communities and improve living standards for families. Already an exciting beginning has been made''. allowing them to improve their quality of life and the environment. and renewable energy. information technology. processing. Grameen and Monsanto could accomplish things. education.

The Grameen Monsanto Center was going to a new partnership to sell technologies to the poor around the world. However. when most of its crops are engineered to sell herbicides. Monsanto does not have any risk. In this venture Monsanto's investment is very nominal . Grameen takes the trouble of realizing the loans advanced and repayment." It may be noted that Monsanto has been selling the Round Up in the Tea Gardens of Bangladesh for over 10 years. In this way Monsanto gets an easy and secured market. As Greenpeace has already accused that part of Monsanto's strategy has been to supply seeds engineered to tolerate its own herbicides. According to the company.000 to establish the new center in Dhaka. It was impossible for them to avail such an easy marketing infrastructure. mostly in merging of companies. rice and cotton. Monsanto's plan was to supply "traditional" hybrid seed technology and stocks. For the poor to buy technologies they need the purchasing power. It is registered in the Pesticide list of Plant Protection Unit of Bangladesh. Utilizing microcredit loans and input financing. it did not rule out extending its technology input to genetically engineered traits in the future. it was delaying introduction of genetically. did not give up its heinous efforts to find its business partner in Bangladesh even though Grameen Bank has officially cancelled the plan to set up Monsanto-Grameen center in Dhaka. Monsanto had a plan to introduce a number of businesses in maize. The Vice- .an initial amount of only $150. In this partnership. The biotechnology giant Monsanto.of the poor only in making available cellular phones and proprietary technologies of Monsanto. which could have the adverse effect of promoting the use of these chemicals in developing countries. Monsanto was more interested in cotton. Monsanto has been involved in the private sector. The planned activities included a series of pilot projects and demonstrations. these new technologies will then be available to local farmers through the Center and the Grameen Agricultural Foundation. which is conditioned to spend for purchasing the technologies the lending agencies want or coercively force them to accept. "Monsanto is saying that it's going to feed the world. with the aim of running the center longer term on a "for-profit" basis.modified crops because Bangladesh lacked a regulatory regime. specially Round Up. There is no risk for the Monsanto's business operation. Monsanto's entry into Bangladesh is deceptive. Grameen role is to create an effective demand for technologies of transnational companies. Grameen was selected also because of its image and acceptability worldwide and therefore has the chance to be replicated in the poor communities in other parts of the world. Grameen provides the credit to the poor.

Mahfuza Touhida. Sayyida Akhter. His name was Mr. UBINIG and Nayakrishi Andolon and the national contact of SANFEC (South Asian Network on Food. They brought large number of male and female police to confront the rally and tried to dismantle them. "We do not want Monsanto". They were saying that this must be stopped. Horacio Navaretti was staying during his three day visit. Palash Baral. Farida Akhter. in both English and Bengali language. The genetically modified hybrid seeds are introduced to make farmers dependent on the companies rather than on the own sources of the farmers. Monsanto seemed to be desperate in marketing its products and was even trying take secretive measures to enter into the Bangladesh market. Sunil Karmakar. Among others. one of the largest NGOs working with the poor. Though the rally was protesting silently holding banners in hand. Mizanur Rahman Apel. Distinguished personalities like Mr. Shahid Hussian Shamim. Ashrafuddin. Ahmed. which is a broad spectrum herbicide. Ecology and Culture) organised a protest rally infront of the Pan-Pacific Sonargaon Hotel in Dhaka where Mr.Z. This was rather a secret visit in trying to find partners to market its harmful agricultural technologies. 1998. This effort of Monsanto has been protested in other countries. The members of UBINIG. Monsanto is the proprietor of a number controversial agricultural technologies which are destructive to the food security of farmers at the household level and at the national level. "Monsanto is a Monster". Horacio Navarretti visited Bangladesh on 30th August. However. Nayakrishi Andolon and SANFEC were holding banners with slogans such as "Mr. They made contacts with BRAC. The Roundup herbicide eliminates all the green from the face of earth and the Terminator technology that Monsanto has acquired sound the death knell for agriculture. A temporary office located in Hotel Mid Way.M. Marina Chowdhury were present. Please go back". "Monsanto out of Bangladesh". the public was in support of the rally and were taking keen interest in the issue. F. Dhaka with an Indian person as incharge was taken. Horacio. Paltan. A. The environmental and farmers groups in Bangladesh and worldwide have protested against Monsanto's efforts which would threaten the livelihood of hundreds of thousands of farmers. Natasha Ahmad. It was learnt that Monsanto had already registered the Company in the name "Monsanto Bangladesh Ltd". Monsanto's skills in agriculture are in the field of genetically engineered crops designed to use more agrochemical such Roundup. Monsanto is anti-farmer" etc. His visit was not announced anywhere even from its head quarter Washington. just one month after the announcement of cancellation. . police did not let the rally stand infront of the hotel and forced the group to go on the other side of the road. and international NGO CARE to be their partners in Bangladesh.President (Development) of Monsanto Company Mr. Obaidullah Khan also joined the rally.

..5 Nomura Holdings......1) million) in FY2009.. K....... Kazi Azhar Ali. P.... compared to JPY312.......... Japan and employs Revenue / turnover 1........641.. the US......... 9 1 Nihonbashi 1 chome Chuo ku Tokyo 103 8645 JPN Phone 81 3 5255 1000 Fax 81 3 3274 4496 Web Address http://www......Another strategy of Monsanto of Mansanto was that it was keeping a link with the retired government bureaucrats such as Retired Secretary Mr... compared to an operating loss of JPY780........... Monsanto is learnt to be working in Bangladesh with somewhat clandestaine approach.192 million ($7....374 people....150.......4 Key Facts.. Page 3 © Datamonitor Nomura Holdings.373... Retired Secretary Mr.............798 million ($731.......135... asset management and merchant banking services through its various subsidiaries............................. the UK..... KEY FACTS Head Office Nomura Holdings............................ Inc.............0 (JPY Mn) Financial Year End March Employees 26..265 million ($8. It is headquartered in Tokyo.....247 million ($1.............374 New York Ticker NMR Tokyo Ticker 8604 Nomura Holdings.... The company has operations in 30 countries including Japan. Inc.. Ershadul Huq and a Deputy Secretary Mr.627 million ($3.....417.. Inc... The company recorded revenues of JPY1..... compared to a net loss of JPY708....... The operating profit of the company was JPY105........ Chowdhury in the Ministry of Agriculture... Page 4 © Datamonitor ......4 million) in FY2009................. Singapore and Hong Kong...822... Inc...5) million) in FY2010............................6) million) in FY2010......150...419............ investment banking. TABLE OF CONTENTS COMPANY OVERVIEW Nomura Holdings (Nomura) is a holding company. providing financial services such as security brokerage.. as they know that Monsanto has already achieved a bad reputation among the general public.nomura.4 SWOT Analysis.....4 million) in the financial year ended March 2010 (FY2010). TABLE OF CONTENTS Company Overview...822 million ($12...The net profit was JPY67........ At present...2 million) 2009 (FY2009)..

it had JPY73.3 trillion or $0. investment banking.8 trillion (JPY59. Page 5 © Datamonitor Nomura Holdings. risk management structure is still weak Enhanced platform and dominant position in the Japanese securities market Continued negative cash flows from operating activities Reduced exposure to illiquid assets helped turnaround at global markets division Strong capital levels and robust liquidity profile help withstand adverse market developments Opportunities Threats Intense competition in Japanese financial industry could reduce market share of the company Acquisitions and alliances could help arrest the decline in revenues and profits Entry into new markets may offset declining growth in matured markets Economic slowdown in Japan likely to affect Positive prospects for asset management business volumes industry Increasing regulatory challenges and cost of compliance Strengths Enhanced platform and dominant position in the Japanese securities market Nomura is Japan's largest securities company. At end March 2009. SWOT Analysis . Nomura’s market share in Japanese IPOs was 39% at end March 2010. At the end March 2010. through its subsidiaries. Inc. increasing competition and economic slowdown in Japan are likely to affect the company’s revenues and market share.5 trillion or $0. with a strong track record. Inc. Inc. the company’s market share in Japanese retail client assets was 35.8 trillion at end March 2009) retail client assets. The company has utilized its dominant position to offer high value added products and services. and advisory. Since 2009. As of end March 2010.7% and its market share is estimated to be around 36% at end March 2010. the company had a market share of 9% in Japanese Government bond auctions. and 11% market share in secondary bond trading in Japan. provides financial services such as security brokerage. asset management and merchant banking services. Nomura is consistently one of the top companies in Japan in wholesale securities brokerage. Company Overview SWOT ANALYSIS Nomura Holdings. However. Strengths Weaknesses Although improving.Nomura Holdings. especially in IPOs and financial advisory services. Nomura has a strong market position in many of its market segments in Japan. the company’s new platform allowed it to expand decisively from its historic Japan focus to a market that includes Nomura Holdings. underwriting.

Nomura expanded its client franchise by enhancing services related to European and Asian equities in addition to its existing Japanese equity-related business. Weaknesses Although improving.3% at end FY2010.5 billion ($4. SWOT Analysis Continued negative cash flows from operating activities Nomura cash flows have been negative for the last six years (2005-2010).2 billion) . Nomura raised JPY435.104. compared to net revenue expense of JPY157. A majority of Nomura’s executives. In the equity business.4 billion) at end FY2009 to JPY2. A case in point is the company’s losses due to its exposure to illiquid assets during subprime crisis and the management’s inability to unwind such portfolios even after coordinated capital infusing actions by governments across the globe. the global markets division recorded revenues of JPY658.780 million ($3.441 million ($7.1 trillion ($22. is still weak when compared to global peers present in Japan. In October 2009.9 billion ($13 billion) at end FY2009 to JPY3.908. Tier 1 ratio rose from 11. who are directly or indirectly responsible for risk management activities.8 billion ($42.9 billion) in 2005 to JPY1. Enhanced platform and dominant position in the Japanese securities market enables the company to be a price leader. Moreover. Inc. 2009. Strong capital levels and robust liquidity profile help withstand adverse market developments Nomura’s capital levels and liquidity profile improved in FY2010 when compared with FY2009. In FY2010. an increase of JPY581.6 million).500.5 billion ($6. 2010 was JPY2.2 billion) at end FY2010.9 billion ($30.3 billion) at end FY2010.254 million ($1.203.all of Europe and Asia-Pacific.7% at end FY2009 to 17. although improving. Page 6 © Datamonitor Nomura Holdings. Moreover. The company’s liquid assets rose from JPY1. total equity as of March 31. Nomura turned around global markets division’s performance by reducing its exposure to illiquid assets that primarily caused losses in FY2009. Inc.696. Nomura saw positive results from its expanded business platform following the acquisition of certain Lehman Brothers operations in October 2008.257 billion ($24. Total qualifying capital as per Financial Conglomerate Guidelines in Japan increased from JPY2. In addition to growth in client equity and fixed income trading in Japan. As a result. Since the company’s business is becoming increasingly international as the company is expanding its global footprint. Reduced exposure to illiquid assets should sustain profitability of Nomura’s global markets division in FY2011 and beyond. which is over four times larger.770 million ($16.7 billion) through issuance of common shares in a global offering. in FY2010.2 billion) compared to March 31.7 billion). lack sufficient experience in risk management activities. Nomura Holdings. the company also saw an increase in such businesses in both Europe and Asia. Net cash used by operating activities rose from JPY360.8 million) in FY2009. in FY2010 Nomura became a Primary Dealer in the US. Strong capital levels and robust liquidity profile help the company withstand adverse market developments. risk management structure is still weak Nomura’s risk management structure.805. the need to tighten risk management structure is all the more pressing. Reduced exposure to illiquid assets helped turnaround at global markets division Nomura’s global markets division achieved turnaround in its performance in FY2010.

Page 7 © Datamonitor Nomura Holdings. Nomura expanded its reach in the EMEA region to 14 offices in 13 countries.176. a UK-based corporate finance advisory firm. In FY2010 Nomura became a Primary Dealer in the US. Positive prospects for asset management industry The global asset management industry has been growing at a fast pace driven by the increasing demand for fund management services for private individuals. The company's unique positioning as both the leading Asian investment bank and one of the largest global investment banks is expected to help the company gain quick traction in Russia. In May 2008.530 million ($23. Nomura has numerous long-standing client relationships with Saudi government bodies. corporates and private investors. This is the first time an Asian securities firm has been authorized in the Kingdom of Saudi Arabia. With the launch of Nomura (CIS) Ltd. For instance. Nomura received Saudi Arabian securities business licence. The acquisitions have strengthened Nomura’s wholesale and investment banking businesses and expanded its global capabilities. Entry into new regions Nomura Holdings. an investment bank. In March 2007. The licence will enable Nomura to conduct capital markets. SWOT Analysis and new license wins could help the company offset the decline or stagnant conditions in developed markets. Nomura Holdings. corporate finance and wealth management activities. Nomura opened an office in Moscow. Major recent acquisitions include Instinet (2007).1 billion) in 2005 to JPY2. Continued negative cash flows from operations has constrained the company to depend more on financing activities and also cut back its investments in order to generate cash and cash equivalent assets. Opportunities Acquisitions and alliances could help expand revenues and profits Nomura has been expanding its geographic reach and strengthening its business division through acquisitions and divestitures. Nomura announced that it will provide a full range of investment banking products and services to its clients in Russia. In February 2009. Entry into new markets and new license wins may offset declining growth in matured markets In the last two to three years. In December 2009. and its specialized service companies in India (2008). Entry into Russia is expected to drive up the business in CIS countries. cash raised through financing activities rose from JPY198. a stake in Calliva Group (2007). Continued negative operating cash flows accentuate the need to increase long term borrowing which could become costlier as the need for global corporate refinancing is increasing at a rapid pace. Acquisitions and alliances could help Nomura expand revenues and profits. financial institutions. Entry into Saudi Arabia will enable the company to capitalize on opportunities in corporate finance advisory and capital markets activities in that country. Inc. equities and investment banking businesses in Europe and the Middle East. Inc. and NikkoCiti Trust and Banking Corporation (2009).017 million ($2. announced that it is acquiring Tricorn Partners. as well as deal as an agent for overseas 2010. Nomura was granted a banking license by the Dubai Financial Services Authority to provide investment banking and capital markets services from the Dubai International Financial Centre. Russia.5 billion) in 2010. Nomura has increased the pace of its entry into new markets.470 billion representing a . Lehman Brothers' Asia Pacific franchise. The global asset management and custody banks sector grew by 19% in 2007 to reach a value of $72.

Deutsche Bank. Nomura Asset Management. IMF has indicated that the world GDP will grow by 3. Inc. SWOT Analysis Increasing regulatory challenges and cost of compliance Reform of financial services industry remained a high priority for many governments 2009 through . Economic slowdown in Japan likely to affect business volumes The group generates majority of its revenues from the Japanese market. In addition to Nomura Asset Management. The asset management of the company is carried out through its subsidiary. underwriting and other business.owned securities subsidiaries and non-Japanese firms. the company also conducts its asset management business through Nomura Corporate Research and Asset Management (which manages bonds and loans in the US). Mitsubishi UFJ Financial Group and Mizuho Financial Group. and Private Equity Funds Research and Investments.compound annual growth rate (CAGR) of 13. Nomura faces intense competition in terms of price. and half as fast as the world economy in 2011. The BOJ is looking for 2010 Japan GDP growth of 1.2% points. Nomura Holdings. The company competes with competitors having larger volumes of business and greater financial resources than those of the company. The Bank of Japan (BOJ) most recent medium-term outlook is even more cautious than the IMF's growth forecast.1 trillion by the end of 2012. IMF has indicated upward revisions to US and BRIC nations. Economic slowdown in the region could affect business volume and financing facilities of the group. such as corporate advisory services. Nomura Funds Research and Technologies in Japan. Page 8 © Datamonitor Nomura Holdings. but the growth rate of Japan in 2010 was left unchanged and the 2011 forecast was actually trimmed by 0.9%. This growth is expected to drive the sector to a value of $116. The compound annual growth rate of the industry during the period 2007-2012 is expected to remain at 9. In 2010. In the FY2009. Inc.3% in 2011. High level of competition in the market place could erode the market share of the company. Nomura Funds Research and Technologies America in the US. Maintrust KAG in Germany. particularly in brokerage.The company competes with players such as Citigroup.TPositive prospects for asset management industry props up Nomura's prospects for revenue expansion.The main factors driving this growth would include the need for private individuals to make provision for their pension requirements. Japan's economy is expected to recover only one-third as fast as the global economy. in terms of delivery of value-added services to customers.3% for 2003-2007. Threats Intense competition in Japanese financial industry could reduce market share of the company The Japanese financial industry is highly competitive.The company encounters significant competition from commercial banks. commercial bank.3%.9% in 2010 and 4.

The directions of financial services industry regulatory reforms suggest that cost of compliance is likely to increase in 2010 and beyond.279. KEY FACTS Head Office Nomura Research Institute Ltd Marunouchi Kitaguchi Building 1-6-5 Marunouchi Chiyoda-ku Tokyo 100 0005 JPN Phone 813 5533 2111 Fax Web Address http://www.118 Tokyo Ticker 4307 Nomura Research Institute Ltd Page 4 © Datamonitor Nomura Research Institute Ltd Company Overview SWOT ANALYSIS Nomura Research Institute (NRI) provides consulting and systems solutions services. as the group generates over 90% of its total revenues from Japan. Targets and benchmarks for national authorities have been set by the G20. while the revitalised Financial Stability Board has been given responsibility for overseeing their implementation. profit margins for banks are likely to be suppressed. a decrease of 12. Japan.first half of 2010. The company recorded revenues of JPY341.0 (JPY Mn) Financial Year End March Employees 6. which has enhanced the brand image of the company.3% over 2008.513 million ($245.1 million) in FY2009. a decrease of COMPANY OVERVIEW Nomura Research Institute (NRI) provides information technology (IT) solution services. a decrease of 5. . Its net profit was JPY24.nri. It is headquartered in Tokyo. As a result.6% over 2008.118 people.412. the economic slowdown in Japan could affect the revenues of the company.279 million ($3.713 million ($497. and employs 6.The company primarily operates in Japan.1 million) in Revenue / turnover 341. NRI has had strong focus on quality since its inception.8 million) during the financial year ended March 2009 (FY2009). The operating profit of the company was JPY49.9% over 2008. Moreover management’s time spent on regulatory issues is likely to be higher than it had been so far. Meetings of the G20 formed the backbone of inter-governmental discussions to ensure a coordinated and consistent response. However.

systems development and the provision of solutions. NRI’s strong focus on quality enhances its brand image. proposed solutions for execution of business innovation. proposals for business and public administration. . NRI is building a quality management system. outsourcing and systems operations. NRI implemented a Two-Year Plan to Double Quality in FY2007. the company aims to reduce incidences of system fault generation by 50% by FY2010. the company holds review meetings at each project milestone. NRI-QMS based on the knowledge acquired in the past. The crucial target in quality control for information systems is to reduce system failures to zero. promoting and supporting quality control activities by individual business divisions. In addition. which was launched in FY2008. In conformity with NRI- QMS. which covers information system construction projects of a certain size. during FY2008. NRI data center system management and operation services gained ISO9001 certification in 1998. and public and private sectors.Strengths Weaknesses Dependence on specific business categories and limited capacity in technology and resources Strong focus over quality Total solutions provider Offshoring model Opportunities Threats Expansion in China Slowdown of Japanese economy Recovering financial services industry Dependence on subcontractors BPO services Competition from foreign firms Strengths Strong focus over quality NRI has been focusing on quality since its inception. Nomura Research Institute Ltd Page 5 © Datamonitor Nomura Research Institute Ltd SWOT Analysis Total solutions provider NRI provides total solutions services ranging from anticipating and resolving clients’ problems. the company determines rules and procedures related to business processes to ensure project quality. BESTWAY. Furthermore. to implementing and managing solutions. compared with FY2007 levels. The company generates revenues from financial services. Operation ITSMS. the Three-Year Plan to Double Quality. The company has also formulated and is implementing a medium-term plan in pursuit of quality enhancement. T-STAR. based on ITIL in preparation for ISO20000 accreditation relating to IT service operation and maintenance management. NRI earned a certification under the ISO9001 quality management standard. The Quality Management Division controls company-wide quality control activities. Through this plan. distribution. I-STAR. Total solutions services are divided into seven categories: projections for society and industry. NRI’s package products and multi-user system services. During FY2008. market research and business analysis. such as STAR. and support for business execution. NRI constructed an IT service management system. NRI revised the plan’s mid-term basic policy and roadmap. succeeded by a second initiative.

and Seven & i Holdings and its subsidiaries. Moreover. the company plans to begin human resources development of systems specialists in China. NRI Group’s combined sales to its major clients. There has been a particularly prominent effect from offshore operations. In FY2008.000 system engineers offshore have boosted the firm’s developmental capabilities by over 50%. As a relative latecomer to the field. the company began its efforts in China to tap the information systems market. NRI’s resources and technology are insufficient to address broader industrial sectors in the Japanese market. For instance. An inability to handle bank settlement systems. high-reliability systems. could put a considerable curb on its expansion plans. NRI could experience an enormous impact on business performance in case the business circumstances of these major clients changed or they radically reexamine their information systems strategies. and the demand for value-added. Based on this projection. the firm is not capable of developing basic bank systems. However. Offshoring model has increased its productivity and sales giving NRI a competitive advantage. In addition. the information systems market in China is focused on packaged software. The company estimates that the 4. As the Nomura Research Institute Ltd Page 6 © Datamonitor Nomura Research Institute Ltd SWOT Analysis company plans to reduce dependence on financial services and acquire clients in other industries. Offshoring model The company increased its productivity and sales using external resources. is not very high. The basic system for Seven Bank is run by Nihon Unisys. The company differentiates itself from its competitors as a total solution provider and attracts more customers. Its success in offshore operations is a result of its focus on China due to insufficient developmental capacity in Japan as well as the stable high volume of work for the securities sector. thereby. it is important for the company to enhance its resources and technology expertise. one of the most crucial system types. NRI’s dependence on few sectors and insufficient resources and technology could limit its growth in future. are highly valued by many financial institutions and hold large market shares. The cost of Chinese engineers is less than half of their Japanese counterparts. Weaknesses Dependence on specific business categories and limited capacity in technology and resources NRI is dependent on specific business sectors and has limited capacity in terms of its technology and resources. and its subsidiaries. Nomura Holdings. Its development operations consist of partnerships with over 20 Chinese firms. At present. thus increasing profitability. these systems are expected to be upgraded in the next five to ten years. NRI has no particular edge in basic corporate systems. amounted to slightly less than 40% of its total sales. Opportunities Expansion in China The company is rapidly expanding its presence in China. For FY2009.and BESTPLAN. . the NRI Group’s combined sales to the financial services accounted for a little less than 70% of its total sales. creating an opportunity for the company. NRI’s current business operations in China are confined to systems support and packaged software sales to Japanese companies that have offices in China.

and raise productivity using IT and the internet. and their Chinese subsidiaries.4 billion) in acquiring IT assets (hardware and software) to provide outsourcing back office services for Nomura Securities’ domestic retail business. but through this acquisition. which are trying to expand their business in China.NRI Shanghai has grown to become NRI’s largest consulting services location in Asia. The company aims to strengthen its presence in Asia. NRI invested JPY40 billion ($0. For financial institutions (FIs). prompting Nomura Research Institute Ltd Page 7 © Datamonitor Nomura Research Institute Ltd SWOT Analysis NRI to increase its staff in insurer-related operations. Demand related to industry restructuring is also expected with the integration of systems at Mitsubishi UFJ Securities and Mizuho Securities. The biggest sales in NRI Shanghai come from Japanese companies. introduce diversified and more sophisticated services. There is a strong demand for consulting services as Japanese companies are increasingly interested in consolidating their business operations in China. It is estimated that NRI secured several billion yen worth of new orders in the first quarter FY2010. Expansion in China could create new market opportunities for the company.5% between 2008 and 2013. NRI has established an Asia Region Systems Division and a tie-up with Mitsubishi Corporation to promote experience and expertise in the systems sector.881. Recovering financial services industry Companies in the financial services industry appear to be resuming projects that had been put on hold during the economic downturn. The securities industry is working on systems which can be used to prevent trading trouble. growing at a CAGR of 3. from the standpoint of competition and operational management. which will be a more stable. Nomura Securities’ system development and enhancement formerly comprised overlapping individual projects. In the future. The company has been involved associated in with JP Insurance systems since the 1990s. The insurance industry is its fastest growing sector. BPO services The company founded NRI BPO Services in April 2009. with a particularly rapid expansion in dealings with JP Insurance. The BPO services sector in Japan was valued at $16. The recovering financial services industry will generate incremental revenues for the company. NRI is also growing business with presence in the insurance and corporate sectors. contract-based business format. strengthen compliance. the company plans further software development investment and business investment in data centers and other facilities. outsourcing will be contracted for an annual fee.3 million in 2008. JP Insurance is likely to continue its investment in systems in order to broaden its service lineup as a private firm. Sales to other insurers such as Nippon Life and Tokio Marine are also growing. to strengthen their information systems constantly in line with the development and spread of technologies worldwide. This sector is expected to reach a . it is vital.

036.8 million by the end of the period. In addition to its operations in Japan. Companies like Infosys and Patni are planning to make acquisitions . which contracted by 0. they are also spread out in various overseas locations. TCS and Patni have material presence in Japan.value of $20. Threats Slowdown of Japanese economy NRI is over dependent on the Japanese market for its revenues. especially China. NRI fails to secure superior subcontracting partners or maintain a good business relationship with them.4% in 2009. The real GDP growth rate is further expected to contract by 5. NRI’s subcontractors were responsible for a little less than 50% of the company’s actual production.3% in 2007. behind the US. NRI has limited flexibility in its operations and is exposed to risks related to currency and other economic fluctuations in the Japanese economy. the real GDP growth rate of Japan was 2.2 billion) FY2009. In case. Competition from foreign firms Japan’s information services market is the second largest in the world. Overdependence on Japanese economy makes the company highly sensitive to the demand dynamics of the country.1 billion ($0. Dependence on subcontractors The company is dependent on subcontractors for a significant portion of its production. economic slowdown in the domestic market could affect the revenues of the company. The Japanese economy is expected to decline in 2009. the subcontracting costs of the company increased from JPY73. the group also operates in China and Singapore.5 billion ($1. The company’s new BPO operations will enable it to capitalize on the growing demand for such services. As the group generates over 90% of its total revenues from Japan. According to the International Monetary Fund (IMF). In FY2009. It is essential for the company to secure high quality subcontractors and maintain a good business relationship with these subcontracting partners in order to carry out the operations smoothly. Chinese companies account more than 10% of subcontracting costs. It is not impossible for Chinese or Indian firms to gain market share in Japanese IT industry through mergers and acquisitions. Due to its high dependence on the Japanese market. Although it is not an easy market for foreign firms to enter there have been successes such as IBM and Accenture.The company is therefore striving to strengthen these partnerships.7% in 2008. Nomura Research Institute Ltd Page 8 © Datamonitor Nomura Research Institute Ltd SWOT Analysis NRI’s subcontracting partners are not only in Japan. Moreover. Already Indian firms like Infosys. it derives more than 90% of its revenues from the domestic Japanese market. it might affect the business operations of the company. Wipro.7 billion) in FY2005 to JPY121. Currently. However.

its dominance in the domestic market could come under threat. if the company is unable to keep up with the increasingly globalized operations of Nomura Holdings and Seven & I Holdings. as there will be a need to merge foreign and Japanese information Japan. Competition from foreign firms would affect the market share of the company. This will put pressure on domestic-oriented NRI. . Furthermore.