A REPORT ON

STRATEGIC MANAGEMENT OF
NATIONAL BANK LIMITED
 Course: Strategic Management (B-408)

A Report on Strategic Management of National Bank Ltd

Submitted To

Shagufta Shahin

Lecturer

Department of Banking and Insurance

University of Dhaka

Submitted By

Group: 04

Nabila Ahmad (ID: 21-013)

Md. Rokibur Rahman (ID: 21-043)

Shafin Ahmed Ratul (ID: 21-079)

Apu Mandal (ID: 21-109)

Md. Ashikur Rahman Payel (ID: 21-151)

Shanonda Routh (ID: 21-265)

Date of Submission:
Strategic Management of
National Bank Limited
 Executive Summary

The report has been prepared to analyze the strategic management of a commercial bank.
Management strategies of a bank can be analyzed by evaluating bank‘s activities and
performances from different aspects. Mission, vision, CSR activity, Internal and external
analysis reveal the strategies a bank follows. National Bank Limited has been selected as the
commercial bank whose strategic management is to be analyzed for this report. Whole report
is divided into five broad sections. The first chapter is the formal part of the report. Here the
Objective, Methodology and Rational of the study, Scope and limitations of the report has
been described. The second chapter presents short description, mission, vision, economic
drives of National Bank Limited. The third chapter ‗Strategic Analysis‘ is the main part of the
report. It is categorized into four broad sections. The first section projects dimensions, levels,
formality and makers of strategic management process. Section four is the main part of the
report that is the analysis of operational success. The second section addresses the CSR
actives of the bank along with cost-benefit analysis. The third section describes about the
environments where the bank competes with other bank following distinctive criteria. Lastly
in the forth section strengths, weaknesses, resources, value chain analysis, distinctive
competencies of the bank has been described. Section four of the report is findings of the
report. It basically express the major significant information of the report and a gives a
summary of the report. The Last one chapter five is a short conclusion of the overall report.
The rest is references from where all the data regarding the report has been collected. There is
no recommendation part as it requires more immense knowledge to give suggestions to a
Bank.
Chapter: 01

Introduction
Objective

As a prominent private commercial bank, National Bank Limited (NBL) put great emphasis
on its strategic management. The major objective of this study is to gain a comprehensive
knowledge of the strategic management of NBL. There are some other objectives also. They
are:-

 To conduct a strategic analysis

 To identify the key strategic decision makers
 To identify the strategic management process
 To be knowledgeable about components of mission statement
 To conduct a cost benefit analysis of social responsibility.
 To have a considerable knowledge about external environment of NBL
 To identify internal strengths and weaknesses of NBL.

Methodology

This report is basically a qualitative one. It is based on data collected mainly from secondary
sources. These data has been used to various types of analysis of National Bank Limited.
Most of the required data were available in the annual report of NBL. Some other sources of
data re:-

 Website of NBL
 News papers
 Other websites

Rational of the Study

Strategic management is the set of decisions and actions that result in formulation and
implementation of plans designed to achieve a company‘s objective. An effective strategic
management is crucial for any organizations‘ long term performance. The aim of this report
is to build a link between theoretical knowledge and practical knowledge. As the world is
now very competitive, one has to be expert in both theoretical and practical knowledge.

Theoretical knowledge is incomplete without the proper application of practical knowledge.

Practical knowledge adds more value to our acquired theoretical knowledge. In fact education
becomes rich when acquired knowledge is applied to practical situations.

This report gave us an opportunity to implement our knowledge on the strategic management
of one of the best private commercial bank of Bangladesh. This report provided us with
substantial knowledge about strategic management of NBL.

Scope
The scope of the study covers strategic management issues of NBL including strategic
analysis, company mission and social responsibility, external environment and internal
analysis. The data gathered for the study is limited to the latest annual report of 2017. Trends
and economic details of NBL have come under the scope of this study. As the study is wholly
a qualitative one, no quantitative model has been used.

Limitations

Some limitations acted as barrier to more comprehensive research in relation to this report.
The limitations were:

• Because of constraints substantial analysis was not attainable.

• There were prohibitions to some crucial documents and papers.

• Due to limited time detailed discussion was not possible.

• Insufficiency associated with needed information, deficiency of experience along with

budget confinement.
 Chapter: 02

Organizational overview
 Overview of National Bank Limited

Established as the first private sector bank fully owned by Bangladeshi entrepreneurs,
National Bank Limited has been flourishing as the largest private sector Bank with the
passage of time. Keeping pace with time and in harmony with national and international
economic activities and for rendering all modern services, NBL has automated all its
branches with computer networks in accordance with the competitive commercial demand of
time. Ensuring accountability and loyalty through quality service in every aspect is the bank‘s prime
strategy.

Bank crossed yet another milestone during the year 2017 with total operating profit
ofTk.1,026.59 crore, highest among the Private sectors Commercial Banks currently doing
conventional banking business in Bangladesh.

The deposits base of Bank was increased by 13.03% to reachTk.272,771.32 million; with
continued focus towards improving low cost/core deposits mix of the Bank.

In line with our Bank‘s strategy of maintaining high asset quality, advances of our Bank grew
by Tk.38,538.08 million to reachTk.248,467.15 million; whereas average advances grew by
18.36%.Major growth was witnessed in long-term loans, commodity operations and working
capital loans. Bank‘s Total Assets base has increased by 14.75% in December 2017.

Equity position of Bank also witnessed sound growth of 12.70%at December 2017; clearly
reflecting strong financial growth prospects. The Capital to Risk Weighted Asset Ratio of the
Bank stood at 12.20%remaining well above the regulatory requirement and industry average.

With strong capital adequacy and risk management parameters in place the Bank remains
poised to capitalize on any uptick in credit appetite.

Vision

Ensuring highest standard of clientele services through the best application of latest
information technology, making due contribution to the national economy and establishing
the bank firmly at home and abroad as a front-ranking bank of the country are the cherished
vision.

Mission

Efforts for expansion of activities at home and abroad by adding new dimensions to banking
services are being continued unabated. Alongside putting highest priority in ensuring
transparency, accountability, improved clientele service as well as to commitment to serve
the society through which bank get closer and closer to the people of all strata. Uplifting the
national economic standard through continuous up gradation and diversification of clientele
services in line with national and international requirements is the desired goal the bank want
to reach.
Core Values

NBL‘s Core Values consist of 6key elements. These values bind the workforce together with
an emphasis that they are essential to everything being in the Bank. The values are-

Integrity

Open Communication

Performance Driven

Continuous Self Improvement

Quality

Teamwork
 Chapter: 03

Strategic Analysis
 3.1 Strategic Analysis

3.1.1 Dimensions of strategic decision

An organization faces numerous strategic decisions. The strategic decisions require close
attention of the strategic management of the organization. Strategic issues facing the National
Bank Limited (NBL) have the following dimensions:

1. Top management decisions: Top management understands the broad applications of

strategic decisions as well as has necessary authority to resource allocation. NBL is re-
arranging its business mix which is not possible to achieve without the help of top
management. The Board of Directors of NBL offers practical propositions and farsighted
guidelines that make the management positive to step forward.

2. Large amount of firm’s resources: A bank needs extensive resources such as people,
physical assets or money to implement strategic decisions. These resources can be
secured either internally or from an outside source. Currently NBL has 200 branches all
over the country. The number of employees grew from 4,126 in 2013 to 4,602 in 2017.

3. Long-term prosperity: When a bank makes a strategic decision, it commits itself for a
long time but the impact of such decisions last even longer. NBL is focused on its prime
strategy i.e. ensuring accountability and loyalty through Quality Service. Thus its image
and competitive advantage is tied with this particular strategy.

4. Future oriented: The strategic issues are future oriented. It requires the ability of the
managers to forecast changes. NBL has a proactive management which enables the bank
to anticipate any change. For example, NBL has set a target of establishing 10 more
branches by the end of 2018 reaching an aggregate of 210 branches country-wide.

5. Multifunctional or multibusiness consequences: Strategic issues are characterized by

multifunctional or multibusiness consequences. Such strategic decisions have impact on
more than one area of the bank. NBL puts only its customer at the core of its business
activities and quality service is its prime strategy. This decision will have impact on
R&D, HR and marketing department. However, there is a gap in this case. NBL, with
gradual expansion of its network, puts emphasis only on its marketing policies.

6. External environment: A bank affects and is largely affected by its external environment.
Bank must consider its external environment to successfully achieve a competitive
position among its competitors.NBL has adopted measures to protect the information and
communication platform from unauthorized access, modification, virus, disclosure and
destruction to ensure business continuity, data safety and security.

3.1.2 Levels of strategy

The decision-making hierarchy of NBL consists of three levels. These three levels are:

Corporate level: The corporate level of hierarchy of NBL consists of Board of Directors,
Managing Director and Senior Executive Vice President. Board of Directors, consisting of 14
members, is responsible for overall supervision and directions on policy matters. The power
of general supervision and control of the affairs of the bank is exercised by the President and
the Managing Director of the bank who is the Chief Executive. The Managing Director and
the Senior Executive Vice President make central decision and transmit it to the second step.

Business level: The second level of decision-making hierarchy is the business level. Business
level decision makers of NBL include Executive Vice President, Senior Vice President, Vice
President and Assistant Vice President. Major responsibilities of this part are to supervise,
control departments and translate the directions formulated at corporate level for individual
business departments. One major responsibility is to secure most profitable market segment
that it can protect with its competitive advantage. The most profitable market segment for
NBL is the corporate customer from where it generated BDT 5,098.90 million interest
income and BDT 1,599.10 million other operating income in 2017.

Functional level: Branch operation management lies at the bottom of this hierarchy. Their
principal task is to implement the strategic plans. Moreover, they formulate annual objectives
and short-term strategies in terms of production, R&D, financing and accounting, marketing
and human relations. Major responsibilities of this part of the 200branches of this bank are to
report to the head Office from time to time. Some of these objectives are to deliver financial
solution, technology, products and services that exceed NBL‘s clients need and demand.
3.1.3 Formality

Formality is the degree to which participation, responsibility, authority and discretion in

decision making are specified in strategic management. The strategic management system of
National Bank Limited is highly formal due to its organizational structure. It was established
on March 28, 1983and inaugurated by the then President of the People's Republic of
Bangladesh.

As NBL is a large bank, it follows planning mode of formality. The degree of responsibility,
participation, authority and discretion in decision making is embedded in the corporate
governance guideline of the bank. The bank issues compliance report under condition No.
7.00 of BSEC in a specified form.

The board is divided into several committees. The responsibility of each committee is
specified in concrete terms. The committees are:

 Executive Committee: makes decisions on credits and exposure to related parties

 Audit Committee: maintains regular contact with both external and internal auditors and
ensures that complaints and observations from the auditors are acted upon.

 Risk Management Committee: responsible for analysis of Risk Management process of

the Bank and monitoring of implementation of overall risk management policy and report
to the Board.

 Management: responsible for day-to-day operations and in this respect observes the
policy and directions of the Board of Directors.

 Accounts, auditing and internal auditor: examines the books of account and other
documents as much as required for providing an independent opinion on Financial
Statements.

 Management Information System (MIS) Committee: harmonizes all the divisions

under the same umbrella.

 Management Committee: Under the authority of the members, it oversees the day-to-
day running of the NBL prepares decisions for Directors and ensures that these are
implemented.

 Assets and Liabilities Management Committee (ALCO): maintains an overview of the

Bank‘s Balance Sheet, proposes policies concerning the structure of assets and liabilities
and the coordination of risk, capital, funding and liquidity matters.

 Anti-money laundering Committee: implements a comprehensive anti-money

laundering program, written policies and procedures, designated anti-money laundering
personnel and special monitoring software.

3.1.4Strategy Makers of NBL

The ideal Strategic management team includes decision makers from all the three company
levels- the Corporate, Business and Functional levels. In a nutshell, they should include-

 CEO

 Product Manager and

 Heads of functional areas

In NBL, The strategic planning approach in is top-down. Top management formulates

strategy at the corporate level, and then it is transmitted through the division to the individual
objectives. Boards of directors or Executive committee are responsible for setting the
strategies.

In this process, lower level manager are detached in making strategies, even brainstorming of
lower level manager is absent in decision-making and planning process. So, this is the gap
between the ideal and actual Strategic Management Team for NBL.

3.1.5 Strategic Management Process

Though firms with multiple products, markets and technologies tend to use more complex
SM systems, there are several components in a SM model that are similar for all the firms:

a) Company Mission: The mission of the National Bank is to become one of the leading
Banks in Bangladesh by its prudence, fair and quality of operation.

b) Internal Analysis: Main strength of NBL is its Human resource. Highly efficient work
force helps the bank to hold its competitive position in the banking industry.

c) External Analysis: Political, social, technological, economic environment always affect

the operation of the bank significantly. As our banking industry is oligopoly based and
other banks offer similar services NBL tries to offer the services at lower costs.

d) Strategic Analysis and Choices: The strategies of NBL support its vision of making
contribution to the national economy and establishing firmly at home and abroad as front
ranking bank through providing best financial services. The strategy is focused on being a
more conservative, ‗through the cycle‘ relationship based business. They have a well
diversified financial services and have largest branch network and to provide Banking
services among the corporate, retail & SME sectors.

e) Long-Term Objectives: NBL is one of the promising banks in terms of -

- Profitability and ROI

- Providing highest quality of services to the customers

- Competitive position

- Technological leadership
 - strong and sustainable shareholder returns

- Employee relations and development

- Public Responsibility

- Delivering sustainable growth.

f) Generic Strategy: NBL provides differentiated quality services at lower costs.

g) Grand Strategies: to achieve the long term objectives, NBL uses market development,
product development and innovation strategies.

As the financial services industry is a very competitive industry, the main strategy of
NBL is the organic growth – to build branches and strengthen their distribution network.

The principle strategies are –People, Profitable Growth, Execution, Credit Quality,
Customer Centered, Ownership and Efficiency

h) Action Plans and Short Term Objectives: different action plans are taken and
implemented. NBL also rewards the best employees for their outstanding performances.

i) Functional Tactics: several strategies are used to attract potential customers or cross
selling products to the existing clients through interaction and information sharing.

j) Restructuring, Reengineering and Refocusing: involves internal focus- getting work

done more efficiently and effectively.

k) Strategic control and Continuous Improvement: The bank has strict control over its
all-organizational activities. NBL has an audit and inspection department to take
controlling measures in internal operations and preparing report.

NBL has zero gaps with the expected scenario in this portion.

3.1.6 Strategic Management as a process

Process is a series of sequential interrelated stages to achieve the goal where flow of
information is a must. It helps to translate the objectives and strategies of the organization
into performance and time-related measures.

Strategic management refers to a managerial obligation that determines the long-term

performance of the organization. An organization‘s mission and values forms the basis that
the organization is built upon.

Viewing the Strategic Management as a process has several important implications:

a) Change- a change in any component will affect several or all the other components.

b) Sequence- the strategy formulation and implementation are sequential. It begins with
developing the mission or vision and ends with evaluation and control.
c) Feedback- Analyzing of post-implementation results that are essential to enhance future
decision making is defined as feedback. The Strategy makers of NBL carefully analyze
the internal and external factors. The strategies can also be changed based on the
modifications in the mission statement.

d) Dynamic-NBL has been flourishing as the largest private sector Bank with the passage of
time after facing many stress and strain. The entire system is now automated. Moreover,
considering its forth-coming future, the infrastructure of the Bank has been
rearranging. In addition, effective and diversified approach is going to be taken on a
continuous process by developing and expanding rural, SME financing and offshore
banking facilities.

To have sustained growth, broaden and improve range of products and services in all areas of
banking activities with the aim to add increased value to shareholders‘ investment and offer
highest possible benefits to the customers-are the Strategic Priority of NBL. The bank has a
strong team of highly qualified and experienced professionals, together with an efficient
Board of Directors who play a vital role in formulating and implementing policies.
 3.2 Company mission and Social Responsibility

3.2.1 Questions Addressed

Why is this firm in business?

National Bank Ltd. was established as the first private sector bank fully owned by
Bangladeshi entrepreneurs with the focus of providing modern banking facilities to the mass
people by giving due importance on opening branches in rural areas alongside urban areas.

What are their economic goals?

The bank got priority as a pioneer in different sectors for taking innovate steps in
development of country‘s economy and upgrading the socio-economic status of rural people.
They greatly focus on providing modern facilities to rural areas as they think that country‘s
economic development depends much on the development of rural areas.

What is their operating philosophy in terms of quality, company image and self-
concept?

Efforts for expansion of their activities at home and abroad by adding new dimensions to
their banking services are being continued unabated. Alongside, they are also putting highest
priority in ensuring transparency, accountability, and improved client service as well as to
their commitment to serve the society. Their effective and diversified approach to seize the
market opportunities is going on a continuous process to accommodate new customers by
developing and expanding rural, SME financing and offshore banking facilities.

What are their core competencies and competitive advantages?

i. Since the very beginning, the bank has exerted much emphasis on overseas operations
and handled a sizable quantum of homebound foreign remittance. It has drawing
arrangements with 415 correspondents in 75 countries of the world, as well as with 37
overseas Exchange Companies located in 13 countries.

ii. NBL was the first domestic bank to establish agency arrangements with the world
famous Western Union in order to facilitate quick and safe remittance of the valuable
foreign exchanges earned by the expatriate Bangladeshi nationals. This has meant that
the expatriates can remit their hard-earned money to the country with much ease,
confidence, safety and speed.

iii. NBL was also the first among domestic banks to introduce international Master Card
in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power
Card. The Bank has in its use the latest information technology services of SWIFT
and REUTERS.

iv. NBL focused on all key areas covering capital adequacy, maintaining good asset
quality, sound management, satisfactory earnings, and liquidity. As a consequence, it
 was possible to a record growth of 175.51 percent in the year under review over the
preceding year.

v. To support the banking needs of the foreign investors, NBL stepped into a new arena
of business and opened its Off Shore Banking Unit to serve the wage earners and the
foreign investors better than before.

What customers do they serve?

National Bank Limited serves customers of all arenas including:

i. Customers and users of goods/products and services;

ii. Suppliers-both backward and forward linkages; and

iii. Service providers and receivers of all categories.

What are National Bank’s views on responsibilities?

 Responsibility to Shareholders

a. Should preserve the lawful benefits and interests of their shareholders;

b. Should make utmost endeavor to maximize profit and increase payout ratio for the
stakeholders; and

c. Should make best effort to maximize company profit and manage the same
ethically and properly.

 Responsibility to Customers

To satisfy the customers-needs efficiently, it is required to:

a. Understand and honor the customer needs, as well as serve them indifferently,
promptly and honestly;

b. Ensure complete secrecy of customers‘ account information at all times unless asked by
any competent court or any other lawful authority;

c. Issue notice with reasonable time in case of closure of bank accounts for any legitimate
reason;

d. Provide customers with requested account statement accurately and promptly;

e. Keep the customers updated regarding any suspicious operations in his account;

f. Exercise due diligence in the operation of customer accounts; and

 Responsibility to Community/Society
 All banking and other financial activities must be complied with the recognized/established
legal, regulatory, as well as social/community norms, customs and values.

 Commitment to the Environment

Emphasizing on the areas of energy and climate change while lending, bankers
would support the process of sustainable economic growth of the country. Bankers must
have firm commitment to choose and do the right things, along with the compliance of legal
requirements. They must consider structural and non-traditional risks management
options that inherent to banking and other financial activities side by side with the
management of traditional financial risks, such as credit risk, market risk and
operational risk etc. Risks inherent to environmental and social events/activities also need
to be taken into consideration.

3.2.2 Components of the Mission Statement

The mission statement of the National Bank Limited is based on some philosophy that depicts
the undermining objectives and goal of the bank. Philosophies that reflect in the mission
statement of the bank are as follows—

Customer market: They cherish to ensure highest standard of client services through the best
application of latest information technology.

Product service: Serving all classes of people offering assistance and versatile financial
services.

Concern for survival: Banking companies have lifelong existence. NBL has opted for
strategies that serve all its stakeholders‘ interest that will help to survive in the long run.

Concern for Public image: bank is making contribution to the national economy and
establishing their selves firmly at home and abroad as a front-ranking bank of the country

Self concept: Bank maintains a self concept of valuing its human resource the most.

3.2.3 Social Responsibility

Economic Responsibilities

a)National Bank Limited foundation was established in 1989 to fulfill the responsibilities of
welfare for the society. National Bank Public School and College in Moghbazar, Dhaka
has been established.

b) National Bank Limited has been continuously creating new fields of employment every
year by way of expansion of its business activities and branch networks. The Bank
consolidated the "One-Bank One-Family" concept since its inception and sought to create
a work culture that excites and motivates staff.

c)National Bank Limited has a tradition of patronizing and sponsoring sports and cultural
activities of the Country.
Legal Responsibilities

a) All new employees joining in bank as well as existing employees are required to
commit to a code of conduct of Human Resource Division and duly sign a
statement of compliance attesting the same.

b) All employees must follow the Anti-Money Laundering Policy of National Bank
Limited meticulously. Employees of National Bank Limited shall exercise requisite
diligence in selecting those with customers/counter- parties while conducting business.
They shall adhere to processes in place for checking the credit and character of
customers and counter parties. These processes ensure customer‘s due diligence and
ongoing monitoring of their customers to detect suspicious transactions during the
entire period of the relationship.

c) Employees shall be vigilant about the frauds, theft or illegal activities and shall not
engage in such activities at any cost. If any such activity comes into any employee's
notice, he/she shall immediately report the same to his/her immediate superior/s or
management to protect the interest of National Bank Limited.

Ethical Responsibilities

a) National Bank Limited has donated 75,000 blankets to the Honorable Prime Minister‘s
Relief Fund under its CSR activities to support the cold affected distressed people of
the country.

b) NBL and UCEP- Bangladesh signed a project named as ‗Industrial Sewing Operation‘
training program with an aim to eliminate unemployment and uplift the living standard
of the under privileged ―Shaontal‖ tribal people live in Rajshahi region.

c) National Bank Limited has donated Tk.5.00 crore to Prime Minister‘s Relief Fund
under its CSR activities to support the Rohingya Refugees.

d) In 2007, National Bank Limited donated to help the victims of flood, for relief
operation of landslide victims and for Sidre victims to the relief fund of the Chief
Advisor and the Army Chief.

e) On 10th March, 2009 a Payment Order for Tk.25.00 Lac has been handed over as a
donation/financial assistance to the bereaved family members of the martyred Army
Officers killed in the BDR carnage held on 25th February, 2009.

3.2.4 Cost-Benefit Analysis of CSR of NBL

 Costs

i. NBL contributed Tk, 8.12 Lac to various educational sectors, sports and cultural
activities.
ii. NBL has contributed Tk. 160.12 Lac as medical expenses to its employees and others.
 iii. In 2009 the amount of donation in sports was 4.65 lac Taka and it is increased
substantially to 64.65 lac Taka.
iv. National Bank Limited has donated Tk.5.00 crore to Prime Minister‘s Relief Fund under
its CSR activities to support the Rohingya Refugees.
v. National Bank Limited donated Tk. 40.00 Lac to help the victims of flood, Tk. 20.00 Lac
for relief operation of landslide victims and Tk. 50.00 Lac for Sidr victims.
vi. In 2010, NBL contributed Tk. 54.65 lac to various sports league of the nation.

 Benefits

As a consequence of CSR activities, it was possible to a record growth of 175.51 percent with
Tk. 8,809.40 million pre-tax profits in the year under review over the preceding year. Other
benefits include:

i. Better brand recognition

ii. Positive business reputation
iii. Increased sales and customer loyalty
iv. Operational costs savings
v. Better financial performance
vi. Greater ability to attract talent and retain staff
vii. Organizational growth
viii. Easier access to capital
 Costs savings

By reducing resource use, waste and emissions, NBL helps the environment and saves money
too.

Finding and keeping talented staff

Being a responsible, sustainable business makes it easier to recruit new employees or retain
existing ones for NBL. Employees are motivated to stay longer, thus reducing the costs and
disruption of recruitment and retraining.

Other benefits of CSR to companies

By acting in a sustainable, responsible way, NBL also finds it easier to:

 Access to finance - investors are more likely to back a reputable business

 Attract positive media attention - when taking part in community activities

 Reduce regulatory burden - good relationships with local authorities can often make
doing business easier

 Identify new business opportunities - for development of new products or services

3.2.5 Effect of CSR in Mission Statement

From the tag line: ―Winning an everlasting seat in the hearts of the people as a caring
companion in uplifting the national economic standard‖ it is clear that National Bank Ltd. is
proactive in its approach to CSR. Their mission statement is all about ensuring modern
banking facilities even to the remote areas of the country, providing the best customer service
with excellence and achieving company‘s goal in comply with all components of company‘s
social responsibility.
 3.3 External Environment

The factors beyond the control of the firm that influence its choices of direction and actions,
organizational structure, and internal processes are known as external environment. External
environment can be divided into three interrelated subcategories:

I. Remote Environment

II. Industry Environment

III. Operating Environment

3.3.1 Remote Environment

The remote environment comprises factors that originate beyond, and usually irrespective of
any single firm`s operating situation. Actually remote environment describes the PEST
Analysis.

PEST is used as a tool by banking industries to track the environment they‘re operating in or
are planning to launch a new project/product/service etc. PEST is a mnemonic which in its
expanded form denotes P for Political, E for Economic, S for Social and T for Technological.

There are certain questions that will be addressed with the PEST analysis of National Bank to
get an idea of what things to keep in mind. These are:

 What is the political situation of Bangladesh and how can it affect National Bank Limited?

 What are the prevalent economic factors of Bangladesh as well as National Bank Limited?

 How much importance does culture has in the market and what are its determinants?

 What technological innovations are likely to pop up and affect the banking structure?

 Are there any current legislations that regulate the banking industry or can there be any
change in the legislations for the industry?

Political Environment: The direction and stability of political factors are a major
consideration for defining the legal and regulatory parameters within which bank must
operate. The political environment of National Bank Limited includes:

 Governmental attitudes towards foreign banks

 Strength of opposite parties

 Stability of government

 Foreign policy etc.

Actually NBL follows the rules and regulations of government who holds the authority and
build a relationship with that govt.
Economic Environment: Economic factors concern the nature and direction of the economy
in which a bank operates. Because consumption patterns are affected by the relative affluence
of various market segments each bank must consider economic trends in the segments that
affect the industry. On both the national and international level National Bank Limited
considers the following factors:

 General availability of credit

 The level of disposal income

 The propensity of people to spend

 Prime interest rate

 Inflation rate

 Trend in the growth of the gross national product (GNP).

Social Environment: Social factors that affect a firm involve the beliefs, values, attitudes,
opinions, and lifestyles of persons in the firm`s external environment as developed from
cultural, demographical, religious, educational, and ethnic conditioning. NBL is continuously
working for optimizing the value of all its stakeholders, business and the society. It does its
utmost to create value for all internal and external stakeholders by establishing
understandable and measurable links between bank‘s operations and their positive impact
upon stakeholders‘ expectations.

The Bank‘s CSR is rooted in its Corporate Governance philosophy, which in turn is woven
around Bank‘s commitment to ethical practices in the conduct of its business, while striving
in the constant quest to grow with profits and enhance shareholders value and align interests
of the shareholders, stakeholders and society.

Technological Environment: The fourth set of factors in the remote environment involves
technological change. To avoid obsolescence and promote innovation, a firm must be aware
of technological changes that might influence its industry.

National Bank is the private sector bank to realize the importance of technology for
Bangladesh market and introduced on-line banking. Due to various obstacles the IT
development process slowed down in the past few years. However, to meet the customers
demand in this competitive market, NBL management, once again, turned their focuses on
the IT sector. Under the guidance of the management, the IT Division of the bank designed a
plan. At first, the management has decided to build communication infrastructure for the
institution and advised the IT division to bring all its branches under one communication
network. Twenty-four hours banking service is increasingly getting popular among the
customers of all ages. Witnessing such facts, National Bank has launched Q-Cash ATM
service at various locations within Dhaka and Chittagong for its customers.
3.3.2 Industry Environment

Industry environment means the general conditions for competition that influence all
businesses that provide similar products and services. Industry Environment Analysis is a
study or exercise done to assess the current industry environment. Generally, industry
analysis is done by external research agencies, consulting firms or businesses themselves.

Porter`s Five Forces: Porter`s Five Forces is a simple but powerful tool for understanding the
competitiveness of business environment, and for identifying firm strategy`s potential
profitability. For example, one may take fair advantage of a strong position or improve a
weak one, and avoid taking wrong steps in future.

Porter`s Forces` effect on NBL: He identified five forces that make up the competitive
environment, and which can erode your profitability. These are:

1) Competitive Rivalry: This looks at the number and strength of NBL`s competitors. How
many rivals do they have? Who are they, and how does the quality of their products and
services compare with NBLs?
NBL is a private commercial bank operating in Bangladesh. At present there are 40
private commercial banks in Bangladesh. These 40 banks are providing almost same
types of services to their customers. So in this perspective NBL has to compete with its
39 competitors who are currently operating banking business in Bangladesh.
2) Supplier Power: This is determined by how easy it is for suppliers to increase their
prices. How many potential suppliers do you have? How unique is the product or service
that they provide, and how expensive would it be to switch from one supplier to another?
Since NBL is a private commercial banking firm, it has no suppliers. So suppliers can`t
influence.
3) Buyer Power: NBL is a private commercial bank. The customer of banking sector can`t
influence the price of products and services.
4) Threat of Substitution: Almost all commercial banks are providing same types of
services. So the customers have many substitutions available. So it is a threat for NBL.
But NBL has some differentiated products. The are-

FC Deposit: A foreign currency fixed deposit is a time deposit issued by NBL bank to
investors who would like to keep foreign currency for future use or hedge against foreign
currency fluctuation. The money cannot be withdrawn until the agreed fixed term has
expired.

Double Account: National Bank Limited offers Double Benefit Account for its
customers. The benefits under this scheme shall become double in 7.5 years. Account
holders are offered with free Life Insurance Policy under this scheme

Century Account: a 100 days deposit scheme for individual and organization to mobilize
fresh deposit from mass market.

5) Threat of New Entrant: Any industry`s position can be affected by other's ability to
enter market. So, think about how easily this could be done. How easy is it to get a
 foothold in your industry or market? How much would it cost, and how tightly is sector
regulated? NBL is old bank established in 1983. So there is no threat of new entrants for
NBL. Moreover NBL also engaged with offshore banking.

3.3.3 Operating Environment

The operating environment, also called the competitive or task environment, comprises
factors in the competitive situation that affect a firm‘s success in acquiring needed resources
or in profitably marketing its goods and services.

Competitive position

NBL forecast its potentiality by constructing competitors‘ profile considering the following
factors –

 Market share of major competitors

 Their financial position
 service quality
 technological position
 advertise and promotion effectiveness
 sales and distributions

Customer profile

 Plan strategic operations

 Anticipate changes in size of markets
 Reallocate resources to support forecasted shifts in demand patterns
 Segment the customers according to geographic and demographic segmentation strategy

Human Resource

NBL has a reputation as an employer and they select the people with needed skills
 3.4 Internal Analysis

3.4.1 Resource based view of the bank

Resources

The human capital policy of National Bank is based on the recognition that its people are its
most valuable asset. They bring products to life, give a face to National Bank and enable
customers to experience the Banks‘ vision and value proposition. The valuable intangible
assets for the bank are its brand image, customer satisfaction and reputation

‗Skilled employee‘ cannot be made inimitable but the employee attitudes and customer
satisfaction with their services are inimitable resource for NBL. National Bank makes their
valuable human resource scarce by providing job satisfaction in the following ways-

 Giving Priority to People

The Bank‘s Human Capital policy places its workforce at the centre. The Bank‘s recruitment
and career development policies provide equal opportunities for all citizens in the country.
The manner in which the Bank has managed its people has been a crucial contributor to the
Bank‘s success. The Bank is nurturing and building the skills and competencies of staff to
meet current needs and to create a wealth of knowledge for the future. Bank creates a
dedicated team who are passionate and who initiate, direct and synergies their common
creativity towards achieving continuous excellence.

 Knowledge Acquisition

Structured knowledge acquisition is a key aspect of the Bank‘s knowledge management

strategy. An exhaustive skills inventory was done early in the year in order to assess skill
gaps that exist and to determine concretely the training and developmental interventions that
need to be made. The HRM Division interacted closely with the line managers and
specifically with the Operations Division to review the Bank‘s skills inventory.

 Knowledge Enhancement

At the managerial level bank has develop a pool of managerial talent that is equipped with the
skills to respond to strategic needs, succession challenges, challenging political environments
and power organizational changes for the future. The Bank‘s front-line staff interacts with
customers and the bank is giving them the technical and product knowledge skills. The
National Bank Training Institute (NBTI) of the Bank provided training in several areas such
as technical skills, soft skills, branch manager orientation, IT, back office, training for
management trainees, Junior Executive Officer development programs.

 Training and Education

All newly recruited employees are inducted through a comprehensive orientation program
prior to their placement. Further, they are provided with on the job training based on standard
training modules in addition to customized training programs as needed.
Some other policies are-

 Diversity and equal opportunity

 Leadership and management capability
 Wages Policy and Labor Management Relations
 Health Plan
 Benefits Policy and Regime
 Future Outlook

3.4.2 Conducting a value chain analysis

Value Chain is a perspective in which business is seen as a chain of activities that transform
inputs into outputs that customer values. The value comes from differentiated product, low
cost operation and quick service.

National bank conducts its value chain analysis to understand the effectiveness of customer
value it is creating. For a bank providing banking service is the main activity along with some
secondary activities.

Identify Activities

Primary services Secondary Services

 Offer Deposit Product  Correspondent banking

 Offer Credit Product  Agency Services
 Card Service  Social Responsibilities
Allocate Cost
Interest rate paid on the deposit products are the main sector of cost. It is actually the cost of
raising fund that National bank use as its working capital and lending credit to the borrowers.
The rate of interest is determined according to the guideline set by the Bank‘s authority.
Another sector where cost must be determined is processing a credit facility. Bank has
efficient Credit department to do the task. After setting a profit margin and forecasting the
returns bank set all its outflow of fund. Along with Bank‘s internal credit policy it maintains
the guideline of Bangladesh Bank.
Identify the activities that differentiate the firm
The differentiated service that has created National Bank‘s competitive advantage is Card
services. National Bank Limited introduced Credit Card first ever in Bangladesh in 1997
among the local banks as a principal member of MasterCard International. Thereafter in
2003, National Bank Limited obtained principal membership of Visa Worldwide and
introduced Visa Credit Card in the country. Now it produces Platinum, Gold, Classic Master
Cards EMV Chip Based Platinum, Gold, Classic Master Card and Visa Card with most
advanced technology for security.
Examine the value chain

National Bank is doing banking in Bangladesh with great success since 1983. Winning an
everlasting seat in the hearts of the people as a caring companion in uplifting the national
economic standard through continuous up gradation and diversification of clientele services
National Bank limited is running successfully. It is now a brand that customer from home and
abroad values undoubtedly.

3.4.3 Position in SWOT analysis diagram

According to the SWOT analysis diagram National Bank Limited own some internal strength that
enables the bank to sustain in the competitive banking industry. Still there remain some threats
which are more like risk to the bank. The strengths and treats ate discussed below-

Strength

NBL’s prime strength is there reputation in private banking industry as well as a firm customer
relationship with a positive image. Followings are other vital strengths-

 Wide spread 200 branches all over the country

 An innovative and modernized technology services such as SWIFT, REUTERS and electronic banking
 Well equipped internal working environment.
 Wide range of customer base and is operating efficiently in this country
 Bulk of qualified, experienced and dedicated human resources
 Satisfactory Business Growth
 Diversified Product Lines
 Social Welfare services

Threats

 Credit Concentration risk

 Settlement risk
 Market risk
 Interest risk
 Foreign exchange risk
 Communication Technology Risk

To resolve the threats and turn them into advantages National bank is working relentlessly. It
has a Risk Management Committee to identify risks, control, and monitor and implement risk
management policies. The main objective of risk management is the protection of NBL‘s
financial strength. National Bank is following the BASEL I, BASEL II and BASEL III to
mitigate all the risks.

3.4.4 Sources of distinctive competence at industry evaluation

National Bank is the first generation bank in the banking industry of Bangladesh. The
banking industry itself is in the growth stage now. National Bank Limited is maintaining its
competencies as it should be. In the growth stage of its life cycle the bank creating some
distinctive attributes in different functional areas.

Marketing: Creating brand image, reducing margin, strengthening customer relationships

and developing new channels like lease financing, green banking and digital banking.

Serviceoperations: adding product variation, lowering costs; improving service quality

Finance: Every year financing expansion, has net cash outflows but with increasing profits;
has bulk of qualified human capital to support service improvements

Personnel: day by day adding skilled personnel; creating motivated and loyal workforce
Chapter: 04

Findings
1. National Bank Limited has matched all the dimensions of strategic decision with only
gap in multibusiness consequence.
2. The key strategy makers of NBL include CEO, Product Manager and Heads of
functional areas.
3. NBL considers strategic management as a process with zero gap with this regard.
4. The mission of NBL addresses its motive to be in the business along with high
priority on transparency and accountability, its goal to uplift economic standard and
serve the customer best.
5. NBL meets its social responsibilities in terms of economic, legal and ethical
responsibilities.
6. NBL contributed a considerable amount of money in educational, sports, cultural
activities, medical expenses to its employees of TK 160.12 lacs, PM‘s relief fund for
Rohingya refugees and victims of flood.
7. The CSR activities of NBL resulted in 175.51 percent growth in its pre-tax profits in
the years under review.
8. The PEST Analysis of NBL reveals that it follows govt. rules and regulations strictly
in order to build a relationship with govt., take into account important economic
factors like level of disposable income, inflation rate, prime interest rate, works to
optimize value of all its stakeholders, puts emphasis on IT such as online banking and
Q-cash ATM service.
9. According to Porter‘s five forces model NBL has a number of competitors, no
influence from both suppliers and buyers, threat from availability of substitutes and
no threat from new entrants.
10. The most valuable resources of NBL are employees, brand image, customer
satisfaction and reputation.
Chapter: 05

Conclusion
The objective of the report was to evaluate the Strategic Management of National Bank
Limited. The study has been conducted by analyzing different aspects of strategic
management. The study also aimed at finding the gaps between theoretically established
requirements of strategic management and National Bank‘s strategic management. Basically
study showed difference between theoretical assumptions and reality. The different aspects
from which a bank‘s management strategies can be understands have been analyzed in this
report. Strategic analysis, Corporate Social Responsibilities, internal and external
environment of National Bank Limited has showed its aim, strength, risks, operational goals,
long term plans etc.

Almost all commercial banks in the country follow similar strategies for growth,
sustainability and prosperity. So National Bank Limited has developed management
strategies that have create some competitive advantages. The overall analysis conducted
throughout the report implies that National Bank Limited as one of the pioneer bank in the
banking industry competing successfully by coordinating all its goal oriented strategies.
 Reference

1) National Bank website- www.nblbd.com

2) National Bank Limited- Annual Report 2017
3) https://www.daily-sun.com/post/278460/2017/12/29
4) http://businessnews24bd.com
5) https://www.bangladeshpost.net