DEPARETEMENET OF SCHOOL OF GRADUATE STUDY

MASTER OF BUSINESS ADMINISTRATION

(MBA)
Business Policy and Strategy Individual Assignment
Section: - 13
Submitted by: - Name:

ID No:

Submitted To:

November 15, 2022

Addis Ababa-Ethiopia
 1. Introduction
1.1. Background of the company
The Great Abay River is a dramatic spectacle and a symbol of natural strength and grandeur. It is
not only a magnificent sight to visit, but also a river with immense potential for our country’s
development. This tremendous natural strength similarly explains why we are named Abay. We are
here to foster growth and development by promoting and financing different sectors, thereby
generating employment opportunities and accelerating capital formation, by ensuring a safe, stable
and sound financial system. By the same token, Abay Bank aspires to be an engine of growth and
development in the financial sector for the farmers, business men and other customers. We are here
to lead the way to financial empowerment.

Abay Bank was officially established on July 14, 2010 and started operation on November 4,
2010.Its head quarter is Addis Ababa Jomo Kenyata Avenue, around Bambis, in front of NOC Gas
Station, Zequala Complex. Currently the bank has more than 5000 shareholders. The bank has
disbursed dividend to its shareholders starting from 2012 fiscal year. Today Abay Bank reached
more than 285 branches w/c are integrated into the core banking system so as to provide full-
fledged banking services with the state-of-the-art technology for extended hours beyond the normal
working hours. Abay Bank planned to open other branches in Addis Ababa and other parts of the
country with the aim of serving customers at their convenience.

Currently the bank has providing various banking service. Among those services some are
Customer Account Services (Saving Deposit, Demand Deposit, Fixed Time Deposit, etc),Loan
Account Services, International Banking services, Foreign Exchange Services, Local and
international Money transfer services, Children’s Special Saving Account Services, Youths’
Special Saving Account Services, Women’s Special Saving Account Services, Education Saving
Account services, Gift card Saving Account Services, Club Saving Account Services, Charity
Saving Account Services, Van Banking Service, Muday Saving Account Services, Senior Citizens
Saving Account Services, NGO employees Credit Services, Interest Free Banking Services, Abay
Bedeje - Agent Banking Service, Abay Card Banking Services, Abay Mobile Banking Services,
Abay Online - Internet Banking Services.

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What Makes Abay Bank Unique from Other Banks?

 Abay Bank serves till 9:00 PM Monday to Saturday;

 Abay Bank provides fast and modern banking services;

 Abay Bank provides consultancy and financial support for entrepreneurs;

 Abay Bank provides professional advice for clients in order they become successful in
their business;

 Abay Bank works in partnership with clients on viability of projects.

Based on the data provided we reviewed that Abay Bank s.c is one of youngest and most influential
private bank w/c was stablished based on Commercial code of Ethiopia 1960 and NBE
proclamation No

1.2. Strategic directions and strategic objectives

1.2.1. Vision
 To become a premium bank
1.2.2. Mission

We are committed to satisfy the expectation of stakeholders by providing full-fledged banking

service through deploying state or art technology and competent human resource.
1.2.3. Core values

 Customer satisfaction

 Integrity

 Team work

 Innovation and scale up

 Employee satisfaction

 social responsibility

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 1.2.4. Motto

Abay: TrustworthyBANK (ዓባይታማኝአገልጋይ)

1.2.5. Logo

2. Marketing Strategy and Implementation

Strategic planning is the process of matching organizational resources and competences against
desired organizational targets through external and internal environment analysis, competitors’
analysis, market analysis, market trends, and form strategies to achieve goals and objectives and
create value for the shareholders, company and for all the stakeholders.
2.1. Internal strategic analysis

According to the bank’s article it helps to give an overview of the functioning of the bank. By
using of various techniques the bank assesses and analyzes its strengths and weaknesses, and
establishes a strategy that will help to improve the image of the company. Abay bank’s internal
investigation starts with evaluating the performance and future potential of the bank and its
capacity to grow.
The strengths of the bank describes that the company excels in and what its unique service point
that separates it from its competitors, fast pace of branch expansion, introduction of new deposit
banking products , aggressive move of the bank management for the bank business growth
,existence of good image and reputation from the public , evening time service delivery ,growing
customer base, continued support and branch visit by the top management, regular follow up of
branches deposit mobilization performance
Abay bank S.c believe that it should have to identify and taking corrective actions in order to
overcome the weakness. Weaknesses stop a company from performing to its full potential. These
factors can include: Poor service quality and weak customer oriented approach, some branches
are highly dependent on few individual or corporate customers for deposit mobilization, lack of
communication and marketing skill (cross selling skill) among branch staff, Lack of initiation
(engagement) of branch to implement new deposit products

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 2.2. External strategic analysis
After the company reviewed and completed its internal analysis, then the bank moves to the
external review. The bank believes that many external factors can act as a roadblock to the
company’s growth.
The external environment affects the strategic planning, market position, sales and management
abilities and skills to compete effectively in the changing business environment (Campbell, and
Edgar, 2011). The external environments has different political, economic, social, technological,
ecological, and legal factors (PESTEL) competitors’ analysis, and analysis of its own company,
market analysis, and the managers form strategies to achieve goals and objectives and achieve
competitive advantage.
2.3. PESTEL Analysis

Political -The political situation of Ethiopia can be said to be stable for banking industry after
reform has made. Ethiopian's government has strived to improve private sectors including
banking development w/c help its operation in a stable area. Under an environment of relatively
stable, it might be able to attract many eyes of investors to operate banking industry, which will
help the development of the banking sectors.

Economics- As is well known, Ethiopia is one of rapid economic developing country in Africa
and sub Saharan countries. Sustained domestic economic growth is expected to stimulate the
banking services even further; Growth of the middle income class continues to create more
demand for modern banking services, Implementation of GTP2 and its stimulating effect in
playing a catalyst role, huge untapped market. But Ethiopia's economy is almost all dependent on
imports it may cause the irregularity of foreign currency

Social cultural – Ethiopia is a multi-ethnic country. Expansion of education and high

population growth and expansion of urbanization are likely to induce greater demand for
banking products. But poor saving habit and unfair practices may consider as threat.

Technological – Abay bank continues to adopt and use of state of art modern technology and
improve its capabilities by creating effective technology vendors and suppliers.
2.4. Industry environment

Industry Environment is the set of factors that directly influence a firm and its competitive

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actions and response.
2.5. Porter’s five force analysis for the Abay Bank S.C’

We tried to relate the bank’s profit potential and overall performance is a function of the five
forces of competition.
Threats of new entrants – According to the article the bank believe that new entrants in the
banking industry is impossible to enter the industry and to offering the trustful and the full range
of services, because they need huge amount of investment and high level of rules and regulations
imposed by the government.
Bargaining power of supplier: This means that the power of these suppliers needs to be
assessed by any company looking to enter the industry. Customer Deposits, Mortgage and Loans,
Loan from other institutions. Strong supplier of ‘Abay Bank’ will have a long term impact on
entity's value, profitability, quality of its service. By diversifying and expanding its customers
base and source of deposit mobilization around can help the bank to reduce suppliers' power.
Bargaining power of buyer: refers to the pressure that customers can put on the bank to get
them to provide higher quality of service, better customer service from the bank. So the bank can
reduce the buyer power by creating large number of customers, implementing loyalty programs
or by differentiating their products and services.
Availability of product substitutes: There is no high levels threaten from substitute for banking
industries in Ethiopia because of most of commercial banks provide the same products of the
bank. But the newest aspirants in Banking sector like Abay bank is providing its banking services
until 9:00 Pm it helps the bank to be best choice of the customers.
Competitors’ rivalry: Competitive rivalry is a measure of the extent of competition among
existing firms. In Ethiopia Competition is stable in the banking sectors. Currently there are
nearly 17 commercial local banks available in Ethiopia. Abay Bank is unique. It is won
customers heart and trust by standing nearly with local customers. Based on the porter’s 5 forces
factor, we can conclude that, the ‘Abay Bank is on the right way of growth, Profitability and
Stability.
2.6. Key five years strategic Issues of the bank

As we reviewed the strategic document of the bank we obtained some of key strategic issue of
the bank such as

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 1. Resource Mobilization

2. Capital Growth

3. Optimal Utilization of IT

4. Premise Acquisition and Asset Management

5. Human Resource Management & Development

6. Process Efficiency and Effectiveness

7. Marketing & Promotion

8. Risk Management and compliance

2.7. An Adoption of BSC
To achieve those prescribed objectives the bank has adopted BSC as a course of action.
Accordingly the balanced scorecard (BSC) is a strategic planning and management system that
organizations use to:
 Communicate what they are trying to accomplish

 Align the day-to-day work that everyone is doing with strategy

 Prioritize projects, products, and services

 Measure and monitor progress towards strategic targets

2.8. Strategic plan Perspective

To formulate its strategy, Abay Bank has chosen the Resource Based View (RBV). The RBV
offers a framework that promises a profound understanding of the Bank’s resources and
capabilities; and the relative strength of those resources and capabilities when compared with
domestic competitors and sample world class banks. Abay Bank S.c with a view of accelerating
its transformation, has initiated the institutionalization of a management tool that would enable it
to formulate and implement its strategy and track its performance—the Balanced Scorecard.

The four perspectives of Balanced Scorecard are Financial(emphasizes the stakeholder concern
about how efficient and effective the unit is at using its resources), Customer(emphasizes
satisfying the needs of customers), Internal Business Process(Perspective emphasizes excellence

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at performing internal processes) and Learning and Growth(emphasizes continuous
improvement, enhancing employees capacity, building information system capabilities ,
identifying and capitalizing the intangible capabilities) were considered robust for the Bank since
they capture the interests of the major stakeholders that are vital in formulating the Bank’s
strategy.
2.9. The bank’s strategic implementation review

Strategic plan implementation concern with considering past, present and future internal and
external factors of an organization then analyze the gap between “as is” and “to be” and finally
build a strategic plan at high level which can bridge seen gap. Planning and implementing of
strategic plan needs the managerial exercise of putting a freshly chosen strategy in to place,
supervising the how the strategic plan is implementing , revising the plan when it needed at the
time of execution, and measure progress in achieving the targeted result. The process is the
most complicated and time consuming part of strategic management. In time of execution of
the strategic management bodies are ultimately responsible for seeing whether it is
implemented successfully or not.
3. Strategic evaluation and control perspective of the Bank

Abay bank conduct Strategic measures in order to track its progress in achieving the company’s
objectives and goals. In order to improve its ability to measure the implementation, the bank has
developed effective measuring tools such as Introducing Strategy Maps and the Balanced
Scorecard.
The bank measures its strategy by evaluating what objectives and goals achieved, what extent its
implementation meets the corporate strategy, w/c activities are performed well and w/c is not,
what is its fault and weakness in the system, how well expected objectives meet with actual
results and by measuring results.
The bank’s control system exercised through the formulation of contingency strategies and by
establishing various teams that follow up various situations and crises management. The bank
adopted strategic control system by monitoring and taking actions in the light of gap existed
between intended results and actual results. Then the bank takes corrective action to address
Performance gap. Corrective actions takes through conducting various situations such as by
finding any deviation, by evaluating methods used, by examining process followed.
This process helps the company for feedback, appraise and reward, to check on the validity of
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 strategic choice, to congruence between decisions and intended strategy, and to create inputs for
new strategic planning.
4. SWOT Analysis

Strength

Strengths are things that organizations do particularly well, or in a way that distinguishes the
organization from its competitors.

The Bank’s Strengths are:-

 Bank of Abay provides a specialized Interest-Free Banking service with a brand

name of “Abay Bedeje” with unique product features and benefits. The product and
services provided by BoA fulfill the need of our esteemed customers and fully in
compliance with the Shari'a principles.

 Virtual banking

 Transfer money from BoA account to other banks.

 Starting of T-24 technology, started POS and Mobile banking

Challenges

In order to survive in the market and to take a competitive advantage over other competitive
banks implementing technological oriented products and services is inevitable and being late
adopter of electronic payment projects made the bank to learn from the existed experience of
banks who adopted these products earlier. Yet, being late adopter made the bank to lose the
potential market available at the first phase of entry.

Opportunities

 The first bank currently serving with Virtual banking system in Ethiopia

 Plenty of available potential unbanked customers which made a reasonable opportunity

for implementing electronic payment technologies.

 Reduction in paperwork and improved service quality by overcoming geographical

limitations and reduces long lines in the banking hall

 Improves customers’ satisfaction considering the conveniences and ease of access

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 So Productivity and profitability increases

Threats

 Growth of technologically advanced banks in future

 Emergence of non-commercial banks, such as industrial banks perform the function of

advancing loans to industrial undertakings, investment banks dedicated to financing the
new and upcoming project
5. Forward Alternatives strategies

Competition, both national and international, is increasing in virtually every industry. The key
features and the implications of this trend are outlined with specific reference to the banking and
financial services industry.
We have used the document as a framework that adopted the bank presented for thinking about
the various ways through which banks can pursue growth. This includes discussion of market
penetration, market development, product development and diversification together with
evaluation of such growth strategies. Uses of these proven alternative strategies support the
company to reach the right audience and increase in aggregate deposit growth, increase in total
capital, and increase in total number of branches, customer base and increase in net profit of the
bank.

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Penetrate the existing product market. A bank may attempt to attract customers from
competitors while or increase usage by existing customers. It can performed through by
increasing advertising expenditure, couponing, and using similar action to increase market share
in a given geographic area.
Product expansion while remaining in the current market. Thus, a company offering banking
services to health-care facilities might expand into supervision of other health-care functions,
such as purchasing and building maintenance.
apply the same products in new markets. The cleaning firm could expand its cleaning services
into other industries.
Diversification when a company moves into unfamiliar territory, new products and new
markets. Such diversification moves represents both the opportunity for growth and
revitalization and the substantial risk of operating an unfamiliar business in a new context.
Finally, a strategic option not covered by product-market scope is vertical integration. Some
publishing companies have integrated backward into paper and wood products. Other firms, such
as Nike and Levi Strauss, have integrated forward into retailing.
Growth in existing market increasing the market share may be one of the most logical ways to
grow. This can be achieved by for example tactical actions (see 4P on this web page), delivering
higher value to customers (see customer value and value map on this web page), or focusing on
selected competitors and their customers. However, attempts to increase market share will very
likely affect competitors directly and they may respond to limit the effects of your market share
growth strategy. The alternative of attempting to increase usage among current customers is
usually less threatening to competitors. Greater usage can be precipitated in two ways, by
increasing either the frequency of use or the quantity used. In either case, there are several
approaches that can be effective (e.g. provide reminder communications, position for regular or
frequent use, make the use easier, provide incentives, reduce undesirable consequences of
frequent use, revitalize the brand, new applications for existing product users).
Product development Product development can occur in a variety of ways, and it is helpful to
distinguish among them. They include the addition of product features, the development of new-
generation products, and the development of new products for an existing market. The addition
of features to a firm’s current product can, if it is the right features, dramatically change the
competitive dynamics. A new generation of products can also lead to significant growth.

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However, the established participants face the two forces that inhibit innovation. First, even if
the new technology is successful, often the best result is that a significant investment will be
required just to maintain the same level of sales and profits. And the new technology could
present problems that add time and expense and reduce customer acceptance. Secondly, the
existing market participants need to focus on improving cost, quality and services for the existing
offering, which leaves little time and effort to explore a totally new technology. While the
established competitors face these two forces that limit innovation an outsider has nothing to lose
and much to gain from pursuing an innovation that will disrupt the market place (see s-curves on
this web page).
Market development Perhaps the most obvious way to grow is to develop new markets by
duplicating the business operation. With market expansion, the same expertise and technology
and sometimes even the same plant and operations facility can be used. Thus, there is potential
for synergy and resulting reductions in investment and operating costs. Of course, market
development is based on the premise that the business is already operating successfully.
Geographic expansion may involve changing from local to regional to national operation. The
success will involve significant investments in logistics, distribution infrastructures, and
organization building and adaptation. O limit the investment this expansion can be implemented
by connecting, through an alliance or merger, to a partner that already has the capability to
market more broadly. A firm can also grow be reaching into new market segments. A key to
detecting new markets is to consider a wide variety of segmentation variables. Sometimes
looking at markets in a different way will uncover a useful segment. It is especially helpful to
identify segment that are not being served well.
Diversification involving new products and new markets Diversification is the strategy of
entering product markets different from those in which a firm is currently engaged.
Diversification can be categorized as related or unrelated with the core business.. In a related
diversification, the new business area has meaningful commonalities with the potential to
generate economics of scale or synergies based on an exchange of assets or competencies. The
resulting combined business should be able to achieve improved Return of Investments because
of increased revenue, decreased costs, or reduced investment. Meaningful commonalities can
involve sharing of R&D, channel of distribution, operating system, brand name, facilities for
manufacturing, offices, or warehousing. An unrelated diversification may still be justifiable, but

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a different rational would be needed.
Vertical Integration strategies Vertical integration represents another potential growth
direction. Forward integration occurs when a firm moves downstream with respect to products
flow, for example a manufacturer that buys a retailer. Backwards integration is moving upstream,
for example a manufacturer buying a raw material source.
6. Conclusions

Abay Bank S.c conducted environmental assess in order to formulate its strategic planning by
using various techniques including PESTEL analysis. Moreover the bank has conducted the
internal environment was assessed using Resourced Based View approach: because resource
based view emphasizes the firm’s resources as the fundamental determinants of competitive
advantage and performance. Further the performance of the bank measured through balanced
score card.
SWOT analysis has been used evaluate the Abay Bank’ strategic situation in the competitive
banking industry. This will identify the Strengths, Weaknesses, Opportunities and Threats of
Abay Bank S.c. Strengths and Weaknesses are affected by the internal factors (Controllable) of
the Company. Opportunities and Threats are affected by the external factors (Uncontrollable) of
the Company. Analyzing the strengths of the Abay Bank will help to find the business
opportunities to Abay Bank enable to have strong market position As well as the analysis of the
weaknesses of the Abay Bank that will help to minimize the threats. Because,threats may reduce
the demand of the ‘ABC Bank’ services.

In order to cascade these strategies Abay bank has taken some measures among those the bank
selected BSC as strategy design tool, training to the Top Management and Experts has been
given, establishment of a steering committee to coordinate and guide the SP dev’t, continuous
deliberation on each part of the draft document, continuous awareness creation among all staffs,
Cascading, monitoring, evaluation has been continually taking.
In the current economic situation, Abay Bank still has a stable growth and profitability. As a
well-known young and influential Abay Bank have been developing different products and
services to its customers. In addition, it has been focused on improve the operations efficiency,
customer service Excellency and performance and increase effective banking service.

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 References
https://www.abaybank.com.et/articles/faqs
https://www.abaybank.com.et/news/news-detail/234
https://www.researchgate.net/publication/326195189_
www.forbes.com/sites/allbusiness/2016/10/23/12tips for start up
business
David A. Aaker, Strategic Market Management 7th Edition, 2005, Hoboken
https://www.academia.edu/36835431/An_Overview_of_Strategic_Management_Practices.

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