An Analysis of Competitive Strategies and the Financial

Performance of Jamuna Bank Ltd.

Code Number:

Submitted to

Department of Organization Strategy & Leadership

Faculty of Business Studies

University of Dhaka

Date of Submission: 9th July, 2023

 Table of Contents

Contents
Executive Summary ...................................................................................................................................... 1
Chapter 1: Introduction ................................................................................................................................. 3
1.1 Background of the study ..................................................................................................................... 3
1.2 Study objectives .................................................................................................................................. 3
1.3 Methodology ....................................................................................................................................... 4
1.4 Scope and Limitations of the study ..................................................................................................... 5
1.5 Profile of the Company ....................................................................................................................... 6
Chapter 2: Literature Review ........................................................................................................................ 9
Chapter 3: Industry and Company Analysis ............................................................................................... 14
3.1: Industry Analysis: Global & Bangladesh ........................................................................................ 14
3.2: Company Analysis ........................................................................................................................... 17
3.3 Key Stakeholder Mapping ................................................................................................................ 22
Chapter 4: Analysis ..................................................................................................................................... 23
4.1 Profile of the respondent ................................................................................................................... 23
4.2 Cost Leadership strategy ................................................................................................................... 23
4.2 Differentiation Strategy: ................................................................................................................... 24
4.3 Focus strategy: .................................................................................................................................. 25
4.4. Analysis of financial performance: .................................................................................................. 27
Chapter 5: Conclusion................................................................................................................................. 33
5.1 Issues to be changed in the organization ........................................................................................... 33
5.2 Conclusion ........................................................................................................................................ 34
References ................................................................................................................................................... 35
Appendix ..................................................................................................................................................... 37

I
 List of Tables

Table 1 CL Strategy response ..................................................................................................................... 23

Table 2 DS Strategy response ..................................................................................................................... 24
Table 3 Focus strategy responses ............................................................................................................... 25
Table 4 Performance responses .................................................................................................................. 26

List of Figures

Figure 1 global banking industry scenario ................................................................................................. 15

Figure 2 GDP Growth of Bangladesh economy by 2022 ........................................................................... 16
Figure 3 JBL’’s Stakeholder mapping ........................................................................................................ 22
Figure 4 Operating profit of JBL ................................................................................................................ 27
Figure 5 Cost income ratio of JBL.............................................................................................................. 28
Figure 6 Deposit and advances (in million) of JBL .................................................................................... 28
Figure 7 Deposit mix of JBL ....................................................................................................................... 29
Figure 8 Loans and advance contribution (in %) ....................................................................................... 31
Figure 9 Capital adequacy ratio of JBL ..................................................................................................... 31
Figure 10 Return on asset ratio of JBL....................................................................................................... 32
Figure 11 Return on Equity ratio of JBL .................................................................................................... 32

II
 Executive Summary

Despite the development and formulation of an effective strategy to outsmart the competition,
strategic management secures organizational performance. The main goal of banks is to increase
performance over time, which will result in profitability. In a cutthroat industry, outstanding
outcomes can be attained by pursuing a general plan. The banking sector has seen the emergence
of numerous institutions that are all vying for the same industry. As a result, banks have had to
develop and put into practice competitive strategies in order to handle the challenges of the
market. Due to the environment's changes, banks are now under pressure to develop competitive
strategies that tackle these pressures in order to acquire a performance advantage over their
rivals.

The report that follows was created using data from a three-month internship program at Jamuna
Bank Ltd, Nasirabad branch, Chattogram. JBL is a bank of the modern generation. It is
committed to offering high-quality financial services and products in order to boost exports,
encourage trade and commerce, speed up industrialization, give educated youth more job
opportunities, reduce poverty, improve the standard of living for those with limited incomes, and
promote the overall socioeconomic development of the nation.

Banks have remained among the powerful companies in the financial industry, functioning
profitably despite obstacles and shifts in the marketplace confronting the banking sector.
Because of the different tactics that banks have implemented to achieve higher performance. The
direction and performance of commercial banks have been influenced by the tactics they have
chosen. Therefore, the goal of the study was to ascertain what type of competing strategies the
bank is adopting and how they are implementing to achieve superior performance.

The report's first chapter provides an overview of the study's history, purpose, methodology, data
gathering procedure, scope, and challenges encountered during preparation, as well as a quick
run-down of Jamuna Bank Ltd.

The investigation of earlier writing or study on the chosen topic is covered in the second chapter.
The third chapter then includes an overview of Jamuna Bank Ltd. and a brief analysis of the
national and international banking industries.

1
The discussion of objectives and analysis of the findings or results are explained in the
subsequent chapters. Finally, after examining the research data, the study has been concluded
with some recommendations.

2
 Chapter 1: Introduction
1.1 Background of the study

Every business has a unique plan for achieving superior excellence, whether it is to boost
profitability, increase customer satisfaction, reduce costs, make the best use of resources, or stay
in business. Since organizations have publicly accessible mechanisms, they interact constantly
with the environment within which they perform. The global economy is constantly evolving,
and every firm is trying to gain a competitive edge. This presents opportunities as well as
obstacles. Businesses must create new ways of working as the old advantages and capabilities
are swiftly lost as a result of both internal and external modifications to the environment (Johson,
1999). Businesses must adapt to environmental changes if they are to avoid becoming obsolete
because they cannot escape the innovation that keeps them alive. Organizations must build the
capacity and ability to manage dangers and quickly seize emerging opportunities if they want to
secure their survival and success. To achieve this, competitive tactics must be developed that are
compatible with available resources and environmental constraints. Thus, a firm's positioning in
order to optimize the value of the qualities that set it apart from its competitors is known as a
competitive strategy. It is still an issue of intense debate among academics and decision-makers
whether competitive methods improve or hinder bank performance (Ijaz, Hassan, Tarazi, & Fraz,
2020). These days, businesses must contend with a market that is extremely competitive,
volatile, and unstable due to rapid technological advancement. The manager's attention is
therefore on developing a new method for strategic development that is suitable for them and
permits a successful adaptation to those industrial and technical changes in order to get a
competitive edge. The association between strategy kind and firm performance is a key focus of
strategy research, as done by (Porter, 1981). These types of techniques are often known as
generic strategies.

1.2 Study objectives

The purposes of the study are to

1. Know about what type of competitive strategies Jamuna Bank Ltd is adopting and how they
are implementing.

2. Analyze the financial performance regarding the competitive strategies of Jamuna bank.

3
 1.3 Methodology

Sampling design: The sample for this study is the employees of Jamuna Bank Ltd in Nasirabad
branch, Chattogram. The sample size is 17 including Head of branch, operational manager,
senior executives and the officers etc.

Methods of data Collection: For the study, primary as well as secondary information were
gathered. Primary data was gathered using structured survey questionnaires that were given to bank
managers and workers who were in positions and roles that allowed them to adequately reply to the
majority of the questions. The surveys were distributed using the drop-and-pick approach. The primary
data was divided into 3 sections.

Section A contained the respondents' demographic information such as gender, age, years of
experience in the work field, current work position etc.

Section B contained questions of competitive strategies consists of 4 items in Cost leadership, 5

items in differentiation and 4 items in focus strategy using 5 point Likert scale as (not at all 1,
little extent 2, moderate extent 3, great extent 4 and very great extent 5). The questionnaire was
followed from Porter’s concept of strategy.

Section C contained questions of firm performance consisting of 8 items. The questionnaire was
measured through 5 point Likert scale as very Poor 1, poor 2, average 3, good 4 and very good 5.

Data Coding: Data from surveys were coded. Microsoft Excel was used to examine descriptive
statistics including mean, median, standard deviation, and percentages for the purpose to sum up
the data for general variable comparisons. Additionally, the financial performance metrics
including profit, ROA, and ROE were computed using an Excel ratio analysis technique.

4
 1.4 Scope and Limitations of the study

This study's goal is to determine how competing strategies concern a particular bank's financial
performance (JBL) where the internship program was operated because it is about the experience
of an internship program. As a result, the study excludes information about additional banks and
the banking sector as a whole. Instead, it concentrates on one specific bank and a performance
review of it.

The report combines primary and secondary data with a research poll on the bank's performance
and competitive tactics. The participants include employee members, including the branch
manager, of JBL Nasirabad in Chattogram. Due to the tiny sample size, it is possible that it is not
entirely representative of the population. The results could therefore be skewed. Additionally,
there were certain restrictions on the amount of time available, the respondents' insincerity in
their comments as a result of the bank's work pressure, not providing much information about the
strategies, and the workload associated with juggling the duties of being an intern while also
fulfilling other obligations.

5
 1.5 Profile of the Company

One of the top banks, Jamuna Bank Ltd., was established in Bangladesh and registered under the
country's 1994 Company Act. It started operating on June 3rd, 2001. This company's
headquarters is in Gulshan, Dhaka.

JBL has currently 167 branches across the country and owns 343 ATM Booth. The total asset of
this bank is BDT 282.64 billion and loans and advances is BDT 180.49 billion, customer deposit
is BDT 225.07 billion by 2022 (www.jamunabankbd.com). Around 3782 employees including
both male and female are working at bank branches in various locations.

Vision: The bank’s vision is to ―become a leading banking institution and to play a significant
role in the development of the country‖.

Mission: In order to ensure sustainable growth, a fair rate of return, and a positive impact on the
development of the country with a prompted and qualified workforce, the Bank is committed to
meeting the diverse needs of its customer base by means of a variety of offerings at fair prices,
while deploying the appropriate technology and providing prompt service.

Objectives:

 To obtain and keep a 'Strong' CAMEL Rating.

 To create strategic marketing programs that will improve service standards and foster
relationship banking.
 To maintain its position as one of the country's top banks in terms of profitability and
asset quality.
 To implement completely automated systems using information technology.
 To make sure the return on investment is adequate.
 To maintain the level of risk (including any off-balance sheet risk) within a reasonable
range.
 Must keep enough cash on hand to fulfill commitments and maturing debt.
 To keep business expanding healthily while maintaining the ideal image.
 To keep effective controls in place and procedures open.

6
  To create and keep a high-caliber workforce using an effective human resources
management strategy.
 To make sure that all resources are used as effectively as possible.
 To seek an efficient management system by ensuring ethical standards are followed, as
well as accountability and openness at all levels.

Values: The core values which JBL follows is to operate specifically with customer friendliness.
According to setting up the best service and facing new challenges there are some other core
values set by the banking including customer focus, integrity, quality, team work, fairness,
commitment, business ethics etc.

Corporate governance: Corporate governance of this bank consists of following heads:

BOD: To the Bank's shareholder, the Board as a whole is accountable for the successful
operation of the business. Its main obligation belongs to encourage the Bank's longer-term
performance and provide enduring shareholder value. The Board directs and supervises the
business of the Bank and is ultimately accountable to the management, guidance, governance,
and achievements of the organization. There are 20 (Twenty) Board members, including 4 (Four)
Independent Directors, until December 31, 2022. According to the Bank's Articles of
Association, the Shareholders' Meetings' decision is followed by the election of the members of
the Board.

Executive Committee: In between Board meetings, the Executive Committee convenes to

discuss critical management concerns, daily/routine tasks, and items pertaining to the execution
of the Bank's operations. The EC was reorganized by the BOD to include 7 (seven) Non-
Executive Directors. Only one member from a family is included to comply with regulatory
requirements, and no members of the AC are included as members of the EC. It operates within
the authority and mandates that have been periodically granted or established by the BOD, taking
into account pertinent rules and laws. The committee's secretary is the company secretary. The
shareholders’ meeting determines the number of board members, which ought to be not less than
seven and no more than twenty. One of the Board's directors is chosen to serve as Chairman. The
chairman and managing director positions are distinct for reasons of good governance, and each
of them has functions and responsibilities that are well-defined.

7
Audit committee: The BOD of JBL established the AC of the Board with 5 (five) individuals,
comprising 2 (two) Independent Directors. To choose and collaborate along with the Bank's
outside auditors while assisting the BOD the inspection of reports on finances, internal controls,
and internal audits. In carrying out its supervisory duties, the Board receives assistance from the
Audit Committee. The committee examines the bank's procedures for ensuring that laws and
regulations are being followed as well as its very own standards of business conduct, as well as
the mechanism for internal controls and risk management for financial risks.

Products and Service: JBL offers a range of support for the nation's trade, commerce, industry,
and general business. The entrepreneurs can also use JBL's funds to launch lucrative new
businesses and BMRE of already-existing industrial facilities. A group of well-known
community entrepreneurs with experience in trade, commerce, industry, and business founded
the bank.

Through designated branches, JBL provides typical and Islamic banking services. It is managed
and operated by a group of highly skilled people with diverse banking and financial experience.
Its management is continually centered on comprehending and foreseeing the needs of its
consumers. The bank does its best to come up with plans and roll out new products to keep up
with the change because client needs are evolving day by day as time goes on. Since its
founding, Jamuna Bank Ltd. has experienced enormous success. The bank already enjoys its
standing as one of the country’s top Service businesses.

Currently, JBL offers real-time digital banking solutions nationwide using a sophisticated IT
infrastructure that serves in rural and urban areas. In addition to conventional points of delivery,
the bank has its own ATMs that it shares with partner banks and consortia across the nation. The
bank is open from Sunday through Thursday from 10:00 A.M. to 6:00 P.M., with transaction
hours of 10:00 A.M. to 4:00 P.M. On Friday, Saturday, and on official holidays, the Bank stays
closed.

8
 Chapter 2: Literature Review

The definition of strategy is not constrained to one since it can be thought of as having multiple
dimensions. Some aspects of strategy are universally applicable, whilst others are significantly
influenced by the firm's culture and structure as well as by its nature (Hax, 1996). For a business
to determine the line of business it is going for and the level of economic engagement it wants to
offer to its customers, staff, and the larger community at large. Strategy is defined as the
arrangement of significant goals, purposes, or targets coupled with essential plans and
procedures for accomplishing those objectives (Andrews, 1971)

According to (Ansoff, 1990), an organizational strategy is a collection of rules for making

decisions that might take one of several types: Yardsticks, also referred to as goals, objectives,
goods or company strategies, organizational ideas (rules for creating internal relationships), or
operational procedures (rules for carrying out regular operations).

If a firm wants to keep its competitive edge, it must always seek new ways to improve its
processes and disseminate this knowledge throughout the company. Businesses must make use
of knowledge's power. Not all knowledge is created equal, (Day, 1988) some knowing is visible
and recordable. Concepts like engineering designs, methods, formulas, and patents are examples
of explicit knowledge. Implicit knowledge is much less tangible and permeates every aspect of
how an organization works. You might call this the organizational culture. Knowledge that is
implicit can be a more reliable source of competitive advantage than explicit knowledge, and it
might be more challenging for rivals to imitate. With financial results dominating performance,
strategic management, either overtly or covertly stated, focuses on the key intended and
unexpected behaviours adopted by executives on behalf of the owners. These initiatives involve
the use of assets to improve the contribution of organizations in their outside environments.
These approaches essentially contend that the process of strategic management consists of three
main, interconnected phases: strategy formulation, implementation, and control.

Competitive strategies: The business tactics and efforts which a firm implements to draw
clients and meet their expectations, to survive the pressures of competition and to increase its
market position make up its competitive strategies. Business strategies, usually referred to as

9
competitive strategies, are a manager's decisions and activities combined to help the company
operate well (Parthasarthy, 2007). It focuses on management's action plan for successfully
competing and giving customers more value. This makes it possible to set the business apart
from its rivals (Thompson, 2007). Competitive strategy is the study of how a business competes
in a particular industry. Competitive strategies also have a significant role in explaining a firm's
performance and consistent profitability over time (Beard, 2017). Existing research looked at
how Porter's competing tactics, specifically LCS and DS, affected bank performance (Islami X.
M., 2020)

A company's strengths eventually fall under the categories of cost reduction and differentiation
(Porter, 1981). Cost leadership, differentiation, and focus are three generic tactics that can be
applied in either a wide or a small scope. At the level of the business unit, several tactics are
used. Because they are independent of businesses or industries, they are known as generic plans.
These are the fundamental forms of competitive advantage since they both result in higher output
than rivals (Porter, 1981)

Cost Leadership Strategy: A company's endeavour to outperform competitors by reducing

costs is referred to as a "cost-sensitive strategy" (Islami, Mustafa, & Latkovikj, 2020). Many
factors have been identified in the literature as being responsible for low costs, including
economies of scale, efficient resource use, budget, logistical assistance, substance and skill
availability, technology, appropriate location (i.e., low production, manufacturing, or taxation
region), and value chain connections (Porter, 1981).

Existing research on LCS has revealed conflicting results on LCS and company performance.
According to certain research, LCS has a beneficial effect on a firm's performance.

(Kankam-Kwarteng.et.all, 2019) for instance, looked at the association between LCS and
company performance for 118 a smaller scale restaurants in Ghana. They discovered a beneficial
correlation between LCS and company performance. (Islami, Mustafa, & Latkovikj, 2020)
revealed that one unit shift in cost strategy boosts company performance by 31.2% in a related
study stream. (Ali, 2022) investigated the relationship between performance and a cost-sensitive
strategy for Pakistan's Islamic banking industry.

10
A low cost may operate as an entrance barrier, since new entrants need a lot of capital to provide
products or services at the identical rate as the cost expert. Additionally, some elements, like
technology, may be produced by means of creation (referred to as inventive build-up in
Schumpeterian innovation), while certain elements may even be resources produced by a
company, like enduring, beneficial connections with vendors that are preserved in order to keep
up supply networks or channels of delivery that are effective from a cost perspective. Similar to
commitments made by a company, economies of scale might be the end consequence of
expenditures like investment in capital for expansions.

Less customer loyalty, however, is a drawback of low cost leadership. Customers may acquire a
negative attitude regarding the product's quality as a result of relatively low prices. Customers'
perceptions of such products will increase their propensity to switch to a product that may be
more expensive but conveys a sense of quality. When taking an analytically thorough picture of
the low cost approach, it is clear that it has the potential to create a competitive edge, but creating
as well as maintaining a lower cost remains a crucial, important responsibility.

Differentiation: By developing a product or set of services that are viewed as distinctive

throughout their industry, differentiation is targeted at the wide market. A company must look
for roots of distinctiveness that are difficult and the duration for competitors to match in order to
develop a competitive edge through differentiation. According to previous research,
organizations typically employ a differentiation approach to acquire an advantage over
competitors (Rehman & Anwar, 2019), which in effect considerably improves company
performance. (Sun & Pan, 2011). The rules that a company adopts, such as those regarding
supplies, technology, human resources, unique features, and brand identity are linked to its
differentiation strategy and are challenging for competitors to quickly copy. Rival companies can
simply copy a low-cost strategy. Rival companies can simply copy a low-cost strategy. However,
it would take a long time to respond to a strategy for differentiation that entails research and
development. When using a differentiation approach, businesses typically charge more for their
goods and services to make up for special qualities. As a result, we contend that a distinct
strategy enhances a firm's success. In this regard, differentiation strategy was discovered to have
a beneficial impact on performance by. However, it would take a long time to respond to a
method of differentiation that entails research and development. When using a differentiation

11
approach, businesses typically charge more for their goods and services to make up for special
qualities.

Focus Strategy: To provide an above-average return on investment, a focus approach should

target market sectors that are less susceptible to replacement or where a competition is weakest.
Focusing on a particular niche is often alluded to as a "niche" approach and is a tactic that
organizations might utilize (Lynch, 2003). In order to implement this strategy, businesses are
prepared to provide services in remote locations, address customers' unusual finance, inventory,
or maintenance needs, or even customize products to meet the relatively specialized needs of
small to medium-sized clients. Porter (1980) asserted that a corporation is essentially trapped in
the middle if it cannot decide amid cost leadership and distinction. A corporation that is in the
middle has no competitive advantage, which frequently leads to subpar financial outcomes
(Porter, 1980).

Competitive strategies and Performance: Performance is how well a work is completed as

compared to predetermined accuracy, completeness, cost, and speed standards. Concerns
concerning the financial management techniques used by businesses have been voiced over time.
Any business organization's strategy has an impact on how well it performs (Manyuru, 2005)A
key component of these accounting and finance solutions is business performance metrics. It is
demonstrated that strategy is a winning plan that matches a firm's capacity and the environment
by demonstrating the relationship between competitive strategies employed and the performance
attained. It is a course of action that a business uses to carry out a set of objectives. Competitive
strategies help businesses achieve higher performance by creating a competitive edge.
Companies adopt a set of plans for their business divisions after evaluating potential courses of
action. In a dynamic environment, businesses use these tactics to adjust to new realities like
greater competition.

Further research is consequently required because neither the literature nor some of the studies
conducted show a clear link amongst competitive strategy and performance. In order to do this,
managers must look outside the firm's own operational boundaries (Pearce, 1999). Therefore,
strategy refers to the actions and market maneuvers that managers make to enhance the firm's
performance, strengthen its long-term competitive position, and obtain a competitive edge over

12
the competition (Thompson, 2007). Therefore, it is necessary to research how competing
strategies affect a firm's performance.

13
 Chapter 3: Industry and Company Analysis
3.1: Industry Analysis: Global & Bangladesh

In 2022, the world's banks experienced both macroeconomic turbulence and geopolitical turmoil,
which upended many assumptions and ended nearly a decade of generally stable conditions.
Pandemic struck first, followed by inflation, war, increasing interest rates, disruption of logistics,
and other factors. Values, however, remained constant. In 2022, it was confirmed once more that
more than 50% of all banks worldwide make less than they spend on equity, which is shown in
the simple fact that banks across all sectors keep trading at an elevated price compared to other
industries.

In the most recent Global Banking Year Review, it is possible to take a careful look at the cycles
of success and failure that banks have recently faced, the growing disparity between banks with
different profiles operating in different countries, and the traits that distinguish the best
performers. In view of the current circumstance, sustainable finance is now being discussed
extensively in the banking industry at a moment when commercial and governmental
commitments to reduce greenhouse gas emissions are growing. Despite ongoing skepticism and
concerns about green washing, there is substantial proof that climate-related funding is moving
into a "next era," as the original boom in capital for green energy gives way to a larger
connection with clients of banks across all industries..

Strong revenue growth helped banks recover from the pandemic, but the situation has drastically
shifted. Currently, a number of interconnected shocks—some geopolitical and others caused by
the pandemic's residual economic and social effects—are escalating fragilities.

With an anticipated ROE between 11.5 % and 12.5 % in 2022, bank profitability will be at a 14-
year high (Figure 1). Global sales increased by $345 billion. Since interest rates had been stuck
for years near their cyclical floors, a sharp rise in net margins was what drove this boom. The
current Tier 1 capital ratios for the world's banking system are between 14 and 15 percent, which
is the highest level ever.

14
 Figure 1 global banking industry scenario

From the perspective of Bangladesh, Bangladesh has being urged to expand its banking sector as
a developing nation to support economic progress. The banking sector has grown dramatically in
the nation over the past 30 years or so. Even farther has been made by pushing for financial
integration among the extremely poor in remote regions, with finance and micro lending serving
as the primary vehicles for reaching this goal. The rural economy has benefited from this by
becoming more monetised and hence more market-oriented. The rural economy's market
orientation also made it easier to shift resources continuously from rural to urban areas. The
banking sector itself, particularly state-owned banks, is now the largest danger to attaining
sustainable economic growth. This is true even though Bangladesh has adopted Basel III Accord
and other internationally recognized banking practices.

A section of the wealthy has amassed enormous riches through scamming banks, particularly
state-owned banks, as a result of the rising financialization of the Bangladeshi economy. It is
generally believed that these illegal financial practices are most likely connected to the

15
Bangladeshi stock market scams, which have the ultimate objective of taking over numerous
listed companies by bankrupting small investors.

According to post-GFC (2007–2008 Global Financial Crisis) time, the legal system has a big
impact on how capital owners can increase and solidify their wealth in industrialized economies.
Market-oriented economies, whether in rich or developing countries, are clearly biased in favor
of capital. Even Bangladesh Bank, the nation's official bank, was the victim of a heist in the
month of February in 2016 when US $101 million from its reserve with the FR in New York was
taken. The identities of those who participated in the theft and the location of the stolen funds are
still unknown. It seems like this is not the only instance. In February of this year, a top bank
officer was found guilty of stealing money from the institution. But what is astonishing is how
long it took to settle out the case—nearly 21 years.

In the previous ten years, Bangladesh's Gross Domestic Product (GDP) has continually increased
at an increasing rate; in the most recent fiscal year, Bangladesh's GDP increased by 8.15 percent,
the highest among Asian nations for FY 2018–19. The expansion has primarily been driven by
domestic demand, Due to the global lockdowns brought on by COVID19, the rate of growth of
GDP in fiscal year 2020 falls significantly. However, in light of the recent Post-COVID
recovery, the growth rate was 6.94% and 7.25%, respectively, in fiscal years 2021 and 2022.

Figure 2 GDP Growth of Bangladesh economy by 2022

(Source: Jamuna bank annual report-2022

16
A slow-motion banking crisis is now affecting Bangladesh's financial system, especially at
subsidized by the banks and a few private sector institutions. The traditional banking and non-
banking sectors of finance have become the most vulnerable. Due in significant part to the
extremely rapid expansion of credit as well as state-directed lending and loan restructuring, the
situation is anything from improving. All of this increases the possibility of a credit crunch.
Almost one-fourth of all bank assets in the nation are held by six state-owned commercial banks.

By mid-2018, the Bangladesh Bank estimates that three private sector banks and seven state-
owned banks had capital shortfalls, necessitating subsidized recapitalization or these companies'
rescues in order to preserve the public's faith in the banking system. These rescue funds,
however, raise moral hazard concerns and are projected to promote banks to continue behaving
in this manner. The government must also refrain from allocating funds to certain sectors or
purposes that benefit more by budgetary provisions. The fact that so many banks are suffering
from capital shortages demonstrates that recent regulatory capital requirements meant to ensure
banks remain a viable business have not had the desired impact. That raises the issue of whether
these specifications are suitable for the job. In that scenario, they should be reviewed.

3.2: Company Analysis

The banking industry dominates Bangladesh's financial sector. The banking industry is facing
challenges from both within and outside risk exposures, some of which are uncontrollable. The
industry has been examined by Jamuna Bank Ltd. taking into account the danger of new
competition and replacement goods and services, the purchasing power of buyers and vendors,
and the level of intense competition. The bank never loses sight of the highly competitive nature
of its current operating environment. Nevertheless, they are equally concentrated on increasing
market share in the real essence of financial integration. Through major initiatives like digital
creativity and service excellence, they achieve their goals.

Competitive rivalry within the industry:

61 listed banks and 34 non-bank lending organizations compete with the banking sector. Due to
competitiveness between the 61 banks currently operating in the market and a fierce price war
that has decreased the number of devoted customers, the banking industry has grown more
competitive. Additionally, switching costs for banking customers in Bangladesh are extremely

17
low. Rival companies' goods and services hardly differ from one another. JBL's reply in that
circumstance must be competitive and would be as follows:

 For JBL, satisfying clients is of the utmost importance. The Bank offers many forms of
assistance to the nation's trade, commerce, industry, and general business.
 It provides its customers with special goods and services.
 Adoption of digital technologies and further expansion of our nationwide banking
network to reach more unbanked citizens of the nation

Bargaining power of Customers:

In general, corporate clients are more sensitive to interest rate changes than retail and SME
clients. They increase pressure for price reductions with better service quality, which lowers the
profit margin. Due to the nation's large amount of financial institutions, consumers have more
purchasing power because they have more options. Additionally, by balancing out the
competitive environment, single digit interest rates inadvertently reduce the bargaining power of
purchasers. The responses from JBL in that scenario are:

• They provide a large selection of deposits and savings instruments that support financial
stability. On the contrary, they offer a wide choice of loan solutions that are tailored to
the unique needs of people and enterprises.
• Their mobile app and other digital banking options guarantee convenient banking. We
put a lot of effort into creating customized product solutions that are best-fit for the
specific needs and demands of our customers.
• Strengthen ties with current clients

Bargaining power of suppliers:

The main source of funding is deposits from clients. Customers have significant negotiating
leverage since the banking industry has a low switching cost. The number of deposit clients has
been directly influenced by recent rate reductions on deposits, which were brought on by a very
competitive lending market. This funding source is heavily influenced by market conditions,
whether it comes from individual customers or loans from other financial institutions. According
to JBL,

18
 • By providing a variety of proposals and ensuring reduced cost funds origination, they
concentrate on luring fresh CASA (current account, savings account) users.
• Because of our ability to access low-cost capital due to our excellent credit ratings, they
offer the most alluring interest rates on deposits.
• They provide a wide variety of fixed deposit options with different maturities. In
accordance with our procurement strategy, they use best practices to control the
bargaining power of suppliers of products and services.

Threats of new entrants:

Due to significant initial capital needs and compliance with relevant regulatory standards, there
is a significant obstacle to entry in the banking industry. Numerous start-ups and NBFIs are now
entering the market, which is proof that it has become competitive and mature over the past few
years. Due to the increased capital needed and legislative barrier, there is less threat from new
entrants. JBL has already cemented its status as the nation's premier private commercial bank in
this area. It works to attain economies of scale by implementing cutting-edge technology, hiring
and educating staff, and consistently enhancing productivity and customer service.

Threat of substitute:

Due to the huge number of banks that are currently active in the banking sector, switching has a
cheap cost. Fin-Tech services of today (such as BKash, Nagad, etc.) offer rapid and simple
access to financial solutions. The main alternative products are those provided by Non-banking
Financial Institutions. However, Jamuna Bank also uses digitalization to stay current with the
quickly evolving modern financial sector while providing distinctive customer care. This bank
offers a wide choice of cutting-edge goods to its consumers.

19
SWOT Analysis: Among its investors and clients, Jamuna Bank currently has a well-established
reputation for providing high-quality services, innovative products, productivity, and sustainable
financial practices, performance and ethical corporate behavior.

Strengths

• Competent directors and a board.

• Strong brand value; skilled and experienced management.
• Best Primary Dealership Bank: Since its foundation, Jamuna Bank has been recognized
by Bangladesh Bank as the best PD bank among 24 PD banks, with one of the greatest
CRAR, which (16.75%) in the banking sector.
• Strong labor forces: 3782 competent workers.
• Improvement of Human Capital: 75 Training Sessions, 2482 Participants; Long-term
Steady Entity Credit Rating
• Long Term: ST-2, Short Term: AA1
• Broad coverage: Jamuna Bank's network includes more than 10 million consumers.167
branches, 106 sub-branches, 42 agent outlets, 343 ATMs, 23 dedicated Authorised Dealer
(AD) branches, and housed in 167 Al-Ihsan Islami Bank Service Centers are located
throughout the country.
• A comprehensive offering of goods and services at affordable prices to satisfy the needs
of different client classes.
• Services for real-time online banking.
• Solid financial standing to satisfy all obligations.
• Jamuna Bank is currently in charge of overseeing the Padma Bridge toll, which will
guarantee the injection of inexpensive deposits.

Weakness

• Excessive reliance on credit from the corporate segment.

• Limited Access to Rural
• Market undersupply
• Automation thorough analysis

20
 • Additional steps are needed to be required to manage defaulted loans for Business
Development.
• Advances & Deposits being distant from the aim.

Opportunities

• Best Primary Dealer Bank; Market standing: Jamuna Bank Ltd. received the "Best CSR
Bank" honor from UK-based "The Global Economics"
• Award for the years 2021 and 2022, 02 (two) times in a row.
• Expanding local business owners.
• Access to the rural market through a large network of branches, sub-branches, and agent
outlets.
• Access to the world through the bank's current network.
• The start of centralization in all areas will make the Bank tech savvy.
• Cutting-edge goods and services.
• Implementing a digital banking system as part of digital transformation

Threats:

• Strong competition: The entry of new banks and NBFIs will boost competition.
• Growing stress because of prolonged political unrest worldwide
• A protracted conflict between Russia and Ukraine.
• Credit Risk: arising as a result of the country's rising trend in NPL levels.
• Recorded inflation in the global and domestic economies.
• Liquidity crisis.
• Shrinking spread results in a degradation of income.
• A slowdown in export and import activity brought on by the foreign currency crisis.
• Greater pressure on sustaining provision and minimum capital requirements.

21
 3.3 Key Stakeholder Mapping

Stakeholder engagement is extremely important to the Bank. The strategy and vision are
impacted by the shifting demands and preferences of stakeholders. In order to provide active
contact channels and paths, the bank has developed a number of official and informal interaction
techniques over time. These aid its stakeholders in locating a forum to express their aspirations
and concerns. Communication platforms are customized for each unique stakeholder group based
on elements like individual participant assessment and ease of interaction. They are supported by
a range of initiatives to proactively examine the input at different levels inside the Bank. Due to
the analysis's useful insights and unique knowledge, it can create a plan that is more concise and
targeted to fulfil stakeholder expectations. The main stakeholder map of JBL below summarizes
their on-going initiatives to actively engage with significant stakeholder groups, outlining each
group's place in the hierarchy with respect to of interest and impact..

 Investors
HIGH

 Board Members  Customers

 Environment  Employees
 Regulators
 Communities & Societies
Level of Influence

Keep Satisfied Keep Engaged

Monitor Keep Informed

 Auditors
 NGO
 Financial analysts
 Business
 CSR Analysts
Organizations
LOW

 Public
 Media

LOW Level of Interest HIGH

Figure 3 JBL’’s Stakeholder mapping

22
 Chapter 4: Analysis

4.1 Profile of the respondent: There are currently 19 workers working for JBL at the
Nasirabad branch. At the General Banking, Credit, and Foreign Exchange Department, there's 1
branch manager, 1 operational manager, 2 FAVP, and 4 senior executive officers. The ratio of
males to females is 12:5. The majority of responders are between the ages of 40 and 44 and have
10 to 14 years' worth of experience working for this bank.

4.2 Cost Leadership strategy

The total mean in the table is 3.60, which is close to 4, indicating that the bank has embraced the
CL approach to a significant extent. The highest means are seen in employee productivity and
marketing skill strength, with 3.88 and 3.76 respectively.

CL (1) (2) (3) (4) (5) Mean SD

Fees charged 0 0 8 9 0 3.53 0.514

lower than other
banks

Achieving 0 0 13 1 3 3.41 0.795

economies of
scales

Introduced cost 0 0 13 3 1 3.29 0.59

cutting measures

Enhanced process 0 0 6 10 1 3.71 0.59

efficiencies
Employees
productivity 0 0 3 13 1 3.88 0.485

Strength in 0 0 6 9 2 3.76 0.664

marketing
capabilities
Overall 3.60
Mean
Table 1 CL Strategy response

23
4.2 Differentiation Strategy:
The total mean is 3.85, showing a significant adoption of differentiation approach by the bank.
Comparatively speaking, leadership differentiation has gained more traction. Improved customer
service received numerous answers, while maintaining client relationships received better
rankings.

DS (1) (2) (3) (4) (5) SD

Mean

0 0 5 12 0 3.71 0.47
market-driven, distinctive
goods and services
0 0 3 12 2 3.94 0.56
Skilled and experienced staff
Use of bank corporate image 0 0 5 7 5 4.00 0.79
Identifying needs of customers 0 0 2 12 3 4.06 0.56
0 0 7 7 3 3.76 0.75
Rewards to employees for
creativity
0 0 0 12 5 4.29 0.47
Maintaining strong customer
relationship
0 0 1 13 3 4.12 0.49
Improved customer service
0 0 3 14 0 3.82 0.39
Improved branch networks
0 0 9 8 0 3.47 0.51
Introduced unique products
and services
0 0 5 12 0 3.71 0.47
Differentiating services from
that of other banks (e.g.
digitalization)
0 0 10 6 1 3.47 0.62
Advertising and promotion on
radio and television or through
social media.
Overall 3.85
Mean

Table 2 DS Strategy response

24
4.3 Focus strategy:
The average response in the table below is 2.97, or 3, in terms of focus strategies. Therefore, JBL uses
focus technique to a moderate amount. Custom-made goods receive the highest rating with a score of
3.47.

Focus Strategy 1 2 3 4 5 Mean SD

focused on offering
goods and services that 0 0 11 6 0 3.35 0.49
other banks don't

Offering corporate 0 0 10 6 1 3.47 0.62

clients specialized
goods and services

Identified a specific 0 0 11 6 0 3.35 0.49

niche in the market

Concentrating in one 10 2 5 0 0 1.71 0.92

market segment
Overall 2.97
Mean

Table 3 Focus strategy responses

Performance: The total average of performance is 4.07, which shows that Jamuna Bank Ltd. is
performing well in terms of its competitive strategies. Customers' satisfaction and retention
receive the highest marks, with a mean value of 4.47, close to 5, indicating that the situation is
excellent. Quality of goods and services, growing market share, a wider selection of goods, and a
rise in revenue and sales are on the list in that order.

25
 1 2 3 4 5 Mean SD
0 0 0 12 5 4.29 0.47
Quality of products
or services
Development of new 0 0 7 9 1 3.65 0.61
products or services
Increase in sales and 0 0 4 9 4 4.00 0.71
revenue
0 0 2 10 5 4.18 0.64
Increase on the
market share
0 0 4 12 1 3.82 0.53
Ability to attract and
retain essential
employees
0 0 2 11 4 4.12 0.60
Product range
0 0 0 9 8 4.47 0.51
Satisfaction and
retention of
customers
0 0 1 15 1 4.00 0.35
Advertising,
Promotion and sales
Overall 4.07
mean

Table 4 Performance responses

26
4.4. Analysis of financial performance:
In reality, the three generic methods are used to outperform competitors and enhance corporate
performance. It can be observed from the preceding examination of the various techniques that
JBL has used the differentiation strategy more frequently than the other two. The fact that JBL
has 167 branches shows that the company places a strong emphasis on diversification and has
broadened the scope of its differentiating strategy. In order to assess JBL's financial performance
in terms of its competitors' strategies, the assessment of financial performance indicators is now
shown below:

Profitability: Figure 4 displays the operating profit for the five-year period between 2018 and
2022. The profit is in million and has grown over the past five years.

Profit( in million)
7000

6000

5000

4000

3000 5842 5709

5089 5180
4629
2000

1000

0
2018 2019 2020 2021 2022

Figure 4 Operating profit of JBL

Cost income ratio: However, the increasing cost income ratio in JBL's 5-year data shows that
the bank is not very effective at reducing costs. As a result, this demonstrates that the bank does
not use cost leadership as a competitive strategy.

27
 cost income ratio

55.47
53.14
52.85 52.79

48.93

2018 2019 2020 2021 2022

Figure 5 Cost income ratio of JBL

Deposit and advances: The primary objective of the banking sector is to make money off the
discrepancy between deposits and loans. Due to the epidemic, JBL's deposit amount decreased in
2020. But it started to gradually rise starting in 2021. The same situation applies to advance
payment amounts.

250000 Deposit & Advance (in million)

200000
225071
212052
202510

191104
188034

162658

174825

180491
166403

150000
177279

Deposit
100000 Advances

50000

0
2018 2019 2020 2021 2022

Figure 6 Deposit and advances (in million) of JBL

28
Deposit Mix: JBL offers a variety of deposits, such as FDR, SNC, FC Deposit, etc. The
percentage contributions of each kind are shown in the figure below. Like other banks, the Fixed
Deposit Rate, or FDR, receives the highest rating with a value of 36%. However, JBL offers
double growth, triple growth, and monthly benefit plans in FDR in order to remain competitive.
Other programs include the Senior Citizen Savings Account, JBL Student Account, Grihini
Savings Account, and so on.

Deposit mix
1%
17% CD & other
24%
A/C
Bills payable
8%
SB A/C
2%
FDR

12%

36%

Figure 7 Deposit mix of JBL

JBL’s deposit strategies are:

• Strengthening marketing department.

• Taping several government offices and continuing to have frequent, strong social
interactions with various societal groups.
• Cross-selling various products, including retail items, to business clients.
• Strict CASA initiative.
• Launched the "Shadhin" banking smartphone app to give Jamuna Bank clients easy
access to a variety of banking services in a safe environment.
• A greater emphasis will be placed on financial integration by including various
demographic groups, enabling the unbanked to open bank accounts, the banked to obtain
credit more quickly and affordably, and consumers to have better access to credit.

29
 • Creating a contemporary, digital, and efficient banking system with the new banking core
technology TCS BaNCS.

Loans and Advances: The contribution of various loan types is depicted in the figure. With a
26% ownership share, commercial credit is the largest contributor. JBL offers a variety of loans
for business purposes, including loans for education, homes, travel, and more. In regards to
corporate loans, the bank also offers residential property funding, syndicated loans and organized
finance, an employee property loan and auto loan program, L/Cs, back-to-back L/Cs, bid bonds,
etc. JBL introduced a variety of services to better differentiate their offerings for SMEs,
including:

1. Jamuna Swabolombi is available for any legitimate business purpose without any hidden fees
or collateral.

2. Jamuna Chalntika would provide working capital and Jamuna Jantrik will buy machinery and
equipment.

3. Jamuna Nari Uddog, which offers loans to female entrepreneurs for up to 50 lac with an
individual guarantee as security.

4. Jamuna Green will make it easier to start an eco-friendly project, etc.

JBL’s advance strategies are:

• Particular focus is placed on growing the SME lending portfolio to generate substantially
better yields and minimizing the negative effects of widespread defaults. Along with the
implementation of suitable monitoring systems, SME lending will be encouraged in
addition to the expansion of corporate loan portfolio.
• Close support of export-oriented businesses to draw more inbound foreign exchange and
channel diversity for the Bank's cost-effective funding.
• Identifying opportunities and focusing financial resources in emerging industries like the
pharmaceutical, jute, yarn, and power sectors.
• Product development in collaboration with key players and governing bodies for the
current thrust sectors of frozen food, leather, textiles, and agro-based industries.

30
 • Targeting industries with backward links can help SME businesses grow by utilizing
supply chain management's advantage.
• Using risk management strategies for effective internal control over corporate operations

Loan & advances

Agriculture & Fisheries

2%
19% 17% large & medium scale
industry
working capital
5%
Export credit

commercial credit
24%
small and cottage
26%
industries
others
7%

Figure 8 Loans and advance contribution (in %)

Capital Adequacy ratio:

The increasing ratio over time shows that the bank has adequate capital on hand to cover the
risk involved with its assets.

Capital adequacy ratio %

18
16 13.58 16.75
14 16.42
15.5
12 14.25
10
8
6
4
2
0
2018 2019 2020 2021 2022

Figure 9 Capital adequacy ratio of JBL

31
ROA and ROE: The bank's decreased ROA, as seen by JBL's ROA, suggests that it isn't
managing its assets as effectively as it may be in order to increase profits. On the other side, from
2020 to 2022, the ROE declined. It demonstrates JBL's poor management of its income and
expansion from its investment in equity.

ROA (in%)
1.2

0.8

0.6

0.4

0.2

0
2018 2019 2020 2021 2022

Figure 10 Return on asset ratio of JBL

ROE (in percentage)

16 14.8
14 12.93
12 13.83
10.88
10
8 7.69
6
4
2
0
2018 2019 2020 2021 2022

Figure 11 Return on Equity ratio of JBL

32
 Chapter 5: Conclusion

5.1 Issues to be changed in the organization

1. Commercial banks face intense competition, so they must work hard to draw in and hold on to
the target market. Although they are a for-profit business, they are intended to provide the
greatest goods and services in comparison to other commercial banks providing identical goods
and services. Therefore, to be competitive, Jamuna bank must use tactics that would guarantee
higher performance and value. Given the abundance of competitors' products on the market, the
differentiation strategy is strongly advised. This would imply that JBL should provide goods and
services that set them apart from the competition. Since core deposits rise directly in correlation
to customer happiness, JBL has worked hard to keep them.

2. JBL should further bolster its position of differentiation by increasing the efficiency of its
processes, producing premium products, and developing new methods to operate in the
marketplace in order to win over customers' loyalty.

3. Even while the bank has a strong record of profitability through deposits and advances, its low
performance in terms of ROA and ROE shows that it has to make improvements in this area. The
environment is essential to the existence of all commercial banks. As a result, JBL must
constantly monitor the environment for evolving conditions and trends that can have an impact
on the sector.

3. In order to effectively compete and try to maintain its standing, the bank needs to market
itself. To do this, they might, for instance, design novel financial products and new products in
line with market growth prospects.

4. Instead of focusing on product-oriented tactics, the bank should place more emphasis on
customer-oriented initiatives. The consumer is the main emphasis of the current banking
business trend. The consumer must specify them because broad financial services are insufficient
on their own.

33
 5.2 Conclusion

Finally, it may be concluded that the performance of a corporation is significantly impacted by

competing strategies. Prior to taking a position in the competitive market, a company must be
aware of its goal, vision, and objectives; as a result, it must determine its market segment.
Prioritizing its clientele enables it to provide better services and, as a result, deliver improved
results. Executives must decide whether to compete on the basis of cheaper or more expensive
characteristics that set their firm apart from rivals to identify the basis of their company's
competitive edge. Additionally, focusing on either a small or large market helps businesses better
understand the customers they serve. Because Jamuna Bank Ltd. has so many branches, they can
either differentiate broadly or focus on differentiation specifically. But practically all businesses
in the banking sector offer essentially the same goods and services at largely similar prices.
Therefore, JBL should concentrate on differentiating strategy since customers matter first and it
should devote more attention to satisfying its customer base in order to be competitive in service
industries like the banking sector. At some point, it will be profitable and perform better.

34
References
Ali, e. (2022). . Competitive strategies-performance nexus and the mediatingrole of enterprise risk
management practices:. Int. J. Islam. Middle East. Finance Manag, 125–145.

Andrews, K. (1971). The Concept of Corporate Strategy. Open Journal of Business and Management.

Ansoff, I. M. (1990). Implanting Strategic Management.

Beard, D. a. (2017). Corporate-Level strategy, Business-Level strategy, and firm performance. Academy
of Management Journal, 24, 663-688.

Day, G. a. (1988). Assessing Advantage: A Framework for Diagnosing Competitive Superiority. Journal
of Marketing, 52, 1-20.

Hax, A. &. (1996). The strategy concept and process: A pragmatic approach. New Jersey: Prentice Hall.

Ijaz, S., Hassan, A., Tarazi, A., & Fraz, A. (2020). Linking bank competition, financial stability, and
economic growth. J. Bus. Econ. Manag., 21.

Islami, X. M. (2020). Linking porter’s generic strategies to firm performance. Future Business Journal, 6,
1-15.

Islami, X., Mustafa, N., & Latkovikj, M. (2020). Linking Porter’s generic strategies to firm performance.
Futur. Bus.

Johson, G. &. (1999). Exploring Corporate Strategy: Texts & Cases. Great Britain, Hall Europe.

Kankam-Kwarteng.et.all. (2019). Innovative low-cost strategy and firm performance of restaurants. Asia
Pac. J. Innov.Entrep, 266–281.

Lynch, C. (2003). Institutional Repositories: Essential Infrastructure for Scholarship in the Digital Age.
ARL Bimonthly Report,.

Manyuru, J. (2005). Corporate Governance and Organizational Performance:companies quoted at the

NSE. School of Business, University o f Nairobi.

Parthasarthy, R. (2007). Fundamentals of strategic management.

Pearce, A. J. (1999). .Strategic Management, Formulation,Implementtion and Control.

Porter, M. (1981). The Contributions of Industrial Organization to Strategic Management. Acad. Manag.
Rev, 6, 609–620.

Rehman, A., & Anwar, M. (2019). Mediating role of enterprise risk management practices between
business strategy and SME perfor. Small Enterp.

Sun, L.-Y., & Pan, W. (2011). . Differentiation strategy, high-performance human resource practices, and
firm performance: Moderation by employee ommitment. Int. J. Hum. Resour. Manag.

35
Thompson, A. S. (2007). Crafting and Executing Strategy:The Quest forCompetitive Advantage:
Concepts and Cases. New York, USA: McGraw Hill Irwin.

www.jamunabankbd.com

Annual Report of JBL-2022.

36
Appendix

SECTION A: Background Info

1. Your age

2. Gender

3. Your current position in this bank

4. Years of experience in this bank

SECTION B: Competitive Strategies

Please tick the extent to which the bank has used the following strategies to remain
competitive in the market.

Not at all Little Moderate Great Very

1 Extent Extent Extent Great Extent
2 3 4 5
Cost Leadership

Fees charged lower than other banks

Achieving economies of scales

Introduced cost cutting measures

Enhanced process efficiencies

Employees productivity

Strength in marketing capabilities

Innovativeness in products and

processes

Differentiation Strategy

Unique market driven products and

services

37
Skilled and experienced staff

Offering professional services to

customers

Use of bank corporate image

Reputable quality of products

Identifying needs of customers

High quality research

Diversity in bank culture

Rewards to employees for creativity

Maintaining strong customer

relationship

Improved customer service

Improved branch networks

Introduced unique products and

services

Differentiating services from that of

other banks (e.g. digitalization)

Advertising and promotion on radio

and television or through social
media.

Focus Strategy Not at all Little Moderate Great Very

1 Extent Extent Extent Great Extent
2 3 4 5

38
Focused on products and services
that not offered by other banks

Custom made products and services

offered to Corporate customers

Identified a specific niche in the

market

Concentrating in one market

segment

Section C: Performance

How would you rate firm performance on the following attributes over the past 5 years to
that of other banks?

Very Poor Poor Average Good Very

1 2 3 4 Good
5

Quality of products or services

Development of new products
or services

Increase in sales and revenue

Increase on the market share
Ability to attract and retain
essential employees
Product range
Satisfaction and retention of
customers

Advertising, Promotion and

sales

39