Application on Porter’s Five Forces to Hatton National Bank

Hatton National Bank is one of the leading banks in Sri Lanka which provides financial services, financial instructions and other financial details for the people who engaging in various type of financial activities. In order to create competitive advantage it is very important to identify the facts in Porter’s Five Forces.

Bargaining Power of customers:

To identify the bargaining power of the customers first need to identify who are the customers in HNB. In HNB most of the customers are young generations. Other than them there are Corporate Clients who engage in large scale of transactions, farmers who come for the micro finance, SME client who need help for their development projects and Clubs & Societies who maintain their deposits. With all these customers HNB maintain a high customer base when it compare to other competitors.

Younger generations have a high bargaining power because they are not considering about the product type they only consider about the ease of use. They always demand for the rates, comfort and many other things. But when it comes to the famers who engaging in cultivation they have low bargaining power. Because once they became loyal to the organization they never leave the organization or demand for anything. When we consider about the Corporate and SME clients they have a huge bargaining power. Most of the competitors try to grab those clients, because of that they demand for the service and other things.

When we consider overall the bargaining power of the customers are high. Sometimes it is good because of that the employees try to give the better service for the customers and try to keep the customers. That helps HNB to become more success when we consider about the market.

Bargaining Power of suppliers

As HNB is a service providing organization there are lots of suppliers. In HNB most of the functions are outsource and they are given to different companies. So the bargaining power of suppliers is low. Most of the functions that are outsource, has given to two individual companies. So that helps to reduce the bargaining power of them. For network also HNB keeps one private sector Company and another government sector company. So if something goes wrong they can easily shift to the other company.

Call centers also given to outsource company. But HNB also have their own trained staff that can be used as the call center staff in case of emergency. That will reduce the bargaining power of them. Stationary also doing by different suppliers. But the bank keeps an additional stock as in case of emergency. HNB is always tried to reduce the bargaining power of suppliers.

Competitor Rival          

Sampath Bank and Commercial Bank are the main two commercial banks that come as competitors to HNB. Other than those banks Bank of Ceylon, Peoples’ Bank and NSB is the competitors when is come to the government sector. In financial sector competitor rival is very high. Everyone try to grab other bank customers into their portfolio. All the banks are in a race and every bank try to earn more profit. This has become a very serious issue to HNB as well as the other banks.

To mitigate the rival of competitors HNB has use various methods. HNB always try to keep customers loyal. So the customers will never leave the bank. HNB always try to give their best service to each and every customer. So they do not feel any different while they were at the branches.

Treats of Substitutes

With the competition in the market lots of substitutes has been added to the market. Earlier utility bill payments can be only made by the banks or the relevant institute. But now they pay from super markets and even online also. Most of the banking functions have been doing by the mobile service providers. To send money to another person earlier people need to have a bank account. But with M-cash and Ez-cash people do not need bank accounts to transfer money. So the treat of substitute became very high. 

To face the situation HNB lunch new products and services to make the customers more confortable. Then the customers does not go for substitutes as they are getting quick and easy service from the bank. This will help to mitigate the risk.

Treat of New Entry

In the financial sector treat of new entry will be very low. Because enter into a financial sector is not that much easy. To enter into the financial sector they should have a huge working capital as well as the assets base. But now leasing companies also try to engage in bank functions. But food cities try to engage in banking sector. This is a huge treat because they are opened 365days and from 9.00a.m to 10.00p.m. As it is very convenience to the customers they try to move to those banks. To meet this HNB has open 7day banking branches. So that will reduce the number of customers who leave the HNB. 

HNB has identified those Porters five forces and always try to address those five forces. By that they have become success and able to earn more and more profits

How to apply Balance Score Card

How to apply Balance Score Card 

Competition has become so intense that managers do have less time to respond to market situation. Efficiency in operation and the profitability are. the key words in driving organizations today to remain competitive. The rapid technology development and improvement in communication have forced the manager to deal with a large quantum of data and arrive at the decision which would produce results comparable to market standards. This makes the process little too complex.what they perhaps needs in some benchmark in indicators to process the data objectively and to come to a conclusion not only correctly but also quickly..

According to BSC collaborative, there are four barriers to strategic implementation. They are

1.vision barrier -No one in the organization understands the strategies of the organization.

        In this situation, the organization is difficult to achieve to its targets without knowing the targets by the employees and all. Toprevent from this barrier,the all employees should be known the targets of the organization , by when the targets to be achieved.So in our bank all employees should have the significant knowledge about its targets.Through training session they can be educated

2.People barrier-Most people have targets but they have not linked to the strategy of the organization.

          In this situation, in order to cross this barrier, all employess should be in one target as well they should have same vision.

3. Resource Barrier-Time, energy and money are not allocated to those things that are critical to the organization.

          The management should understand the need of the bank and Time, energy and money is most important to implement the balance score card in the bank. Allocation of time energy, time is not wastage at all

4.Management Barrier-Management spends too little time on strategy and too much time on short term tactical decision making

  The bank should be expected the strategically decision from higher management than the tactical management. So they should have enough time to allocate to get strategic decisions

Therefore, through this research paper they have devised a process of calculating a suitable bench marking figure called balance score through which the achievements of the performance in the implementation of the strategy by the firm can be evaluated

Balance score card is a system that enables the organization to clarify their strategy and translate them into action. It is a system derived from the strategy reflecting the business objectives which the firm had set for it self.

Balance Score card consists of 4 categories. They are,

1)Financial Perspective-It evaluates the profitability element of the strategy

2)Customer’sperspective-It identifies the target market, segments and measures the company’s success in these segments.

3)internal andbusiness perspective –It focuses on internal operations.

And

4) learning & growth perspective- It identifies the capabilities in which the organization must excel in order to achieve superior internal process that creates value for customers and share holders.

Our bank applies Balance score card to achieve its targets.

First metrics should be designed to support strategies. According to Kaplan and Norton there are typical allocation across four perspectives.

1-Financial (22 %)

2-Customer (22%)

3-Internal (34%)

4-learning and growth (22%)