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7/23/2019 Business Model: A Strategic Business Approach, Case of Bank BJB
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MM 5012
Business Strategy
Business Model: A Strategic Management Approach, Case of Bank bjb
29111311 Haidir Afesina (FEZI)
MBA Executive 46
MASTER OF BUSINESS ADMINISTRATION
SCHOOL OF BUSINESS MANAGAMENT
INSTITUTE TECHNOLOGY BANDUNG
2013
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1. INTRODUCTION
1.1Company Success in The PastTransformation has deeper intention than
change, which requires stronger control
by bank bjb toward its scheme and
process to become one of the major banks
in Indonesia. It can be seen by
repositioning its position in order to be
conventional bank and get rid the
perception of regional development bank
(BPD). There are three significant steps that BJB did according to bank bjb annual report
(2012):
1. Transparency of corporate governance practice.By transparency, accountability, independency, and fairness carried out with
responsibility of its management, bank bjb move forward to reach its goal and adapt
the companys behavior in accordance with publics expectation. Successful Initial
Public Offering (IPO) marks it in 2010.
2. Enhancing for greater growth.Various work programs especially on micro segment, carefully planned and
consistently implemented, have resulted in improvements and quality enhancements
in various areas of the organization and its operations, leading to faster growth in all
business lines of bank bjb.
3. Developing growth and profit.Broadened its service networks and enlarged its range of product offerings, as well as
successfully promoted its corporate branding as a national bank. Also to consolidate
and strengthen its business fundamentals, which will enable bank bjb to continue to
grow profitably. During 2012, bank bjb has a healthy performance in growth and
profit, as the table shown that the profit in 2012 has increase more than 23% along
with more than 30% of asset (table 1). In addition, bank bjb has expanded its channel
by 84.23% to seize opportunities in all areas in Indonesia.
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3. CONCEPTUAL FRAMEWORK
Looking at an organization as a whole, each individual leader often sees the organization
primarily through his or her lens and filters. Those with finances biases see the organization
as an economic revenue generator; those with marketing see the organization as a means of
creating products or services for customer; those with technology backgrounds see the
organizations as a source of information; those with human resource background see the
organization`s talent and culture. Each of these views is right and wrong. Organizations exists
as an integrated whole. In fact, they can be divided into parts, but they only operate and make
sense when the parts work together. Accordingly, it needs the right strategy formulation in
order to aligned all views and achieve the company`s vision (figure 1).
Figure 1. Conceptual Framework
Sources: Various sources
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4. STRATEGY INPUT
It starts with strategy inputs by examining external and internal environment in order to
determine its resources, capabilities, and core competencies as the sources of strategic inputs.
These are the first two steps to see whether its competence aligned with the vision and
mission of company. External analysis using PEST gives the overviewed of macro-
environment of the industry that describe the opportunities and threat (Ireland, Hoskisson and
Hitt, 2011) along with industry analysis using Porter five forces with the outcome of industry
level attractiveness. On the other hand, internal analysis explore its value chain (primary and
supporting activities) to see company`s activities that create competitive advantage and core
competencies (resources based view) in order to explore the core that support business
strategy.
4.1 External Analysis
4.1.1 PEST
Politics/Legal
Bank Indonesia (BI) as the regulator has issued the new regulation that required banks to
allocate minimum of 20% of the total loan for micro, small medium enterprise(UMKM/SMEs). Many argued that BI associated the program with election or others`
politician intervention. It is becoming important issue, because the distribution of wealth of
society in terms of credit to public enterprise is unequal, as well as in terms of access to
finance and capital. Regardless of the background, BI`s steps to enhance the role of the
banking industry in SMEs market is positive and should be supported. Thus the competition
in this segment would be highly competitive from both of national and international banks.
Micro banking market will be increasingly lively as banks were forced to give credit to SMEs
segment. Furthermore, BI`s policy also is also forcing banks to decrease interest rates and
improve intermediary function. This would be another challenge as many banks enjoyed huge
profits in 2012 by the high lending rates. In addition, bank bjb that still has a strong
relationship with West Java government would be affected, especially for the independent of
its strategic decision.
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Economic
SMEs occupy an important and strategic place in the economic growth and equitable
development in all countries. They are viewed upon as a powerhouse of employment,
innovation and entrepreneurial spirit. In both industry and service, almost 90% of enterprises
are in the SME sector. GDP of Indonesia has increased 6% annual growth from IDR 708T in
2010 to IDR 846T in 2011. Indonesian per capita income is predicted increase from USD
3000 in 2010 to USD 5000 in 2014 and USD 14,000 in 2025 and up to number 44 in the
world for global competitiveness index ratings from 54 in 2010 (World bank, 2012). Driven
by strong domestic demand, economies of developing East Asia and Pacific continue to be an
engine of global growth, growing at 7.5 percent in 2012, higher than any other region in the
world (FT.com). Indonesian inflation rates below are 6.5% and predicted to be 3% in 2025.
Means inflation remains under control although there is still risk of higher inflationary
pressures. Thus Indonesia becomes the 17th
biggest economy in G-20 (thejakartaglobe.com).
Banking industry has been more resilient as indicated by a secure level of CAR (Capital
Adequacy Ratio) and it has been twice to the minimum level of 8% (exhibit 1). It therefore
indicated the stability of banking industry in Indonesia. Moreover, further improvement in
banking also reflected in credit growth improvement as the increasing trend of loan growth
indicated a good economic condition that resulted becomes a favorite among foreign investor.
However, the common problem with the loan is the process itself i.e. complicated
requirements.
Social/Demography
As the economy grows and as more opportunities appear on the horizon, many expected to
see rising incomes accompanied by increased consumer spending, driving more economic
growth, especially for the middle class group. According to World Bank, Indonesia has one
of the fastest growing middle classes with rate up to 7 million people a year (people who
spend USD 2 to 20 a day). According to bps, the total of middle class are 56% or 154 million
from 237 million Indonesian populations in 2010 (exhibit 2). From the population itself,
there are 48% women. In 2020 it is predicted to be 265 million people with 180,3 billion
(70%) productive ages i.e. 15-64 years old (world bank, 2012). The sizes of SMEs were 55
million with 13 million people are not bankable (info bank, 2012). The market itself increases
0.5-1.5% annually. Furthermore, there are 0.24% female are micro player. Having these huge
SMEs, it offers attractive margins for banking. In addition, SMEs are the driving force behind
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a large number of innovations and contribute to the growth of the national economy through
employment creation, investments and exports.
Technology
Many banks are leaving the traditional banking and move to Internet banking. Investment for
IT is becoming mandatory in order to serve customer with easiness transactions everywhere.
The era of mobile transforms the industry. Thus many banks reduce its physical outlet in
order to concentrate with E-banking. This is becoming a problem for bank bjb, as it has no
credit card and e-banking facilities. Bank bjb is member of ATM bersama and Prima, so
that its ATM card is accessible to lfots of ATM machine with that logo. However, bank bjb
has no access with international network provider such as VISA, Master card, American
Express, while other competitor has offer this services. The investment has been started end
of 2012. The technology developments force the bank to create a creative solution through its
product and services in order to support the operational excellence so that customer would
like to enjoy the facilities.
The issue of whether Internet banking can satisfy what customers want remains unanswered
question. However, in this globalization era, the Internet can be leveraged to act as a
competitive weapon in businesses, especially for bank bjb in order to stay competitive.
Internet banking and traditional PC banking differ with respect to the application software
resident on the user's computer and hence the requirement for ongoing software upgrades and
distributions. The value of the Internet as a distribution channel is its ability to enhance
interactions between the bank and its customers, as opposed to merely providing a means for
touching base with customers. The better a bank can identify its customers and know about
them, the less it will depend on traditional marketing channels. On the other hand, SMEs
need to overcome their problems and enhance their access to new technologies for increasing
their competitiveness in the international market. For this, the government and banking sector
have an important part to play & take a proactive role of identifying and encouraging new
entrepreneurs. They must come forward to remove the bottlenecks faced by the SMEs at
national & international level
4.1.2 Porter Five ForcesThe industry environment has a more direct effect on the firms strategic actions. Using
Porter`s five forces model analysis help the company to determine the long run profitability
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in any given industry. This theory is based on the concept that there are five forces that
determine the competitive intensity and attractiveness of a market. In addition it helps
anticipate and exploit cultural change. The five forces are threat of new entrants, bargaining
power of buyer, bargaining power of supplier, threat of substitute product or services, and
rivalry among existing firms. Thus, the framework reveals the important differences among
industries, how industries evolve and help companies find a unique position.
Banking industry has a promising growth as many banks enjoyed huge profits in 2012 by the
high lending rates. Based on Porter`s framework, the industry of micro financing is highly
attractive (table 2). Not only few players who dominated the market (BRI, regional
development bank (BPD), rural bank (BPR) but also the emerging of the people and industry
itself who contribute to the economic growth. However, not all banks are able to penetrate in
this segment, even bank bjb has only 0.4% market share of micro segments from IDR
113.75T total of national micro credit. In addition the era of banking industry with Internet
capability is highly competitive, regardless of its almost matured market (saturated), the
profit remain dynamics.
Table 2. Porter Five Forces
FORCES ANALYSIS
ATTRAC
TIVENES
S
Thereat
of NewEntrants
(Medium)
It takes strong capital requirements along with experience in
order to compete in this segment. Economic scale becomes a
barrier, as the distribution channels are important. Thus it
dominated by big existing player such as BRI and Mandiri.
However, new banks would still be able to compete, as the
players from middle class bank are still low. Many banks are
also offer the same product but with different labels. This also
becomes another barrier for new player.
Attractive
Bargainin
g Power
of Buyer
(Medium)
Interest rate and service charge is sensitive indicator for Attractive
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FORCES ANALYSIS
ATTRAC
TIVENES
S
customer in bank industry, therefore customer is price
sensitivity. Micro consumers can easily change from one bankto other bank whenever find the offer that suits them, especially
for the process.
Bargainin
g Power
of
Supplier
(Medium)
Government is the main regulator that control policy for banks
and other financial institutions. However, bank still has power
to decide its own rates, especially when the demand is higher.
Attractive
Threat of
Substitute
(Medium High)
Many other financial institutions besides banks are competing
in these segments. Thus it make consumers has lots of choices.
Attractive
Rivalry
Among
Existing
Competit
or
(High)
The rivalry is not coming from the same micro banks, but also
from high establish bank, international bank, and financial
institution that offer various services and products. Many banks
are also provide theirs IT advance services.
Attractive
4.2 Internal Analysis4.2.1 Value Chain Analysis
Value chain analysis is based on the principles that firm exist to create value for their
customers. It used to identify and evaluate the competitive potential of resources and
capabilities (Ireland, Hoskisson and Hitt, 2011). The firms activities are divided into
separate sets of activities that add value (primary and support). The firm can more effectively
evaluate its internal capabilities by identifying and examining each of these activities. Each
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value adding activity is considered to be a source of competitive advantage. It allows the firm
to understand the parts of its operations that create value and those that do not. Primary
activities and support activities are linked to each other.
According to Porter (1980) five primary activities are inbound logistic, operations, outbound
logistic, sales and marketing, and services, while the supporting activities are procurement,
technology development, human resources, and firm infrastructures. The author tried to
adjust those activities based on research at bank bjb (exhibit 3, exhibit 4). Bank bjb has to
see that the primary activities as a step that has to add some increment value to the finished
product or service, otherwise it is just a cost. A channel branch expansion outside West Java
along with increasing its ATM machine has been done annually i.e. 56 branches, 742 ATM.
Bank bjb mostly participate on government related activities than public activities. Its strong
capital structures some from regional development source of cash. Public education has to be
done aggressively in order to offer the product, services as many unfamiliar products for
people besides micro financing. Bank bjb therefore struggle to generate demand from
consumer banking. For micro financing process, bank bjb has offered a quick and easy loan
process compare to others i.e. within a day. Indeed, there are still some requirements to be
filled. However, the maximum amounts of loan are IDR 250 million with lower interest to
others as bank bjb implemented the cost leadership i.e. 7-11%.
With the sorting activities in the value chain, in order to
reduce operating costs by choosing the pattern of
outsourcing. However, out sourcing can only be done in
areas that do not create value or areas at a substantial
disadvantage compared to competitors. In contrast, bank
bjb put its outsourcing as a sales promotion female and
some as a customer service. In fact, bank bjb stressed on
giving personalized customer service to the entire
employee as their core competences. Thus it could be a
problem as become customer service needs not only
adequate product knowledge, but also as brand
ambassador. The recruiting is not only focusing on young
age with a good looking criteria from top universities, but also focusing on finding the
personality that accordance with bank bjb. In addition the talent mapping and incentive based
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performance should be encouraged. This to prevent hijacking from other banks and also to
aligned the social mission of bank bjb. Therefore the selective strategy has to be done as
competitive advantage arises from the activities in a company`s value chain. A good business
strategy presents a specific action plan to overcome a defined challenge.
4.2.2 Resources Based ViewCategorized as tangible or intangible, resources can be defined as inputs into a firms
production process, such as capital equipment, the skills of individual employees, patents,
finances, and talented managers (Ireland, Hoskisson and Hitt, 2011). As a source of
competitive advantage for a firm over its rivals, it should be met the four criteria; rare
(capabilities that are not possessed by competitors), valuable (capabilities that help a firm
neutralize threats or opportunities), costly to imitate capabilities (capabilities that other firms
cannot easily develop), non-substitutable capabilities (capabilities that do not have strategic
equivalents). The tangible resources are financial, organizational, physical and technological,
while the intangible are human and reputational. From the tangible aspect (organization),
Bank bjb has a limited product portfolio that served in niche market. In addition the corporate
culture (Go Spirit) is established for family working environment. In other words, care is not
only to customer but also to colleagues. From the intangible aspects, the reputation of bank
bjb within West Java and Banten is high, however it is still hard to convince public regarding
its new status as conventional banking especially outside West Java & Banten. In addition the
innovation on its IT system is still behind major competitor, as explain the details of
resources and capabilities (exhibit 5, exhibit 6). Most of bank bjb competence is temporary
competitive advantage TCA). Thus bank bjb should combine single competence in order to
create sustainable competitive advantage (SCA) as shown below:
Table 3. Combination of resources
Category ResourcesValuabl
eRare Imitable
Non
Substitu
table
TYPE
Tangible
and
Intangible
Technology YES YES YES YES TCA
Reputational,
organizational
YES YES YES YES SCA
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5. BUSINESS LEVEL STRATEGY
A business-level strategy is an integrated and coordinated set of commitments and actions the
firm uses to gain a competitive advantage by exploiting core competencies in specific product
markets. Porter (1980) developed three generic strategies (cost leadership, differentiation and
focus) to help the firm outperformed rivals within industry, and so successfully position itself
against the five forces.
5.1 Current Business Level Strategy.
Bank bjb business level strategy is competitive strategy i.e. cost leadership. Means relatively
standardized product, features acceptable to many customers and lowest competitive price.
According to Ireland, Hoskisson and Hitt, the risks are:
A loss of competitive advantage to newer technologies A failure to detect changes in customers needs The ability of competitors to imitate the cost leaders competitive advantage through
their own unique strategic actions.
Bank bjb is focus on lowering their operational cost. The product is based on interest loan,
while others fee based income. For instance is its savings product has low administration fees
compare to others. Also by cooperate with bersama and prima for ATM network with
free of charge withdrawal all over Indonesia. Its ATM also function as debit card that can be
used in any BCA EDC (electronic data capture) machine.
According to Tracey and Wiersema, bank bjb adopted the strategy of product leadership for
its segment i.e. PNS (West Java & Banten government officer). In addition, since IPO in
2010, bank bjb also aggressively on market penetration. Bank bjb customer segmentation is
male and female with age of 21-45 years old and middle low (IDR 1-2 million per month).
Mostly their targets are West Java & Banten government officers and SMEs. In order to
satisfy their target, the product that they give is related with their payroll, such as easiness
transaction, ATM debit facilities along with consumer loans. For SMEs, varieties loan
products with low interest such as KMU (Kredit Mikro Utama), KUR (kredit Usaha Rakyat)
and KCR (Kredit Cinta Rakyat) are becoming favorites. Therefore many of its branches and
ATM are close with government areas. Bank bjb launched Waroeng bjb, which as lending
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outlets.Bank bjb is also providing wireless EDC in order to help SMEs transaction without
coming the bank. The future of bank bjb plans to focus with growth in the SME sector with
the support of existing consumer sector at this time. Therefore bank bjb tried to build its
CRM in order to reach customer in rural and also build the awareness.
Competitor Analysis
The two main competitors are bank Bukopin and BTPN
(exhibit 8). Both of them are interest in SMEs as their
target. Bank Bukopin, is a powerful SMEs player. It is no
11 top banks that successfully get rid of its image as
cooperative bank, while bank bjb still struggle with its
image as regional development bank. In addition, bank
Bukopin has a wider network along with its e-banking
facilities. Second, bank BTPN is an emerging SMEs
player. Despite of its position on no 15, bank BTPN able
to attract consumer through its insurance product with unlimited age. It also develops banking
community through sub branches in the SMEs communities. Therefore, bank bjb has to be
able to combine through its process as differentiation i.e. quick and easy process. The
opening of waroeng BJB has to be increases through channel partnership. However, any
such strategy must occur in the context of rules of the game for socially desirable competitive
behavior, established by ethical standards and through public policy. The rules of the game
cannot achieve their intended effect unless they anticipate correctly how businesses respond
strategically to competitive threats and opportunities. Furthermore, the Author recommends
bank bjb to acquire existing rural banks (BPR) in order to increase its market share in SMEs
(exhibit 9).
5.2 Future Business Level Strategy
Since bank bjb transform itself to be conventional banking, its business strategy should be
change. Despite of serving mass market through its expansion, the Author argued that bank
bjb has to play in niche market according to the analysis of external and internal factors i.e.
Women, 21-45 years old, with social class B, C1, C2 and D. Therefore, bank bjb should focus
with customer intimacy according to its core competence, while the product will be
customized based on customer needs. The quality of service is an essential issue in this
industry because the offered products are usually difficult for the customer to understand and
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to differentiate. Therefore integrated marketing communication has to be developed and well
targeted asbank relationships are strongly based on interpersonal relationships. The Author
proposed focus differentiation as new business level strategy (exhibit 7). Based on the
analysis both of internal and external, bank bjb has to redefine its positioning through its
marketing strategy. Marketing strategy has to be aligned with its business strategy in order to
achieve company`s vision. According to Maslow hierarchy of needs, consumers of bank are
categorized to safety needs, as they need a security and protection. The bank therefore is able
to guarantee security in addition to the money. Bank bjb therefore try to fulfill their segments
through its customized and specialized product and services. By still maintaining its SMEs,
bank bjb is also able to target women, especially on micro.
Strategic Positioning
The Author proposed its positioning as women financial solutions both of consumer banking
and SMEs. The globalization, technology and liberalization of the market, which support the
entrance of new national and international banks as well as the changing patterns of consumer
activity, have led to a highly competitive environment. Accordingly, bank bjb is not only
compete with local BPD (bank Jateng, bank DKI), state owned bank (Mandiri, BRI), private
banks (Bank Mega, Bank danamon), rural banks (BPR KS, BPR Jatim) but also with other
financial institution such as pegadaian, leasing companies and other international banks. In
order to achieve its vision to be top 10 banks, bank bjb has to differentiate and then
aggressively communicated its message as a modern conventional bank. As fact, bank bjb as
a brand has low awareness outside West Java & Banten. Brands, from a strategic perspective,
help to create unique features to distinguish a company from other competitors who offer
similar products and services.
Positioning statement
For womenpreneur, bank bjb, is a women financial solution that delivers quick and easy
process with high trust and high touch, because only bank bjb who understand local needs.
Growth Strategy
Bank bjb has range of product portfolio. It is important to be more aggressive penetrate into
market as many people unfamiliar with the product (exhibit 11). Therefore it needs to
analyze which category that has the highest revenue and potentially to be developed. Using
BCG matrix (exhibit 12), bank bjb has to concentrate on micro credit along with developing
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another savings product along with applying
reward strategy in order to acquire new
customer i.e. direct gift when open account,
point reward to change with gift directly.
These are method to gain customer loyalty. It
is proved to be effective as BRI and BCA
has done it. The needs of product development are a must in order to compete and attract
customer, especially customization product along with personalized service. In service
industry, service quality has been identified as a key success factor for the prospective
performance and represents a significant element of the bank s brand values. Consumer
satisfaction is mainly influenced by customer service and the way organizations deal with
customer problems.
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6. CORPORATE LEVEL STRATEGY
A corporate level strategy is expected to help the firm earn above returns by creating value.
The corporate level strategy`s value is ultimately determined by the degree to which the
business in the portfolio are worth more under the management of the company than they
would be under any other ownership (Ireland, Hoskisson and Hitt, 2011). Diversified firms
vary according to their level of diversification and the connections between and among their
business. Bank bjb is pursuing a low-level diversification strategy, categories as dominant
business strategy. It is between 70% and 95% of revenue comes from a single business.
Mainly 70% revenue is generated from consumer banking followed by 30% of SMEs
product.
6.1 TOWS Matrix
Having SWOT results from both of external and internal analysis, the TOWS matrix is being
used as a conceptual matrix for systematic analysis that facilitates matching the external
threat and opportunities with the internal strengths and weaknesses. (Exhibit 14). Bank bjb
should be focus on building human capital. The recruitment should be based its goal and their
core business. In addition, human capital readiness is important in this high competitive
industry. Giving customer service is normal, but giving care by anticipating customers
anxiety and desires are more important. It is all about the character that will become image of
the brand. As the future of the bank would be SMEs by specializing on women, the human
resources should be developing its micro business skills i.e. customer service. In addition the
IT system has to develop by maximizing the use of Internet along with invest on IT system
software. The system would be benefit as:
1. Use integrated data source to guide automated event marketing2. Use enterprise data warehouse (EDW) to track customer interaction with the firm and
marketing campaign
3. Track and monitor marketing campaigns and assets using automated software such asmarketing resources management
With IT, bank bjb would be able to maximize its program after its brand audit (explatory and
inventory) in order to generate demand. From the Author point of few, bank bjb focus on
building its assets. Banks that anticipate the power of the Internet will be in control of events.Conversely, banks that do not respond will be forced to accept changes that others initiate and
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will effectively find themselves in a position of competitive disadvantage. In addition channel
partnership with highly recognized institution that has wider distribution channel is being
encouraged such as PLN, Pos Indonesia. It is believed to be much more effective as the future
of banking industry is branchless.
6.2 IPO
Bank bjb is a pioneer among regional development banks that become public listing or IPO
on the Indonesian Stock Exchange (IDX) on July 8, 2010. It offered to the public of
2,424,072,500 Series B shares, (including EMSA) at an offering price of IDR 600 per share
with total proceeds from the IPO of about IDR 1.4 trillion. Then bank bjb obtained a
relatively large interest from domestic and foreign investors. The compositions of shares are
25% owned by public, and 75% by government. Then it has 92.72% domestic shares and
7.28% foreign shares. The highest price of shares during 2012 was IDR 1130 and the lowest
was IDR 910 (exhibit 15). The reason that the shares prices low at that time was because it
effected by bank bjb lawsuit case i.e. politics issue. Banks bjb use the funds from the offering
to:
1. Strengthening the companys capital,2. Support loan expansion, especially the SMEs sector3. Expansion of network and information technology development.
.
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7. STRATEGY MAP
Strategy map is being made in order to achieve company`s primary objectives by associate it
with balance scorecard as the performance measurement. In other words, it is a way to
communicate to with a graphic depiction of strategic objectives and the factors linked to them
(Kaplan and Norton, 2004). The importance of aligning human capital and IT programs also
being stated in order to maintains high readiness and flexibility. The three elements on
strategy map are:
1. Quantify company`s goalsSet strategic targets and verify maps cause-effect links.
2. Define the time lineTo ensure value-added proposition is workable and sustainable over time, determine
how it will generate value in short-, medium- and long-term periods.
3. Select initiativesPrioritize organizations actions, programs and initiatives, including investments in
order to achieve its goals within the required time frames.
7.1 Balance Scorecard
Management performance measurement is a complex task since multiple inputs and multiple
outputs are involved in the process. Kaplan and Norton (1992) proposed four balanced
perspectives to measure performance comprehensively including financial, customer, internal
business processes, and learning and growth perspective. These perspectives reflect the
interests of the key stakeholders of companies involving shareholders, customers and
employees. Kaplan and Norton (1996) proposed the cause-and-effect relationships among the
four perspectives of BSC by measuring the strength of the linkages among measures in
different. Measures such as ROI, shareholder value, profitability, revenue growth, and cost
per unit are the lag indicators that show whether the organization's strategy is succeeding or
failing (Kaplan, 2004). The balance scorecard of bank bjb can be seen on exhibit 18.
Learning and growth perspective
It stressed on innovation, creativity, competition, and capabilities, and target subjective
properties. This perspective aims to identify professions (human capital), system
(informational capital), and organizational state (organizational capital) in order to support
internal processes. The measurement will be seen from the turnover of employee along with
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number of the champions in every division. Bank bjb strategies are:
1. Develop human capitalIt is important for bjb to have a proper talent map. So that it will be talent based
competency
2. Information capitalBuild the IT infrastructure for developing knowledge management system and to
documented any of learning process
3. Developing competitive working environmentBy having a fair competitive environment, each individual will provide their best
capabilities that would help the company achieve its vision
Internal process perspective
It identifies decisive processes in the organization. In this perspective, company mustmake
sure that companys products and services meet the needs of customers.
Bank bjb strategies are:
1. Channel partnership with highly recognized public institution.2. Waroeng bjb outlets expansion3. New product development is needed to adapt with the current trend4. CRM and CSR will be actively encourage as the need of public education of banking
products along with established awareness
Costumer perspective
Results in introduction of a valuable approach that guarantees loyalty of costumers. In this
perspective we must keep constantly identifying parameters, which costumers consider as
valuable, and provide them for costumers. The measurement will be seen from the increment
of market share. Bank bjb strategies are:
1. Customer satisfaction (quality of services) index2. Customization products based on customer insight and needs. However, provide the
best solutions for customer is the main goal.
3. Build the confidence of customer to be loyal and trust bank bjb through its programand social mission i.e. womenpreneur
Financial perspective
It defines tangible outcomes of organizations strategies and includes a series of traditional
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8. BUSINESS MODEL
To conclude all the ideas from the analysis above, the Author tried to create bank bjb
business model. The business model itself can be illustrated using business model canvas. It
is a flexible template for conceiving, completing and assessing business models (Osterwalder
and Pigneur, 2010). Below are tnine building blocks cover an organizations customers,
offer, infrastructure and financial viability.
Figure 3. Business Model Canvas
The proposed business models are:
1. Value PropositionA women financial solution that delivers quick and easy process with high trust and
high touch, because only bank bjb who understand local needs. It encourages women
to be womenpreneur on SMEs. Having customization product based on women and
SMEs needs and also low interest on their loan programs.
2. Key PartnershipHaving partnership with insurance company and local government for their payroll
distribution. Banking industry is highly regulated by the government. It is very
important for regulatory agencies to maintain control over the banks because they are
the lifelines of an economy. The control is also needed to protect the depositors
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against any fraud. One example of a regulatory requirement is the Reserve
requirement. It sets the minimum reserves that each bank must hold. The operations
of a bank are highly IT intensive. Therefore to fulfill their IT needs, should partner
with technology vendors. The technology vendors provide IT solutions in areas of
customer experience management, multi-channel integration, business process
improvement, loans origination and processing etc.
3. Key ActivitiesCRM is becoming very important besides their banking operation (branch, call center,
IT, and sales and marketing) in order to maintain its customer along with acquire new
customers such as customer gathering and public relation.
4. Key ResourcesCombining both of IT and human capital development are important intangible
resources. From the tangible resources are coming form loan assets, bank bjb`s
physical assets such as ATM machine and offices.
5. Customer RelationshipsCRM along with personalized service on banking daily operations are becoming
crucial factors to engage with customers. Social media is a trend to have customer
insight and close with them.
6. Customer SegmentsBesides SMEs and local government officers (PNS), women are becoming the next
focus target.
7. ChannelBeing expanded to outside West Java, it is important for bank bjb to apply channel
partnership with high recognize institution such as PT. POS, PLN. Besides build their
own offices, this type of distribution also would help them to save cost effectiveness.
Local cooperative is also being encouraged for sub rural distribution channels.
Waroeng bjb as lending outlets are build on public area for the accessibility. The use
of social media and internet access are also being encouraged as channels.
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8. Cost StructuresChannel costs are the key component of the cost structure of a bank. The interest paid
by the bank to the depositors is also one of the important cost structure components.
9. Revenue StreamsThe revenue is coming from lenders and IPO. The Author proposed bank bjb to also
make money through Credit cards business.
REFERENCES
Bank bjb Brand Guidelines (2010)
Bank BJG Annual Report (2012)
Henry, Anthony E (2011), Understanding Strategic Management, 2nd Edition, Oxford
University Press
Ireland, R.D, Hoskisson, R.E, and Hitt, M.A (2011), The Management of Strategy; Concept
& Cases, 9th Edition, South-Western Cengage Learning
Porter, Michael E (1980), Competitive Strategy, Techniques for Analyzing Industries and
Competitors, Free Press/Simon & Chuster
Porter, Michael E (1985), Competitive Advantage, Creating and Sustaining Superior
Performance, Free Press/Simon & Chuster
Kaplan, Robert S., Norton, David P. 2004. Strategy Maps: Converting Intangible Assets into
Tangible Outcomes. Boston: Harvard Business School Publishing
Kaplan, Robert S., Norton, David P. 1996. The Balanced Scorecard. Boston: Harvard
Business School Press.
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APPENDIX
Exhibit 1. Sufficient CAR (%)
Source: Bank Indonesia, April 2012
Exhibit 2. The Rising of Middle Class (in USD)
Class Cut off 2003 (%) 2010 (%)
Low 20 0.1 0.2
Note: Per capita expenditure per day is adjusted to the 2005 purchasing power parity terms.
Source: World Bank, March 2011, based on Susenas.
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Exhibit 4. Supporting Activities
Supporting
ActivitiesEXPLANATION
Firm
infrastructures
Risk Management Strategic planning
Human
Resources
Internal training and send employee to workshop based on TNA(training need analysis)
Compensation system based on performance Management trainee program
Procurement
Recruitment is done by rigorous selection refer to education level andskill that have core competence in communication skills from top
universities
Vendor and outsource selectionTechnology
Development
No internet banking No mobile banking No credit card facilities
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Exhibit 5. Capabilities
Resources Explanation
Financial
Regional development source of cash IPO since 2010
Organizational
Strong government related Corporate culture i.e. Go spirit (service oriented) Range of product portfolio
Physical
Its total asset in 2012 is IDR 70.84T/+30.11% Branch network i.e. 56 branch, 228 sub branches
ATM network i.e. 742 in Indonesia
Technological
Lack of IT development i.e. No mobile banking, no internet banking No credit cards facilities
Human
Management trainee program Young age with communication skills from top universities Competence based
Innovation No innovation in terms of product or services
Reputational
Strong image as regional development bank of West Java andBanten
Low awareness outside West Java & Banten
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Exhibit 6. Core Competencies
Category ResourcesValu
ableRare
Imitabl
e
Non
Substi
tutable
TYPE
Tangible
Financial:
CapitalYES NO NO NO
Competitive
parity
Organizational:
Product, cultureYES YES YES YES SCA
Physical:
Channel
(branches, ATM)
YES NO YES NOTCA
Technological
Internet facilitiesYES NO YES NO TCA
Intangible
Human:
Employee skillsYES NO NO NO TCA
Reputational:
BrandYES YES YES YES SCA
Exhibit 7. Future Business Level Startegy
MARKET
SCOPE
ADVANTAGE
LOW COSTPRODUCT/SERVIC
ES UNIQUENESS
BROAD Cost Leadership Differentiation
NARROW Cost Focus
Focus Differentiation
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Exhibit 12. BCG Matrix
High
Growth
STARS
Consumer loani.e. Kredit Guna Bakti
Depositsi.e. Deposito suka-suka
QUESTION MARKS
Insurance
Low
Growth
CASH COWS
Debit card (ATM) Savings product
i.e. Tanda Mata berjangka
DOGS
Cheque
High Market Low Market
Exhibit 13. BJB Product Portfolio
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Exhibit 14. TOWS Matrix
STRENGHTS
S1:IPO
S2:Strong financial
performance
S3:Strong customer base in
West Java and Banten
WEAKNESSES
W1:Lack of IT
development
W2:Human capital
readiness
W3:Low brand image
OPPORTUNITIES
O1:Emerging marketon micro outside
West Java
O2:Women on micro
(niche)
S-O
S1-S2-O1Expansion outside WestJava and Banten
S3-02Redefining its
Segmentation, targeting,
positioning
W-O
W1-W2CRM and CSR W2-W2
Employee branding
W3-O1-O2Invest on Ads, CRM,
CSR
THREAT
O1:Many banks are
entering SMEs
including other
financial institution
O2:IT as competitive
advantage from
competitor
S-T
S1-S2-O1Acquire local rural
banks
S3-O1Channel partnership
Create community
among SMEs
S2-O2:Invest on IT
development
W-T
W1-O2Invest on IT system
W2-O1Human capital
development
W3-W1CRM and heavily on
Ads
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Exhibit 15. Bank bjb Shares Price
Source: Bank bjb Annual report 2012
Exhibit 17. Road Map Bank bjb
Source: Bank bjb Guideline
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Exhibit 18. Strategy Map Balance Scorecard
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Exhibit 20.Financial Highlights
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Source: Bank bjb Annual Report 2012
Exhibit 21. Ratio
Source: Bank bjb Annual Report 2012
Exhibit 22. Growth and Profit
Source: Bank bjb Annual Report 2012
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Exhibit 23. Existing Business Model
Exhibit 24. Business Model Recommendation
Recommended