Conversion Gate

31/12/2014

12/31/2014

Project Report

Strategic

Management

Strategic

management

SSegic

management

Submitted By: Group 1 (Sec B)

Mukul Parashar (14020841084)

Srishti Kak (14020841088)

Deepshikha Ranjan (14020841094)

Sourav Jalan (14020841104)

Swetha Bandaru (14020841108)

1 | P a g e S I B M B e n g a l u r u

Contents

1 INDIAN BANKING OVERVIEW ........................................................................................................................ 3

1.1 STRUCTURE OF INDIAN BANKING INDUSTRY ................................................................................................ 3 1.2 MAJOR PLAYERS IN INDIAN BANKING INDUSTRY .......................................................................................... 3 1.3 HOW DOES THE INDUSTRY WORK ................................................................................................................ 3

2 ICICI BANK OVERVIEW .................................................................................................................................. 4

2.1 INTRODUCTION ............................................................................................................................................ 4 2.2 VISION ........................................................................................................................................................... 4 2.3 MISSION ........................................................................................................................................................ 5 2.4 AWARDS & RECOGNITION ............................................................................................................................ 5 2.4 PRODUCTS OFFERED ..................................................................................................................................... 5

3 EXTERNAL ANALYSIS- OPPURTUNITIES AND THREATS .................................................................................. 5

3.1 OPPURTUNITIES ............................................................................................................................................ 5 3.2 THREATS ....................................................................................................................................................... 6 3.3 PORTERS FIVE FORCES MODEL .................................................................................................................... 6

3.3.1 BARGAINING POWER OF SUPPLIERS ..................................................................................................... 6 3.3.2 BARGAINING POWER OF CUSTOMERS: LARGE NUMBER OF CUSTOMERS ........................................... 6 3.3.3 INTENSITY OF EXISTING RIVALRY .......................................................................................................... 6 3.3.4 THREAT OF SUBSTITUTES ...................................................................................................................... 7 3.3.5 THREAT OF NEW COMPETITORS ........................................................................................................... 7

4 INTERNAL ANALYSIS ...................................................................................................................................... 7

4.1 VALUE CHAIN ANALYSIS AT ICICI BANK ......................................................................................................... 7 4.2 STRENGTHS ................................................................................................................................................... 7 4.3 WEAKNESS .................................................................................................................................................... 8

5 BUILDING BLOCKS OF COMPETITIVE ADVANTAGE ........................................................................................ 8

5.1 SUPERIOR EFFICIENCY ................................................................................................................................... 8 5.2 QUALITY ........................................................................................................................................................ 8 5.3 INNOVATION ................................................................................................................................................ 9 5.4 RESPONSIVENESS TO CUSTOMERS ............................................................................................................... 9 5.5 ECONOMY OF SCALE ..................................................................................................................................... 9 5.6 LEARNING EFFECT ......................................................................................................................................... 9 5.7 MARKETING STRATEGY AND PRACTICES ..................................................................................................... 10 5.8 HUMAN RESOURCES DEVELOPMENT ICICI ................................................................................................. 11 5.9 RECOMMENDATIONS FOR ICICI .................................................................................................................. 11 5.10 CRM AT ICICI BANK ................................................................................................................................... 12

6 BUSINESS LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT ................................................................ 12

6.1. HORIZONTAL MERGERS: ............................................................................................................................ 12 6.2 CHAINING ................................................................................................................................................... 13 6.3 USING INFORMATION TECHNOLOGY AND INTERNET ................................................................................. 13 6.4 ICICI POSITION IN OVERALL INDIAN BANKING SECTOR ............................................................................... 13

7 ICICI INTO INTERNATIONAL MARKETS ......................................................................................................... 14

7.1 TECHNOLOGY ISSUES .................................................................................................................................. 15 7.2 OPERATIONAL ISSUES: ................................................................................................................................ 15

8. DIVERSIFICATION STRATEGIES FOLLOWED BY ICICI .................................................................................... 16

8.1. RELATED PRODUCT DIVERSIFICATION- HORIZONTAL INTEGRATION ......................................................... 16


8.2 UNRELATED PRODUCT DIVERSIFICATION- HORIZONTAL INTEGRATION ..................................................... 16 8.3 VERTICAL INTEGRATION ............................................................................................................................. 17 8.4 CONCENTRIC INTEGRATION ....................................................................................................................... 17

9 CORPORATE LEVEL STRATEGY ..................................................................................................................... 17

9.1 DOMESTIC RETAIL BANKING ....................................................................................................................... 17 9.3 GLOBAL CORPORATE AND INVESTMENT BANKING .................................................................................... 17 9.4 INTERNATIONAL BANKING ......................................................................................................................... 17 9.5 RURAL BANKING ......................................................................................................................................... 17 9.6 INSURANCE AND ASSET MANAGEMENT ..................................................................................................... 18 9.7 BOSTON CONSULTANCY GROUP (BCG) MATRIX ......................................................................................... 18

10 PHILOSOPHY OF CORPORATE GOVERNANCE ............................................................................................. 18

10.1 WHISTLE BLOWER POLICY......................................................................................................................... 19 10.2 PERFORMANCE REVIEW ........................................................................................................................... 19 10.3 PROFIT & LOSS ACCOUNT ......................................................................................................................... 19

11 STURUCTURE STRATEGY IN A SINGLE INDUSTRY ....................................................................................... 19

11.1 ORGANIZATION STRUCTURE OF ICICI BANK: ............................................................................................. 19 11.2 GEOGRAPHICAL STRUCTURE OF ICICI BANK ............................................................................................. 20 11.3 CULTURE AT ICICI BANK ............................................................................................................................ 20

12 ICICI STRATEGIES TO COMPETE ACROSS COUNTRIES ................................................................................. 20

12.1 WHOLLY OWNED SUBSIDIARIES ............................................................................................................... 20 12.2 OFFSHORE BANKING UNITS ...................................................................................................................... 20 12.3 REPRESENTATIVE OFFICES ........................................................................................................................ 21 12.4 ICICI INTERNATIONAL OPERATIONS .......................................................................................................... 21

13 BIBLIOGRAPHY .......................................................................................................................................... 22


1 INDIAN BANKING OVERVIEW The Indian Banking System is known the world over for its robustness. The Reserve Bank of India is the central/apex Bank that regulates the functioning of all banks operating within the country.

1.1 STRUCTURE OF INDIAN BANKING INDUSTRY

1.2 MAJOR PLAYERS IN INDIAN BANKING INDUSTRY

1.3 HOW DOES THE INDUSTRY WORK


2 ICICI BANK OVERVIEW

2.1 INTRODUCTION The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at

the initiative of the World Bank, the Government of India and representatives of Indian

industry, with the objective of creating a development financial institution for providing

medium-term and long-term project financing to Indian businesses.

Below are some of historical data of ICICI bank:

ICICI emerges as the major source of foreign currency loans to Indian industry.

In 1994, ICICI Bank was incorporated promoted by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary.

In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.

In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896million) for the year ended March 31, 2010.

The Bank has a network of 2,529 branches and about 6,102 ATMs in India, and has a presence in 19 countries, including India.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.

ICICI Bank provides a wide array of banking products and financial services to its retail and corporate customers.

It has a wide variety of delivery channels and specialized affiliates and subsidiaries that ensure the flow of its offerings in the areas like investment banking, venture capital, life and non-life insurance and asset management.

This bank is also India's largest credit card issuer. ICICI Bank also has the largest international balance sheet among all the banks in

India.

2.2 VISION

To be the leading provider of financial services in India and a major global bank.


2.3 MISSION

We will leverage our people, technology, speed and financial capital to:

Be the banker of first choice for our customers by delivering high quality, world-class products and services.

Expand the frontiers of our business globally.

Play a proactive role in the full realization of Indias potential.

Maintain a healthy financial profile and diversify our earnings across businesses and geographies.

Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which we operate.

Create value for our stakeholders.

2.4 AWARDS & RECOGNITION Below are major awards that were given to ICICI bank,

ICICI Bank ranked 5th in the list of "57 Indian Companies", and 288th in World

Rankings in Forbes Global 2000 list.

ICICI Bank has won the "Banking Technology Awards 2010" at The Indian Banks

Association in the following categories:

"Best Financial Inclusion Initiative" (first prize).

"Best Online Bank" (runner up).

"Best use of Business Intelligence" (runner up).

"Technology Bank of the year" (runner up).

2.4 PRODUCTS OFFERED Some of the banking products offered are shown below:

Personal Banking

Global Private Clients

Corporate Banking

Business Banking

NRI Banking

3 EXTERNAL ANALYSIS- OPPURTUNITIES AND THREATS

3.1 OPPURTUNITIES 1. The concept of saving in banks and investing in financial products is increasing in rural

areas as more than 62% percentage of Indias population is still in rural areas.

2. ICICI bank is planning to open 1500 new branches

3. Small and non performing banks can be acquired by ICICI because of its financial

strength

4. ICICI bank is expected to have 20% credit growth in the coming years.

5. New products and new markets can help the bank to expand their business and

diversify their portfolio of products and services

6. International markets offer ICICI Bank new opportunities to expand the business and

increase sales


3.2 THREATS 1. The concept of saving in banks and investing in financial products is increasing in rural

areas as more than 62% percentage of Indias population is still in rural areas.

2. ICICI bank is planning to open 1500 new branches

3. Small and non performing banks can be acquired by ICICI because of its financial

strength

4. ICICI bank is expected to have 20% credit growth in the coming years.

5. New products and new markets can help ICICI Bank to expand their business and

diversify their portfolio of products and services

6. International markets offer ICICI Bank new opportunities to expand the business and

increase sales

3.3 PORTERS FIVE FORCES MODEL

3.3.1 BARGAINING POWER OF SUPPLIERS

Inputs have little impacts on costs: When inputs are not a big component of costs,

suppliers of those inputs have less bargaining power. Low cost inputs positively affect

ICICI Bank. Inputs have little impact on costs (ICICI Bank), so an analyst should put

more weight into it.

Bargaining power of supplier of ICICI bank: Bargaining power of supplier of ICICI bank

has a significant impact, so an analyst should put more weight into it. "Bargaining

power of supplier of ICICI bank" will have a long-term negative impact on this entity,

which subtracts from the entity's value. This qualitative factor will lead to an increase

in costs. This statement will lead to a decrease in profits.

3.3.2 BARGAINING POWER OF CUSTOMERS: LARGE NUMBER OF CUSTOMERS

When there are large numbers of customers, no one customer tends to have

bargaining leverage. Large number of customers has a significant impact, so an

analyst should put more weight into it. It will have a short-term negative impact on

this entity, which subtracts from its value. This qualitative factor will lead to an

increase in costs and decrease in profits.

3.3.3 INTENSITY OF EXISTING RIVALRY

Low storage costs: When storage costs are low, competitors have a lower risk of

having to unload their inventory all at once. This will have a long-term positive impact

on the entity, which adds to its value.


Government limits competition: Government policies and regulations can dictate the

level of competition within the industry which is positive for the bank.

Large industry size: Large industries allow multiple firms and produces to prosper

without having to steal market share from each other so an analyst should put more

weight into it. So competing institutions will have a difficult time overcoming it.

3.3.4 THREAT OF SUBSTITUTES

New aspirants in banking sector: New Aspirants in Banking sector like AV Birla, Tata

Group, IFCI etc. have significant impact, so an analyst should put more weight into it.

This can lead to a decrease in profits.

3.3.5 THREAT OF NEW COMPETITORS

Strong distribution network: Weak distribution networks mean goods are more

expensive to move around and some goods dont get to the end customer. The

expense of building a strong distribution network positively affect the bank.

High capital requirement: High capital requirements mean a company must spend a

lot of money in order to compete in the market.

High sunk costs limit competition: High sunk costs make it difficult for a competitor to

enter a new market, because they have to commit money up front with no guarantee

of returns in the end.

Industry requires economy of scale: Economies of scale help producers to lower their

cost by producing the next unit of output at lower costs. When new competitors

enter the market, they will have a higher cost of production, because they have

smaller economies of scale which will affect positively.

Geographic factors limit competition: If existing competitors have the best

geographical locations, new competitors will have a competitive disadvantage.

High learning curve: When the learning curve is high, new competitors must spend

time and money studying the market before they can effectively compete.

4 INTERNAL ANALYSIS

4.1 VALUE CHAIN ANALYSIS AT ICICI BANK

4.2 STRENGTHS

Online Services: All the banking facilities of ICICI have been encircled by online

services.


Advanced Infrastructure: ICICI bank one of the well-equipped bank in India with a

good deal of advanced infrastructure in each and every branch of it in order to help

its customer with a tester banking services.

Friendly Staffs

12 Hrs. banking services

Late night ATM services

Brand name: Within a very short span of time this bank has acquired a strong brand

name by providing a quality of services to its customers, thus they have a getting a

huge edge over their customers.

Huge network: The bank consists of near about 450 branches and over 1800 ATMs all

over India.

Diversified portfolio: This bank has a well-diversified portfolio of products which not

only helped them to minimize their risk but also huge customer base.

Expanding International and rural business: ICICI has been aggressively progressing

towards international growth. Today more than 25% of its business comes from the

foreign shores

Strong balance sheet and loan growth

4.3 WEAKNESS

High banking service charges

Less Credit period

Overdependence on domestic market

Increase in NPAs reduces the profitability of the company.

Poor Customer Care Service

5 BUILDING BLOCKS OF COMPETITIVE ADVANTAGE

5.1 SUPERIOR EFFICIENCY

5.2 QUALITY

Compliance and Quality:

o Each and every Account Opened is audited by a Sales Manager instantly.

o Avoid Data Redundancy: Field level validations prevent initiation of account

opening applications with wrong data.

o Different MIS Report and real-time tracking of the application.

Reduced Operational Costs

o Reduction in Scanning Costs


o Easy audit and tracking

o Better utilization of resources

Better Productivity:

o Minimal manual intervention has ensured First Time Right.

o Training time for mobile workforce reduced from 15 days to 2 days.

o About 600 cases are registered in a day across the 2500 field agents.

5.3 INNOVATION Some of the innovative and breakthrough products and services by ICICI bank is shown

below:

Pockets by ICICI Bank: In September 2013, ICICI Bank launched a one of its kind app

on Facebook 'Pockets by ICICI Bank' to enable customers to carry out a wide range of

financial transactions on Facebook.

MySavings Rewards: ICICI Bank has rolled-out the programme 'MySavings Rewards'

from 1 September 2012, where reward points are offered to individual domestic

customers for a variety of transactions done through the savings bank account.

iWish: the flexible recurring deposit: iWish is a flexible recurring deposit product

launched by ICICI Bank for its savings account customers.

ICICI Bank has developed this product in collaboration with Social Money.

NRI Advantage: ICICI Bank offers a new product benefit for its NRI customers. It

entitles customers to handpicked, exclusive discounts/special offers. These exclusive

offers on various products/services are centred on the important needs of NRIs,

hence ensuring their relevance.

5.4 RESPONSIVENESS TO CUSTOMERS

Reduced TurnAround-Time: The TAT has been reduced from 4 days to less than 24

hours.

Customer Delight: Improved customer interactions resulted in higher customer

satisfaction

Made2Order Account: ICICI Bank's Made to Order Account (M2O) is an account tailor-

made keeping in mind transactions unique to your business.

5.5 ECONOMY OF SCALE ICICI bank is able to get customers by using economies of scale. This has lead ICICI bank to

reduce transactional cost. This has helped ICICI to the second largest bank in India in terms of

assets and market capitalization. It has near zero credit costs for retail portfolio over last

several quarters. Some of the attempts are given below:

Bank currently has a network of 3,839 Branches.

Bank has 11,162 ATMs

It has presence in 19 countries to serve NRI customers.

5.6 LEARNING EFFECT


ICICI bank faced issues during 2008 subprime crisis, as it gave loans to less credit worthy

customer and invested fund in other countries. ICICI bank learnt from this mistake and

started giving loans before checking credit worthiness of customer. ICICI bank follow KYC

(Know Your Customer) rigorously.

5.7 MARKETING STRATEGY AND PRACTICES ICICI bank has some of the best marketing strategies. These marketing strategies are shown

below:

Product Portfolio: ICICI bank offers products in various market segments.

Segmentation Strategy: It has segmented market as per below points:

o Occupation: Different products for different occupational segment identified.

o Income: Minimum balance serves as income segment barrier.

o Geographical: Concentrated on Tier 1 & Tier 2 Cities trying to extend reach.

o Age: Different products like student account.

Differentiated product strategy: ICICI bank offered new innovative product to cater

particular market. Some of such initiatives are:

o ICICI bank offers range of remittance products that target the Indian diaspora

worldwide. Two such products are Speed Transfer and Insta Transfer, both of

them provide fast transfer of fund. It offers various products for NRI customer

as well, which is strengthened by its presence in 19 countries.

o It offer new and innovative products, such as Pockets, iWish etc. It also use

technology in tracking customer segments.

o To acquire rural market, ICICI bank launched a pilot program in 6 villages in

Tamil Nadu, where it offered remittance services to rural customer and to

provide financial literacy services. It introduced low cost ATMs to serve rural

market.

o Cash Agent Model: ICICI bank took help of local entrepreneurs to setup

internet kiosk where internet connectivity is provided by Wireless Local Loop

(WLL) technology.

Promotion Strategy: It has adopted various promotion and communication strategies

to gain customer from all segments. Some of the ways are:

o ICICI bank was shown in a Hindi movie Bagban starring Amitabh Bachchan,

where he was employee of ICICI bank.

o Campaign Khayal Aapka was started to revive its image among customers

after 2008 crisis, when ICICI bank used goons to get loan amount from

customers.

ICICI Bank

Funds & Investments

Insurance & Risk Protection

Investment Advice

Credit CardsManaging

InvestmentBanking Products

Banking Services

Business Banking


o Print media, hoarding, sponsoring events, channel partner outlets, kiosks in

residential and commercial complex are some of the ways to communicate its

products and services.

o Cross Brand Association: Tie up with Woven Hues, Cartoon Network are

some of the examples of cross brand associations.

Positioning: ICICI has positioned itself in various sectors. Positioning strategies can be

summarized as:

o Core Positioning: Hum Hein Naa- trust, credibility, total financial solution

provider, which is brought about through its cross selling effort.

o Modernization: Process and physical evidences- technology as backbone and

accelerator.

5.8 HUMAN RESOURCES DEVELOPMENT ICICI The Bank has always viewed Human Resource (HR) Development as a critical activity, as it

plays a very important role in culture building and gives an impetus to the effort put in

achieving business goals more efficiently.

Three different job profiles viz., customer service and cross selling of products, back

office operations and marketing and sales emerged after the new organizational

structure was put in place.

New recruits have been provided training in skill up gradation and team building and

development of an appropriate mind-set for better conduct of banking business.

Training programs of shorter duration were designed for the existing staff, with

specific focus on product information, customer service, crosses selling of products

and operational excellence.

The promotion process has been designed on the principles of openness and

transparency.

Career progression is based on performance of employees being above an acceptable

level with emphasize on those with high business drive and potential.

These exercises are carried out by the Career Development Centre, which offers a

comprehensive competency-building program.

A high level of performance is rewarded by a system of performance bonus.

5.9 RECOMMENDATIONS FOR ICICI

1. Simplify its recruitment and selection process.

2. Reduce salaries of employee and increase the incentives and benefits part in their

compensation.


5.10 CRM AT ICICI BANK

CRM at ICICI Bank involves increased communication between the bank and its

present and prospective customers.

It facilitated coordination of multiple business functions & multiple channel of

communication with the customers to carry out customer management more

efficiently.

It also automated the process flow tracking in the product sales process and helped to

generate customized reports and promote cross-selling.

6 BUSINESS LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT

6.1. HORIZONTAL MERGERS: ICICI has been keep consolidating partial fragmented banking industry. They have been

struggling with competitors to get more market share and, ultimately, profit margins. This

has led many mergers and acquisitions, domestically and abroad, by ICICI bank. Some of

them are:

1996: SCICI Ltd. A diversified financial institution with headquarters in Mumbai

1997: ITC Classic Finance. Incorporated in 1986, ITC Classic was a non-bank financial

firm that engaged in hire, purchase, and leasing operations. At the time of being

acquired, ITC Classic had eight offices, 26 outlets, and 700 brokers.

1998: Anagram Finance. Anagram had built up a network of some 50 branches in

Gujarat, Rajasthan, and Maharashtra that were primarily engaged in retail financing of

cars and trucks. It also had some 250,000 depositors.

2001: Bank of Madurai

2002: The Darjeeling and Shimla branches of Grindlays Bank

2005: Investitsionno-Kreditny Bank (IKB), a Russian bank

2007: Sangli Bank. Sangli Bank was a private sector unlisted bank, founded in 1916,

and 30% owned by the Bahte family. Its headquarters were in Sangli in Maharashtra,

and it had 198 branches. It had 158 in Maharashtra and 31 in Karnataka, and others in

Gujarat, Andhra Pradesh, Tamil Nadu, Goa, and Delhi. Its branches were relatively

evenly split between metropolitan areas and rural or semi-urban areas.

2010: The Bank of Rajasthan (BOR) was acquired by the ICICI Bank in 2010 for INR 30

billion.

Consolidating Banking Industry

IT Services

Finacle by Infosys and Phone banking

(iWish, iMobile)

Chaining

Opening branches nationally and internationally

Opening Regional Offices

Horizontal Mergers

(Bank of Rajasthan, Bank of Madurai etc)


6.2 CHAINING ICICI Bank has opened branches (chain of nationwide banks) at most of the cities in India. To

attract NRI customers, it has branches at prominent international locations. It also has

regional offices that maximized responsiveness to the need of regional branches and

customers.

6.3 USING INFORMATION TECHNOLOGY AND INTERNET ICICI bank has always been differentiating its product by integrating Internet into its solution

and business models. They have purchased Finacle Core Banking Solution from Infosys, which

provide one stop solution for all banking related services. ICICI came up with mobile portal

iMobile long back when internet penetration on mobile devices was not commonly seen.

They have partnered with many other government and private organizations to provide

banking solution to their customer base. One such example is providing Indian Railway ticket

over mobile to those who have IRCTC account and ICICI bank account.

6.4 ICICI POSITION IN OVERALL INDIAN BANKING SECTOR Indian banking sector has been through a transformation after 1991 liberalization. Indian

banking industry which was highly segmented and dominated by public sector banks, took a

sharp turn after post reform. Indian banking sector was opened up for various sub sectors.

Also various private sector banks were introduced and they became integral part of Indian

Banking industry. Today it is full of diversified financial group.

If we look at various factors that should be compared to check ICICI banks strategic position

in overall banking industry. Some of the factors are mentioned below:

1. NPA Level: In 2013, overall industry NPA level was 1.68% of total assets. This NPA

level is low as compared to other countries. If we look at ICICI bank, then its position

is much better than any other private bank, which is .81% in FY 2013. However this

has been increased from .64% in FY2012. The same is shown below:

(i) (ii)

Figure (i) shows trend of overall Indian banking industrys and private sectors NPA

level over various years. Figure (ii) shows the same for ICICI bank.

2. Capital Adequacy Ratio: Overall Indian banking sectors capital adequacy ratio is close

to 13% in FY2013, but ICICI has the same as 16.5% in FY2013. As per Basel III, it should

be 17.94%. ICICI bank might reach this target by FY2014-15.


3. Infrastructure: ICICI bank has largest rural branch network among private sector

banks. There has been 75% branch addition in rural and semi urban area since 2012.

ICICI bank has 3588 branches in Dec 2013, largest in private sector banks. This is

supplemented by 11000+ ATMs.

Although ATM growth rate (CAGR) of overall Indian banking sector is 30.6%, but ICICI

bank holds 11000+ ATMs in Mar, 2013.

7 ICICI INTO INTERNATIONAL MARKETS ICICI Bank in Canada reveals that a transnational strategy coupled with an ethnocentric

staffing policy allows the parent firm to retain control, while the choice of a subsidiary as an

entry mode allows for local responsiveness.

In order to achieve growth, the Board of ICICI Bank decided to expand into international

markets. The Board of ICICI Bank asked Lalita Gupte to lead the internationalization process.

Subsequently, Bhargav Dasgupta was invited to join Gupte to build the international banking

business of ICICI Bank. The management team of international business deliberated on the

international strategy of the firm.

It looked into the existing model, where the bank followed its customers, whether corporate or retail.

It looked into the alternative modes of servicing the customers based in different parts of the world.

It evaluated on how to leverage its banking and business network to expand in the international markets.

ICICI as an organization is divided into six major product divisions like;

Retail Banking

International Banking

Rural

Micro-Banking and Agri-Business

Government Banking

Corporate Centre The company identified international banking as a key opportunity, aiming to cater to the

cross-border needs of clients and leveraging the domestic banking strengths to offer

products internationally.

We believe that we have to serve our customers anywhere in the world

-K V Kamath, CEO

The company had substantially used the alliances and partner model in the domestic market

and it tried to replicate the same in the international markets. In the domestic market it had

alliances with the airlines and travel houses. The objective was to target NRI when they were

either visiting or leaving India. It also had a focused marketing approach in the domestic

market, where it tied up with universities and companies from where students and

employees were likely to migrate to foreign countries for different purposes.


To tap the opportunities in the remittance market in India ICICI launched a remittance

product in association with US based Wells Fargo to enable non-resident Indians in the US to

send money to India directly from their Wells Fargo account to their beneficiarys ICICI Bank

account in India in just 24 hours. It also launched a partnership with Mees Pierson, Fortis

private banking arm to provide a full range of high net worth products and services to ICICIs

clients in India and abroad.

7.1 TECHNOLOGY ISSUES The fixed cost of setting up a physical outlet and the variable cost of maintaining a set-up

have generally been very high both in India and more so in the industrially advanced

countries. The company adopted technology as a solution to most of its business transaction,

products and services. The company set up an Internet portal for NRI to transfer money to

India.

The software professionals with easy access to Internet were early to adopt the technology

solutions to money transfer that the company offered. Further the speed of delivery and

tracking facility were additional advantages in the mode proposed by the company. Money

could be delivered within 3-7 days if correspondent was a foreign bank and within 2-3 days if

the correspondent was an Indian bank. With technology as the mode of remittance transfer,

the business became round the clock (24*7).

7.2 OPERATIONAL ISSUES: The company had two types of accounts viz.


Vostro INR Account

Nostro Account Further, three different types of Nostro Accounts were initially created that are for NRI

Accounts, Credit Services, and Treasury. About 180 correspondents operate through the

Vostro Account and about 40 correspondents operate through the Nostro Account.

For every transaction, a swift code is generated and that is then passed on to the Finacle

Core Banking system of ICICI Bank. Instead of a one to one transaction, ICICI Bank

accumulates all the remittances and carries out a bulk transaction at one go. The automatic

process involves talking of different systems with each other.

8. DIVERSIFICATION STRATEGIES FOLLOWED BY ICICI

8.1. RELATED PRODUCT DIVERSIFICATION- HORIZONTAL INTEGRATION Horizontal integration are those types of mergers where companies manufacturing similar

kinds of commodities or running similar type of businesses merge with each other. the

principal objective behind this type of mergers is to achieve economies of scale in the

production procedure through carrying off duplication of installations, services and functions

,widening the line of products ,decrease in working capital and fixed assets investment

,getting rid of competition ,minimizing the advertisement expenses ,enhancing the market

capability and to get more dominance on the market

Examples:

ICICI Bank's merger with Bank of Madura

ICICI Bank's merger with Bank of Rajasthan

8.2 UNRELATED PRODUCT DIVERSIFICATION- HORIZONTAL INTEGRATION Broad Spectrum or unrelated diversification refers to expansion other than vertical

integration into a different business i.e. into a different non-banking business like merchant

banking, insurance etc. this is a type of diversification under which a firm develops or

acquires new products that are different from its core business or technology ,but which may

appeal to its current customers. Examples

ICICI Lombard General Insurance

ICICI Prudential Life Insurance

ICICI Venture

ICICI Prudential & AMC Trust

ICICI Securities


8.3 VERTICAL INTEGRATION Firms enter business either related or unrelated to their core or flagship business, leading to

related or unrelated diversification. Related diversification can also take the shape of vertical

integration, where the firm enters the business of its supplier or its customers as it seeks to

gain control over the supply and delivery systems. Example:

In the case of ICICI Bank it entered the Life Insurance business through its subsidiary, ICICI

Prudential life insurance. Here the banking and financial services company enters the life

insurance business with an intension of leveraging its existing assets and competencies to its

advantage in the life insurance business.

8.4 CONCENTRIC INTEGRATION In the case of a concentric merger, a smaller company (usually the subsidiary) is merged with

the bigger one, having almost the same kind of business. A peculiar variation of this

concentric merger happens when a bigger company is merged with its subsidiary, the smaller

company. This is known as a Reverse Merger. Example: The reverse merger of ICICI Ltd with

ICICI Bank on 30th March 2002.

9 CORPORATE LEVEL STRATEGY ICICI bank has a global distribution capability. It focuses on risk diversification and return

optimization of the assets and resources. ICICI bank has diversified its business into many

fields.

9.1 DOMESTIC RETAIL BANKING The bank intends to enhance the share of retail deposits and sustain leadership position in

credit franchise.

9.3 GLOBAL CORPORATE AND INVESTMENT BANKING Through global banking ICICI wants to leverage corporate relationships, structure expertise,

balance sheet and global syndication capability.

9.4 INTERNATIONAL BANKING It wants to leverage NRI opportunity and technology capabilities.

9.5 RURAL BANKING This is an investment for future growth by tapping into rural areas.


9.6 INSURANCE AND ASSET MANAGEMENT The bank wants to enhance and leverage market leadership position. These are the various

types of banking that ICICI bank do. Apart from this it also offers various products and

services for different customer requirement and reduces its risk. The products and services

are:

1. Personal banking

2. Global private clients

3. Corporate banking

4. Business banking

5. NRI banking

6. Life insurance

7. General insurance

8. Securities

9. Mutual fund

10. Private equity practice

9.7 BOSTON CONSULTANCY GROUP (BCG) MATRIX ICICI banks products can be mapped to the BCG matrix as shown below

10 PHILOSOPHY OF CORPORATE GOVERNANCE ICICI Banks Corporate Governance philosophy encapsulates regulatory, legal requirements

and also several voluntary practices which aim at a high level of business ethics for

safeguarding the interest of all related stakeholders. The Corporate Governance framework

followed by the Bank also includes significant portion of the recommendations given by the

Corporate Governance Enactments and initiating regulatory bodies.


10.1 WHISTLE BLOWER POLICY ICICI Bank has also introduced a Whistle Blower Policy. As per this policy, employees of ICICI

group are free to raise issues related to accounting policies and procedures related to any

area or item and report them back to the Audit Committee through specific channels. This

system has been communicated to the employees through Banks intranet.

10.2 PERFORMANCE REVIEW Some of the points in performance review is mentioned below:

17% year-on-year increase in standalone profit after tax to 2,655crore (US$ 441

million) for the quarter ended June 30, 2014 (Q1-2015) from 2,274crore (US$ 378

million) for the quarter ended June 30, 2013 (Q1-2014)

Operating profit increased by 18% to 4,517crore (US$ 751 million) for Q1-2015 from

3,814crore (US$ 634 million) for Q1-2014

10.3 PROFIT & LOSS ACCOUNT

Standalone profit after tax increased by 17% to 2,655crore (US$ 441 million) for the

quarter ended June 30, 2014 (Q1-2015) from 2,274crore (US$ 378 million) for the

quarter ended June 30, 2013 (Q1-2014).

Net interest income increased 18% to 4,492crore (US$ 746 million) in Q1-2015 from

3,820crore (US$ 635 million) in Q1-2014

11 STURUCTURE STRATEGY IN A SINGLE INDUSTRY

11.1 ORGANIZATION STRUCTURE OF ICICI BANK: Key people in ICICI bank is shown in below diagram,


11.2 GEOGRAPHICAL STRUCTURE OF ICICI BANK

11.3 CULTURE AT ICICI BANK

Work Environment: ICICI banks work environment fosters growth and learning of an

individual. This helps individual to fulfilling both the individual and organizational

aspirations. ICICI bank tries to conduct business which refleects its values and results

to maximize values to stockholder. This approach benefits both organization,

stackholders and comminity. Personal growth of an individual and balancing work life

balance is one of the main agenda.

Performance Driven Culture: ICICI bank commits to create inclusive organization

where everyone can succeed based on merit.

Learning & Development: L&D practice at ICICI promotes professional to enhance

their technical, function and softer aspects required to succeed. ICICI bank thrive by

imparting skills and knowledge through various training interventions to enhance

personal & team effectiveness.

12 ICICI STRATEGIES TO COMPETE ACROSS COUNTRIES The Bank set up the International Banking Group (IBG) in the year 2002 to implement

a focused strategy for its international banking business.

ICICI Bank believes that a home country linked approach is a very effective entry strategy for new international markets.

The Bank has initially focused on serving the entire range of investment, remittance and financing needs of non-resident Indians (NRIs)

ICICI Bank's international presence spans 12 countries

12.1 WHOLLY OWNED SUBSIDIARIES

UK

Russia Canada

12.2 OFFSHORE BANKING UNITS

Singapore

Central Operations

CEO

Central

UK, Germany, Belgium, Qatar,

Abu Dhabi, Dubai,

Eastern

Russia, China, Hong Kong, Bangladesh, Thailand, Malaysia,

Indonesia

South

Sri Lanka, Singapore, South

Africa

Western

Canada, USA


Hong Kong Bahrain

12.3 REPRESENTATIVE OFFICES US

China

UAE

Bangladesh

South Africa The international operations of ICICI Bank diversify risks, accelerate growth and enhance profitability

for the Bank. The Bank's strong retail network in India, technology enabled operations, superior

servicing capabilities and corporate relationships in India provide it with a distinctive competitive

advantage in each of the services it offers overseas.

12.4 ICICI INTERNATIONAL OPERATIONS ICICI operated in various countries. Some of them are mentioned below:

1. United Kingdom: Set up in November 2003 as a fully owned subsidiary, ICICI Bank UK

Limited undertakes both retail and corporate banking activities. ICICI Bank UK has a

strategic alliance with Lloyds TSB of UK for offering India-linked services to customers

through Lloyds Banks branches.

2. Canada: Established in December 2003 as a fully owned subsidiary, ICICI Bank Canada is a

full-service direct bank, and a member of Canada Deposit Insurance Corporation (CDIC).

3. Singapore: The Monetary Authority of Singapore granted ICICI Bank a license to transact

banking business in Singapore with effect from August 2003 and the overseas offshore

branch commenced operations in September 2003. ICICI Bank envisages the Singapore

Offshore Branch as a hub for business in the Asia-Pacific region.

4. Bahrain: The operations at the Bahrain offshore banking unit commenced in October

2004 following the granting of license from the Bahrain Monetary Agency with a special

permission to provide NRI banking services.

5. Hong Kong: ICICI Bank set up its Hong Kong branch in November 2005. This branch offers

retail and corporate banking services, trade finance, remittances, investment advisory

services, real estate opportunities, portfolio management services and joint advisory

services.

6. Sri Lanka: ICICI Bank set up its Sri Lanka branch in January 2006. This branch offers a wide

range of retail and corporate banking products and services.


13 BIBLIOGRAPHY

http://www.business-standard.com/article/finance/icici-bank-opens-101-rural-branches-

across-6-states-112121400175_1.html

https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-

8#q=icici%20annual%20report

https://www.google.co.in/search?q=icici&espv=2&source=lnms&tbm=isch&sa=X&ei=_p6jV

M7GFce2uASww4HQCg&ved=0CAgQ_AUoAw&biw=1163&bih=558

http://www.icicibank.com/managed-assets/docs/investor/annual-

reports/2014/Subsidiaries-of-ICICI-Bank-Annual-Report-FY2014.pdf

http://www.icicigroupcompanies.com/corporate_governance.html

http://www.icicibankrussia.com/iciciworldwide.htm

http://www.ximb.ac.in/~jcr/JCR1.pdf

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