Submitted By:

Tanggaro, Arnel

Arquio, John Dave

Lazan, Jimmy Rodolfo

Submitted To:

Prof. Melody Malnegro

August 13, 2019

 EXECUTIVE SUMMARY

Banco de Oro Unibank, Inc. or BDO is a universal bank that is involved in

providing financial services to individuals and corporate markets and specializes in

lending, deposit-taking, Foreign Exchange, brokering, trust and investments, credit

cards, corporate cash management and remittances in the Philippines. BDO belongs

to the SM Group of Companies, one of the country's largest conglomerates, with

businesses spanning between retail, mall operations, property development, and

financial services owned by tycoon Henry Sy.

It should be noted further this paper is general on Banco de Oro Unibank,

Inc. who operates in the Philippines, however it must be said that there is

significant effect to BDO branches including in Digos City.

In their vision-mission statement, they are looking forward to becoming the

preferred by many in terms of financial services and so on. To achieve this,

they must perform strategic management in utilizing their resources,

maximizing their services and gaining the eyes of the many as the leading

financial institution in the Philippines.

In the conducted analysis of BDO, it is shown that BDO is equipped in

taking effective advantage of opportunities and minimizing threats. The

analysis shows that there are opportunities present for BDO to take, such that

of the rise in demand for mobile banking applications and increase in

automotive. However, there are also threats that BDO should minimize. It was

shown that BDO is in a position that is proactively upgrading and striving to

cater to its clients and providing quality services. It shows the strengths of

BDO as a business, which should be utilized more in answer to opportunities.

Meanwhile, such analysis also showed BDO’s weaknesses that should be

managed. It was also found that BDO is in a position to aggressively take on

the challenges posed by the opportunities stated. In doing so, the objectives

for BDO formulated were to increase in net income while maintaining

expense, increase in market share, and increase in presence in rural areas

and to invest more in technology. In order to achieve such, it was

recommended for BDO to pursue intensive strategies which are that of

product development and market penetration and also horizontal integration.

INTRODUCTION

Banco de Oro Unibank, Inc. or BDO is a universal bank that is involved in

providing financial services to individuals and corporate markets and

specializes in lending, deposit-taking, Foreign, Exchange, brokering, trust and

investments, credit cards, corporate cash management and remittances in the

Philippines. BDO belongs to the SM Group of Companies, one of the

country's largest conglomerates, with businesses spanning between retail,

mall operations, property development, and financial services owned by

tycoon Henry Sy.

As the company’s vision is to be a preferred bank in every market they

serve, they should be able to adapt changes including laws, social preference,

economic growth and technological advancements. They have been the

largest bank in the Philippines in terms of assets but it is to be known that

they still have competition. If they wish to maintain its status, what are the
following decisions they should improve competitiveness or enhance image

projection, expand or widen business horizon.

Research design and methodology

In order to accomplish this paper the data requirements include that of

financial statements, operational highlights, financial projections and recent

surveys. Industry studies, trends, economic conditions are also required

regarding the industry analysis. To achieve the comparison between the

subject company and its competitors, information and background regarding

top competitors are sought. Lastly, to complete the paper, internal information

on BDO is also gathered.

Sources are gathered mostly from BDO’s website and annual reports.

Other secondary sources were also gathered from the National Statistics

Coordination Board, National Statistics Office, National Economic

Development Authority, World Bank, Bangko Sentral ng Pilipinas websites.

It should be noted further this paper is general on Banco de Oro Unibank,

Inc. who operates in the Philippines, however it must be said that there is

significant effect to BDO branches including in Digos City. The paper is

focused mainly on industries serving in the financial and insurance sector and

that the study is for studying the performance of the company and its strategic

position.
 STRATEGY PLANNING

Nature of business

Banco de Oro Unibank, Inc. or BDO is a universal bank that is involved in

providing financial services to individuals and corporate markets and

specializes in lending, deposit-taking, Foreign, Exchange, brokering, trust and

investments, credit cards, corporate cash management and remittances in the

Philippines. BDO belongs to the SM Group of Companies, one of the

country's largest conglomerates, with businesses spanning between retail,

mall operations, property development, and financial services

BDO provides services for both individuals and corporations. As for

individuals or also called as personal banking, it offers eBanking; with

services such as phone banking, ATM banking, online banking and mobile

banking, trust and investments, account management, credit card

management, loans, remittances and insurance. BDO also offers services to

corporations such as cash management services, trade facilities, investment

banking, treasury, foreign exchange, investment advisory services, insurance,

leasing and financing, trust and investments and corporate credit card

management.

The companies have been serving the Filipino people for decades and

have widespread branches to deliver their services in the Philippines. This

includes their branches in Digos City.

History

BDO had its beginnings on January 2, 1968 as it started as a thrift bank

having the name Acme Savings Bank while having only two branches in

Metro Manila. In November of 1976, Acme was acquired by Henry Sy and

was renamed as Banco de Oro Savings and Mortgage Bank.

In December of 1994, Banco de Oro became a Commercial Bank, and to

portray its new status as a bank, it was renamed Banco de Oro Commercial

Bank, and in September of 1996, BDO became a universal bank, which made

BDO to change its name to its current, Banco de Oro Universal Bank.

BDO is one of the banks owned by a Chinese-Filipino in the Philippines.

Examples of other include Metrobank and Chinabank. In order to remain

competitive and strengthen itself through vision, innovation and value, in

1997, BDO became involved in insurance services by establishing a

subsidiary called BDO Insurance Broker.

In 1999, it expanded its insurance through partnership with Assicurazoni

Generali S.P.A., one of the world’s largest insurance firms, and Jerneh Asia

Berhad, a member of the Kuok Group in Malaysia. In March 2000, BDO

partnered up with its insurance affiliates, Generali Pilipinas Life Assurance

Company and Generali Pilipinas Insurance Company.

On June 15, 2001, BDO merged with Dao Heng Bank’s Philippine

subsidiary. The merger increased the number of BDO’s branches from 108

branches prior to the merger to 120 after the merger. BDO’s expansion

through its increasing number of branches had become one of BDO’s

competitive advantages, and as it reached out to its increasing number of

depositors. The bank further expanded in April 2005, United Overseas Bank

sold 66 out of 67 of its Philippine subsidiary’s branches to BDO, and as it set

to rationalize its operation from retail to wholesale banking, BDO, on March

22, 2006, after all United Overseas Bank completed its integration into BDO

network, it increased the number of its BDO branches to 220.

On August 5, 2005, BDO and SM investments, bought 24.76% of the

shares of Equitable PCI bank, the Philippines’ third-largest bank, and 10% of

an Equitable PCI affiliate, Equitable Card Network, one of the Philippines’

largest credit card issuers, from the Go Family. On December 27, 2006 both

Banco de Oro Universal Bank and Equitable bank had agreed to merge, thus

making the Banco de Oro-Equitable PCI bank. As of February 2007, it

became known as Banco de Oro Unibank, Inc.

As of March 31, 2014, BDO is the country’s largest bank in terms of total

resources, capital, customer loans, total deposits, and assets under

management and has about 23,600 employees. In December 2014, BDO had

acquired Mindanao’s largest rural bank.

Corporate Mission-Vision Statement

To be the preferred bank in every market we serve by consistently

providing innovative products and flawless delivery of services, proactively

reinventing ourselves to meet market demands, creating shareholders value

through superior returns, cultivating in our people a sense of pride and

ownership, and striving to be always better than what we are today…

tomorrow.
Recent events

BDO is the first local bank in the country to roll out a Debit Card with EMV

chip embedded on it. The EMV chipping system, just like the ones on credit

cards will also enhance the security of the cardholders. The cards were

released in 2016. In 2017, they also introduced the EMV Visa Debit Card.

As of Bank rankings in terms of assets as of 2017.BDO Unibank is still the

country’s leading bank in terms of assets having 2,484,620.57, followed by

BPI and Land bank having 1,627,441.03 and1,541,030.66 respectively.

External analysis

Political, Legal and Government Aspects

According to Republic Act No. 8791 or the General Banking Law of

2000, in its Declaration of Policy, it recognizes the fiduciary nature of banking

that requires the highest standards of integrity and performance. This is why it

is upon the State to promote and maintain a stable and efficient banking and

financial system by creating and upholding laws not only intended for the

supervision of banking and financial institutions but also for the protection and

benefit of the clients of such banks and financial institutions.

The banking industry is an industry that is imbued with public interest

that requires itself to be regulated by the government. Mainly, the General

Banking Act of 2000 governs all banking institutions through the Bangko

Sentral ng Pilipinas and its Monetary Board. It is imposed in the Monetary

Board, the governance, supervision, authority over such banking and financial

institutions as well as to provide policy direction. Aside from BSP Circulars,

the banking industry is protected by the Philippine Deposit Insurance

Corporation. Being an industry generally involved with money, capitalization

requirements are specific and must strictly be followed. As well as managerial

requirements especially for universal and commercial banks.

Economic Developments

The Philippines economy as a slower pace in 2018, failing to hit the

government’s target but still among the fastest in Asia, the National Economic

and Development Authority (NEDA) reported. This brings the full year

economic expansion to 6.2 percent, slower than the 6.7 percent registered in

2017 and below the government’s downward revised target ranged of 6.5 to

6.9 percent for the year.

Philippine financial markets experienced large volatilities as investors

responded to the tapering of the United States’ stimulus program, wherein

stock and bond prices fell significantly. However, monetary and fiscal policy

supported growth. While government finances continue to improve due to tax

improvements and efficient spending. On the other hand, remittances and

export of services were more or less unaffected by the slow growth in

advanced economies. Cash remittances increased by 6.4% in the previous

year, along with the increasing demand for skilled Filipino workers.

The services sector remained the main source of growth which

expanded by 7.1%. This explains the resilient growth of financial

intermediation and other business activities. Manufacturing grew by 10.5%

due to the strong domestic demand for food, chemical products,

communication products, basic metals, etc. While agriculture barely

contributed to the growth as several decline in the production of corn,

coconut, sugarcane and banana occurred.

Socio-cultural, Demographic, Lifestyle Changes

The Philippines is a society that is confronted by many socio-cultural

challenges, such a rapid population growth, ethnic, religious and poverty

problems. The Philippines, being under the rule of Western powers for

centuries, has left a mark which had become a part of the Filipino identity.

Over the years, the country had been witness to many cultural and lifestyle

trends that have influenced the banking industry.

The Philippines has a dense population but with an uneven distribution.

It has an estimated population of 101,112,799 Million and fifty percent of

which is urban, especially in Metro Manila, which has the highest density. For

the last quarter of 2018, it was recorded that the Philippines had a 6%

unemployment rate, making the employment rate at 94%. With, the large

percentage of Filipinos who are employed, this contribute to the growth of the

banking industry. Their profit indicates the ability to engaged in banking and

financial activities.

Lifestyle and business trends affect the banking industry. Aside from

young adults to the elderly, banking trends for the young have been prevalent

recently. Junior savings accounts, jumpstart accounts and other savings plan

for children. Also, an increase in the number of universities and colleges

partner up with banks in the collection process of tuition fees.

 Technological Developments

The banking industry is not easily swayed by technological trends,

however, when such a trend does, it leaves a huge impact. Banks are

developing new branch formats that consist of sturdier alternatives to the

traditional bank branch. Banking customers also now handle their banking

transactions via smartphones and tablets than through other channels. This

makes the mobile banking channel a key element in earning customer loyalty.

Mobile banking is coupled with transactions with other banking channels so as

to deliver seamless service. There was a reported rise in the use of a bank’s

mobile banking application by 19% in the previous year. Despite the large

patronage of mobile banking, there is still a decline in the usage of bank

branches, ATM’s and even online banking.

However, there is an increase in omnichannel consumers.

Omnichannel means accessing with more than one banking channels.

Despite mobile banking rising to mass appeal, clients still prefer combining

digital and physical channels in banking. Clients sees that this is critical for

effective service, marketing and selling, because customers expect to be able

to hop from one channel to another. Said company also provided that banks

that pull ahead in loyalty by investing heavily in mobile to better experience

will reap financial benefits. While banks that lag investing in such advantage

will miss reaping the financial benefits as well as fall behind in investment.

Behind this advantage, however, comes a small problem: hidden

defection. These small hidden defects that result to lesser customer

satisfaction which may result to bank switching. Banks that fail to respond
against these defects risk profits. Aside from defection, which is an entirely

internal concern, there also exist a threat of security breaches and attacks.

Several causes of which is the crumbling personal relationships between

managers and customers and a reputation for security, also the increase of

digital assets in the banking and financial institutions.

Industry and Competitor Analysis

Porter’s Five Forces Model

PORTER’S FIVE FORCES MODEL

Rivalry among competitors High

Threat of substitutes Medium

Threat of new entrants Low

Bargaining power of suppliers Low

Bargaining power of consumers Medium

Rivalry Among Competitors

The banking industry, being as it is, an industry that is difficult to

penetrate as the government regulates the establishment and organization of

banks in the country. This implies that there are not so many banks operating

in the Philippines. Competition in the banking industry is very tight.

As for rivalry among competitors based on the differentiation of

products, rivalry is also tight. Most banks offer the same financial services;

lending, credit card services, foreign exchange, insurance, remittances, etc.

Most banks usually differ in its rates and on the manner of delivery,

nonetheless, services offered are relatively same. With respect to strategies,

the competition is also high. Each bank has its own strategy to outperform

another.

Threat of Substitutes

Considering the difficulty in entering the banking industry and

the competitive rates and charges, there remains a possibility of substitutes to

cater clients who are not able to transact with banks. The business of lending

extends to pawnshops and lending houses which may be a become a

substitute. Even pawnshops now have remittances services. Nonetheless, the

threats are still relatively low to medium because not all banking services can

be substituted by other channels such as the credit card services. Although

the switching from a primary bank’s services to avail of another is another

kind of threat of substitute is due to the differences in service rates and

interests caused by the competitive pressure brought about the tight

competition in the banking industry.

Threat of New Entrants

Being imbued with public interest and its nature being fiduciary,

the banking industry requires itself to be regulated. The law provides for strict

compliance in the requirements for the establishment of banks in the

Philippines. Capitalization requirements are relatively high so as to keep

banks liquid in its operations. Such requirement is necessary so as to protect

to who invest and transact with banks and so as to prevent frequent cessation

of banks. As for brand loyalty, most customers prefer more established banks
which have proven themselves through the test of time.

Bargaining Power of Suppliers

Such bargaining power is low. The services provided by the

banking industry cannot be easily substituted. While differentiation of services

are also limited. There is also the possibility of forward integration. Taking all

these factors it shows that suppliers have little power the banking industry.

Banks high capitalization gives them the ability or at least the possibility of

control over its suppliers.

Bargaining Power of Consumers

The consumers’ bargaining power is a major force which affects

the level of competition in the banking industry. However, their bargaining

power is only medium. There may be stiff competition in banks, nonetheless,

their services cannot be easily replaced or substituted. Consumers do not

have much power in controlling banks and their services. Moreover, the

governments’ regulation also hinders banking in constantly changing and

updating their services without compliance with the requirements.

Strengths, Weaknesses, Opportunities and Threats (SWOT) Matrix

SWOT MATRIX

OPPORTUNITIES

(O1) Rise in demand for mobile banking applications

(O2) Increase in loyal omnichannel customers

(O3) Harnessing mergers and acquisition to access the talents needed

(O4) Boosts in automotive loans

(O5) Increase in strength and profits from remittances from OFWS

THREATS

(T1) Bank switching due to hidden defection

(T2) Decrease in online, ATM and branch usage due to rise in mobile applications

(T3) Possibility of crumbling reputation for security and relationship between

managers and customers

(T4) Vulnerability to security breaches and attacks due to increase in digital assets

in banking and financial institutions

Opportunity 1, Aside from the future integration, the adaptation of the

people of mobile banking continues to rise. Banking customers now handle

more of their banking interactions, on average, via smartphones and tablets

than through any other channel and the mobile channel has become a key

element in the bid to earn customer loyalty as Bain and Company, Inc.

reports. In line with this, it gives BDO the opportunity to make most of the new

mobile capabilities, especially when not all banks are not capable of such

services yet.

Omnichannel means accessing with more than one banking channel.

Despite mobile banking rising to mass appeal, clients still prefer combining

digital and physical channels in banking. Bain and Company, Inc. sees that

this is critical for effective service, marketing and selling, because customers

expect to be able to switch from one channel to another. It gives BDO the

chance to access more clients by focusing on Omnichannel customers, thus it

is given the second heaviest weight in the matrix.

 The Philippine economic condition also had provided probable

opportunities to the banking industry. As the service sector remains strong,

banks and its services continue to remain strong. Moreover, the increase in

demand for skilled Filipino workers abroad in turn give an increase in

remittances.

This rise in mobile banking is also susceptible to threats. There is this

hidden defection of customers who go to another provider for additional

products. As well as dependence on mobile banking reduces customer and

bank managers interaction and relationship. ATM usage will also be

threatened to decrease, as increase in mobile banking continues. Most of

these threats are interrelated that is why their weights are also in close

ranking with the others. However, the greatest weight in threats is given to

Threat 5, wherein the scope of mobile banking continuous widening, the

susceptibility of the bank’s information and client database to security

breaches also increased.

STRATEGY FORMULATION

Tows Matrix

STRENGTHS WEAKNESSES

(S1) Experienced (W1) Security in data assets

TOWS MATRIX
management (W2) Less branches in rural

(S2) International presence areas

 (S3) Up-to-date electronic (W3) Decrease in capital

banking services adequacy ratio

(S4) Strong support units in (W4) Slow customer service

I.T. and R&D

(S5) High capitalization

(S6) Skilled workforce

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

(O1) Rise in demand for 1. Improvement of both 1. Acquire employees who

mobile banking applications mobile applications and will help improve security

(O2) Increase in loyal branch banking system to measures (W1, O3)

omnichannel customers increase number of 2. Acquire competitor banks

(O3) Harnessing mergers omnichannel customers. (S3, or smaller banks to increase

and acquisition to access the S4, S5, O2) equity (W3, O3)

talents needed 2. Improvement of mobile 3. Use of improved mobile

(O4) Boosts in automotive banking applications. (S5, banking applications and

loans O1, O6) amplified marketing

(O5) Increase in strength 3. Reach more markets with strategies (W2, W4, O1)

and profits from remittances new and improved services

from OFWS (S2, S4, S5, O4, O6)

4. Provide better remittance

service by innovating transfer

system (S2, S4, S5, O6)

THREATS ST STRATEGIES WT STRATEGIES

(T1) Bank switching due to 1. Improve security 1. Improve mobile banking

hidden defection measures and data and its security (W1, T1, T3,

(T2) Decrease in online, ATM protection (S3, S4, S5, T1, T4)

and branch usage due to rise T3, T4) 2. Acquaint employees with

in mobile applications 2. Amplify marketing better and more efficient

(T3) Possibility of crumbling strategies for other banking systems of service (W4, T3)
reputation for security and channels (S4, S5, T2) 3. Amplify advertising for

relationship between clients and investors to

managers and customers increase (W2, W3, T2)

(T4) Vulnerability to security

breaches and attacks due to

increase in digital assets in

banking and financial

institutions

Based on the matrix above, the following strategies were generated; a)

product development through improvement of mobile banking applications,

branch banking systems for security, better customer service and increase

customer loyalty and increase profit; b) market penetration through amplified

marketing strategies to increase rural area presence; and c) horizontal

integration to increase equity and assets which will in turn increase capital

adequacy
Boston Consulting Group (BCG) Matrix

This Matrix allows an organization to manage its portfolio to businesses

by assessing its relative market share position and the industry growth rate.

Having the largest market share in the Banking industry based on, assets,

deposits, loan receivables, branches in operation, ATMs and assets under

management, ahead of Metrobank Co. by at least 48% in market share and

with a high market growth rate, BDO can be considered in the Stars position

in the Boston Consultancy Group (BCG) Matrix. Having considered BDO’s

large market share and its industry growth rate, the strategies appropriate

may either be market penetration, market development and product

development as intensive strategies, or related diversification.

Stars
Strategic and Financial Objectives

By relating BDO’s Mission-Vision statement, External Factor Evaluation

(EFE) Matrix and Internal Factor Evaluation Matrix (EFE), there are issues

with which the following objectives are formed to address as such:

1. To increase market share in the industry

2. To invest more in technology to improve mobile banking

applications and other bank transactions

3. To have a continuously increasing net income while maintain

expenses

4. To increase BDO’s presence in the rural areas

Business Strategies

1. Product Development

One of BDO’s objectives is to invest more in technology to

improve mobile banking applications and other bank transactions. BDO’s

mobile banking application should be developed. Such application should

have the basic transactions ready and available with a tap. Security should

also be tightened, like having better password and coding systems as well as

backup systems.

Aside from online services, BDO must use technology to

develop its services in bank branches. This is to address its mission on the

flawless delivery of services. Using machines to make transactions faster or to

make queues more organized. BDO has to keep in mind that quality service
should be its priority so as to meet its objectives. To facilitate this product

development, BDO must capitalize on its strong support units in R&D and I.T.

Departments. BDO’s high capitalization is also an indication that the company

can afford such development.

2. Market Penetration

Being one of the top players in the banking industry and having

the largest market share in the industry, BDO should still exert efforts in

market penetration. One of its missions is to be the preferred banking

institution in the markets it serves. BDO cannot be complacent with its current

position. Amplification of its marketing strategies using its new products will

help dig a deeper niche for BDO in its current markets. BDO has to develop

its market, but nonetheless it should not lose sight of its current market where

foundation is deeper. This also to address its issue in rural areas – which is

already a penetrated market, but it has to amplify marketing strategies along

with other strategies to capture this market. Establishing more branches or

ATMs in rural areas should also increase its presence in the rural areas.

3. Horizontal Integration

Aside from establishing more branches or ATMs to increase

presence, BDO can acquire rural banks in the areas it needs to penetrate so

as to lessen competition and increase more presence in the area. This will in

turn translate to an increase in its relative market share which is another

objective of BDO. Considering BDO’s high capitalization, it would be able to

buy out a rural bank. Moreover, BDO has experienced management as one of

its strengths who may be capable of negotiating to acquire other banks at

better prices.
Organizational Strategies

The strategies would head no change in the organizational

structure of BDO as to the top management. However, with the establishment

of new branches in rural areas, it is recommended that there should be a new

position in the Branch Banking Group of BDO, that instead of per area, it

should be per region instead. More so, there should be another manager to

oversee all bank branches in a province. With the acquisition of a rural bank

through horizontal integration, more employees and executives should be hire

so as to manage the newly acquired bank. BDO may also choose to retain the

existing employees of the newly acquired bank.

STRATEGY IMPLEMENTATION

To increase market share in the industry

Despite BDO being in the primal position in the market, it is going to be

too costly to be complacent especially when the banking industry’s players

are very competitive as they may overtake BDO in the market share. It is also

to address BDO’s mission in becoming the preferred bank in the markets it

serves. The increase in market share also contributes to the increase in

BDO’s capitalization to further finance improvement which addresses its

mission to consistently provide innovation products and proactive reinvention

to meet market demands.

To invest more in technology to improve mobile banking applications

and other bank transactions

This is BDO’s answer to the opportunity in the banking industry which

is the rise in the demand of mobile banking applications. In investing more in

technology, BDO capitalizes its strengths which are its strong support units in

R&D and I.T. as well as its high capitalization. Integrating better technology in

BDO’s products and services will also translate to a more flawless delivery of

services as well innovated products, both of which are in BDO’s Mission-

Vision statements. Better technology also means safer transactions which

answer the issues on vulnerability of digital assets to breaches and attacks as

well as BDO’s security. This objective answers BDO’s goals in ten folds.

To have a continuously increasing net income while maintain expenses

In every business, profit is one of the indicators that such is doing well.

As for BDO, to see whether such objectives are attained, strategies are

implemented, it will translate to profits. The development in technology for

BDO will translate to new and better products and services which will likely

increase profit, which will in turn be an increase in interest income, loan

applications, investment and receivables. BDO should start with a 10%

increase then gradually adding 5% each year in growth. Moreover, BDO has a

mission to create shareholder value through superior returns. Aside from

such, this will address the decrease of BDO’s capital adequacy ratio which is

to either increase in equity or increase in profit. BDO should start with a 10%

increase then gradually adding 10% each year in growth. To further take

advantage of growth, instead of cutting or lessening expenses, BDO should

maintain expenses, except when extremely necessary, especially for

operating expenses, but nonetheless, other expenses should be maintained.

To increase BDO’s presence in the rural areas

One of BDO’s weaknesses is its lesser branches and ATM in the rural

areas all over the Philippines. Bank accessibility becomes it weakness. In

order to address this, BDO should establish more bank branches or ATMs in

rural areas to serve more clients. This will also answer BDO’s mission for

flawless delivery of services. An increase in profits and market share will also

likely to result.
Strategy Map

Below is a strategy map for product development wherein it is

recommended that BDO should invest more in technology to improve its

mobile banking application. Such step is to fulfill the strategy for product

development.

Increase in
capital
adequacy

Increase in
Financial
equity

Increase in net
income

Growth in
Increase
Feedback number of
customer
clients
satisfaction

Decrease load
Internal Process time for mobile
bank
application

Innovate
Learning & Growth products using
latest
technology
 Below is a strategy map for market penetration wherein it is

recommended that BDO should establish a rural bank to gain more presence

in an already penetrated or serviced geographical area, which are rural areas.

Increase in
capital
adequacy

Increase in
Financial equity

Increase in net
income

Increase Growth in
Feedback customer number of
satisfaction clients

Improved
Improved
Internal Process accessibility ofof
accessibility
services
services

Conduct studies
Learning & Growth and researches
for the
establishment of
a new bank
branch
Below is a strategy map for horizontal integration wherein it is recommended

that BDO should acquire a rural bank to gain more presence in an already

penetrated or serviced geographical area, which are rural areas and to

increase in market share through buying out or acquiring the competition.

Increase in
market share

Financial Increase in
equity

Increase in net
income

Feedback Increase Growth in

customer number of
satisfaction clients

Decrease in
Internal Process time to acquire
another bank or
business

Conduct studies
and researches for
Learning & Growth the acquisition of a
rural bank

Financial
 One of BDO’s financial objectives is to have a continuously increasing

income while maintaining expenses except when necessary. The projected

income statement reflects its compliance with the objectives formulated.

Moreover, the statement above reflects the result or income from the

implementation of the recommended business strategies. The interest income

and other operating income were computed at increasing rates of 10% whose

increase is justified by the implemented strategies, while expenses for interest

and impairment losses were maintained and the tax expense rate was also

remained at 8.50%. Meanwhile, operating expenses remained the same only

until 2016 and increase by 10% in 2017 and 20% in 2018. It is so because it is

in 2017 when the upgraded and improved mobile banking application will be

launched. Such justified the 47.31% change in net profits from 2016. While in

2018, there will be establishment of the new bank branch and the acquisition

of a new rural bank. This supported the 53.88% change in net profits from

2016 to 2018. The changes in the amounts are justified using the strategies

implemented as well as compliance of the financial objectives.

Another financial objectives of BDO is to have a continuously increase

in net income. The increase in income translates to an increase in assets

because an increase income may be due to increase in loan receivables,

deposits, investments, cash and net property plant and equipment. The 10%

increase in each year is justified by the implementation of the recommended

strategies. In 2016, the increase was justified by the launch of the updated

and improved mobile banking application of BDO. This means more clients

can access BDO’s services and it also translates to a flawless delivery of

services. It satisfies further, one of the formulated objectives which is to invest

more in technology to improve its mobile banking application. While in 2018,

the increase is justified by the establishment of a new bank branch and the

acquisition of a rural bank. This also satisfies BDO’s objective which is to

increase presence in rural areas. An increase in market share is to be

expected as well, being that the assets of BDO are also increasing. Liabilities

also increased as the assets increase. This reflects that while there was an

increase in assets during acquisition the implementation of the strategies,

there is also a relative increase in liabilities.

Product Development

This is to take advantage of BDO’s high capitalization and strong

support units in R&D and I.T. Departments. Such is also to address BDO’s

mission to consistently provide innovative products and flawlessly deliver

services. Lastly, this is to take the opportunity of the rising demand for mobile

banking applications.

Market Penetration

A better and more flawless delivery of services is to be expected when

the bank in accessible. Aside from addressing the objective to increase

market share. The establishment of new branches in rural areas solves BDO’s

minimal presence in rural areas. Such strategy also utilizes BDO’s high

capitalization. This also means a larger network of clients which may translate

to more profits that is an answer to BDO’s mission to create shareholder value

through superior returns.

Horizontal Integration
 Such integration is a response to BDO’s weakness which is lesser

presence in rural areas. The acquisition of a rural bank entails a greater

relative market share for BDO which is one of its objectives. This will also

utilize BDO’s high capitalization, experienced management and strong

support units in the R&D and I.T. Departments. The acquisition will generate

more profits seeing as the BDO’s network and operations will be expanding.

This in turn will address one of BDO’s mission that

Marketing

With a growing market share due to the increase in presence in rural

areas through the establishment of a new bank branch and the acquisition of

a rural bank, it means that the number of clients served increase. With this

said, there can be an increase in the for more prospective clients. BDO then

should amplify its marketing strategies through a more dynamic, flexible and

productive Marketing Department. Such should be able to compete with the

aggressiveness of the competitors. More training for marketing managers are

advised.

Operations

With many changes in the operations come 2015 and 2016 due to the

implementation of the strategies. It is required that the Operations Department

polish itself and align itself with the other departments to ensure successful

implementation. The Operations Department may need more employees

seeing as that a larger market has to be served by BDO due to the

establishment of a new bank branch and the acquisition of a rural bank.

Information Technology

Investing in technology is one of the non-financial objectives

formulated. Thus, it should be that BDO’s I.T. Department is developed. It

may be fitting for BDO to hire more I.T. Experts or to open a new segment in

the department. More funding is also probable to support the upgrade of the

department and its systems. A better security for digital assets and data is

also needed to support BDO’s operation.

Research and Development

The R&D Department is the in-demand department during the

commencement of the implementation of the recommended strategies. This

means that to achieve better results and to aid in better research in the

market, operations, etc.; the R&D should be developed. More researchers

should be hired. There must also be better tools and equipment for efficient

gathering of data and better study. This department should not be overlooked.

A huge part of the data that BDO managers are collected by the R&D

department.

STRATEGY EVALUATION

BALANCED SCORECARD FOR BDO

Objectives Scorecard (KRA) Performance Indicator
Increase in Net
Income Statement Increase by 10, 20 and 30%
Income
Increase in Return on Average
FINANCIAL Increase by 20%
Average Equity Equity; Market Share
Increase in Capital
Liquidity Ratio Increase by 20%
Adequacy Ratio
Increase in Market
Market Share Increase by 20%
Share

LEARNING & Lessen time to Time to develop

Decrease by 6 months
DEVELOPMENT innovate services services
 Increase
Number of clients
accessibility of Increase by 10%
served, market share
services
Lessen time in
Time to respond of the
INTERNAL loading for mobile Decrease by 30 seconds to 1
mobile banking
PROCESS banking minute
application
applications
Lessen time to Time to reach a
convene, negotiate decision on the Decrease by 3 months
and acquire a bank acquisition of a bank
Lessen time to
Time to establish a
establish a new Decrease by 3 months
new branch
bank branch
Increase customer
satisfaction in rural Customer Feedback Increase by 30%
FEEDBACK areas
Growth of clients
Number of clients Increase by 20%
(as to number of)

The above matrix shows objectives of BDO to monitor performance by

using scorecards measured using performance indicators. Financially, BDO

plans to increase by 20% in its income, capital adequacy ratio and equity.

While as for Learning & Development, performance in such is measured using

Employee Turnover statistics, Employee Turnover statistics and time to attend

to clients. In internal processes, BDO’s objective is to lessen time for queuing

in bank branches to ensure flawless and efficient delivery of services. Lastly,

as to feedback, such is measured using customer feedback surveys and a

data on the number of clients of BDO.