Chapter IV - BCG Matrix

STARS
-

QUESTION MARK

Deposits
Internet based services
Card based services

CASH COW
-

Express Net
Express Deposit
Cash Acceptance Machine

DOG

Lending
Leasing
Investment banking
Trade and cash management

Insurance
Mortgage

BCG Analysis
As shown in the figure, a four-quadrant diagram is drawn and labeled as stars,
question mark, cash cow and dog. The market potentials of each of the products or
services handled by the the firm are assessed and then indicated or listed in the
appropriate quadrant of the BCG matrix. Given the BCG matrix indicating in which
product or service belongs to which product or service will be pushed hard or set aside
for the time being. The listed services that fall under the category of the star are market
leaders typically at the peak of their service life cycle. They are usually capable of
generating enough cash to maintain their high share in the market. When their market
rate slows, star become cash cow. Services
thatEntrants/Potential
fall under theCompetitors:
castegory LOW
of question
Threat of New
mark are new products with the potential for success, but they ned a lot of cash for
Currently,
no newiscommercial
bank is entering
banking
industry inathe
Philippines. As of
development. If such
a product
to gain enough
marketthe
share
to become
market
government
policy
and
capitalization
requirements,
the
threat
of
new
entrants
leader and thus a star, money must be taken from more mature products and spent on is low since
there are strict provisions
General
Lawcategory
of 2000 which
governs or
the creation of
question marks. Products/Services
that fallonunder
theBanking
cash cow
are products
banks
in the
Philippines.
Therethan
are is
minimum
requirements
services that typically
bring
in far
more money
neededcapitalization
to maintain in
the marketand requisite
number of depositors where the bank shall obtain its deposits in order to operate as such
share. In the declining stage of their life cycle, these products are milked for cash that
as well as legal aspects that needs to be attained first. Access in distribution channels of
will be invested in new question marks. And lastly, the dog category, in this category of
banks is high where they monopolize such which threatens the entry of new banks who
services has low market share and does not have the potential because they are in
will locate banking channels to certain areas. Product differentiation is low because
unattractive industry
to bring in cash. Question marks unable to obtain a dominant
although banks offer different interest rates and methods of using their products and
services, they still all have the same product and service and thus differ only on how they
introduce their products and services to its customers. There is a high switching cost for
customers because of the existence of long-term contracts and client loyalty that hinders the birth new
banking institutions. Brand loyalty of customers also s h o w s a l o w t h r e a t t o e x i s t i n g b a n k i n g
f i r m s b e c a u s e m o s t b a n k i n g i n s t i t u t i o n s prioritize customer service among other
things creating good relationships to its customers.

market share and thus become stars by the time the industry growth rate inevitably
slows become dogs.

Competitive Profile Matrix (CPM)

Critical
Success Factor
Advertising
Product Quality
Price
Competitivenes
s
Management
Financial
Position
Customer
Loyalty
Global
Expansion
Market share
TOTAL

Wt
.15
.10
.10

China Banking
Corporation
Rating
Scor
e
4
0.6
4
0.4
3
0.3

Banco De
Oro (BDO)
Ratin Scor
g
e
4
0.6
3
0.3
3
0.3

Bank of the Philippine

Islands (BPI)
Rating
Score
4
4
3

0.6
0.4
0.3

.15
.10

4
4

0.6
0.4

4
4

0.6
0.4

4
4

0.6
0.4

.15

0.6

0.6

0.45

.10

0.3

0.2

0.1

.15
1

0.6
3.8

0.6
3.6

0.6
3.45

Based on the table, the critical success factors are the market share, global expansion,
advertising, product quality, financial position and customer loyalty. BPI has a competitive
advantage compared to Banco De Oro in terms of product quality but the two other companies
has gained a better score in global expansion factor and customer loyalty. In all, ChinaBank has
the highest rating in terms of the critical success factor than the other two or in time parallel with
the two companies. This evidences the billion growth in Chinabanks income portfolio.

TOWS Analysis
STRENGTHS (S)

WEAKNESSES (W)

1
2
3
4
5

6
7
8

Doubling size of branch network since 2008 until present

Continuous improvements in their human resources, banking technology, and processes
Clear customer value proposition
Strong collaborations
Major player investment banking by acting as lead or joint lead for a total of nearly US$400 million in dollar-denominated deals and
over 450billion in peso-denominated deals
Strong management team and being equipped with highly experienced and team of experts and technology-backed
Top Commercial Payment Partner Bank in the Philippines for achieving a 98% Straight Through Processing (STP) rate among its
local partner banks in the country product portfolio
International banking

47 branches of the bank in Cebu,

Dumaguete, Tagbilaran, Bacolod, Ormoc,
Iloilo, and Bicol, among other areas hit by
the typhoon Yolanda were destroyed
Some staffs does not possess the proper
qualifications for the position they are hired
for which results to bad quality of service
from them

THREATS (T)

OPPORTUNITIES (O)
1
2
3
4
5
6
7
8
9

10

1
2

Cash Remittances of OFWs

Online market in the Philippines with 41 million internet users
Increased mobile penetration
Labor market and increased income
Innovations in Banking Technology
Investment Incentives in the Philippines
Investment Opportunities in the Philippines
Sound supervisory and regulatory system of the government
Growth in domestic economy of the Philippines

3
4
5
6

Existence of several substitutes for banks

Existence of many banks offering the same
products and services
Very aggressive and competitive
competitors
Better offer of bank competitor
Merger and consolidation of banks in the
industry
Low product differentiation
Brand loyalty of customers

Good credit ratings of banking industry in the Philippines by international agencies

SO

ST

WO

WT

It will be less difficult for1

them to adapt banking new
innovations because such
thing is already their
strength and such strength
shall attract and gain more
customers for them.
International banking as a2
strength
shall
make
stronger the transactions of
ChinaBank abroad like for
example cash remittances
of OFWs. There shall be
increase of remittances
because customers shall
trust the banks because it is
said to be strength for
3
them.
Taking advantage of the
good credit ratings of
banking industry in the
Philippines will continue
the doubling size of branch
network of Chinabank that
shall provide opportunities.

The doubling size of branch1

network of Chinabank may
monopolize that market by
attracting customers to invest,
deposit or patronize them to
avoid their customers from
patronizing substitutes.
Continuous improvements in
their
human
resources,
banking technology, and2
processes, clear customer
value proposition and strong
collaborations may calm the
aggressiveness
and
competitiveness of their
rivalries and give better offer
than them.
Strong management team and
being equipped with highly
experienced and team of
experts and technologybacked to deliver a customer
service to their customer and
build trust fir brand royalty
before their competitors do.

Investment opportunities in1

the Philippines may help
ChinaBank recover from the
great devastation suffered by
its branches in Cebu,
Dumaguete,
Tagbilaran,
Bacolod, Ormoc, Iloilo and
Bicol brought by typhoon
Yolanda.
Sound
supervisory
and
regulatory system of the
government may reduce the
instances where employees
are hired without possessing
proper qualifications in order
to maintain a good quality
service
to
ChinaBanks
customers.

Given
the
different
strengths of the firm, it shall
be used to grab those
opportunities in the industry
in order to achieve success.
The strong collaborations
that ChinaBank has may
build an image for a new
product offering better than
its competitor, Investment
incentives in the Philippines
may encourage foreigners
to invest in banks and avoid
them from investing in the
substitutes.

Space Matrix
Conservative

Aggressive

7
6
5
4
3
2
-7

-6

-5

-4

-3

-2

-1

1
0

-1

CHINABANK

-2
-3
-4
-5
Defensive

Competitive

-6

As shown in the Space Matrix, the bank lies on the competitive quadrant because of the
aggressiveness and competitiveness trend in the industry therefore it should implement strategies
to offer better products and services than its competitors.