Appendix

1:
Forces Model

Porters

Five

LEGEND
0
1
Bank
2
3
Bank
4

No threat to China Bank

Insignificant threat to China
Low threat to China Bank
Moderate threat to China
Significant threat to China

Competitive Rivalry within an Industry: (HIGH) - The competition

among banks in this industry is high. This industry has been around for
hundreds of year that everyone who needs banking services already has
them. This is because there are a lot of companies in the financial sector.
This includes not only big banks but also small-time financing institution like
pawnshops and cooperatives. And this has cause a dramatical reduction in
interest rates especially on top-tier corporations. Because of this, many
banks are attempting to lure clients away from their competitors like offering
higher rates, investment services and give greater conveniences than what
their rivals offer. Furthermore, the buyer costs to switch banks are low. It is
because consumers rely on word-of-mouth of others in making a decision on
what bank to choose and some consumers find it rather hard and
inconvenience to switch to another bank that is why they stick to one they
know and trust. Given the environment of this industry it is more likely to see
more consolidation because many major banks tend to prefer to acquire or
merge with other banks than to spend money in marketing and advertising
for a new bank.
Bargaining Power of Suppliers: (MODERATE) The source of any banks
of capital are customer deposits, mortgages and loans, mortgage securities,
and loans from other financial institutions. By utilizing these resources, the
banks can be sure that they have the essential resources required to service
their customers. And with regard to materials and equipment, the suppliers
generally provide the same materials. It is easy to switch suppliers.
Bargaining Power of Buyers: (MODERATE) The consumers of banks are
investors, businessmen, pensioners, loaners and ordinary people who want
to open an account to secure and make their money grow. But one major
factor affecting the power of buyers is the high switching cost. This is due to
the inconvenience that a consumer will experience in switching to another

bank. But nowadays because of the internet, many consumers are being
swayed to change banks because it increases their ease greatly.
Threat of Substitutes: (SIGNIFICANT) The banking industrys largest
threat is not from other banks but from non-financial competitors for
example the pawnshop. The real threat is not from the deposits or
withdrawal but from insurances, mutual funds, and fixed income securities
that not only offered by banks but also offered by non-banking companies.
And there is also a threat from the small-time financing institutions because
they offer cheaper interest and loan requirements.
Threat of New Entrants: (LOW) The presence of new entrants in the
banking industry does not pose a strong competitive pressure to other
banks. It is very difficult for a new and unknown entrant to start competing
against existing banks. Due to the nature of the industry, many people are
more willing to place their money to banks that are well known and who they
consider to be trustworthy. The barrier to entry is high due to trust issue,
fixed cost, strict compliance and high capital requirements.
Source: Team Estimates
Appendix 2: SWOT Analysis

Strength:
1. Acquisition of Development Bank (Plantersbank)

It increases the operating income of China Bank to 49%.

Due to this acquisition China Bank raise their stake in the

bancassurance joint venture Manulife China Bank Life Assurance
Corporation.

It strengthens their 94-year banking franchise, expand the

product menu, and consolidate market positioning, with the
objective of becoming a top-tier player in the industry.

They also sustained strategy to build up recurring revenues from

lending, investing, and service delivery that bolstered net
margins and market share in the face of continuing decline in
interest rate and tighter regulatory environment.

2. Creation of three major engines of growth: Relationship Banking

Segment, Financial Capital Markets & Investment Segment, and the
Savings Bank.

China Banks organization able to extensively revamped in 2014

to establish a competitive and customer centric as a result of
these three engines.

3. Reorganization of 27 branch areas reporting to eight regional offices

Strengthens marketing focus at every level and facilitate

performance monitoring and feedback processes.

By rationalizing the span of control at the area and regional

levels, enhancing the business and operational skills of branch
personnel, and devolving credit evaluation down to the area and
branch levels through it they will be able to achieve their goal of
creating more full service branches led by well-rounded and
entrepreneurially minded.

4. China Bank credit cards

China Bank Credit Cards have these basic features: worldwide

acceptance at 22 million Master Card accredited merchants, EMV
technology for secure card transactions, Pay Pass contactless
NFC technology for faster and no-signature-required purchases,
and electronic statement of account. In the pipeline are more
features and benefits like the cash advance feature, multiple
payment channels, 0% installment schemes, balance transfer
programs, rewards programs, and other perks and privileges.

5. China Bank vast branch network complemented by electronic banking

channels and touch points

Through this technology they able to enhance customer

experience, improve revenues, and reduce costs. With China
Bank Online (Internet and mobile banking), China Bank App,
China Bank Teller phone, and China Bank Teller Card (ATM),
customers can choose how, when, and where they want to bank
with us.

Opportunities:
1. Continuation of widening of its reach in key urban communities by offering
extended banking hours throughout the week and opening mini branches at
selected malls and supermarkets.
* Through this operation they have opportunity to attract more customer
because of the conveniences that they offer.