Financial Service Sector Analysis 2022

Running head: FINANCIAL SERVICE SECTOR
FINANCIAL SERVICE SECTOR
Name of the Student:
Name of the University:
Author Note:

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Part A (1):
DBS bank has been serving the customers of Singapore since 1968 and considered the
best in the country. Along with serving the market of Singapore, DBS Bank is reached some
of the important markets of the countries of Asia and considered to be the safest bank. The
most important strength of this company is that it can serve the Asian market in Asian way
unlike other banking services. The target group of this bank is the corporate, private and
small and medium companies which needs the financial services and advisory. Along with
this, the company also has a large client base in China, Indonesia and India.
Strengths:
 DBS bank has a strong market position in Hong Kong and Singapore (Dbs.com.sg
2019).
 It has diversified products as well as offerings that help in generating bank’s revenue.
 It has been serving more than 4 million clients in 15 countries like China, India and
Indonesia.
 The dividend of DBS bank is comparatively higher in comparison to sector and
industry scores.
 The company has more than 20 thousand employees working in the branches of Asia
(Dbs.com.sg 2019).
 The customers of DBS bank are served with the new generation internet banking
device that assist to thwart phishing attacks.
 This company has pioneered DBS Hotspot Pre-Accelerator to cultivate
entrepreneurship through perfect experimentation, training and mentorship in
Singapore.
Weakness:

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 DBS bank has highly skewed presence in the Asian market and lowest penetration in
the Americas and Europe.
 The main revenue comes from the consumer banking, asset management and treasury
but other offerings contribute less in the revenue.
Opportunities:
 DBS bank has focussed on the asset management industry that is a positive and
growing interest in the Asia countries.
 In Asia pacific region, the company will be able to capture the growing demand of
retail savings and investments
 The developing countries of Asia are creating opportunities for the bank and in most
of the cases DBS bank is trying to enter the markets through acquisition process.
Threats:
 Despite the fact that the Asian market is gradually growing giving the bank
opportunity to enter and conduct business, there is an uncertainty in both the Asian as
well as world financial market.
 The competitors like HSBS, CBCL or Chinese Banking Corporation Limited and
Standard Chartered bank are pressing the company to push limit as much as possible.
 Along with the banks of china, the American and European banks are grabbing the
opportunities of the Asian markets.
 The liquidity regulations can affect the operation of DBS bank.
Key issues:
 The bank is facing issue of high competition and the bargaining power of the
customers.
 The digitalisation process of the company is much slower than demanded

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 The creation of new products are not being done in DBS bank
 The bank is not being able to incorporate rapid innovation in the payments as well as
wider transformation in the systems.
Part A (2):
From the above analysis of the situation of DBS Bank and its operation, it has been
understood that the management needs to understand the position of the firm on the
perspective of porter’s generic competitive strategies. A company’s relative position within
its industry actually determines whether its profitability is above the industry average or
below. The important basis of above the average profitability in long run gives a sustainable
competitive advantage (Abdolshah, Moghimi and Khatibi 2018). Despite the company has a
large number of competitive advantage similar to its competitors but there are two aspects
that the firm can utilise to overcome the competition completely.
These are low cost and differentiation process. These two competitive advantages get
full support by another strategy like ‘focus’ for achieving average performance in industry.
Differential and cost leadership strategies aim at competitive advantage in wider range of
industry segments and the focus strategies actually target the cost advantage in the wide range
of industry segments and focus strategies target the cost advantage or differentiation in
narrow range of industry segment (Okeyo and Irene 2017).
Competitive advantage
Competitive Lower cost Differentiation
Cost
leadership Cost leadership Differentiation

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scope
Narrow
target
Cost focus Differentiation focus
Cost leadership:
Under the cost leadership, the bank can effectively become a low cost service
provider within financial service industry if Singapore and develops a wide range of banking
products and services to serve the industry segments. The source of cost advantage is varied
in banking industry considers the structure of industry. According to the authors like
Abdolshah, Moghimi and Khatibi (2018) the low cost producers sell standard products the
place a considerable emphasis on the absolute cost advantage from all the sources. In order to
achieve the cost advantage in banking industry, it requires abundance of inexpensive labours
in the market, low overheads and effective process of providing training to the employees.
This low cost strategy is the most transparent of all the three strategies hence the low cost
producers need to find out as well as exploit all the sources of cost advantage (Laela et al.
2018). The sources of this cost advantage can vary and include the pursuit of proprietary
technology, economics of scales, and preferential access to the raw materials along with other
factors. The achievements as well as sustenance of the cost leadership by DBS Bank depends
on the pricing close the industry average to achieve the average perforce of the industry.
The cost leaders rely on the cost leadership for competitive advantages but this need
to attain the proximity on the foundation of differentiation comparing to the competitors as
above average returns. The foundations of differentiation cannot be avoided because when a
product or service suffer, a pessimistic point of view relating to the quality of the products or
service comparing to those of the competitors. This is the reason why the cost leaders must be
forced to give discounts below for competing products for gaining sales. This nullifies the
benefit of the favourable cost positions. Proximities applied to differentiation hence relates to

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the price discount required for gaining acceptable market shares cannot offset the cost
advantage of the cost leader that leads the cost leaders to earn above average returns.
The cost leadership’s strategic logic requires a firm to be the cost leader and not
jostling for the position. This particular strategy must be dependant ion the preemtion unless
some important technological changes allow the bank to radically change the cost position
(Ndung’u, Otieno and Rotich 2016). The themes that run through entire strategy has been low
cost that is compared to the competitors though this cannot be attained to detriment of high
service standard and quality. Cost leadership needs aggressive construction of vigorous
attainment of the cost reduction through experience, efficient sale facilities, tight control and
cost, avoidance of the peripheral customer accounts and other cost minimization in the fields
like R&D, sales force, service and advertisements.
Differentiation:
Another generic strategy is known as differentiation which is based on the
differentiation of the products and services offered by DBS Bank hence creating something
which is perceived as the unique product throughout industry. This differentiation method
when achieved can present a feasible opportunity to earn an above average return in the
banking industry because it builds a defensible position to cope with the five competitive
forces (Laela et al. 2018). To achieve, get success and sustain the differentiation, the price
premium of the firm needs to exceed the cost in every areas of cost incurred to create or attain
the unique position. The differentiators therefore need to aim at the proximity relative to the
competitors through reduction of cost that must not affect differentiation (Ndung’u, Otieno
and Rotich 2016).
According to Porter’s generic strategy, the firm needs to choose the attributes based
on which the firms will be differentiating itself from the competitors. This mandates that the

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firm must be unique at its product or service offerings. It also must be perceived as expectant
of premium price. This contrasts the position of the firm with the cost leadership and if the
company has numerous attributes valued in the market, it can have more than one successful
differentiation strategies to follow and overcome all the issues in the financial industry of
Singapore. In differentiation strategy, the company seeks to be unique in the industry along
with the dimensions that the buyers actually value (Omsa, Abdullah and Jamali 2017). This
helps to select one and more attributes that most of the clients in the industry perceive as
essential. Thus the company positions itself uniquely for meeting those needs. This is prized
for being unique with premium price.
Focus:
Both the low cost strategy as well as differentiation strategy aim to provide
opportunity to the bank to achieve its objectives through the financial industry. The focus
strategy however rests on providing service to a particular target market well where the
management carve functional strategies with keeping focussed on the target market. Porter’s
generic strategy of focus depends upon the choice of not so wide competitive scope within
the financial industry. Here the bank needs to select a group of segments and tailor the
strategies for serving those to exclude the others in the industry (Abdolshah, Moghimi and
Khatibi, 2018). This type of focus strategy has two parts namely differentiation focus and
cost focus.
In the cost focus, the company need to seek cost advantage in the target segment
whereas in the differentiation focus seeks differentiation in the target segment. Both the
variants of the focus strategy rest on the differences between the focusers’ target segments as
well as the other segments in this industry (Salavou 2015). Therefore, the target segments
need to either have the clients with the unusual requirements or else the delivery system or

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production which serves best the target segments must differentiate from those of the other
industry segments. The cost focus is able to exploit differences in the cost behaviour in some
of the segments on the other hand the differentiation focus can exploit the unique needs of the
buyers in specific segments.
DBS Bank as aims to attain success on the basis of eliminating all the issues
mentioned, it needs to focus on selecting one particular segment or any group of segment
within banking industry then tailor the strategies to serve the clients to exclude the other
competitors. By optimising this strategy, the management of the bank needs to achieve
competitive advantage above all for the target market (Karyani and Rossieta 2018). The cost
focus will allow the bank to seek cost advantage in in the target customer segment while the
differentiation focus helps the bank to eek differentiation in the customer segment. Both these
variants of focus strategy depend upon the management’s target segment as well as other
segments within financial and making industry. Therefore, it can be stated that achievement
of competitive advantage needs the bank to make a selection about competitive advantage.
Part B:
From the module I have learnt about the aspects that play important roles in the
growth of the business in any country. It is more important in the aspects of the financial
corporation as these companies are more responsible for their responses towards the
customers and other stakeholders. In order to get the best response from the market, very
organostions including DBS Bank need to follow the Strategy Process Model. From the
online learning activities, class workshops and e-tivities, I have gained an in depth insight of
Strategy Process Model. According to this model, the strategic analysis has two parts like
external environment and internal resources that are essential to understand the resources of
the company in the first hand. Then the strategic objectives need to be set where the company

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will introduce or change their mission and vision for the sustainable growth. Then the
strategic definition which include option generation, option evaluation and option selection,
must be done so that strategic implementation process can be attained (Kaya 2015). This last
step of Strategy Process Model includes detailed planning, execution and control that
complete the implantation process. From this model, the idea of company’s operation
becomes clear to me.

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References:
Abdolshah, M., Moghimi, M. and Khatibi, S.A., 2018. Investigating Competitive Advantage
in Banking Industry Based on Porter's Generic Strategies: IRANs Newly-Established Private
Banks. International Journal of Applied Management Sciences and Engineering
(IJAMSE), 5(1), pp.52-62.
Abdolshah, M., Moghimi, M. and Khatibi, S.A., 2018. Investigating Competitive Advantage
in Banking Industry Based on Porter's Generic Strategies: IRANs Newly-Established Private
Banks. International Journal of Applied Management Sciences and Engineering
(IJAMSE), 5(1), pp.52-62.
Dbs.com.sg (2019). DBS Bank | Singapore. [online] Dbs.com.sg. Available at:
https://www.dbs.com.sg/index/default.page [Accessed 26 May 2019].
Karyani, E. and Rossieta, H., 2018. Generic Strategies and Financial Performance Persistence
in The Banking Sector in Indonesia. Management & Accounting Review, 17(1).
Kaya, N., 2015. Corporate entrepreneurship, generic competitive strategies, and firm
performance in small and medium-sized enterprises. Procedia-Social and Behavioral
Sciences, 207, pp.662-668.
Laela, S.F., Rossieta, H., Wijanto, S.H. and Ismal, R., 2018. Management accounting-
strategy coalignment in Islamic banking. International Journal of Islamic and Middle
Eastern Finance and Management, 11(4), pp.667-694.
Ndung’u, C.M., Otieno, W. and Rotich, G., 2016. Competitive business strategies on
financial performance of commercial banks in Kenya: Case study of Equity Bank
Limited. International Academic Journal of Economics and Finance, 2(1), pp.41-58.

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Okeyo, W. and Irene, L.D., 2017. Contribution Of Strategies To Sustainable Competitive
Advantage Among Banks After Interest Rate Controls Reintroduction In Kenya. Advances in
Social Sciences Research Journal, 4(20).
Omsa, S., Abdullah, I.H. and Jamali, H., 2017. Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances.
Salavou, H.E., 2015. Competitive strategies and their shift to the future. European Business
Review, 27(1), pp.80-99.