A REPORT ON

STRATEGIC GROUP MAPPING OF BANK INDUSTRY IN

BANGLADESH

Submitted To,

Prepared By,
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ABSTRACT
This abstract explores the application of
strategic group mapping in the dynamic
landscape of the banking industry of
Bangladesh. By analyzing key players and
their competitive positions, this study aims to
identify distinct strategic groups within the
sector. Through a comprehensive
examination of factors such as market focus,
product offerings, and technological
advancements, the research provides
insights into the evolving patterns of
competition and strategic interactions
among banks. We are using variables such as
STRATEGIC GROUP MAPPING remittance and geographical coverage. The
findings contribute to a deeper
understanding of the strategic dynamics
OF BANK INDUSTRY OF shaping the industry, offering valuable
implications for managerial decision-making
BANGLADESH and strategic planning within the banking
sector.
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Table of Contents
Introduction ................................................................................................................................................. 3
Theoretical Analysis of Strategic Group Mapping .................................................................................. 3
Competitive Analysis ................................................................................................................................ 3
Resource Allocation: ................................................................................................................................. 3
Market Positioning .................................................................................................................................... 3
Strategic Alliances .................................................................................................................................... 4
Risk Management ..................................................................................................................................... 4
Innovation and Adaptation ........................................................................................................................ 4
Policy Formulation.................................................................................................................................... 4
About the Bank Industry of Bangladesh ....................................................................................................... 4
List of all banks in Bangladesh .................................................................................................................. 6
State Owned Commercial Banks (SCBs).................................................................................................. 6
Specialized Banks (SBs) ........................................................................................................................... 6
Private Commercial Banks (PCBs) ........................................................................................................... 6
Foreign Commercial Banks (FCBs) .......................................................................................................... 7
Economic Conditions of Bank Industry .................................................................................................... 7
Quantitative Analysis (Strategic Group Mapping of bank Industry in Bangladesh) ........................... 9
The steps of strategic group mapping ....................................................................................................... 9
Analytical Discussion ............................................................................................................................. 10
The Data needed for the mapping ....................................................................................................... 10
Strategic Group Mapping ........................................................................................................................ 11
Market Positioning as per Map: .............................................................................................................. 12
Recommendation: ..................................................................................................................................... 13
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Introduction
In the dynamic landscape of Bangladesh's banking industry, strategic group mapping emerges as
a pivotal tool for understanding the competitive dynamics, particularly concerning distinctive
characteristics such as remittance services and geographical coverage. As a hub for international
remittances and with a diverse geographic landscape, Bangladesh's banks face unique challenges
and opportunities. This introduction explores how strategic group mapping, through a lens of
competitive characteristics like remittance efficiency and extensive geographical reach, can unveil
clusters of banks sharing similar strategic positions. The study aims to elucidate how these
competitive groups navigate the complexities of remittance services and geographical coverage,
providing nuanced insights for stakeholders in the banking sector and contributing to strategic
decision-making in this multifaceted industry.

Theoretical Analysis of Strategic Group Mapping

Strategic management involves the formulation and execution of initiatives that enhance an
organization's competitive advantage and long-term success. A crucial aspect of strategic
management is strategic group mapping, which provides a visual representation of how firms
within an industry are positioned relative to each other based on specific strategic dimensions.
Understanding the needs of strategic group mapping is essential for effective strategic
management.

Competitive Analysis
Strategic group mapping facilitates a comprehensive analysis of the competitive landscape. By
identifying and comparing strategic groups, organizations can assess their competitive strengths
and weaknesses in relation to peers, enabling informed decision-making.

Resource Allocation:
Mapping strategic groups aids in resource allocation by highlighting areas of strength or weakness.
Organizations can allocate resources more efficiently by focusing on areas that align with their
strategic position and market dynamics.

Market Positioning
Strategic group maps assist in defining and refining an organization's market positioning. By
recognizing where competitors concentrate their efforts, businesses can identify opportunities to
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differentiate themselves, target specific customer segments, or adjust their strategies to gain a
competitive edge.

Strategic Alliances
Understanding the strategic groups in an industry helps in identifying potential allies or partners.
Organizations can form strategic alliances with others in similar positions to enhance collective
strengths or address shared challenges.

Risk Management
Strategic group mapping enables organizations to anticipate industry changes and potential
disruptions. By identifying the strategic moves of competitors within specific groups, businesses
can proactively manage risks and adapt their strategies to changing market conditions.

Innovation and Adaptation

Keeping track of strategic groups helps organizations stay agile and responsive to market trends.
It allows them to identify areas for innovation, adapt to emerging technologies, and align their
strategies with evolving customer preferences.

Policy Formulation
Governments and regulatory bodies can utilize strategic group mapping to formulate effective
policies for the industry. Understanding the dynamics of strategic groups helps in crafting
regulations that foster healthy competition and sustainable growth.

In summary, strategic group mapping is integral to the strategic management process as it provides
a framework for analyzing competition, allocating resources efficiently, positioning in the market,
forming alliances, managing risks, fostering innovation, and shaping policies. Recognizing the
need for strategic group mapping enhances an organization's ability to navigate complex market
dynamics and make informed decisions for long-term success.

About the Bank Industry of Bangladesh

The banking industry in Bangladesh plays a crucial role in the country's economy. Key players
include the Bangladesh Bank (central bank) and various commercial banks. The sector has seen
growth in recent years, with a focus on digitalization and financial inclusion. Challenges, such as
non-performing loans and regulatory issues, persist but ongoing reforms aim to address them.
Overall, the industry is integral to fostering economic development in Bangladesh.
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Banking Sector Overview:

 Bangladesh has a diverse and rapidly growing banking industry.

 The sector comprises a mix of public, private, and foreign banks, each contributing to the
country's economic development.
 The Bangladesh Bank, the central bank of the country, regulates and supervises the
banking industry.
 Regulatory reforms are often implemented to enhance transparency, financial stability,
and customer protection.
 The banking sector consists of several state-owned banks, private commercial banks,
foreign banks, and specialized banks catering to specific needs such as agricultural or
industrial development.
 Bangladesh is a significant player in the global remittance market, with a large number
of its citizens working abroad and sending money back home.
 Remittances play a crucial role in the country's economy, contributing to foreign
exchange reserves and supporting the livelihoods of many families.
 Banks in Bangladesh aim to provide financial services across the country, including both
urban and rural areas.
 Geographic coverage is a strategic focus for many banks, especially in reaching the
unbanked population in rural regions.
 The banking industry in Bangladesh has been adapting to technological advancements,
with increased emphasis on digital banking services, online transactions, and mobile
banking.
 Challenges faced by the sector include non-performing loans, regulatory compliance, and
the need for continuous adaptation to changing market dynamics.
 Efforts are being made to enhance financial inclusion, ensuring that a larger portion of
the population has access to banking services.
 Many banks engage in CSR activities, contributing to social and environmental causes as
part of their commitment to sustainable development.
 The banking industry in Bangladesh is expected to continue evolving, driven by
technological innovation, regulatory changes, and global economic trends.
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List of all banks in Bangladesh

Banks of Bangladesh

SCBs SBs PCBs FCBs

These banks are categorized by the Bangladesh Bank into four Sectors. These are following

State Owned Commercial Banks (SCBs)

State-owned commercial banks are financial institutions that are owned and operated by the
government of a particular country. These banks are typically established with the primary
objective of providing financial services to support economic development, implement monetary
policies, and serve the public interest. State-owned commercial banks play a crucial role in the
banking sector and the overall economy. Those are Agrani Bank, Janata Bank, Rupali Bank, Sonali
Bank, BASIC Bank and BDBL.

Specialized Banks (SBs)

Specialized banks refer to financial institutions that focus on providing specialized financial
services or catering to specific segments of the market, rather than offering a full range of
traditional banking services like commercial banks. These banks are designed to meet the unique
needs of particular industries, sectors, or customer groups. The specialization allows them to
develop expertise in specific areas and tailor their services to the requirements of their target
clients. Those are Bangladesh Krishi Bank and RAKUB.

Private Commercial Banks (PCBs)

Private commercial banks are financial institutions that are owned and operated by private
individuals or shareholders, rather than by the government or the public. These banks operate as
for-profit entities and offer a wide range of financial services to individuals, businesses, and other
organizations. Private commercial banks play a key role in the overall financial system by
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providing essential banking services, facilitating economic activities, and contributing to the
development of the financial markets. Those are AB Bank Ltd., Al-Arafah Islami Bank Ltd.,
Bangladesh Commerce Bank Ltd., Bank Asia Ltd., Bengal Commercial Bank Ltd, BRAC Bank
Ltd., Community Bank Bangladesh Ltd., Citizens Bank Plc., Dhaka Bank Ltd. Dutch Bangla Bank
Ltd. Eastern Bank Ltd. EXIM Bank Ltd. First Security Islami Bank Ltd. Global Islami Bank Ltd.
ICB Islamic Bank IFIC Bank Ltd. Islami Bank Bangladesh Ltd. Jamuna Bank Ltd. Meghna Bank
Ltd. Mercantile Bank Ltd. Midland Bank Ltd. Modhumoti Bank Ltd Mutual Trust Bank Ltd.
National Bank Ltd. NCC Bank Ltd. NRB Bank Ltd. NRB Commercial Bank Ltd. One Bank Ltd.
Padma Bank Ltd. Premier Bank Ltd. Prime Bank Ltd. Pubali Bank Ltd. Shahjalal Islami Bank Ltd.
Shimanto Bank Ltd. Social Islami Bank Ltd. SBAC Bank Ltd. Southeast Bank Ltd. Standard Bank
Ltd. The City Bank Ltd. Trust Bank Ltd. Union Bank Ltd. United Commercial Bank Ltd. Uttara
Bank Ltd.

Foreign Commercial Banks (FCBs)

Foreign commercial banks refer to financial institutions that are incorporated and operate in a
country other than their home country. These banks establish a presence in foreign markets to
conduct banking and financial activities, extending their services beyond their home borders.
Foreign commercial banks play a significant role in facilitating international trade, supporting
cross-border investments, and contributing to the globalization of the financial system. Those are
Bank Al-Falah, CITI Bank NA, Commercial Bank of Ceylon, and Habib Bank Ltd. HSBC,
National Bank of Pakistan, Standard Chartered Bank, State Bank of India, Woori Bank Ltd.

Economic Conditions of Bank Industry

During FY21, Bangladesh Bank (BB) prioritized maintaining the financial system's resilience and
stability while supporting the government's recovery efforts from the COVID-19 pandemic. The
pandemic had severely impacted large financial markets worldwide, and Bangladesh lost internal
production and export earnings during the first wave. However, the second wave hit again in April
2021, and all scheduled banks remained operational to provide regular banking services. BB issued
several policies and prudential measures to assist scheduled banks and non-bank financial
institutions (NBFIs) in surviving the crisis and contributing to the country's economy. These
included re-fixing regulatory liquidity ratios, implementing directives for banks to prevent
COVID-19 outbreaks, easing foreign trade and currency transaction regulations, relaxing loan
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classification policies, implementing government stimulus packages, introducing a special fund

for capital market investment, and restricting dividend payouts. Other major policies and circulars
included guidelines on interest rate risk, country risk management, and post-import financing
policies. BB conducted regular on-site inspections throughout the year, evaluated the performance
of risk management committees, and continued monitoring to oversee the liquidity level of the
banking sector. By the end of FY21, a sufficient and strong level of aggregate liquidity was
observed, and BB continued its efforts to reduce overall non-performing loans (NPLs) in the
banking sector.
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Quantitative Analysis (Strategic Group Mapping of bank Industry in

Bangladesh)
The steps of strategic group mapping
Strategic group mapping involves several steps:

1. Identify Industry Key Success Factors (KSFs)

Determine the factors critical for success in the industry, which could include technology,
distribution channels, or customer service.

2. Select Competitive Variables

Choose variables that differentiate companies within the industry, such as pricing strategies,
product quality, or geographical coverage.

3. Collect Data

Gather relevant data on competitors regarding the selected variables. This could involve market
research, financial reports, or industry publications.

4. Plot Data Points

Use the collected data to plot competitors on a graph or matrix based on the chosen variables.
Each axis represents a different variable.

5. Identify Strategic Groups

Clusters of firms that occupy similar positions on the map form strategic groups. These groups
share similar competitive characteristics.

6. Analyze Group Characteristics

Examine the characteristics and behaviors of each strategic group, understanding their strengths,
weaknesses, opportunities, and threats.

7. Evaluate Mobility Barriers

Assess the ease or difficulty for firms to move between strategic groups. High mobility barriers
may create more stable competition within groups.
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8. Anticipate Industry Changes

Consider how industry changes might affect strategic groups, helping businesses anticipate and
adapt to shifts in the competitive landscape.

9. Develop Strategic Insights

Use the strategic group map to derive insights for positioning, competitive advantage, and
potential areas for innovation or differentiation.

10. Adjust Strategies Accordingly

Based on the insights gained, adjust business strategies to enhance competitiveness and respond
effectively to industry dynamics. Strategic group mapping is a dynamic process, and regularly
updating the analysis ensures alignment with the evolving industry landscape

Analytical Discussion
As per the steps, the discussions as follows:

The Data needed for the mapping

*Though the number of the banks in BD is about 61 banks and it’s difficult to apply the
data as input in strategic group mapping individually. So, we consider the categories of the
banks.
We usually choose the key factors of bank industry as well as competitive variables as follows:
1. Remittance

Remmitance (Million USD)

110.64 4.16
28.82

1220.52

PCBs SBs SCBs FCBs

Figure:
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[N: B: Data considering the remittances in the time during January, 2024.]
2. Branches

BRANCHES
FCBs
6%

SCBs PCBs
35% 44%

SBs
15%

Figure:

[Here, SCBs (6 banks) have total 3693 branches, SBs (2 banks) have 1571 branches, PCBs (41
banks) have 4614 branches and FCBs (12 banks) have total 634 branches.]

Now we are considering the size of the banks as per the assets, which are taken from the table
5.01. Let us create a strategic group map based on remittance (y-axis), branches (x-axis), and
assets as size for the mentioned group of banks:

Strategic Group Mapping

PCBs

FCB SBs SCBs

s
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[N: B: Branches: Low <3000, Moderate = 3000, High> 3000; Remittance: Low <800, Moderate = 800,
High> 800]
Description of the Map:

PCBs (Private Commercial Banks):

 High remittance volume
 A broad number of branches
 Comparatively high amount of assets

SCBs (State Commercial Banks):

 Lower remittance volume
 Substantial number of branches,
 Moderate level of assets

SBs (Specialized Bank)

 Lower remittance volume
 Fewer branches compared to PCBs and SCBs
 Smallest sized assets

FCBs (Foreign Commercial Banks)

 Smallest volume of remittance
 Smallest number of branches
 Size of the assets bigger than Specialized banks but smaller than State owned and private
commercial banks

This map positions the different types of banks based on their remittance activities, branch
networks, and asset sizes.

Market Positioning as per Map:

Private commercial banks have the best market position considering the two significant
competitive characteristics such as higher volume of remittance and the largest number of branch
with the biggest size in terms of industry assets. On the other hand, Foreign Commercial Banks
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have worst market condition in terms of remittance and number of branches but have slightly
greater size of assets than Specialized Banks.

Recommendation
High Remittance Volume & Large Number of Branches such as Private Commercial Banks:
- Dominant players with extensive branch networks and strong remittance services.
Recommendations:
- Leverage technology for efficient remittance processing.
- Enhance customer engagement through personalized services.
2. Low Remittance Volume & Large Number of Branches such as State Owned Commercial
Banks:
- Emphasizing on a wide branch network but with limited remittance focus.
Recommendations:
- Evaluate the potential for remittance services in specific regions.
- Optimize branch operations to align with market needs.
3. Low Remittance Volume & Limited Number of Branches such as Foreign Commercial Banks
and Specialized Banks
- Limited branch network with a focus away from remittance.
Recommendations:
- Assess opportunities for remittance expansion in key markets.
- Consider partnerships or digital solutions for remittance growth.

Overall Recommendations
- Invest in digital remittance platforms to cater to changing customer preferences.
- Strategically expand branch networks where there is potential for remittance growth.
- Collaborate with international partners to enhance global remittance networks.
- Regularly assess and adapt strategies based on market dynamics and regulatory changes.
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