Business Model: A Strategic Business Approach, Case of Bank BJB

7/23/2019 Business Model: A Strategic Business Approach, Case of Bank BJB

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MM 5012

Business Strategy

Business Model: A Strategic Management Approach, Case of Bank bjb

29111311 Haidir Afesina (FEZI)

MBA Executive 46

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS MANAGAMENT

INSTITUTE TECHNOLOGY BANDUNG

2013


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1. INTRODUCTION

1.1Company Success in The PastTransformation has deeper intention than

change, which requires stronger control

by bank bjb toward its scheme and

process to become one of the major banks

in Indonesia. It can be seen by

repositioning its position in order to be

conventional bank and get rid the

perception of regional development bank

(BPD). There are three significant steps that BJB did according to bank bjb annual report

(2012):

1. Transparency of corporate governance practice.By transparency, accountability, independency, and fairness carried out with

responsibility of its management, bank bjb move forward to reach its goal and adapt

the companys behavior in accordance with publics expectation. Successful Initial

Public Offering (IPO) marks it in 2010.

2. Enhancing for greater growth.Various work programs especially on micro segment, carefully planned and

consistently implemented, have resulted in improvements and quality enhancements

in various areas of the organization and its operations, leading to faster growth in all

business lines of bank bjb.

3. Developing growth and profit.Broadened its service networks and enlarged its range of product offerings, as well as

successfully promoted its corporate branding as a national bank. Also to consolidate

and strengthen its business fundamentals, which will enable bank bjb to continue to

grow profitably. During 2012, bank bjb has a healthy performance in growth and

profit, as the table shown that the profit in 2012 has increase more than 23% along

with more than 30% of asset (table 1). In addition, bank bjb has expanded its channel

by 84.23% to seize opportunities in all areas in Indonesia.


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3. CONCEPTUAL FRAMEWORK

Looking at an organization as a whole, each individual leader often sees the organization

primarily through his or her lens and filters. Those with finances biases see the organization

as an economic revenue generator; those with marketing see the organization as a means of

creating products or services for customer; those with technology backgrounds see the

organizations as a source of information; those with human resource background see the

organization`s talent and culture. Each of these views is right and wrong. Organizations exists

as an integrated whole. In fact, they can be divided into parts, but they only operate and make

sense when the parts work together. Accordingly, it needs the right strategy formulation in

order to aligned all views and achieve the company`s vision (figure 1).

Figure 1. Conceptual Framework

Sources: Various sources


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4. STRATEGY INPUT

It starts with strategy inputs by examining external and internal environment in order to

determine its resources, capabilities, and core competencies as the sources of strategic inputs.

These are the first two steps to see whether its competence aligned with the vision and

mission of company. External analysis using PEST gives the overviewed of macro-

environment of the industry that describe the opportunities and threat (Ireland, Hoskisson and

Hitt, 2011) along with industry analysis using Porter five forces with the outcome of industry

level attractiveness. On the other hand, internal analysis explore its value chain (primary and

supporting activities) to see company`s activities that create competitive advantage and core

competencies (resources based view) in order to explore the core that support business

strategy.

4.1 External Analysis

4.1.1 PEST

Politics/Legal

Bank Indonesia (BI) as the regulator has issued the new regulation that required banks to

allocate minimum of 20% of the total loan for micro, small medium enterprise(UMKM/SMEs). Many argued that BI associated the program with election or others`

politician intervention. It is becoming important issue, because the distribution of wealth of

society in terms of credit to public enterprise is unequal, as well as in terms of access to

finance and capital. Regardless of the background, BI`s steps to enhance the role of the

banking industry in SMEs market is positive and should be supported. Thus the competition

in this segment would be highly competitive from both of national and international banks.

Micro banking market will be increasingly lively as banks were forced to give credit to SMEs

segment. Furthermore, BI`s policy also is also forcing banks to decrease interest rates and

improve intermediary function. This would be another challenge as many banks enjoyed huge

profits in 2012 by the high lending rates. In addition, bank bjb that still has a strong

relationship with West Java government would be affected, especially for the independent of

its strategic decision.


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Economic

SMEs occupy an important and strategic place in the economic growth and equitable

development in all countries. They are viewed upon as a powerhouse of employment,

innovation and entrepreneurial spirit. In both industry and service, almost 90% of enterprises

are in the SME sector. GDP of Indonesia has increased 6% annual growth from IDR 708T in

2010 to IDR 846T in 2011. Indonesian per capita income is predicted increase from USD

3000 in 2010 to USD 5000 in 2014 and USD 14,000 in 2025 and up to number 44 in the

world for global competitiveness index ratings from 54 in 2010 (World bank, 2012). Driven

by strong domestic demand, economies of developing East Asia and Pacific continue to be an

engine of global growth, growing at 7.5 percent in 2012, higher than any other region in the

world (FT.com). Indonesian inflation rates below are 6.5% and predicted to be 3% in 2025.

Means inflation remains under control although there is still risk of higher inflationary

pressures. Thus Indonesia becomes the 17th

biggest economy in G-20 (thejakartaglobe.com).

Banking industry has been more resilient as indicated by a secure level of CAR (Capital

Adequacy Ratio) and it has been twice to the minimum level of 8% (exhibit 1). It therefore

indicated the stability of banking industry in Indonesia. Moreover, further improvement in

banking also reflected in credit growth improvement as the increasing trend of loan growth

indicated a good economic condition that resulted becomes a favorite among foreign investor.

However, the common problem with the loan is the process itself i.e. complicated

requirements.

Social/Demography

As the economy grows and as more opportunities appear on the horizon, many expected to

see rising incomes accompanied by increased consumer spending, driving more economic

growth, especially for the middle class group. According to World Bank, Indonesia has one

of the fastest growing middle classes with rate up to 7 million people a year (people who

spend USD 2 to 20 a day). According to bps, the total of middle class are 56% or 154 million

from 237 million Indonesian populations in 2010 (exhibit 2). From the population itself,

there are 48% women. In 2020 it is predicted to be 265 million people with 180,3 billion

(70%) productive ages i.e. 15-64 years old (world bank, 2012). The sizes of SMEs were 55

million with 13 million people are not bankable (info bank, 2012). The market itself increases

0.5-1.5% annually. Furthermore, there are 0.24% female are micro player. Having these huge

SMEs, it offers attractive margins for banking. In addition, SMEs are the driving force behind


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a large number of innovations and contribute to the growth of the national economy through

employment creation, investments and exports.

Technology

Many banks are leaving the traditional banking and move to Internet banking. Investment for

IT is becoming mandatory in order to serve customer with easiness transactions everywhere.

The era of mobile transforms the industry. Thus many banks reduce its physical outlet in

order to concentrate with E-banking. This is becoming a problem for bank bjb, as it has no

credit card and e-banking facilities. Bank bjb is member of ATM bersama and Prima, so

that its ATM card is accessible to lfots of ATM machine with that logo. However, bank bjb

has no access with international network provider such as VISA, Master card, American

Express, while other competitor has offer this services. The investment has been started end

of 2012. The technology developments force the bank to create a creative solution through its

product and services in order to support the operational excellence so that customer would

like to enjoy the facilities.

The issue of whether Internet banking can satisfy what customers want remains unanswered

question. However, in this globalization era, the Internet can be leveraged to act as a

competitive weapon in businesses, especially for bank bjb in order to stay competitive.

Internet banking and traditional PC banking differ with respect to the application software

resident on the user's computer and hence the requirement for ongoing software upgrades and

distributions. The value of the Internet as a distribution channel is its ability to enhance

interactions between the bank and its customers, as opposed to merely providing a means for

touching base with customers. The better a bank can identify its customers and know about

them, the less it will depend on traditional marketing channels. On the other hand, SMEs

need to overcome their problems and enhance their access to new technologies for increasing

their competitiveness in the international market. For this, the government and banking sector

have an important part to play & take a proactive role of identifying and encouraging new

entrepreneurs. They must come forward to remove the bottlenecks faced by the SMEs at

national & international level

4.1.2 Porter Five ForcesThe industry environment has a more direct effect on the firms strategic actions. Using

Porter`s five forces model analysis help the company to determine the long run profitability


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in any given industry. This theory is based on the concept that there are five forces that

determine the competitive intensity and attractiveness of a market. In addition it helps

anticipate and exploit cultural change. The five forces are threat of new entrants, bargaining

power of buyer, bargaining power of supplier, threat of substitute product or services, and

rivalry among existing firms. Thus, the framework reveals the important differences among

industries, how industries evolve and help companies find a unique position.

Banking industry has a promising growth as many banks enjoyed huge profits in 2012 by the

high lending rates. Based on Porter`s framework, the industry of micro financing is highly

attractive (table 2). Not only few players who dominated the market (BRI, regional

development bank (BPD), rural bank (BPR) but also the emerging of the people and industry

itself who contribute to the economic growth. However, not all banks are able to penetrate in

this segment, even bank bjb has only 0.4% market share of micro segments from IDR

113.75T total of national micro credit. In addition the era of banking industry with Internet

capability is highly competitive, regardless of its almost matured market (saturated), the

profit remain dynamics.

Table 2. Porter Five Forces

FORCES ANALYSIS

ATTRAC

TIVENES

S

Thereat

of NewEntrants

(Medium)

It takes strong capital requirements along with experience in

order to compete in this segment. Economic scale becomes a

barrier, as the distribution channels are important. Thus it

dominated by big existing player such as BRI and Mandiri.

However, new banks would still be able to compete, as the

players from middle class bank are still low. Many banks are

also offer the same product but with different labels. This also

becomes another barrier for new player.

Attractive

Bargainin

g Power

of Buyer

(Medium)

Interest rate and service charge is sensitive indicator for Attractive


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FORCES ANALYSIS

ATTRAC

TIVENES

S

customer in bank industry, therefore customer is price

sensitivity. Micro consumers can easily change from one bankto other bank whenever find the offer that suits them, especially

for the process.

Bargainin

g Power

of

Supplier

(Medium)

Government is the main regulator that control policy for banks

and other financial institutions. However, bank still has power

to decide its own rates, especially when the demand is higher.

Attractive

Threat of

Substitute

(Medium High)

Many other financial institutions besides banks are competing

in these segments. Thus it make consumers has lots of choices.

Attractive

Rivalry

Among

Existing

Competit

or

(High)

The rivalry is not coming from the same micro banks, but also

from high establish bank, international bank, and financial

institution that offer various services and products. Many banks

are also provide theirs IT advance services.

Attractive

4.2 Internal Analysis4.2.1 Value Chain Analysis

Value chain analysis is based on the principles that firm exist to create value for their

customers. It used to identify and evaluate the competitive potential of resources and

capabilities (Ireland, Hoskisson and Hitt, 2011). The firms activities are divided into

separate sets of activities that add value (primary and support). The firm can more effectively

evaluate its internal capabilities by identifying and examining each of these activities. Each


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value adding activity is considered to be a source of competitive advantage. It allows the firm

to understand the parts of its operations that create value and those that do not. Primary

activities and support activities are linked to each other.

According to Porter (1980) five primary activities are inbound logistic, operations, outbound

logistic, sales and marketing, and services, while the supporting activities are procurement,

technology development, human resources, and firm infrastructures. The author tried to

adjust those activities based on research at bank bjb (exhibit 3, exhibit 4). Bank bjb has to

see that the primary activities as a step that has to add some increment value to the finished

product or service, otherwise it is just a cost. A channel branch expansion outside West Java

along with increasing its ATM machine has been done annually i.e. 56 branches, 742 ATM.

Bank bjb mostly participate on government related activities than public activities. Its strong

capital structures some from regional development source of cash. Public education has to be

done aggressively in order to offer the product, services as many unfamiliar products for

people besides micro financing. Bank bjb therefore struggle to generate demand from

consumer banking. For micro financing process, bank bjb has offered a quick and easy loan

process compare to others i.e. within a day. Indeed, there are still some requirements to be

filled. However, the maximum amounts of loan are IDR 250 million with lower interest to

others as bank bjb implemented the cost leadership i.e. 7-11%.

With the sorting activities in the value chain, in order to

reduce operating costs by choosing the pattern of

outsourcing. However, out sourcing can only be done in

areas that do not create value or areas at a substantial

disadvantage compared to competitors. In contrast, bank

bjb put its outsourcing as a sales promotion female and

some as a customer service. In fact, bank bjb stressed on

giving personalized customer service to the entire

employee as their core competences. Thus it could be a

problem as become customer service needs not only

adequate product knowledge, but also as brand

ambassador. The recruiting is not only focusing on young

age with a good looking criteria from top universities, but also focusing on finding the

personality that accordance with bank bjb. In addition the talent mapping and incentive based


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performance should be encouraged. This to prevent hijacking from other banks and also to

aligned the social mission of bank bjb. Therefore the selective strategy has to be done as

competitive advantage arises from the activities in a company`s value chain. A good business

strategy presents a specific action plan to overcome a defined challenge.

4.2.2 Resources Based ViewCategorized as tangible or intangible, resources can be defined as inputs into a firms

production process, such as capital equipment, the skills of individual employees, patents,

finances, and talented managers (Ireland, Hoskisson and Hitt, 2011). As a source of

competitive advantage for a firm over its rivals, it should be met the four criteria; rare

(capabilities that are not possessed by competitors), valuable (capabilities that help a firm

neutralize threats or opportunities), costly to imitate capabilities (capabilities that other firms

cannot easily develop), non-substitutable capabilities (capabilities that do not have strategic

equivalents). The tangible resources are financial, organizational, physical and technological,

while the intangible are human and reputational. From the tangible aspect (organization),

Bank bjb has a limited product portfolio that served in niche market. In addition the corporate

culture (Go Spirit) is established for family working environment. In other words, care is not

only to customer but also to colleagues. From the intangible aspects, the reputation of bank

bjb within West Java and Banten is high, however it is still hard to convince public regarding

its new status as conventional banking especially outside West Java & Banten. In addition the

innovation on its IT system is still behind major competitor, as explain the details of

resources and capabilities (exhibit 5, exhibit 6). Most of bank bjb competence is temporary

competitive advantage TCA). Thus bank bjb should combine single competence in order to

create sustainable competitive advantage (SCA) as shown below:

Table 3. Combination of resources

Category ResourcesValuabl

eRare Imitable

Non

Substitu

table

TYPE

Tangible

and

Intangible

Technology YES YES YES YES TCA

Reputational,

organizational

YES YES YES YES SCA


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5. BUSINESS LEVEL STRATEGY

A business-level strategy is an integrated and coordinated set of commitments and actions the

firm uses to gain a competitive advantage by exploiting core competencies in specific product

markets. Porter (1980) developed three generic strategies (cost leadership, differentiation and

focus) to help the firm outperformed rivals within industry, and so successfully position itself

against the five forces.

5.1 Current Business Level Strategy.

Bank bjb business level strategy is competitive strategy i.e. cost leadership. Means relatively

standardized product, features acceptable to many customers and lowest competitive price.

According to Ireland, Hoskisson and Hitt, the risks are:

A loss of competitive advantage to newer technologies A failure to detect changes in customers needs The ability of competitors to imitate the cost leaders competitive advantage through

their own unique strategic actions.

Bank bjb is focus on lowering their operational cost. The product is based on interest loan,

while others fee based income. For instance is its savings product has low administration fees

compare to others. Also by cooperate with bersama and prima for ATM network with

free of charge withdrawal all over Indonesia. Its ATM also function as debit card that can be

used in any BCA EDC (electronic data capture) machine.

According to Tracey and Wiersema, bank bjb adopted the strategy of product leadership for

its segment i.e. PNS (West Java & Banten government officer). In addition, since IPO in

2010, bank bjb also aggressively on market penetration. Bank bjb customer segmentation is

male and female with age of 21-45 years old and middle low (IDR 1-2 million per month).

Mostly their targets are West Java & Banten government officers and SMEs. In order to

satisfy their target, the product that they give is related with their payroll, such as easiness

transaction, ATM debit facilities along with consumer loans. For SMEs, varieties loan

products with low interest such as KMU (Kredit Mikro Utama), KUR (kredit Usaha Rakyat)

and KCR (Kredit Cinta Rakyat) are becoming favorites. Therefore many of its branches and

ATM are close with government areas. Bank bjb launched Waroeng bjb, which as lending


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outlets.Bank bjb is also providing wireless EDC in order to help SMEs transaction without

coming the bank. The future of bank bjb plans to focus with growth in the SME sector with

the support of existing consumer sector at this time. Therefore bank bjb tried to build its

CRM in order to reach customer in rural and also build the awareness.

Competitor Analysis

The two main competitors are bank Bukopin and BTPN

(exhibit 8). Both of them are interest in SMEs as their

target. Bank Bukopin, is a powerful SMEs player. It is no

11 top banks that successfully get rid of its image as

cooperative bank, while bank bjb still struggle with its

image as regional development bank. In addition, bank

Bukopin has a wider network along with its e-banking

facilities. Second, bank BTPN is an emerging SMEs

player. Despite of its position on no 15, bank BTPN able

to attract consumer through its insurance product with unlimited age. It also develops banking

community through sub branches in the SMEs communities. Therefore, bank bjb has to be

able to combine through its process as differentiation i.e. quick and easy process. The

opening of waroeng BJB has to be increases through channel partnership. However, any

such strategy must occur in the context of rules of the game for socially desirable competitive

behavior, established by ethical standards and through public policy. The rules of the game

cannot achieve their intended effect unless they anticipate correctly how businesses respond

strategically to competitive threats and opportunities. Furthermore, the Author recommends

bank bjb to acquire existing rural banks (BPR) in order to increase its market share in SMEs

(exhibit 9).

5.2 Future Business Level Strategy

Since bank bjb transform itself to be conventional banking, its business strategy should be

change. Despite of serving mass market through its expansion, the Author argued that bank

bjb has to play in niche market according to the analysis of external and internal factors i.e.

Women, 21-45 years old, with social class B, C1, C2 and D. Therefore, bank bjb should focus

with customer intimacy according to its core competence, while the product will be

customized based on customer needs. The quality of service is an essential issue in this

industry because the offered products are usually difficult for the customer to understand and


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to differentiate. Therefore integrated marketing communication has to be developed and well

targeted asbank relationships are strongly based on interpersonal relationships. The Author

proposed focus differentiation as new business level strategy (exhibit 7). Based on the

analysis both of internal and external, bank bjb has to redefine its positioning through its

marketing strategy. Marketing strategy has to be aligned with its business strategy in order to

achieve company`s vision. According to Maslow hierarchy of needs, consumers of bank are

categorized to safety needs, as they need a security and protection. The bank therefore is able

to guarantee security in addition to the money. Bank bjb therefore try to fulfill their segments

through its customized and specialized product and services. By still maintaining its SMEs,

bank bjb is also able to target women, especially on micro.

Strategic Positioning

The Author proposed its positioning as women financial solutions both of consumer banking

and SMEs. The globalization, technology and liberalization of the market, which support the

entrance of new national and international banks as well as the changing patterns of consumer

activity, have led to a highly competitive environment. Accordingly, bank bjb is not only

compete with local BPD (bank Jateng, bank DKI), state owned bank (Mandiri, BRI), private

banks (Bank Mega, Bank danamon), rural banks (BPR KS, BPR Jatim) but also with other

financial institution such as pegadaian, leasing companies and other international banks. In

order to achieve its vision to be top 10 banks, bank bjb has to differentiate and then

aggressively communicated its message as a modern conventional bank. As fact, bank bjb as

a brand has low awareness outside West Java & Banten. Brands, from a strategic perspective,

help to create unique features to distinguish a company from other competitors who offer

similar products and services.

Positioning statement

For womenpreneur, bank bjb, is a women financial solution that delivers quick and easy

process with high trust and high touch, because only bank bjb who understand local needs.

Growth Strategy

Bank bjb has range of product portfolio. It is important to be more aggressive penetrate into

market as many people unfamiliar with the product (exhibit 11). Therefore it needs to

analyze which category that has the highest revenue and potentially to be developed. Using

BCG matrix (exhibit 12), bank bjb has to concentrate on micro credit along with developing


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another savings product along with applying

reward strategy in order to acquire new

customer i.e. direct gift when open account,

point reward to change with gift directly.

These are method to gain customer loyalty. It

is proved to be effective as BRI and BCA

has done it. The needs of product development are a must in order to compete and attract

customer, especially customization product along with personalized service. In service

industry, service quality has been identified as a key success factor for the prospective

performance and represents a significant element of the bank s brand values. Consumer

satisfaction is mainly influenced by customer service and the way organizations deal with

customer problems.


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6. CORPORATE LEVEL STRATEGY

A corporate level strategy is expected to help the firm earn above returns by creating value.

The corporate level strategy`s value is ultimately determined by the degree to which the

business in the portfolio are worth more under the management of the company than they

would be under any other ownership (Ireland, Hoskisson and Hitt, 2011). Diversified firms

vary according to their level of diversification and the connections between and among their

business. Bank bjb is pursuing a low-level diversification strategy, categories as dominant

business strategy. It is between 70% and 95% of revenue comes from a single business.

Mainly 70% revenue is generated from consumer banking followed by 30% of SMEs

product.

6.1 TOWS Matrix

Having SWOT results from both of external and internal analysis, the TOWS matrix is being

used as a conceptual matrix for systematic analysis that facilitates matching the external

threat and opportunities with the internal strengths and weaknesses. (Exhibit 14). Bank bjb

should be focus on building human capital. The recruitment should be based its goal and their

core business. In addition, human capital readiness is important in this high competitive

industry. Giving customer service is normal, but giving care by anticipating customers

anxiety and desires are more important. It is all about the character that will become image of

the brand. As the future of the bank would be SMEs by specializing on women, the human

resources should be developing its micro business skills i.e. customer service. In addition the

IT system has to develop by maximizing the use of Internet along with invest on IT system

software. The system would be benefit as:

1. Use integrated data source to guide automated event marketing2. Use enterprise data warehouse (EDW) to track customer interaction with the firm and

marketing campaign

3. Track and monitor marketing campaigns and assets using automated software such asmarketing resources management

With IT, bank bjb would be able to maximize its program after its brand audit (explatory and

inventory) in order to generate demand. From the Author point of few, bank bjb focus on

building its assets. Banks that anticipate the power of the Internet will be in control of events.Conversely, banks that do not respond will be forced to accept changes that others initiate and


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will effectively find themselves in a position of competitive disadvantage. In addition channel

partnership with highly recognized institution that has wider distribution channel is being

encouraged such as PLN, Pos Indonesia. It is believed to be much more effective as the future

of banking industry is branchless.

6.2 IPO

Bank bjb is a pioneer among regional development banks that become public listing or IPO

on the Indonesian Stock Exchange (IDX) on July 8, 2010. It offered to the public of

2,424,072,500 Series B shares, (including EMSA) at an offering price of IDR 600 per share

with total proceeds from the IPO of about IDR 1.4 trillion. Then bank bjb obtained a

relatively large interest from domestic and foreign investors. The compositions of shares are

25% owned by public, and 75% by government. Then it has 92.72% domestic shares and

7.28% foreign shares. The highest price of shares during 2012 was IDR 1130 and the lowest

was IDR 910 (exhibit 15). The reason that the shares prices low at that time was because it

effected by bank bjb lawsuit case i.e. politics issue. Banks bjb use the funds from the offering

to:

1. Strengthening the companys capital,2. Support loan expansion, especially the SMEs sector3. Expansion of network and information technology development.

.


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7. STRATEGY MAP

Strategy map is being made in order to achieve company`s primary objectives by associate it

with balance scorecard as the performance measurement. In other words, it is a way to

communicate to with a graphic depiction of strategic objectives and the factors linked to them

(Kaplan and Norton, 2004). The importance of aligning human capital and IT programs also

being stated in order to maintains high readiness and flexibility. The three elements on

strategy map are:

1. Quantify company`s goalsSet strategic targets and verify maps cause-effect links.

2. Define the time lineTo ensure value-added proposition is workable and sustainable over time, determine

how it will generate value in short-, medium- and long-term periods.

3. Select initiativesPrioritize organizations actions, programs and initiatives, including investments in

order to achieve its goals within the required time frames.

7.1 Balance Scorecard

Management performance measurement is a complex task since multiple inputs and multiple

outputs are involved in the process. Kaplan and Norton (1992) proposed four balanced

perspectives to measure performance comprehensively including financial, customer, internal

business processes, and learning and growth perspective. These perspectives reflect the

interests of the key stakeholders of companies involving shareholders, customers and

employees. Kaplan and Norton (1996) proposed the cause-and-effect relationships among the

four perspectives of BSC by measuring the strength of the linkages among measures in

different. Measures such as ROI, shareholder value, profitability, revenue growth, and cost

per unit are the lag indicators that show whether the organization's strategy is succeeding or

failing (Kaplan, 2004). The balance scorecard of bank bjb can be seen on exhibit 18.

Learning and growth perspective

It stressed on innovation, creativity, competition, and capabilities, and target subjective

properties. This perspective aims to identify professions (human capital), system

(informational capital), and organizational state (organizational capital) in order to support

internal processes. The measurement will be seen from the turnover of employee along with


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number of the champions in every division. Bank bjb strategies are:

1. Develop human capitalIt is important for bjb to have a proper talent map. So that it will be talent based

competency

2. Information capitalBuild the IT infrastructure for developing knowledge management system and to

documented any of learning process

3. Developing competitive working environmentBy having a fair competitive environment, each individual will provide their best

capabilities that would help the company achieve its vision

Internal process perspective

It identifies decisive processes in the organization. In this perspective, company mustmake

sure that companys products and services meet the needs of customers.

Bank bjb strategies are:

1. Channel partnership with highly recognized public institution.2. Waroeng bjb outlets expansion3. New product development is needed to adapt with the current trend4. CRM and CSR will be actively encourage as the need of public education of banking

products along with established awareness

Costumer perspective

Results in introduction of a valuable approach that guarantees loyalty of costumers. In this

perspective we must keep constantly identifying parameters, which costumers consider as

valuable, and provide them for costumers. The measurement will be seen from the increment

of market share. Bank bjb strategies are:

1. Customer satisfaction (quality of services) index2. Customization products based on customer insight and needs. However, provide the

best solutions for customer is the main goal.

3. Build the confidence of customer to be loyal and trust bank bjb through its programand social mission i.e. womenpreneur

Financial perspective

It defines tangible outcomes of organizations strategies and includes a series of traditional


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8. BUSINESS MODEL

To conclude all the ideas from the analysis above, the Author tried to create bank bjb

business model. The business model itself can be illustrated using business model canvas. It

is a flexible template for conceiving, completing and assessing business models (Osterwalder

and Pigneur, 2010). Below are tnine building blocks cover an organizations customers,

offer, infrastructure and financial viability.

Figure 3. Business Model Canvas

The proposed business models are:

1. Value PropositionA women financial solution that delivers quick and easy process with high trust and

high touch, because only bank bjb who understand local needs. It encourages women

to be womenpreneur on SMEs. Having customization product based on women and

SMEs needs and also low interest on their loan programs.

2. Key PartnershipHaving partnership with insurance company and local government for their payroll

distribution. Banking industry is highly regulated by the government. It is very

important for regulatory agencies to maintain control over the banks because they are

the lifelines of an economy. The control is also needed to protect the depositors


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against any fraud. One example of a regulatory requirement is the Reserve

requirement. It sets the minimum reserves that each bank must hold. The operations

of a bank are highly IT intensive. Therefore to fulfill their IT needs, should partner

with technology vendors. The technology vendors provide IT solutions in areas of

customer experience management, multi-channel integration, business process

improvement, loans origination and processing etc.

3. Key ActivitiesCRM is becoming very important besides their banking operation (branch, call center,

IT, and sales and marketing) in order to maintain its customer along with acquire new

customers such as customer gathering and public relation.

4. Key ResourcesCombining both of IT and human capital development are important intangible

resources. From the tangible resources are coming form loan assets, bank bjb`s

physical assets such as ATM machine and offices.

5. Customer RelationshipsCRM along with personalized service on banking daily operations are becoming

crucial factors to engage with customers. Social media is a trend to have customer

insight and close with them.

6. Customer SegmentsBesides SMEs and local government officers (PNS), women are becoming the next

focus target.

7. ChannelBeing expanded to outside West Java, it is important for bank bjb to apply channel

partnership with high recognize institution such as PT. POS, PLN. Besides build their

own offices, this type of distribution also would help them to save cost effectiveness.

Local cooperative is also being encouraged for sub rural distribution channels.

Waroeng bjb as lending outlets are build on public area for the accessibility. The use

of social media and internet access are also being encouraged as channels.


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8. Cost StructuresChannel costs are the key component of the cost structure of a bank. The interest paid

by the bank to the depositors is also one of the important cost structure components.

9. Revenue StreamsThe revenue is coming from lenders and IPO. The Author proposed bank bjb to also

make money through Credit cards business.

REFERENCES

Bank bjb Brand Guidelines (2010)

Bank BJG Annual Report (2012)

Henry, Anthony E (2011), Understanding Strategic Management, 2nd Edition, Oxford

University Press

Ireland, R.D, Hoskisson, R.E, and Hitt, M.A (2011), The Management of Strategy; Concept

& Cases, 9th Edition, South-Western Cengage Learning

Porter, Michael E (1980), Competitive Strategy, Techniques for Analyzing Industries and

Competitors, Free Press/Simon & Chuster

Porter, Michael E (1985), Competitive Advantage, Creating and Sustaining Superior

Performance, Free Press/Simon & Chuster

Kaplan, Robert S., Norton, David P. 2004. Strategy Maps: Converting Intangible Assets into

Tangible Outcomes. Boston: Harvard Business School Publishing

Kaplan, Robert S., Norton, David P. 1996. The Balanced Scorecard. Boston: Harvard

Business School Press.


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APPENDIX

Exhibit 1. Sufficient CAR (%)

Source: Bank Indonesia, April 2012

Exhibit 2. The Rising of Middle Class (in USD)

Class Cut off 2003 (%) 2010 (%)

Low 20 0.1 0.2

Note: Per capita expenditure per day is adjusted to the 2005 purchasing power parity terms.

Source: World Bank, March 2011, based on Susenas.


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Exhibit 4. Supporting Activities

Supporting

ActivitiesEXPLANATION

Firm

infrastructures

Risk Management Strategic planning

Human

Resources

Internal training and send employee to workshop based on TNA(training need analysis)

Compensation system based on performance Management trainee program

Procurement

Recruitment is done by rigorous selection refer to education level andskill that have core competence in communication skills from top

universities

Vendor and outsource selectionTechnology

Development

No internet banking No mobile banking No credit card facilities


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Exhibit 5. Capabilities

Resources Explanation

Financial

Regional development source of cash IPO since 2010

Organizational

Strong government related Corporate culture i.e. Go spirit (service oriented) Range of product portfolio

Physical

Its total asset in 2012 is IDR 70.84T/+30.11% Branch network i.e. 56 branch, 228 sub branches

ATM network i.e. 742 in Indonesia

Technological

Lack of IT development i.e. No mobile banking, no internet banking No credit cards facilities

Human

Management trainee program Young age with communication skills from top universities Competence based

Innovation No innovation in terms of product or services

Reputational

Strong image as regional development bank of West Java andBanten

Low awareness outside West Java & Banten


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Exhibit 6. Core Competencies

Category ResourcesValu

ableRare

Imitabl

e

Non

Substi

tutable

TYPE

Tangible

Financial:

CapitalYES NO NO NO

Competitive

parity

Organizational:

Product, cultureYES YES YES YES SCA

Physical:

Channel

(branches, ATM)

YES NO YES NOTCA

Technological

Internet facilitiesYES NO YES NO TCA

Intangible

Human:

Employee skillsYES NO NO NO TCA

Reputational:

BrandYES YES YES YES SCA

Exhibit 7. Future Business Level Startegy

MARKET

SCOPE

ADVANTAGE

LOW COSTPRODUCT/SERVIC

ES UNIQUENESS

BROAD Cost Leadership Differentiation

NARROW Cost Focus

Focus Differentiation


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Exhibit 12. BCG Matrix

High

Growth

STARS

Consumer loani.e. Kredit Guna Bakti

Depositsi.e. Deposito suka-suka

QUESTION MARKS

Insurance

Low

Growth

CASH COWS

Debit card (ATM) Savings product

i.e. Tanda Mata berjangka

DOGS

Cheque

High Market Low Market

Exhibit 13. BJB Product Portfolio


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Exhibit 14. TOWS Matrix

STRENGHTS

S1:IPO

S2:Strong financial

performance

S3:Strong customer base in

West Java and Banten

WEAKNESSES

W1:Lack of IT

development

W2:Human capital

readiness

W3:Low brand image

OPPORTUNITIES

O1:Emerging marketon micro outside

West Java

O2:Women on micro

(niche)

S-O

S1-S2-O1Expansion outside WestJava and Banten

S3-02Redefining its

Segmentation, targeting,

positioning

W-O

W1-W2CRM and CSR W2-W2

Employee branding

W3-O1-O2Invest on Ads, CRM,

CSR

THREAT

O1:Many banks are

entering SMEs

including other

financial institution

O2:IT as competitive

advantage from

competitor

S-T

S1-S2-O1Acquire local rural

banks

S3-O1Channel partnership

Create community

among SMEs

S2-O2:Invest on IT

development

W-T

W1-O2Invest on IT system

W2-O1Human capital

development

W3-W1CRM and heavily on

Ads


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Exhibit 15. Bank bjb Shares Price

Source: Bank bjb Annual report 2012

Exhibit 17. Road Map Bank bjb

Source: Bank bjb Guideline


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Exhibit 18. Strategy Map Balance Scorecard


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Exhibit 20.Financial Highlights


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Source: Bank bjb Annual Report 2012

Exhibit 21. Ratio


Exhibit 22. Growth and Profit



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Exhibit 23. Existing Business Model

Exhibit 24. Business Model Recommendation

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Business Model: A Strategic Business Approach, Case of Bank BJB

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