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    Submitted By..

    MOHAMMAD ROKUNUZZAMAN

    ID NO: 3-07-11-039

    Batch-11

    Supervisor Name:PROFESSOR DR SHAHID UDDIN AHMED

    Department of Management Studies

    University of Dhaka

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    Chapters

    1. Introduction

    2. Methodology of the report

    3. Company Profiles

    4. Analysis and Interpretation

    5. Conclusions and Recommendations

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    Introduction

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    To analyse the strategy adopted by a

    major bank in Bangladesh.

    To have better direction on strategicmanagement activities specially business

    level strategy

    To compare the existing BLS of Agranibank limited with other commercial

    banks.

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    To identify and suggest scopes of

    improvement in strategy of ABL.

    To get an overall idea about the performance of

    Agrani Bank Ltd.

    To fulfill the requirement of the internship

    program under MBA program

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    The study gives me privilege to observe the

    management of this bank.

    It showed how strategy is working in a big

    organization.

    It also gave me opportunity to analyze balance

    sheet, financial statement of the bank.

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    It enhances my knowledge about ratio analysis,

    calculation of CRG.

    I can say this study has learned me about the

    economy of Bangladesh; regarding issues like

    how the financial activities are being operated,

    how it should be conducted etc.

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    Strategy is an integrated and coordinated set ofcommitments and actions designed to exploit core

    competencies and gain a competitive advantage.

    Strategic competitiveness is achieved when a firmsuccessfully formulates and implements a value

    creating strategy.

    Competitive advantage occurs when a firm implements

    a value creating strategy and other companies are

    unable to duplicate it or find it too costly to imitate

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    Above average returns are returns in excess of

    what an investor expects to earn from other

    investments with a similar amount of risk.Risk is an investors uncertainty about the economic

    gains or losses that will result from a particular

    investment.

    Average returns are returns equal to those an investorexpects to earn from other investments with a similar

    amount of risk.

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    The strategic management process is the full set of

    commitments, decisions and actions required for a firm

    to achieve strategic competitiveness and earn above-

    average returns.Resources are inputs into a firms production process,

    such as capital equipment, the skills of individual

    employees, patents, finances and talented managers.

    Capability is the capacity for a set of resources to performa task or an activity in an integrative manner.

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    Core competencies are resources and

    capabilities that serve as a source of

    competitive advantage to a firm over its rivals.Business-Level-Strategy is an integrated and

    coordinated set of actions the firm uses to gain a

    competitive advantage by exploiting core

    competencies in specific product markets.

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    Cost Leadership Strategy is an integrated set of

    actions taken to produce goods or services with

    features that are acceptable to customers at the

    lowest cost, relative to that of competitors.-Lowest cost compared to rivals

    -Target market is broad

    -Product is comparatively standard

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    Differentiation Strategy is an integrated set of

    actions taken to produce goods and services at

    an acceptable cost that customers perceive as

    being deferent in ways that are important to

    them.

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    Focus Strategy is an integrated set of actions

    taken to produce goods or services that serve

    the needs of a particular competitive segment.1)Focused Cost leadership strategy

    -Target Market specific & small

    -Product price is low

    -Product is standard-Cost of production low

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    Focused Differentiation Strategy-Product is different

    -Target market is small

    -Product quality is high

    Integrated Cost Leadership & Differentiation Strategy

    Relatively differentiated products at relatively low

    costs is the products of integrated strategy

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    Those firm doing well in market by using

    integrated strategy who-

    1) Adapt quickly to environmental changes

    2) Learns new skills and technologies more

    quickly3) Effectively leverage its core competencies while

    competing against its rivals.

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    The target populations of this study were employees of

    different corporate branches of Agrani Bank Limited. The

    sample size was allocated as 21. As this sample is very

    small regarding the size of the population, randomsampling techniques were applied. A mix of convenience

    and judgmental sampling was also performed to select the

    samples for this research. The primary qualification for

    being a respondent was those who are involved withAgrani Bank Ltd for many years.

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    Data collection method was divided into twosources:

    1 Data Collection from Primary SourcesFor the procedure of different banking operations,

    I observed the operations and talked with theOfficers, I provided questionnaire to the

    employees and also informally interviewed theABL Officials for getting more information.

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    2 Data Collection from Secondary Sources

    Data was collected from different statements

    and the annual reports of the bank. Besides,

    different books and training pamphlets were

    also a good source of information.

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    For collecting books and periodicals, I have used

    the following.

    ABTI Library

    Agrani bank Ltd web site

    Janata bank Ltd web site

    Brac Bank web site

    Duch-Bangla Bank web site

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    The bank started operation with 249 branches

    with its head office in Dhaka. Now Agrani

    Bank ltd is operating with 867 branches and its

    total manpower is 10921 at 31st December

    2008. The Bank also has two wholly owned

    subsidiary Companies named Agrani Exchange

    House (Pvt) Ltd. in Singapore and AgraniRemittance House SDN, BHD, Malaysia.

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    Agrani Bank has been converted into governmentowned banking company from nationalizedcommercial

    bank on 15th May 2007 Bank was registered in JointStock Companies and Farm as public limited company.

    On 15thNovember by Vendors agreement betweenAgrani Bank and Government, Agrani Bank took overall its assets and liabilities from government and

    becames Agrani Bank Limited. Though 100% share is

    owned by government but Agrani Bank ltd is now apublic Limited company

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    To help rebuild the economy of Bangladesh byadvancing money to all socio-economic activitiesand developments.

    To give banking services to all types of peopleand finance them for their productive purposes.Besides giving advances to general business,

    priority is given to make advance on agriculture

    and industrial sector and expanding foreign trade.

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    To taking banking services to the rural people

    by expanding their branch network to the rural

    area.

    To help government by giving dividend

    through earning profit.

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    Accepting deposits.

    Providing advances and helping in investment.

    Discount and purchase of bills.

    Financing trade (both local and foreign).

    Facilitating remittance (both local and foreign).

    Providing various information's, guidance and suggestions to

    the entrepreneur

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    DEPOSITS: (A) 1. Savings Account 2. Current Deposit Account

    3. Special Notice Time Deposit (SNTD) 4. Fixed Deposit Receipts A/C 5. Monthly Deposit Pension Scheme A/C (B) 1. Foreign currency account

    2. Non-resident foreign currency deposit account 3. Resident foreign currency deposit account 4.Foreign remittance

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    LOANS:

    Overdraft

    Cash Credit(Hypo)

    Cash Credit(Pledge)

    Rural Credit

    Industrial Credit

    IBP( Inland Bill Purchased)Local Guarantee

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    Foreign Trade and Foreign Exchange:

    Letter of credit

    Packing credit

    Payment against document(PAD)

    Loan against imported merchandise(LIM)

    Foreign guarantee

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    LOANS (Sector-Wise): 1. Agriculture 2. Large & Medium Scale Industries 3. Working Capital (Jute) 4. Working Capital (Other than Jute) 5. Jute Trading 6. Jute and Jute Goods Export 7. Other Exports 8. Other Commercial Lending

    9. Urban Housing 10. Special Program Small Industry 11. Other Special Program 12. Others

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    FEE BASED SERVICES: 1. Collection of Bills/Cheque etc. 2. Issuance of Demand Draft/Pay-Order/Mail

    Transfer/Telegraphic Transfer

    3. Issuance of Bank Guarantee 4. Opening of Letter of Credit 5. Exchange AccountF.C.

    6. Export Bills 7. Godown Rent Record/ Locker

    Services 8. Dividend Warrant 9. Underwriting 10. Miscellaneous.

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    Investments:

    1. Purchase of Treasury Bills

    2. Purchase of Approved Securities of the

    Govt.

    3. Purchase of ICB share certificate

    4. Purchase of Debenture of different

    Autonomous Bodies5. Other Investment

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    ProfitabilityIn 2009, the Bank earned operating profit of TK. 644crore. In recent past bank has to sustain cumulative netloss charging of cumulative provision shortfall against

    loans and advances and superannuation fund since1972. It was done as per provisions of IAS-30,Implemented by the Bangladesh Bank vide their BRPDcircular No.14 dated 25 June 2003 and as such theauditors certified the accounts without any qualification.

    In spite of huge volume of accumulated loss, the Bankis on the path of recovery and has taken steps toconsolidate its position.

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    Year

    Net Profit(in Crore.

    TK)

    2005 214

    2006 358

    2007 526

    2008 633

    2009 644

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    year

    Deposit

    (in Crore.

    TK)

    2005 7731

    2006 7491

    2007 7129

    2008 7209

    2009 7357

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    Year

    Advance

    (in Crore.

    TK)

    2005 9940

    2006 10587

    2007 11849

    2008 11336

    2009 12224

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    year

    Export

    (in Crore.

    TK)

    2005 4171

    2006 5171

    2007 4892

    2008 4954

    2009 4461

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    year

    Import

    (in Crore.

    TK)

    2005 5119

    2006 11592

    2007 11343

    2008 10062

    2009 7753

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    year

    Remittances

    (in Crore.

    TK)

    2005 3457

    2006 3930

    2007 4281

    2008 5269

    2009 5587

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    year

    Total

    Assets

    (in Crore

    TK)

    2005 7541

    2006 8358

    2007 9509

    2008 9511

    2009 10346

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    Main Issues to find

    -Are the products are low cost?

    -Are the market is broad?

    -Are the product is acceptable to customers.-Relative position of differentiation

    -Cost of Product.

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    HBL Interest Rate

    11.512

    12.513

    13.5

    1414.5

    1515.5

    16

    Agrani

    Bank

    DBBL Brac N.C.C.

    Bank name

    Intere

    stRate

    HBL Interest Rate

    HBL Interest Rate Agrani Bank DBBL Brac N.C.C.

    13 14 14 15.5

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    Cash Credit Interest Rate

    Agrani Bank

    DBBL

    N.C.C.

    MTBL

    13

    13.5

    14

    14.5

    15

    15.5

    16

    16.5

    Agrani

    Bank

    DBBL N.C.C. MTBL

    Cash Credit Interest

    Rate

    Cash Credit Interest Rate

    Agrani Bank DBBL N.C.C. MTBL

    14 15 16 15

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    FDR Interest Rate

    Agrani BankDBBL

    BracN.C.C.

    0

    2

    4

    6

    8

    10

    12

    14

    Agrani Bank DBBL Brac N.C.C.

    FDR Interest Rate

    FDR Interest Rate

    Agrani Bank DBBL Brac N.C.C.

    10 11 12 13

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    100

    300 300

    0

    50

    100

    150

    200

    250

    300

    350

    Agrani Bank Janata Bank Dhaka Bank

    Bank

    PPEndors

    eComm.

    (inTK)

    Passport Endorse

    Commission Agrani Bank Janata Bank Dhaka Bank

    (in TAKA) 100 300 300

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    After comparison with above five

    different products we see

    products are low cost.

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    Total Advance at 2007

    0

    2000

    4000

    60008000

    10000

    12000

    14000

    Agrani

    Bank

    Janata

    Bank

    Brac

    Bank

    Dhaka

    Bank

    Total Advance at2007

    Total Advance at 2007 (In Crore)

    Agrani Bank Janata Bank Brac Bank Dhaka Bank

    11900 12000 3300 2000

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    Deposit at 2007

    0

    5000

    1000015000

    20000

    25000

    Agrani

    Bank

    Janata

    Bank

    Brac

    Bank

    Dhaka

    Bank

    Deposit at 2007

    Deposit at 2007 (In Crore)

    Agrani Bank Janata Bank Brac Bank Dhaka Bank

    13600 19800 3800 2300

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    Two of the main indicator of a financial

    institute is advance and deposit. From

    above two comparison we see market of

    this bank is broad. As the branch numberof this bank is 867 they are able to gain

    this competitive advantage. And off course

    products is acceptable to customers.

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    Interest Income62%

    Investmentincome

    13%Commission

    Income

    7%

    ExchangeEarning

    13%

    Other OperativeIncome

    5%

    Income Sectors of Agrani Bank Ltd.

    Interest Income

    Investment income

    Commission Income

    Exchange Earning

    Other Operative Income

    c

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    Income Sectors of Brac Bank

    Interest Income

    58%Income from

    Investment

    20%

    Commission,Exchange

    22%

    Other Operative

    Income

    0%

    Interest Income

    Income from Investment

    Commission,Exchange

    Other Operative Income

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    Income Sectors of DBBL

    Interest Income

    43%

    Income fromInvestment

    24%

    Commission,Excha

    nge

    27%

    Other Operative

    Income

    6%

    Interest Income

    Income from Investment

    Commission,Exchange

    Other Operative Income

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    From above information we can say

    differentiation of product is relatively

    standard. This banks number of income

    sectors is as like other commercial banksincome sector.

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    Cost of production of this bank is lowest

    compared to other commercial banks.

    Here we see Interest paid by this bank is

    only 66% compared to Brac banks 82%.

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    Number of branches covering almost all over the country.

    Amount of confidence regarding this bank in the mind of

    mass people (being a government bank everyone thinks

    the policy of this bank will not be changed very rapidly).

    Ability to give advances in big volume with lowest interestrate.

    Ability to handle remittances efficiently.

    Ability to give loans to rural areas especially to farmers.

    Ability to take help from government to collect classifiedloans

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    -Technology used by the bank is not up-to-date.

    -Service given by the bank is below customers satisfaction level.

    -Inefficient employees in comparison to other private commercial

    banks.

    -Political intervention over this bank is more than other private

    banks. -Recovery rate of loans is low compared to private banks.

    -Salary structure of the employees of the bank is very inefficient. In

    2006 the number employees were 11793 and the amount was used

    to give them salary was 2,511,990,943 tk (including salary and

    allowances). Per month 17500 (almost) tk for each person. This isless than the lowest salary getter of many private sector banks

    (excluding allowances).

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    -Net interest income (NII) is increasing day by day.

    -Amount of classified loan is decreasing.

    -Operating profit is increasing gradually.

    -Import-export business is very much favorable to bank now a days.

    -Loss-making branches has been reducing for last few years.

    -Remittances increased by 13.68 percent. -Human resources management division is getting more emphasis

    from top management.

    -Huge number of IT specialist is being employed to up grade

    computer system and network.

    -Salary structure is also improving in some extent.

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    -The banking industry is the main threat of the bank as many potential

    competitors are in competition on the market.

    -Technological drawback is a big problem.

    -Salary structure is a big threat not to attract potential and efficient

    employees from market.

    -Outlook and interior design is not attracting customers as they areattracted by other commercial banks.

    -Government is a big threat also. Because to balance deficit budget and

    to pay different dues of various government organization like BPC

    government is dependent of this bank.

    -Though classified loan condition is improving but still it is in danger one.

    -And off course still trade union is a big threat to it, as the CBA leadersare more interested to take leadership than to do well for the bank.

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    Target market is broad for this Bank. Bank is giving advances for various

    reasons to all type of customers. It includes poultry loans, SME loans,

    hatchery loans, shallow water pump loans to high industrial loans. The

    range of advancement is from 5,000 taka to 2000 ml taka.

    Cost of product is lowest among competitive banks. In comparison to

    other commercial banks especially private sector bank the rate ofinterest of this bank is so minimum. Sonali bank and Janata Bank is also

    giving advance to their customers all most same rate but most cases

    those rate are more than the rate given by Agrani bank Ltd. Moreover

    different general banking services given by Agrani bank Ltd is lower in

    comparison to all bank in the banking industry.

    As the market of this bank is broad i.e. hole Bangladesh is their marketand almost every type of people is their customer we can say , the

    business level strategy followed by this bank is cost leadership strategy.

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    The market of this bank is broad i.e. hole Bangladesh is their market and almost

    every type of people is their customer. Bank is giving advances to their

    customers on big amount as well as very little amount. Besides small sized loan

    bank is pursuing Industrial loans, syndicated loan with other banks which are

    very huge in volume. And the customers of those loans are big businessmen. So

    as there is no special emphasis on any particular segment of market we can

    easily recognize that the bank is pursuing cost leadership strategy. In addition to

    this we can say, as there are very little differences between the four state owned

    commercial banks in Bangladesh from the point of view of uniqueness the bank

    is not unique from others, so they are not performing differentiation strategy.

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    -Some uniqueness should be assessed by strategy

    formulators and special emphasis is needed to highlight

    people on that uniqueness. i.e.; integrated low cost

    differentiation strategy should be implemented.

    -The bank should invest more to coup up with the currenttechnological changes and adopt online banking in a vast

    way.

    -The salary structure should be rational with other banks.

    -More training is needed to make current employees ascustomer friendly.

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    -Top management should be free to formulate banks own strategy.

    -bank should focus on broader business issues by having outside

    experts handle various operational details.

    -An appropriate organizational culture encourages the development

    of an entrepreneurial orientation among employees so the change of

    the organization culture is necessary.

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