DEVELOPMENT OF A SITUATION ANALYSIS INTRODUCTION Situation analysis

DEVELOPMENT OF A SITUATION ANALYSIS

INTRODUCTION • Situation analysis answers the first market and planning question(where are we now? ) • It’s a formal systematic procedure that helps banks understand their current situation • To understand their weaknesses and strengthens • Critical function: helps management know what needs to be done

Why formalize the situation analysis? 1) Essential research must be conducted. Information is essential for setting objectives, measuring and evaluating. 2) Situation analysis is objective and thorough. In order to compare the banks position with its competitors. 3) Formalizing situation analysis works wonders for internal public relation and motivation. Gives employees an understanding of the importance of their cooperation.

FOUR ELEMENTS OF SITUATION ANALYSIS 1) SELF ANALYSIS- learn about banks performance and current situation. Should include a review of current marketing mix strategies, banks market share and maybe feedback from market surveys. (Current strategies and tactics; their effectivness, maret share and position, financial position) Information for it comes from internal secondary source(MCIF). Other information available within the bank comes from their financial statements. This information is used to answer the banks questions regarding financial services.

2) ANALYSIS OF MACROECONOMICAL FACTORS They affect the marketing plan. Consist of: • Economic environment- need to know the economy of their trade area, understand economic trends and make projections about the economic future. Economic environment analysis should include: o Employment trends, inflation, business cycle o (capalisim is full of crisis –greed, herd mentality and optimisim. First financial crisis is Tulip Crisis- Holland). o Retail activity and commercial activity o Construction activity

• Demographic environment Creates picture of banks population in its market area. There’s an important relationship between number of people in the market and the number of financial services that are required. Age distribution, education, income and geographic distribution of the population. • Social and cultural environment Change in consumers values and lifestyle may cause their needs and desire for products and services to change

• POLITICAL, LEGAL AND REGULATORY ENVIRONMET • Effect of regulation and legislation. Example; • Glass-Stegall Act of 1933 separeted investment banks from commercial banks. The Gramm–Leach–Bliley Act (GLBA) of 1999, lifted this separation and commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. • TECHNOLOGCAL FACTORS • Advances in technology cause new techniques for delivering services (computers, smart phones, ATMs etc. • NATURAL ENVIRONMENTAL FACTORS Need to be included in banks planning process because of environment protection laws. Some countries and states put strict gas limits by 2020, eg. Norway and California)

3) ANALYSIS OF MICROENVIRONMENT FACTORS • CUSTOMERS Must understand them demographically, learn their needs and preferences regarding bank products and services (surveys carried out by CSR). Buying beaviour, attitudes toward bank. • MARKETS Addresses size, growth, geographic distribution, demographic and potential profitability of market/s targeted by the bank

• COMPETITION Need to compare your performance to the performance of your competitors. They need information on: 1) Comparative operating statistics 2) Comparative market shares 3) Comparison of market strategies - OPERATING STATISTICS Involves comparing financial statements with your competitors financial statements.

- MARKET SHARE Is an indicator of banks competitive strength. Need to generate primary data using market research surveys, banks cooperate with each other to gather the information they need. Having the biggest market share doesn’t make you the best! - MARKET STRATEGIES Marketers go to the market and see what the competition is doing, observe the competitors use of the marketing mix (4 P’s)

• MARKET INTERMEDIARIES Addresses; accessibility, timeliness, pricing and courtesy, concerning the intermediary. • PUBLICS Bank must be sensitive to internal and external publics that might be interested/affected by the banks plan. internal- employees should be informed about the plan and trained to excute the plan.

ANALYSIS OF PROBLEMS AND OPPORTUNITIES • Final step of situation analysis is to summarize your findings(summary of banks weaknesses and strengthens). • Summary should be factual statements , covering banks main opportunities and problems. • It’s the foundation for developing objectives, strategies and tactics.