What are the main strategies for Bank of China to develop international business?
I Provisional title
The paper presents a proposal to explore the main strategies in developing international business. . This study will be conducted with reference to the Bank of China specifically its Guangxi branch. Apart from being the oldest bank in China, Bank of China is one of the big four state-owned commercial banks of the People’s Republic of China. It was founded by the government in 1912 which has now become a purely commercial bank. Having said this, the Bank of China had recently embraced a series of expansion strategies after it last opened a branch in New York in 1981.
II Research background
Strategies are central to the achievement of sustainable development. These are the driving force of practically every organization that are motivated to grow fast ahead of the competitors, grow in line with the industry or to simply catch-up and defend an existing status. Either domestically or internationally, the orientation of these organizations is to expand, to reach and to penetrate into new market segments despite of all the hindrances that the market environment imposes. Organizations are also initiated by efforts to maximize profit and minimize risks through strategizing. International strategies and branding strategies are just two of these strategies that companies converged into.
International strategies can be viewed as outcome of the interrelationship between industry characteristics, strategic flexibility and organizational capability (Segal-Horn and Faulkner 1999, p. 1). International strategies are defined as the strategies organizations use if they have domestic market operation as their primary market and converge into offshore markets as accessories, options and alternatives. The strengths companies can draw from international strategies include the independence of the country market while providing local needs and services offshore, maximize and centralized operational scale, the limitations of the direct presence in overseas markets with respect to sales and marketing and build and develop interdependent networks worldwide (p. 9). The weaknesses of international strategies is that it involves modern factors of production, different types of international trade; international polices, regulations and laws compliance; the role by the governments and the role of risk in international strategy.
To further enhance the company’s position in the international market, some companies are employing different strategies at corporate and international levels. The basis for decision-making is the product itself and the international scope and the process on how the company attempts at improving or adding values that are created by the business units such as the branches (Johnson and Schools, 2002). To focus on value-adding elements, brand strategies are further pursued. Brand strategies are used to create a unique identity that will differentiate an organization from the competition. Brand identity of a company or the source of a promise to the customer will be repeatedly communicated. Prior to communicating the brand identity, there is the need for determining the brand objectives to have a clear definition of what the brand needs to achieve (Lake, 2009).
International strategies and definitive branding strategies are important in building the competitiveness of the business. It is in this sense that Bank of China will be investigated. Despite the fierce competition in the global financial market, how the Bank of China will thrive through its international and specific brand strategies? Is Bank of China Guangxi branch competitive enough to penetrate the global financial market? Competitiveness is the ability and performance of a firm towards acquiring sustainability, growth and development. As such, there is the need to determine the level of competitiveness of Bank of China Guangxi branch to distinguish the strategic capabilities that could bring global success for the company.
Other questions that will be explored include: How does Bank of China conduct both strategies in work processes? Specifically, how international strategies correlate with brand strategies? These are the questions in line with how Bank of China Guangxi brand will compete with foreign banks. Competition means to utilize strategies that are difficult to imitate to acquire sustainable competitive advantage. And so, how are international strategies and brand strategies will bring sustainable competitive advantage to Bank of China Guangxi branch must be also investigated. Another question yet to be answered is: Are international strategies and brand strategies will bring success to Bank of China Guangxi branch with reference to the competition?
III Rationale for the chosen topic
The study will be a significant endeavour in gaining in-depth understanding of the main strategies in developing an international business. This study will be helpful to Bank of China as new recommendation of strategies could emerge from this research. This research will be also significant to the field of banking research as it may unravel useful strategies not only for Bank of China but to all banks that are planning to move into the global context. Moreover, this study will be an important contribution to a body of research on strategizing in the global market. The study is also significant to MBA students as it may serve as useful reference for future researchers and those who will seek information about international branding strategies. Overall, it may help boosts the growth of global banking research.
IV Aims and objectives
The main aim of the study is to investigate the competitiveness of Bank of China Guangxi branch and its desire to compete internationally. It is also the aim of the study to explore the employed international and brand strategies of Bank of China. In lieu with this, other research objectives are to:
- Determine how these strategies impact the international market of Bank of China Guangxi branch
- Determine how, through these strategies, Bank of China Guangxi branch will compete with foreign banks
V Brief review of literature
Chinese financial sector
Wu, Chen and Shiu (2007) traced the evolution of the banking sector in China. The authors noted that the financial reforms in China have focused on allowing the market mechanism to operate more freely. One of the significant changes in China’s financial sector is the emergence of a range of different types of commercial banks. This resulted in diversification of Chinese banks into state-owned commercial banks (SCBs), regional and national shareholding commercial banks, city commercial banks and foreign banks. Banks dominate the financial system and play a very important role in funds allocation. Along with the Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank, Bank of China is one of the leading players.
Monetarization, the financial interrelations ratio (FIR) and the level of capitalization are the indicators of financial system development in China. Monetarization is deeply caused by market opening which leads to the demand of money as a medium of trading. Wu, Chen and Shiu (2007) suggested that the deepening of moneterization thus reflects the successful development of the market mechanism in China's financial sector. FIR is measured by the total value of the financial sector's assets as a percentage of GDP. The rapid increase in the financial interrelations ratio (FIR) shows that the financial sector's assets have been growing even faster than the economy as a whole. The reforms in the financial sector as a whole have been accompanied by the rapid development of the stock market which changes both the structure of China's financial markets and the pattern of business financing (Wu, Chen and Shiu, 2007).
Chinese’ bank preferences
Heijes (2008) also noted that there are several reasons that affect the customers’ choice in selecting Chinese or foreign banks. Based on his study, supplier performance in terms of responsiveness is of particular importance in preferring foreign banks, which are seen to have an advantage in terms of professionalism, innovation and client-orientation. For Chinese banks only one selection reason belongs to an inherent advantage, a large and convenient network, with the other reasons deriving from government's protection and historical conditions. Surprisingly, cultural aspects such as “guanxi” or personal relationship are only of minor importance.
This implicates that with the ongoing transitioning of the financial services in China, customers are provided with increasing number of options whether to bank in a local or foreign bank. More than customer selection processes, this reflects the growth of foreign banks in China and initiatives of Chinese banks to penetrate the global financial market because local people are becoming less interested in banking in local banks.
VI Statement of design and methodology
The research philosophy adopted for this dissertation is interpretive epistemology which simply refers to the philosophical underpinning of the research. Interpretive epistemology has a basic assumption that knowledge can only be created and understood from the point of view of the individuals who live and work in a particular culture or organization. Therefore, every individual acts in situation and makes sense of what is happening based on experiences of the situation and the expectations people bring into it. This means that there may be different understandings and interpretations of reality and interpretive epistemology leads to accessing meanings made by others and describe how they come to make those meanings (Hatch and Cunliffe, 2006, p, 14). The choice of this philosophy is important because it guides the research design, the research approach, choice of methods, analysis of the findings, and even the presentation.
Further, an instrumental case study approach would be used since this enables the researcher to make generalizations based on the findings although only one case study organization will be considered. In an instrumental case study, the particular case is less important than the insight it can provide into a specific issue of theory. Thereby, the goal of this case study is to understand something more general than the case but nothing generalisable to other contexts (Colwell, 2006, p. 331). Denzin and Lincoln (2005), however, contend that the case, although it is of secondary interest, plays a supportive role and facilitates the understanding of important concepts. Investigating the case in-depth has a purpose of pursuing an external interest (p. 445).
The research will be exploratory because it aims to determine the present facts as well as facts that are not yet explored about the phenomenon (Saunders et al, 2003). Exploratory research will enable the study to look at the problem in both descriptive and exploratory manner. This approach is a preferred mean of finding out “what is happening to seek new insights” or “to ask questions or to assess phenomena in a new light” (Saunders et al, 2003; Robson, 2002). This study will use the principal ways of conducting exploratory research, which include: literature search; talking to experts about the subject; and conducting focus group interview.
VII Sources and acquisition of data
In this study, primary and secondary research will be both incorporated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. The primary data for the study will be represented by the survey results that will be acquired from the respondents. Respondents of the survey will be the staff of Bank of China. A structured questionnaire will be developed and it will be used as the survey tool for the study. It is planned that the questionnaire will have a 5 point Likert Scale, as well as ranking questions. The researcher will survey consumers on their knowledge on international and brand strategies of Bank of China and its competitiveness.
Interview with some responsible persons in Bank of China Guangxi Branch will be also considered. The reason behind this is that the study will try to find and build theories that will explain the relationship of one variable with another variable through qualitative elements in research. Through this method, qualitative elements that do not have standard measures such as behavior, attitudes, opinions, and beliefs within the organizational domain will be analyzed. In the event, however, that time and commercial constraints will hinder the conduct of interview, it will be dropped to respond to these constraints. Notably, interviews will involve commercial information that may be highly confidential.
On the other hand, the literature reviews to be presented in the second chapter of the study will represent the secondary data of the study. The secondary sources of data will come from published articles from journals, theses and related studies, books, company reports and official statistics. Sometimes, secondary research is required in the preliminary stages of research to determine what is known already and what new data are required, or to inform research design. Acquiring secondary data are more convenient to use because they are already condensed and organized. Moreover, analysis and interpretation are done more easily. Internet databases will be also consulted including Questia, Highbeam and Emerald. Document analysis, nonetheless, will focus more on the annual report of Bank of China.
VIII Method of data analysis
The data obtained will be analyzed with descriptive statistics analysis using SPSS version 14.0. The data results of the study will be analyzed by determining their corresponding frequency, percentage and weighted mean. The following statistical formulas will be used:
1. Percentage – to determine the magnitude of the responses to the questionnaire.
n
% = -------- x 100 ; n – number of responses
N N – total number of respondents
2. Weighted Mean
f1x1 + f2x2 + f3x3 + f4x4 + f5x5
x= --------------------------------------------- ;
xt
where: f – weight given to each response
x – number of responses
xt – total number of responses
IX Form of presentation
The dissertation will be presented in written form with the addition of data charts which will present the project’s results. The first chapter of the study will present and discuss the problems and objectives of the study. The second chapter on the other hand will present the various related literatures that were reviewed for the study. Chapter 3, on the other hand, will discuss the methods and procedures that will be used in the study. Chapter 4 will present the results of the study in tables along with their specific interpretations. Finally, the fifth chapter will present the conclusion and discussion of the study. Further, some of the analyzed data will be illustrating using pie charts and network charts but this may not be confirmed until survey data had been analyzed.
X Timetable
TASK
Weeks
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
Read Literature
Finalize Objectives
Draft Literature Review
Devise Research Approach
Review Secondary Data
Organize Survey
Develop Survey Questions
Analyze Secondary and Primary Data
Evaluate Data
Draft Findings Chapter
Complete Remaining Chapters
Submit to Tutor and Await Feedback
Revise Draft and Format for Submission
Print, Bind
Submit
References
Colwell, R 2006, Handbook of Research Methodologies, Oxford University Press, US.
Denzin, N K & Lincoln, Y S 2005, The SAGE handbook of qualitative research, Sage Publications Inc, UK.
Hatch, M J & Cunliffe, A L 2006, Organization Theory: Modern, Symbolic, and Postmodern Perspective, Oxford University Press, Oxford.
Heijes, C 2008, ‘Culture, convenience or efficiency: Customer behavior in choosing local or foreign banks in China,’ Chinese Management Studies, vol. 2, no. 3, pp. 183-202.
Johnson, G and Schools, K 2002, Exploring Corporate Strategy, Prentice Hall.
Lake, L 2009, Developing Your Brand Strategy.
Saunders, M, Lewis, P and Thornhill, A 2003, Research Methods for Business Students, 3rd edn, Prentice Hall Financial Times, London.
Segal-Horn, S & Faulkner, D 1999, The Dynamics of International Strategy, Thomson Learning EMEA.
Wu, H L, Chen, C H & Shiu, F Y 2007, ‘The impact of financial development and back characteristics on the operational performance of commercial banks in the Chinese transition economy,’ Journal of Economic Studies, vol. 34, no. 5, pp. 401-414.
Credit:ivythesis.typepad.com
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