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Executive summary
While identifying the current market conditions of an organization, external environmental analysis takes essential part in the strategic audit. It explains the opportunities and the threats which the organization is facing and helps to plan the ways to meet environmental needs and wants with the available resources. External environmental factors such as competition, consumer behaviors, economic conditions and the legal backgrounds are very important to an organization while retaining in the dynamic business environment.
The purpose of this study is to evaluate the external environment of the Hatton National Bank (HNB). Currently, bank sector is the one of the main sector that impact due to the external changes of the industry. Mainly PESTEL and Porter’s five forces analysis are mainly used to conduct the external environmental analysis. Further, core competencies of the company has been analyzed to face the external environmental changes.
PESTEL analysis is the most powerful tool to analysis the external environment. Porter’s five forces analysis is useful to identify the competitiveness of the industry. Digitalization and new social trends are the key drivers of the banking sectors. Finally this report suggest the recommendations to adopt according to new environment.
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| Table of Content |
1.0 Introduction
Macro environmental analysis evaluate the all the forces in the wide society which are affecting to the companies. External environmental analysis is the first sub part of the macro environmental analysis. External environmental analysis is the first study to industry analysis and the competitive analysis too (Diaz, 2017). The purpose of the macro environmental analysis is to identify the future events which are affecting to the organizations. According to Johnson and Scholes (2008) industry environment explains the factors which have the direct impact or influence to the firm’s actions and the responses. According to Thomson (2008), that the industry analysis explains the factors which are affecting to the organizational profitability and the competitor analysis explains the behaviors of the dynamic competitors which help to anticipate the competition actions and reactions.
This study will explain the environmental analysis of the Hatton National Bank. Banking sector has become to a significantly high technological with available technological improvements. Therefore this report mainly explained the dynamic factors of the banking sector and its’ impact to the HNB. Hatton National Bank can be identified as one of the prominent commercial bank which is listed in Colombo Stock Exchange. This operates since 1888 and by today it has more than 250 branches. Fitch rating to HNB is AA- (lka).
Below are the main parts of the HNB’s banking which help to gain profitability.
1. Retail Banking
2. Corporate Banking
3. International Banking
4. Treasury and project financing
People, technology and the processes are the main strategic tools which are the HNB uses to become one of the game changer in the banking industry.
Customer service is the significant factor of the banking sector which determines the profitability of the bank by attracting the customer. For that banks are using enhanced customer convenience and the value addition with the offers and the speeding up the delivery of the services. Micro environment is the one part of the external environment and it consists with PESTEL factors. HNB’s external environmental analysis has done by using the PESTEL factor analysis. It can be explained that the demand and the supply pf an organization will determine the profit of the organization in short run. The profitability of the long term organization will be determined by the type of the industry and the structure of it.
According to Porter (2008) an organization can develop a strategic plan to gain its long term profit by identifying and understanding the five competitive forces which are influencing the profitability of the industry. The competitiveness of the banking industry also has explained by using Porter’s five forces model. This report is prepared by using secondary data such as annual reports of the HNB and the books and the articles related to the banking industry.
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