De La Salle University Dasmariñas

DBB-B Dasmariñas, Cavite, Philippines

West Ave, Dasmariñas, Cavite

In Partial Fulfillment of the Requirements for Basic Microeconomics

Final Output:

Porter’s Five Forces

Banco De Oro Unibank, Inc. (BDO)

Submitted to:

Mr. Willington Onuh

Submitted by:

Lamarca, Ilyne Mhae

Macatangay, Nicole Suzaine

Meude, Mark Kianno

BOM 21

June 1, 2020
 Banco De Oro Unibank, Inc. (BDO) Porter’s Five Forces

ABSTRACT

The purpose of this paper is to analyze the SWOT Analysis and Porter's Five
Forces System of Banco De Oro Unibank, Inc. (BDO) would be used to research where
the bank is working. The given data given in this paper would help to understand how
BDO works, its financial and operational rankings, and the potential strategies that it
expects to implement.

Keywords: BDO; banks; finance; operations; Philippines

INTRODUCTION

Banco De Oro Unibank, Inc. (BDO) is the number one universal and industrial
bank in terms of resource estimate and credits within the Philippines as of June 30,
2014 (BSP, 2014). It is the item of a merger and over the years it has spoken to a firm
consolidation of qualities and competencies (BDO, 2014). It may be a full benefit
universal bank and has the ability to supply a wide cluster of items and services to its
individual buyer and the corporate market (BDO, 2014). Still being run by its founder
and chairman emeritus, Mr. Henry Sy Sr., the bank is right now at the best of
its amusement. Henry Sy Sr. is ranked by the Forbes as the number one wealthiest man
in the Philippines with self-made worth (Forbes.com LLC, 2014) as prove with
the great notoriety of the bank within the past years. With the continuous increase of
international banks within the Philippines, BDO would have to revamp itself and pick
up more competitive advantage in order to stay feasible.
SWOT Analysis

Being the country's largest universal bank, BDO has used its strength over the
years to create customer loyalty. Through their slogan, “We Find Ways,” the bank has
been able to develop a large customer base within extended banking hours to the
degree that it operates. With the use of advanced technologies, BDO is able to meet the
needs of customers efficiently. It helped the firm to diversify and develop its business by
providing loans and deposits, payments and settlement services, asset management,
investment banking, dealership, insurance services, etc. Furthermore, BDO has a
strong and experienced management run by the SY family, which pioneered the
development of SM Malls.

The bank has limited presence in rural areas, with some branched raising
contradictions around customer support. A big challenge to BDO will be strong market
competition, with the Bank of the Philippine Island (BPI) and Metropolitan Bank and
Trust Corporation (Metrobank) as its close competitors. BDO’s rivals are limited not only
in domestic financial institutions but also in international banks. It may be attributed to
the rise in the involvement of foreign banks, as there is an act of liberalization of foreign
banks. Other external factors which contribute to BDO’s threat include government
regulation. The bank is governed by legislation, and government is in charge when it
comes to tax implementation; on the other hand, the Bangko Sentral ng Pilipinas (BSP)
decides the interest rates that affect the income of the bank.

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

advanced limited international expansion to tight competition in
technology, presence, limited foreign markets, the market, no
customer loyalty, presence in the merge with other substitute for
strong and rural areas, banks, increase financial services,
competent inconsistencies in exposure in the increased amount
management, customer services Philippines of foreign banks,
innovative services, government
and extensive regulation
banking hours
Figure 1. BDO Porter’s Five Forces Summary of Findings

Threat of New
Entrants (LOW)
 Cathay United
 Rivalry among
Competitors (HIGH)
Bargaining Power of Bargaining Power of
Suppliers  Bank of the Buyers (MODERATE)
(MODERATE) Philippine Island
(BPI)  Investors
 Suppliers of  Metropolitan  Employees
pass book, ATM Bank and Trust  Professionals
cards and Corporation  Pensioners
machines, cards, (Metrobank)  Students
slips  Philippine  Insurers
National Bank
(PNB)

Threat of Substitutes
(LOW)
 Cooperative
 Pawnshop
 Microfinance
 Loan sharks
 STRENGTHS AND WEAKNESSES OF THE HOTEL INDUSTRY IN THE FIVE
COMPETITIVE FORCES

Threat of New Entrants – Low

Within the banking industry, there's a high capital necessity (save prerequisite)
required as set by BSP. Setting up a bank requires a colossal sum of ventures and
innovation prerequisites, particularly with today’s fast-paced computerized age.
Although there are numerous worldwide banks display within the Philippines, the law
still directs the number of outside banks to be display within the country. Customers, on
the other hand, still have that brand devotion and as one of the foremost trusted banks,
most individuals would still favor BDO. In conclusion, there are tall exchanging costs for
the buyers, particularly the investors who have kept by means of time-deposit. Clients
discover it troublesome to switch to other banks as their speculations have a certain
term.

Rivalry among Competitors – High

Banks are always competing with one another, either through quick benefit,
assortment of items, or inventive measures. BDO has its similarly adjusted competitors,
which are Metrobank and BPI. In conclusion, with the undifferentiated administrations
(banks offer the same administrations like advances and stores and resource
administration to title a number) of banks would compete with each
other indeed more to induce a bigger showcase share.

Threat of Substitutes – Low

There are no substitutes for monetary administrations other than the substitutes
of the nonbanks that have quasi-banking capacities. Within the keeping money industry
alone, as it were banks are considered.

Bargaining Power of Suppliers – Moderate

Ordinarily the providers of banks are as it were for ATM machines, cards, and
slips. They can alter their costs depending on the showcase condition and these
materials and gear are essential for the banks to operate in their everyday exchanges,
but without the banks, providers would have no utilize for these materials.

Bargaining Power of Buyers – Moderate

The buyers are the shoppers of the banks and they are either people or
corporate accounts. They can effectively select to contribute their cash in a distinctive
bank depending on the intrigued rates. Additionally, the bank being the provider, gives
these items and administrations to advantage the buyers fiscally.

WHAT ARE THE KEYS TO PROFITABILITY IN THE INDUSTRY?

 Achieving balance sheet efficiencies

Banks would need to revamp their deposits and asset mixes so that they are in
line with enforcement regulations while at the same time not compromising on that
profitability. Banks would have to improve their customer services to attract deposits
and increase cross-selling activities.

 Pursuing Growth

Banks will need to invest in both customer insights and digital technologies to
develop better cross-selling strategies and to create more customer interest as well.
But, underwriting practices should be strictly adhered to. The establishment of alliances
with non-bank technology companies may be advantageous in terms competitive
advantage.

 Transforming Payments

Banks have replaced their conventional chip and PIN cards with the modern
EMV. Contactless payments are also becoming very popular with the launch of Apple
Pay. And as contactless payments become more common, banks may need to look for
ways to differentiate the way they offer customer service.

 Strengthening compliance management

Banks need to fully integrate compliance and risk management fully into the
banks’ culture, rather than focus on specific processes. It should also be enforced,
through the employee training and in performance management systems. New
regulations including heightened risk governance standards and the enhanced
prudential supervision law clearly specifically require the banks to strengthen their risk
capabilities.

 Enhancing Cybersecurity

Banks need to spend more in technology whether it is enforcement or consumer

relationships, or cybersecurity. Improving analytical data skills would ensure the overall
growth and productivity target is achieved. It also guarantees improved competitiveness
with ethics and risk management integrated in the corporate culture.

WHAT IS THE COMPETITIVE ADVANTAGE AND COMPETITIVE POSITION OF

BDO?

BDO prides itself on a notoriety for a hands-on, service-oriented trade logic and
illustrated commitment to quality, unwavering quality and responsiveness to client
needs. BDO work without the clashes and chains of
command normal in numerous bigger firms. For our clients this implies more responsive
benefit, quick issue determination, and agile adjustment to changing needs. BDO
grasp a hands-on, adaptable benefit logic and a culture of openness, candor
and believe. Combined with the preferences of a streamlined, open organizational
structure, this approach interprets to opportune reactions and
quick determination of specialized issues for our clients.

WHAT ARE OTHER MAJOR INCOME STREAMS FOR BDO?

BDO may be a full-service universal bank within the Philippines. It gives a total
cluster of industry-leading items and administrations counting Loaning (corporate and
consumer), Deposit-taking, Remote Trade, Brokering, Trust and Ventures, Credit Cards,
Corporate Cash Management and Remittances within the Philippines. Through its
neighborhood auxiliaries, the Bank offers Investment Banking, Private Banking, Leasing
and Finance Renting and Back, Rural Banking, Life Insurance, Insurance Brokerage
and Stock Brokerage services.
 BDO’s regulation qualities and value-added items and administrations hold the
key to its fruitful trade connections with clients. On the front line, its branches stay at
the cutting edge of setting tall benchmarks as a deal and service-oriented, customer
focused drive. BDO has the biggest distribution network with over 1,300 working
branches and more than 4,000 ATMs nationwide.

Through specific acquisitions and natural development, BDO has situated itself
for expanded adjust sheet quality and proceeding extension into modern markets. As of
30 June 2019, BDO is the country’s biggest bank in terms of solidified assets, customer
loans, deposits, resources beneath management and capital, as well as branch and
ATM network nationwide.

BDO is a member of the SM Group, one of the country’s biggest and most
successful aggregates with businesses crossing retail, shopping center operations,
property advancement (residential, commercial, resorts/hotel), and financial services.
Although part of a conglomerate, BDO’s day-to-day operations are dealt with by a
group of proficient directors and bank officers. Encourage, the Bank has one of the
industry’s most grounded Board of Directors composed of experts with broad encounter
in different areas that incorporate banking and finance, accounting, law, and business.

WHAT IS BDO’S BUSINESS STRATEGY?

From fabricating and dissemination, development, and innovation, to monetary

administrations and healthcare, organizations over about each industry require help
overcoming deterrents and capitalizing on openings. As commerce gets to be more
worldwide and competitive, arranging for long run has gotten to be crucial to
accomplishing maintained trade success.

At BDO, they work with their clients to analyze and get it their businesses within
the setting of the markets and competitive situations in which they work. They
offer quick, real-time, vital, viable and imaginative direction to trade proprietors, sheets,
and stakeholders to help them arrange their future in a way that maximizes potential,
creates competitive points of interest, and positions them for development and victory.
Their different group of experienced experts combine a high-level commerce procedure
with innovative ability. Partner-led benefit groups collaborate with administration to
record a methodology that adjusts operations, culture, values, deals & promoting, back
and innovation with long-term development activities.

CONCLUSION

BDO is the top local bank within the Philippines and is biggest in terms of
resources and credits. It ought to center more on its qualities and
upgrade its services to compete with its competitors. The most point is that BDO ought
to be superior in terms of quality. Fiscally, it is doing exceptionally well from a long time
2011 to 2013. It is anticipated that it would be here for the long run. In its operations
side, there are numerous dangers that hinder the bank for 2015. In any case, with the
proper technique, BDO can compete with universal banks indeed with the increment of
their nearness locally. It ought to be famous that the bank must be able to compete
globally as well; as of now, it still has not achieved this status. Assist investigate must be
done on other banks to compare their diverse characteristics and decide the proper
methodology to confront not as it were the ASEAN integration, but moreover
globalization within the future.

At present, BDO is taking continuous steps to move forward its competitiveness

but the question of executing the techniques in time for the future circumstances to
come, still remains. The analysts would like to recommend the future
analysts to progress this ponder by making other investigation pertinent to the subject
matter and by getting more interior data within the bank to be examined. This will make
the ponder more accurate and appropriate to its current circumstance.

REFERENCES:

https://www.dlsu.edu.ph/wp-content/uploads/pdf/conferences/research-congress-
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https://www.bdo.com.ve/en-gb/about/about-bdo-member-firm/why-bdo/competitive-
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https://www.bdo.com.ph/about-bdo/business-operation