Competitive Strategy For Bank Of China

After shareholding system reform, state-owned commercial bank of China got into a new development period. In view of patient management style and international finance control, local market will be the key scope of business for state-owned commercial bank of China. At present,a new competition situation arises on the domestic market. As a financial enterprise,establishing and implementing a clear, explicit, practicable competition strategy is important for the development of Bank of China. This article is based on competition strategy theories, make use of the tools such as PEST model, five kinds of competition strength model and SWOT model, adopt the analytical methods such as positive analysis, historical comparison and deductive inference, to research into the competition strategy of Bank of China.First, we elaborate the basic concepts, development process and main schools of thought of the competition strategy theories, put forward the main theories and models used in this text, review the strategy development of Bank of China, offer an opinion that with the change of the exterior environment and the internal resources, the original strategy of Bank of China is not in adaptation to the environment, we need to scheme a new strategy.While carrying on the exterior environment analysis, we analyzed the economic environment, policy and law environment, social cultural environment and technique environment through the PEST model. Through a banking industry environment analysis, we analyzed the industry characteristic and development trend of China's banking industry. Through the five kinds of competition strength model, we point out that: Bank of China is facing a intense inter-bank competition, the bargaining power on the selling side and the buy side continuously strengthens, the threat from incomer and replacer exists to some extent. Through competitor analysis, we carried on the demarcation of strategic group, confirmed the main competitors, analyzed their strength and current strategy.While carrying on an internal resources analysis, with SWOT model we analyzed opportunities and threats of exterior environment, the advantages and disadvantages of internal resources compared with the competitor.Make use of SWOT matrix, put forward the responding measures of Bank of China, these measures all represent the thought of the overall cost leadership strategy drawn up afterwards.For establishing a competition strategy, we should use history experience for reference.During the 1980s, under the changing market environment, the four largest banks of Britain carried on competition strategy adjustment and gained different results. Through comparison, we put forward the urgent matter of China's bank is: According to the property scale of oneself, draw up total strategy, improve management efficiency, draw up business development strategy in keeping with self-condition.Base on competitive advantage theories, through analysis we clarify that differentiation strategy and focus strategy doesn't fit, overall cost leadership strategy is the suitable one for Bank of China. According to Arnold Hacks' Triangle model and case analysis, we put forward the business development in keeping with Bank of China's state.Overall cost leadership strategy means that through exaltation of production efficiency, cancellation of waste, strict cost control to acquire a lower cost than the rival, then win competitive advantage. The conditions to successfully carry out overall cost leadership strategy lie in: 1. the spread income; 2.non-performing assets rate and risk management ability; 3.operating cost control ability; 4.The allotment of economy capital. In addition, the corporate governance structure also play a key role in carrying out strategy. According to the five points mentioned above, we put forward policy and suggestion for Bank of China to implement overall cost leadership strategy.