Strategic Management

Micro-Finance Situations

Lecturer: Dr. Kenneth Kee Kia Hiong, BA, PG. DIP, MBA, Ph.D.

Group I:

1. Mr. Sann Sopheap

2. Mr. Moung Soveasna

3. Mr. Kim Sophal

4. Mr. Morn Sokhara

5. Mr. Yim Chan Boravy

6. Mr. Dang Rivann

December 20, 2013

Table of Contents

1. Introductions2. What are the challenges and

solutions?3. What are the resources and

capabilities that you need to obtain competitive advantages?

4. What is the strategic Intent of your business?

5. What else do you need to do in order to earn above-average return?

Introduction• After Cambodian civil ruinous war, Pol Pot regime, people

who want to run business or do something else borrow money from lenders in their villages and districts with high interest rate up 10% or 20% a month.

• In 1990, Microfinance in Cambodia started opening in the form of NGOs in order to stimulate economic growth.

• 1993, Royal Government opens the free market economic policy widely in the country, region, and world.

• During 1998 – 2000, microfinance industry in Cambodia has grown increasingly, become a potential industry, and developed stronger than other countries in Southeast Asia.

• At present, there are many microfinance institutions and NGOs work in micro financial sector.

• Up to June 2012, 7 microfinance institutions among 37 microfinance institutions have received license for taking deposits from the public.

Challenges of Micro-Finances

Political instability- Micro finance institute

(MFI) will not provide much loan to their clients.

- Lack of fund because clients will withdraw their money to keep by their self.

- International financial institutes will not continue to provide loan to MFI for their operation.

Many competitors - There are 37 MFIs, 33

NGOs, and 32 banks that have received legal licenses from National Bank of Cambodia to operate in micro finance sector.

Natural Disaster- Natural disaster such

as flooding and drought make clients delay or unable to repay to MFIs.

How to response to the challenges?

Political instability

- Risk management have focus much on political situation and analyze the impact to make promptly response.

- Reduce providing to clients.

- Preserve fund for clients withdrawal.

Many competitors - Need strong

competitive strategy.- Provide loan with low

interest.- Good costumer

service- Provide consultation

to clients to help them achieve their business.

Natural Disaster- Delay repay period

Resources & Capabilities for Completive Advantages Human resources- Set up effectively HRM- 137,253 students study at university and

65,734 study in Business management in 2008-2009 . Source: MoEYS

International Finance Support- Apply loan from International finance

institution Internal Saving (deposit)- $346.10 M saving in 39MFI- Lunch saving product

Strategic Intent

What is Strategic Intent? A business’ long-term, far-reaching goal. In order to determine your business’ strategic intent, you must not only consider what you want in the next five or ten years, but what you want to accomplish in a 50 year timeframe.

For example, decades ago, Coca-Cola’s strategic intent was for there to be a Coke within the reach of every human being on the planet.

Strategic Intent

Figure 1: Strategic Intent Framework

Strategic Intent

1. Market Penetration

Price or promotions that you decide to penetrate in the market.

Strategic Intent

2. Product DevelopmentProduct development involves developing new products or services and placing them into existing markets.

Agriculture Loan

Small Business Loan

Student Loan

Home Improvement Loan

Strategic Intent

3. Market Development

Increases the Market Shares (Including current clients and new

clients)

Future Market Share of B

Current Market Share of B

Strategic Intent

3. Market DevelopmentSmall & Medium

Enterprises

Farmers, students &

small consumer

loan

Strategic Intent

4. Diversifications

Future Operation Area

Current Operation Area

For in stance, currently we operate in some provinces that most clients are prefer to use KHR currency more than THB. But if next few year the company expand its operation areas into some provinces like Battambang, Banteay Meanchey, Pailin, Oddar Meanchey and Koh Kong, THB currency is need to be consider to introduce in those new markets to compete with other existing institutions.

How to earn above average-return?

In order to earn above average returns, your business must have a competitive advantage over your rivals.

Competitive

Advantage

Cost-Leadership

Differentiation

R&DR&D

Conclusion & Recommendation Strategic management has emerged in respond to the

need for mental models and planning tools to help executives guide their firms in this challenging global business environment. It is concerned primarily with the actions organization take to achieve competitive advantage and create value for the organization and its stakeholders.

The Strategic Management process is the full set of commitment, decision and action required for a firm to create value and earn returns that are higher than those of competitors. In its simplest form to formulate and implement strategies that lead to competitive advantage. Thus, the strategic management process is used to match the conditions of an ever-changing market and competitive structure with a firm’s continuously evolving resources, capabilities, and competencies.

Sources of References1. Marketing and product strategies for growth: http

://businesscasestudies.co.uk/enterprise-rent-a-car/marketing-and-product-strategies-for-growth/ansoffs-matrix.html#axzz2nPqYyE5M

2. Market development: http://en.wikipedia.org/wiki/Market_development

3. Amret Microfinance Institutions: http://www.amret.com.kh/amret/en/about-us/about-usen.html

4. National Bank of Cambodia: http://www.nbc.org.kh/

5. Debts rise along with water level: http://www.phnompenhpost.com/business/debts-rise-along-water-level

6. MFIs downplay debts: http://www.phnompenhpost.com/business/mfis-downplay-debts

Thank You!

Thank You!