Introduction

The major segments of the BFSI Banking, Financial Services & Insurance are abuzz with Capital Markets, which has built up since the de-regularization in 1991. Even though the global financial turmoil of 2008 rattled the domestic BFSI a bit (due to the sub-prime mortgage crash in the US), the recovery in India was fast. The Banking and Insurance contributed 6 percent of GDP during the year ended 2008. On a broader canvas, financial services encompass products and services offered by financial institutions in order to facilitate financial transactions and other related activities. These could be associated with loans, insurance, credit cards, investment opportunities, money management, and stock broking services. But the substantial chunk of work happens in capital markets.

Porters diamond framework of national competitiveness advantage for Financial services Industry

Factor endowments:
Land, Labor, entrepreneurship, capital Skilled labor is the scarce resource in the whole world. Industry experts believe that a plethora of employment opportunities will emerge at the pace at which the BSFI industry is growing. It is likely to employ 8.4 million people, according to an ICRA Management Consulting Services report. The credit rating agency ICRA stated in its interim report that "the incremental human resource requirement, between 2008 and 2022, is expected to be about 4.2 million. Companies

hire equity analysts to research the market and suggest profitable investment options. The research analysts do the valuation, and track the companies' financial performance. Organizations also hire investment analysts who research, study and analyze financial reports of companies. The analysts also study market and company statistics, stock performance, assess financial results and suggest long/short-term investment options. You can rise in the corporation to become a fund manager. They identify buying and selling opportunities, and risk return tradeoff while maintaining knowledge of liquidity requirement. The advisors or financial planners understand the financial goals of the customers. They chart out a plan of action for them, so that their financial goals can be realized. For loans and other banking services also the employee is required to understand the financial needs of the customer. "We usually prefer post-graduates from leading business schools, with a specialization in finance or sales and marketing," says Sunaina Matto, executive vice-president, HR, Bajaj Capital said in one of his interview with rediff.com. Other certifications related to the same are AMFI (AMFI) NCFM (NSE) IRDA (IRDA) CPFA (SEBI) CA, CS, ICWA And many private institutions certifications like MFA, CFA, and CPA. But the quality is still a concern as according to World economic forums global competitiveness report 2011-2012 India

lacks in tertiary education with global rank of 100. But the situation is better in case of management schools with global rank of 30. Entrepreneurial initiatives are the second part of the factor endowment of porters diamond model. In the financial sector there is a huge row of small entrepreneurs catering to the financial needs of general public like tax filing, insurance advisory and investment advisors. Many small and new companies are entering this space as a security broker, sub broker, corporate agents and other Non-banking financial companies. If we look it with the perspective of global competitiveness, the large organizations are also very keenly following the changing global financial equation, and planning to grow global. Big companies are not just looking toward competing globally but also coming with new and innovative ideas to cater domestic market and maintain their market share, especially after the IDR of standard charted bank in India. Capital is no bar for financial sector of India, as the foreign as well as domestic investors are willingly providing the entire required amount. The global competitiveness report also shows the financial services sector is the major strength of our nation. With rankings given by world economic forum are as follows: Availability of financial services Affordability of financial services Financing through local equity market Ease of access to loans Venture capital availability Soundness of banks Regulation of securities exchanges Legal rights index Overall 45 32 15 35 27 32 26 20 21(Best overall ranking in all segments after market availability 3rd)

In a nutshell we can easily say that the factor endowment is present for financial services in Indian scenario.

Related and supportive Industry

It is very tough to mention the supportive industry for the financial services industry except financial education as it is itself acting as a supportive industry to all the industry. And the scenario of financial education has been already discussed in the earlier parts of this report. Other side of the coin is that all the banking and Non-banking financial institutions act as a support as well as competition to each other. Cross selling is very efficient in financial markets. Banking system of India is globally competitive (Rank 32). And Equity market is the second biggest strength of India (Rank 15) after market availability (Rank 3).

In short financial services have sufficient supporting industry factor.

Demand Conditions
Macro economic factors are the factor we can use to measure the support to financial services industry for that matter India has grown @8% per year for many years, even recession havent impacted India up to a great extent. Where most of the countries posted ve growth, India maintained a growth rate of almost 6% a year. Industrial production was +ve in India when most of the countries were facing ve industrial production. BFSI sector is continuously growing at a rapid pace, contributing 6% to GDP. While accessing the demand conditions one more dimension that is needed to be taken under consideration and that is demographic dividend. While the majority of the population is young there will be no dearth of infrastructure and education need that subsequently leads to more loan and other financial requirements.

Demand conditions are good and growing.

Firm Strategy, Structure and Rivalry

On domestic front, Indian companies are doing great business and attracting global recognition. In India all the major corporate houses are in the business of financial services. Including ADAG, BIRLA, TATA, SUNEEL MITTAL, MAHINDRA and many have made their name with their business in this sector only Like ICICI, HDFC, SBI, LIC. Many financial Institutions are coming up with innovative ideas to compete the market, like Gold finance. The concept is age old in India but the packing is new. But they are still not justifying with their domestic image on the global front. Indian financial institutions attract respect but not the business on the global front. Reasons can be many like recession, for example; recession had hit the globe right when Mr. Anil Ambani announced opening up a global Investment bank. But Indian financial institutions are all set to capture the globe, as the Indian banks are considered very sound. Capital adequacy ratios are very good of Indian bank, which is the cause of concern for most of global banks. While Indian banking association shows that most of the foreign banks in India have CAR ranging between 0 to 10 %. And India banks are now required to maintain 15% CAR. Means for every 100 crore of advance the bank must have a minimum capital of 15 crore (as par RBI circular in 2011). Even before the circular mentioned above, Indian banks were maintain a CAR ratio of almost 13%.

Indian banks have the capability to penetrate the global market, much more then today but they are maintaining a defensive stance on this issue.

Michael Porters five forces modal for financial services industry

Threat of new entrants

Time and cost of entry: High cost, low threat Specialist knowledge: High specialist knowledge required, low threat Barriers to entry: High barriers, low threat Threat of new entrants is low, which gives competitive advantage to the industry.

Competitive rivalry
Number of competitor: High, Higher competitive rivalry Quality differences: Low, Higher competitive rivalry Switching costs: High, Lower competitive rivalry Customer loyalty: Medium, Medium competitive rivalry Cost of leaving market: Very High, Lower competitive rivalry Competitive rivalry is high hence it will be helpful in competing globally.

Buyer Power
Number of customers: Huge, High buyer power Size of each order: variable Differences between competitors: High, High buyer power Price sensitivity: Low Ability to substitute: Low, lower buyer power Cost of changing: Low, higher buyer power Buyer power is moderate which gives competitive advantage to industry.

Supplier power
There is no supplier to financial institutions except money supply in economy, which is influenced by RBI, SEBI, IRDA.

HDFC Standard Life Insurance Company

Vision
The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry.

Our Values
Integrity Innovation Customer centric People care Team work Joy and simplicity

Business Performance Highlights

FY10-11 saw significant regulatory changes that impacted the availability of products, the economics of distribution channels and the customer disposition towards the insurance sector. These structural changes that were focused on long term customer interests would improve the health of the industry in future. The speed of the implementation of these changes, however, did impact the new business premium collections for the industry. The industry (including LIC) witnessed a ve growth of almost 20% on individual new business (weighted received premium) in the second half (Oct 10 Mar 11) of this financial year.

Despite the dynamic external environment, Company saw strong growth in new business premium and renewal premium during the FY 10-11. The first year premium income grew by 21% (over FY 09-10) to ` 4,059 crore and renewal premium collected grew by 36% (over FY 0910) to ` 4,945 crore. The strong performance in the renewal collections helped the company improve its conservation ratio of individual business to 81% from 72% in the previous year. Total premium (including Group business) registered a 29% growth to ` 9,004 crore during the current year. The sum assured in force for the overall business at the end of the current year stood at ` 98,917 crore as compared to ` 72,610 crore for the previous year. The Company was ranked #1 amongst private life insurers on individual new business (weighted received premium) during the second half of the year. On a full year basis, the company increased its market share (weighted received premium of individual business) in private life insurance space to 13% from 9% in the previous year. This was the largest market share gain among the top 10 private insurers (on new business premium) over the previous year. The Company continued its focus on improving operational efficiencies and cost containment. Operating expense ratio (total expenses excluding service tax to total premium) reduced from 20% in 2009-10 to 16% in 2010-11. The company launched a raft of efficiency enhancement initiatives that included tightening span of control, automation, vendor consolidation and stronger alignment of performance with incentives. The annual losses as per Indian GAAP reduced from ` 275 crore in 2009-10 to ` 99 crore in 2010-11. During the year the Company continued with its ongoing efforts on customer service and building awareness about insurance. There were industry leading initiatives that were carried out on providing multiple payment options to customers, offering a 30 day free look-in period instead of the mandated 15 day period, need based selling, coaching amongst the sales force and welcome calling to every new policy holder to ensure there are no expectations

mismatch at the time of buying a policy. Our Underwriting and Claims Management practices were rated best-in-class in a benchmarking survey done by Swiss Re during the year. The Company undertook a revamp of its visual identity based on market research to make it more appealing and relevant to the target demographics. The new visual identity that positioned the company as HDFC Life (A strategically placed move) was launched along with the 10th year anniversary celebration during the year. The new identity has been well received by all the key stakeholders. The Company also received significant recognition and accolades during the year for its people practices, brand promise, quality and process maturity and enabling technology.

New business/ renewal business generation

Distribution

Asset management

Corporate Agents

Financial consultant

Asset Management company

Issue Priority matrix:

Probable Impact on Corporation

High Medium Low

Probability of occurrence

High Medium Low

Depleted agency Substitution from fixed network income products Higher attrition More regulatory changes Global competition

The strategic type of the company is prospector as the company is focusing on product innovation and market opportunities. The strategic positioning of HDFC Standard Life Insurance Company is a proper mix of variety based, need based and access based positioning. The company has great access to customers with its wide spread and sound agency network made of 1,38,000 Financial Consultants as on 31st march 2011. The company has most innovative and diverse product base, which help company to strengthen its variety based positioning. The company uses the policy of Need based Insurance.

Four Evolutionary Trajectories of Industry Change

Core Activities
Threatened Not-Threatened

Core Assets
Threatened Not-Threatened MANTHAN SAM

The Company is currently implementing a large scale transformation programme called Manthan to dramatically improve the productivity, customer focus and the effectiveness of the channel.

Company has introduced an all round Sales Management process, called Sales Activity Manager (SAM) to measure and monitor productivity of sales staff supporting channel sales. It helps to track prospects better, improves conversion rate and helps in monitoring

and enhancing the productivity expectations from the field staff. SAM helps the sales force in aligning their daily activities with the achievement of organization objectives and brings a discipline and rigor in selling process that will help the channel.

Corporate strategical activities:

1. Leaner organization (retrenchment)-MANTHAN 2. Lesser area under rent (retrenchment)-MANTHAN 3. Dilute non-performing posts (retrenchment)-MANTHAN 4. Expending base of better performing posts (growth)-MANTHAN 5. Introducing SAM (growth) Activities are pointing toward the vision & values which shows the company is driven by strategy. 1st , 2nd , and 3rd toward Value for money. While 4th and 5th indicates toward easiest to deal with and values Innovation and customer centric.

Balance score card

Strategy map Financial Increase shareholders wealth Decrease cost Customer Increase market share Internal process Product innovation learning & growth Optimizing work force Improve workforce Skills Improve distribution Improve brand image Increase revenue Strategic Objectives
Increase

shareholders wealth Decrease cost Increase revenue

Increase market share Improve brand image

Performance Measures Net Worth Operating cost Revenue

Market share

Initiatives
Project

Manthan

Improve

customer interface New LOGO

Revenue Dilute

Product innovation Improve distribution

from new product launch

Per

nonperforming posts

Optimizing work force Improve workforce

person revenue

Goal sheets Dedicated

Skills

training department

HDFC Limited
Objective
The objective has been two fold capitalizing on HDFC as a trusted brand name and creating value for our shareholders. As part of the organizations strategic positioning, over the last decade HDFC has devoted large resources and management time in sowing the seeds to diversify into various financial services banking, life and general insurance, asset management, property funds and education loans. Creating HDFC was not just about having a new idea for India. For H. T. Parekh, it was equally important to build an organization on the principles of efficiency, effectiveness, integrity and transparency. He also demonstrated that enhancing shareholder value and fulfilling social objectives were not conflicting goals. Deepak parekh, Chairman HDFC limited.

Issue priority matrix

Probable Impact on Corporation

High Medium Low

Probability of occurrence

High Medium Low

High interest rates

Global recession and inflation More regulatory Competition changes

The strategic type of the company is analyzer. Company is keeping its core business (housing finance) stable while on the same time it is active in many businesses through its subsidiaries: HDFC Bank One of the largest private bank of india HDFC Standard Life Insurance Company HDFC RED-on-line real estate portal HDFC AMC-Credila is Indias first dedicated education loan company HDFC ERGO-General insurance company HDFC property fund-a registered venture capital fund with the Securities and Exchange Board of India (SEBI). HDFC sales private limited - Corporations marketing and sales efforts by providing a dedicated sales force to sell home loans and other financial products. Credila financial services limited-Dedicated education loan company GRUH finance limited-GRUH is a housing finance company with operations primarily in the states of Gujarat and Maharashtra

Company is venturing into related businesses only and reaping benefits of its core competencies. The strategic positioning of the core business of HDFC Limited is need based positioning. But overall strategic positioning of HDFC Limited is a proper mix of variety based, need based and access based positioning, which it is doing through its subsidiaries.

Four Evolutionary Trajectories of Industry Change

Core Activities
Threatened Not-Threatened

Core Assets
Threatened Not-Threatened HDFC RED, HDFC Expansion sales private Ltd.

With the global recession, real estate industry started facing problems in selling their properties hence the demand of loan was also going down. To boost its sales of home loan HDFC started two companies, one HDFC RED from where it also gets the data about its prospective customer with normal course of business. And second HDFC sales private Ltd, which provides a dedicated sales force for its home loan business. The company is also aggressively venturing into newer markets and foreign markets. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRIs and PIOs to own a home back in India. HDFC has undertaken a lot of consultancies abroad assisting different

countries including Egypt, Maldives, Mauritius and Bangladesh in the setting up of housing finance companies.

Balance score card

Strategy map Financial Increase shareholders wealth Increase revenue Strategic Objectives
Increase

Diversify in related business Customer Increase market share Internal process Cross selling learning & growth Optimizing work force

shareholders wealth Diversify Increase revenue

Increase market share Improve brand image

Performance Measures Net Worth Operating cost Revenue

Market share

Initiatives
Venturing

new companies

Blanket

Improve brand image

brand promotion
Number

Improve distribution

Cross selling Improve distribution

of product to every customer person revenue

Centralizing

customer data
Goal sheets Dedicated

Improve workforce Skills

Optimizing work force Improve workforce

Per

Skills

training company

Mahindra and Mahindra financial services limited (MMFSL)

Vision
To be a leading financial services provider in semi urban and rural India.

Mission
Transform rural lives and drive positive change in the communities.

Goal of Mahindra and Mahindra financial services limited is to be the preferred provider of retail
financing services in the rural and semi-urban areas of India, while our strategy is to provide a range of financial products and services to our customers through our nationwide distribution network. MMFSLs rural financing is considered as the cornerstone of poverty reduction, rural development and inclusive growth in many parts of the country. With a majority of our countrys population living in rural India, their loans to over 10,00,000 customers belonging to the low income groups have proved to be a catalyst in helping rural India surge ahead in a big way. Their unique business model is socially inclusive as it helps customers who are at the bottom of the income or social pyramids to grow by providing them loans based on their future earning capacities. It is also their continuous endeavour to develop skill sets at the local level. MMFSL currently provide employment to over 6200 people who belong to the areas in which it serve, ensuring that the employees truly understand their customers.

Since 1945, the Mahindra Group, have remained and ensure to remain partners in the progress of rural India, through both growth and turbulence. It try to provide its services to every Indian living off the land and move ahead, trying to understand the financial needs of rural India and tapping into this vast market of unbounded opportunities. The strategic positioning of the company is access based as it continued selling related product to the customer base of its parent company i.e. rural India. MMFSL has inherited a wide coverage of rural market from Mahindra and Mahindra. The strategic type of the company is transforming from prospector to analyzer. Company is keeping its core business (retail finance) stable while on the same time trying to capture new business opportunities through its subsidiaries. Working in domain of selling insurance as a corporate broker through Mahindra Insurance Brokers Ltd Mahindra Rural Housing Finance Provide loans for home construction, purchase, extension and improvement to customers in rural and semi-urban India. Issue priority matrix

Probable Impact on Corporation

High Medium Low Global recession and inflation

Probability of occurrence

High Medium Low

Rural growth

Four Evolutionary Trajectories of Industry Change

Core Activities
Threatened Not-Threatened

Core Assets
Threatened Not-Threatened Ventured services in related Sustainable and steady growth

Balance score card

Strategy map Financial Increase shareholders wealth Retaining margins and improving asset quality

Strategic Objectives
Increase

Servicing in rural and semi urban areas Customer Penetration in rural and semi urban market Internal process Focus on gains from rural growth learning & growth Workforce with local knowledge

Consolidate brand

shareholders wealth Servicing in rural and semi urban areas Retaining margins and improving asset quality Penetration in rural and semi urban market Consolidate brand

Performance Measures Net Worth Revenue from rural markets

Rural Market

Initiatives
Intense focus

on rural markets

Sustainable

share

growth initiative
Centralizing

Cross selling

Cross selling Focus on gains from

Number

rural growth
Optimizing work force Workforce with local

of product to every customer of data

data

Quality

Hiring local

Use of technology

people
Centralized

knowledge

data centers

Reliance capital
Mission
Excellence in Financial Services

Vision
Creating Indias leading financial superstore

Vision 2012
"The largest, most profitable, innovative, and most trusted financial services company in India and in the emerging markets".

List of Subsidiaries

Reliance Capital Asset Management Ltd. India -92.94 Reliance Capital Trustee Co. Ltd. India - 100 Reliance General Insurance Co. Ltd. India- 96.32 Reliance Gilts Ltd. India - 100 Reliance Capital Research Pvt. Ltd. India - 100 Reliance Venture Asset Management Pvt. Ltd. (formerly Reliance Technology Ventures Pvt. Ltd.)India - 100

Reliance Money Express Ltd. India - 100 Reliance Infrastructure Finance Pvt. Ltd. (Formerly Reliance Capital Markets Pvt. Ltd.) India 100

Reliance Asset Management (Mauritius) Ltd. Mauritius - 92.94 Reliance Asset Management (Singapore) Pvt. Ltd. Singapore - 92.94 Reliance Capital Asset Management (UK) Ltd. United Kingdom - 92.94 Reliance Asset Management (Malaysia) SDN BHD Malaysia - 92.94 Reliance Equity Advisors (India) Ltd. India - 100 Reliance Equities International Pvt. Ltd. India - 100 Reliance Home Finance Pvt. Ltd. India - 100 Reliance Securities Ltd. India - 99.60 Reliance Commodities Ltd. India - 100 Reliance Financial Ltd. India - 100 Reliance Alternative Investments Services Pvt. Ltd. India - 100 Reliance Wealth Management Ltd. India - 100

Reliance Spot Exchange Infrastructure Ltd. India - 100 Reliance Exchange next Ltd. India - 100 Reliance Investment Banking Services Ltd. (Formerly Reliance Prime International Ltd.) India 100

Reliance Capital Pension Fund Ltd. India - 92.94 Reliance Capital (Singapore) Pte. Ltd. Singapore - 100 Reliance Consultants (Mauritius) Ltd. Mauritius - 100 Quant Broking Pvt. Ltd. India - 74 Quant Capital Advisors Pvt. Ltd. India - 74 Quant Capital Pvt. Ltd. India - 74 Quant Securities Pvt. Ltd. India - 74 Quant Commodity Broking Pvt. Ltd. India - 74 Quant Commodities Pvt. Ltd. India - 74 Quant Investments Services Pvt. Ltd. India - 74 Quant Capital Finance and Investments Pvt. Ltd. India - 74 QOPPA Trading Pvt. Ltd. India - 74 Valankulam Investments and Trading Pvt. Ltd. India - 74

List of Associates

Reliance Land Pvt. Ltd. India - 50 Reliance Share & Stock Brokers Pvt. Ltd. India - 50 Indian Commodity Exchange Ltd. India - 26 Ammolite Holding Ltd. Bermuda - 50 Reliance Asset Reconstruction Company Ltd. India - 49

Business mix of Reliance Capital

Asset Management Insurance Commercial Finance Mutual Fund, Offshore Fund, Pension fund, Portfolio Management Life Insurance, General Insurance Mortgages, Loans against Property , SME Loans, Loans for Commercial Vehicles, Loans for Construction Equipment, Auto Loans, Business Loans, Loans against Securities, Infrastructure financing

Broking and Distribution Equities, Commodities and Derivatives, Wealth Management Services, Portfolio Management Services, Investment Banking, Foreign Exchange and Offshore Investment, Third Party Products Other Businesses Exchanges, Private Equity, Institutional Broking, Asset Reconstruction, Venture Capital

Balance score card

Strategy map Financial Increase shareholders wealth Increase revenue Strategic Objectives
Increase

Financial superstore Customer Increase market share Internal process Cross selling learning & growth Optimizing work force

shareholders wealth Financial superstore Increase revenue

Increase market share Improve brand image

Performance Measures Net Worth No. of products in bag Revenue

Market share

Initiatives
Venturing

new companies

Blanket

Improve brand image

brand promotion
Number

Innovation

Cross selling Innovation

products customer

of per

Centralizing

customer data
Continuous

Product design

Optimizing work force Product design

Distinctiveness

of product

innovation

Issue priority matrix

Probable Impact on Corporation

High Medium Low

Probability of occurrence

High

High interest rates

Medium Low

Global recession and Low Real inflation, IRDA estate prices guidelines Low margins, over Loss in equity Attrition diversification investments Competition Lower exchange rate

Reliance capital has exposures in various businesses & assets and they affect the revenue of the company.

Four Evolutionary Trajectories of Industry Change

Core Activities
Threatened Not-Threatened

Core Assets
Threatened Not-Threatened Ventured services in related Sustainable and steady growth

Kotak Mahindra Bank

Goal
Becoming a bank of choice for the small and mid segment business enterprises Kotak Mahindra Finance Limited, a diversified financial institution with interests including life insurance (Kotak Mahindra Old Mutual Life Insurance Limited), investment banking (Kotak Securities), vehicle financing (Kotak Mahindra Primus), institutional equity (Kotak Mahindra Capital Company) and mutual funds (Kotak Mahindra Asset Management Company), has been converted (it obtained the banking license in February 2003 ) into Kotak Mahindra Bank (KMB). To achieve its goal bank focuses on the base of customers engaging in trade and foreign currency transactions.

Balance score card

Strategy map Financial Increase shareholders wealth Increase revenue Strategic Objectives
Increase

Premium charges Customer NRI specific services Internal process Multilingual ATMs learning & growth E-learning for employees

shareholders wealth Premium charges Increase revenue

NRI focus Privy League Program

Performance Measures Net Worth Revenue

Initiatives
Venturing

new companies

Privy League Program

Market share No. of NRI

partnership

with OIFC
Click2Remit Various

customers
Multilingual-ATMs NRI specific services Growth in no.

Premier Service

of High end customers for

Customer

premier services
Service

E-learning

C.R.M.

employees Customer relationship management

loyalty Employee satisfaction

oriented architecture

Probable Impact on Corporation

High Medium Low

Probability of occurrence

High Medium Low

Lower remittance, IRDA guidelines Competition, Global recession inflation Loss in equity investments

Subsidiaries
Kotak Mahindra Prime Limited, the car finance company Kotak Securities Limited, the stock broking company Kotak Mahindra Capital Company, the investment company Kotak Mahindra Asset Management Company Kotak Mahindra Old Mutual Life Insurance Limited

Four Evolutionary Trajectories of Industry Change

Core Activities
Threatened Not-Threatened

Core Assets
Threatened Not-Threatened Sustainable and steady growth

Conclusion
All the companies taken above are true to their strategy as their actions are leading them not just toward their profits but toward their given vision, mission objectives and goals.