SPACE Matrix: Strategy Analysis: Strategic Analysis

STRATEGIC ANALYSIS

Strategies are a unique set of activities performed by the company to stay ahead of its competitor. They must be formulated by properly studying both the company and the competitor. There are proper tools that can help determine which activities the company should perform in the coming years. We have chosen SPACE matrix as the tool to determine which strategy it should follow. It can help make a decision based on company financials, industry’s stability position, industry’s position, and company’s competitive position.

SPACE MATRIX

Financial position Ratings

Profit after tax has increased significantly over the years 4

The bank’s Gross NPA is one of the lowest in the industry- though loan amount are lower too. 6

RoE, that

The higher the rating the better the financial position of the company. If we have taken the following four parameters to check the position of the company.

a) Profit after tax- The net profit is the prime profitability ratio of any firm. The PAT of IndusInd has been stable for past many years, and hence been averagely rated.

b) Gross NPAs- In these times of financial distress, IndusInd bank stands strong. The gross NPA ratio of the bank is one of the lowest on the banking industry and hence gets a high rating.

c) RoE- The bank has a high share of equity capital and the prime motive of any firm is to maximize its shareholders value. The RoE of IndusInd bank has been stable over the year and hence been averagely rated.

d) Capital adequacy- CRAR of the bank is very high as compared to other private banks and therefore gets higher rating.

Industry position Ratings

The increase in consumption levels of people, will possibly increase demand for retail

-3

Change in lending ratings can affect loan demand. -3

Barriers to entry is low. It will especially affect micro finance business because of increasing number of NBFC, MFIs etc. -4

Stability position average -3

Stability position means the stability position of the banks.

a) Everyday new technologies are coming up. They affect the stability of the banks. There is also an issue of the cybersecurity among banks. If the risk-management systems of the banks are not up to the mark, this may lead to problems.

b) The change in inflation, among other economic factors, can lead to fluctuations in the banking industry.

c) Though there has not been an increase in repo rate in the last one year, if it does the banks will have change their lending rates, which in turn will affect both debt and mortgage market.

d) The barriers to entry in micro finance business is very low. Rural people prefer to take loan from local business than a bank due to various reasons. This affects the bank’s