Introduction

Banking industry has many challenges and opportunities in global operations. The long-term strategic management policies formulate the orientation of the business operations and define the critical success factors for a global organization. The organization selected as a case study for this paper is an Indian based bank HDFC, the largest bank of the country with reference to market capitalization. This global bank has than twenty five million customers, with a large network of 4,014 branches located in 2,464 local and international cities and support service of 11,766 ATM across India (HDFC website 2015). In order to sustain the market leadership in the country, HDFC Bank uses state of the art consumer relationship management system CRM next that provides it a single platform for strategies execution across departments, products, and marketing channels. The authorized capital share of the bank in March is Rs. 550 crore (HDFC website 2015). The prosperous growth of the bank is based on the critical success factors of core business areas. The following paper discusses the implication of three of these important areas of operations.

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Culture and management behavior

Organizational culture is a diversified term that encompasses the norms, beliefs, values, and ways of working in the organization (Rodrigues 2006). According to Samuel and Papasolomou (2007), culture can be defined as a set of shared values among a group of people and organizations to solve the internal problems and external obligations.  The ways employees think, act, and perceive in the capacity of their official roles creates culture that binds the organization together and stimulates employees. Further, Schien (2001) asserted that the central issue with culture in any organization is its link with the organizational performance. Therefore, the evaluation of HDFC is required to provide the evidence of its role which is enhancing HDFC performance in targeted areas.

According to the information available on the company portal, a strong culture and governance is practiced at HDFC due to the global existence.  The Schien model (2001) constructed for HDFC as:

 

The open door culture of the organization also helped the fast execution of operations in the bank. The main cultural challenges of the bank are large numbers of ethnicities present in India with one of the largest populated country status. Therefore, handling employees and customers that have diversified origins is not a simple task. Consequently, transparency, openness, straightforward approaches, and ‘Learning by Doing’ policy has created participative management styles and a set of shared values at HDFC. The company also possesses an informal culture that values commitment, integrity, excellence and teamwork that decreases stress, uncertainty, and increases employee involvement.

Corporate social responsibility

Campbell (2004) mentioned that corporate social responsibility (CSR) activities acts as a competitive edge of a company over competitors in terms of customer connectivity, government regulations, and investor relations. Moreover, Sharma et al (2000) asserted that CSR must be started with the practical recognition by corporation that it must be profitable to offer returns for shareholders and encourage investment continuation.

In the banking industry, banks like HDFC have a vital role in economic growth, reducing unemployment and increase in living status of consumers due to personal loans and leasing facilities. Though, banks are rated as one of the most progressive industries and is a large sector with 40 banks in India in top 500 companies. On the other hand, banks stay behind due to non publication of annual sustainability reports when compared to other multinationals. Also, most of the banks also do not publish CSR reports.  CSR contribution cannot be evaluated without the knowledge of total income and size of banks. HDFC bank is found to have more focus on functioning and role in the progress of society through CSR activities

Source: HDFC website

The main CSR activities if HDSC are evaluated in the table below

Education	Friends Union for Energizing Lives (FUEL) EduConnect programme  for underprivileged students
Financial literacy	Financial literacy projects in 600 schools serves 63200 students Government schools’ students.
Capacity Building Program (CBP	Capacity Building Program (CBP) successful for positive impact creation  for underprivileged community, Providing key skills that empower people for a reputable and enhanced livelihood.
Enabling and Training	Enabling and Training Adolescents for Healthy Adulthood. Work Culture Customer Service &, automated Office with data Data Entry, capacity building in Accounting, Taxation & Tally
Community initiatives	Watershed Organization Trust (WOTR) partnership to handle environmental degradation, scarcity of water, land and food and livelihoods security
Environmental Sustainability	inventory of energy-related emissions Manage GHG emissions. Carbon Disclosure Project (CDP).

Source: HDFC website

MN competitive advantage

According to Porter (2008), competitive advantage is a distinguished feature of the company that cannot be replicated by competitors for a long time. The competitive advantage of HDFC is its sustained edge in providing superior customer services. The competitive advantage of HDFC lies in its seamless and fast IT structure, for over 55000 employees and 25 million customers. This highly automatic environment facilitated by IT and telecommunication systems, increased in the online branches connectivity, speedy funds transfer facilities, and simultaneous multiple branches access to its customers. The impact of this CRMnext system has increased the loyalty index of the bank from 38 points to 62 points in period of 3 years from 2007 to 20010. Also, service quality rating has been improved from 65% to 97% in the same period (Nasscom  2012).

In order to evaluate competitive advantage of HDFC, VRIO analysis is performed. This model involves internal and external advantages of brand name, the user interface simplicity, and advanced technology incorporation into organizational design.

 

 

 

VRIO Analysis of HDFC

Resources/ Competencies	Value	Rarity	Imitability	Organization	Competitive Advantage
Brand Name	Yes	Yes	Yes	Yes	Sustained
Simplicity	Yes	No	yes	Yes	Parity
Service excellence	Yes	yes	Yes	Yes	Sustained
Customer relationships	Yes	No	yes	No	Temporary

The VRIO analysis shows that the bank possessed both sustained and temporary competitive advantages in areas of brand equity and service excellence while temporary for customer relationships. It was possible through substantial efforts and acquiring best technology through investments available internationally, on the other hand, in the presence of international giant banks and local strong competitors, HDFC has to strive constantly to retain its competitive advantage.

Conclusion

The analysis of strategic initiatives in the areas of culture, CSR, and competitive advantage retention, this paper shows that HDFC bank has progressive and streamlined operations. In view of tough competition in the banking industry, the bank should continue with open culture, state of art IT systems, and focused customer relationship systems.