Experience in the West and in the East shows that state ownership of firms does not provide the incentives for managers to behave in a profit-maximizing way and to undertake effort in order to restructure the firms they are responsible for.
The main role of markets is to allocate inputs and outputs to their efficient use. The system of markets can however only fulfil this function if prices emerge through the interaction of demand and supply and not according to political objectives.
Diversification versus specialisation For all-purpose banking, as we know it in Continental Europe, further diversification will involve the development of all round financial business with the addition of insurance and savings accounts, leasing, factoring, electronic banking products and management consulting.
Strategic options The progressive liberalisation of capital movements and the global dimension assumed by the financial markets in the eighties have resulted in a world-wide structural change in the credit Industry.
Commercial banks and investment banks 1. Commercial Banks These are usually large or medium sized banks, including a network of branches covering all or part of the national territory; most of them have an international activity through subsidiaries or representative offices.
The statutory framework In every country, bank activities are strictly regulated. Why is this necessary? What is the content of the regulation? Such questions have to be answered.
How to make sure that the action plan is correctly implemented? What is the impact of each component on the bank’s commercial effectiveness?
Pricing policy Adapt the pricing to their local markets Who is sensitive to prices? In general private clients, more than companies.
The nature of products and services that the bank is best able to sell depends on its know-how by type of customer:
Explain that after the diagnosis and recommendations have been done objectives and strategies have been decided upon, then the action programme can be designed using the 5 P’s — product, price, place, promotion and people.
