Maryland International Collage

Executive Summary

Cooperative Bank of Oromia is a well-Known financial institution, mostly in Ethiopia, and also the leading
companies in banking industry. Cooperative bank of Oromia must have the ability to compete healthily
with their rivals and new entry by engaging some kind of unique and modern method in a way to retain
its brand name that is popular with low cost carriers and also to be the favorite of customers to continue
to use its services provided. There are many great commercial banks in Ethiopia in term of their products
and services offer, so in order to maintain its brand especially in the heart of their customers. The bank
should have come out with the generic strategy’s by decreasing the cost of operations and also organizing
the savings through to customers with very quality services and products.

Cooperative bank of Oromia has a very strong vision and mission of the organization and this helps each
staff who work day and night at the bank to work even harder to achieve the mission and vision that has
been promised and must be achieved both in the future and in the long term. Yet, interms of service. The
bank has should never be hiding or run away from the problems and this must be addressed by coming up
with new tactics, proper management and detailed preparation to deal with those problems.

Based on the strategy formulation analytical framework from the organization, we have come out with the
strategic tools which are SWOT analysis, Internal and External Environment Factor Evaluation, PORTER
BIG FIVE FORCE MODEL analysis and Competitor analysis to analyze the bank strengths, weakness,
opportunities and threats that must be adopted by cooperative bank of Oromia in order to enhance its
achievement of the bank in the near future. Hence, from the recommend effective adaption strategies,
Cooperative bank of Oromia can pursue its continued competitive differentiation and profitability.

In this group assignment we will try to identify and analyze the Cooperative Bank of Oromia Strategic
planning analysis. The document provides a brief description of the 5 years strategic planning analysis of
Cooperative Bank of Oromia starting from 2016 to 2020. The main objective of this paper is to assess five
years strategic planning, analysis and implementation process in Cooperative Bank of Oromia.

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1.1 Introduction
The challenges of the modern business environment and fast changing global economy demands high
productivity speed and flexibility for organizations that seeks to thrive. In order to achieve the required
efficiency and effectiveness, organizations must change their structure strategically. Ethiopian financial
services sector has strong potential for growth from a relatively low base, with robust economic expansion
and favorable demographics being key long-term tail winds.

The gradual liberalization of the economy and financial sectors should create opportunities for domestic
players and lead to the development of a local capital market over the short to medium term. Thus
developing of effective strategic planning is necessary for banking industries in order to determine their
stated goals and objectives, and to adopt course of action and moreover to focus and allocate necessary
resources to achieve those goals.

The most critical challenge facing most organizations today is coping up with today’s game of business,
dynamism. For a past few decades, organizations have been facing severe competition in their external
environment in which they operate. In order to operate in a competitive environment organization needs
strategic management. A strategy is an integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive advantage.

According to Michael Porter, “Strategy is the big picture of how the organization is going to win in its
environment, whatever that is Strategy is not competing to be the best. Many managers and leaders and
organizations think that they are trying to be the best organization in their industry. The best bank, the
best coffee shop, etc. And to do so, we must make the best products. But that’s a wrong approach and a
very dangerous way of thinking about strategy.

1.2 Background of the organization

The history of co-operative banks has been traced back to the financial exclusion faced by many
communities in 19th century. With the industrial revolution, the emerging financial services sector was
primarily focused on wealthy individuals and large enterprises in urban areas. The rural population,
particularly farmers, small businesses and the communities they supported, were excluded from financial
services. Thus, co-operative banks were originally set up to correct this market failure and to overcome
the associated problems of asymmetric information in favor of borrowers. Beginning in Germany, the
co-operative banking concept gradually spread to the rest of the continent and to the Nordic countries.

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In respect of Ethiopia, the country has a very low financial service coverage as mainstream financial
institutions are heavily tilted towards the urban centers with good physical infrastructure, leaving the rural
areas underserved. Traditionally, ‘Equbs’ and ‘Idirs’ are informal institutions that are deeply ingrained in
the life communities and have also been serving financial needs of the society. Reluctance and low
capacity of the financial institutions in the country to serve rural community, a demand-supply gap
prevailed in financial market especially in rural areas, coupled with farmer’s awareness to be organized
in to cooperatives and the increasing need to finance cooperatives’ called for establishment of a
cooperative bank. Furthermore, finance appeared to be the critical bottleneck to sustain the cooperative
institutions and ultimately the farmers. It was all these glitches that initiated the inception and
establishment of Cooperative Bank of Oromia.

Obbo Haile Gebre Lube, regarded as the founding father (proponent) of Ethiopia’s cooperatives, brought
the idea of founding the bank for he believed that the best way to fight poverty is through cooperation.
Formally establishing a project once in 2002, the bank’s formation was realized with majority of
shareholders being the cooperative societies. The bank then is commercially licensed in October 2004 and
commenced operations in March 2005. As there are no legal provisions that allow establishment of a
cooperative bank in the country, the bank was registered in accordance with article 304 of the commercial
code of Ethiopia.

Cooperative Bank of Oromia (S.C.) was registered commercially on October 29, 2004 in accordance with
article 304 of Commercial Code of Ethiopia. It was established in line with proclamation no. 84/1994 with
authorized capital of Birr 300 million. It started operation on 8th march 2005, with paid up share capital
of birr 112 million.

Cooperative Bank of Oromia is a private commercial bank in Ethiopia. As of December 2021/22, annual
report the Bank has about 8.99 Million account holders, a branch network of about 593 network.

Cooperative Bank of Oromia (Coop bank) has ETB 114.61 billion Asset ETB 11.31 billion Capital and
ETB 96.77 billion in Deposits. It’s headquarter is located in Addis Ababa, Africa Avenue Flamingo area.
The Bank has broad ownership base and diversified ownership structure.

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I Ownership of the Bank

 Cooperative Societies
 Primary Cooperatives
 Cooperatives Union
 Cooperatives Federation
 Non-Cooperative
 Organizations and Associations
 Individual

1.3 Strategic directions and strategic objectives

Mission
“We root our foundation in communities to provide banking solutions that create greater customer
experience with emphasis to cooperatives and agro-based businesses through proper use of human
resource and up-to-date technologies to maximize stakeholders’ value.”
Vision
To be the leading private bank in Ethiopia by 2025

CBO Values
 Integrity
 Customer Satisfaction
 Learning Organization
 Teamwork
 Cost Consciousness
 Concern for Community
Salient Features
Social and Cultural values oriented services
First bank of its kind in the country
Broad ownership base and diversified ownership structure
Gives priority to the unbanked society
Objectives
 To promote saving culture and create access to loans
 To maximize shareholder's value

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Motto

ለላቀ ለውጥ የቆመ!

THE BANK COMMITTED TO BREAKTHROUGH!

Corporate Brand Identity

The Bank’s corporate identity is expressed in numerous ways, both explicitly and implicitly. When
considering identity in a broad sense, the term corporate image is often used. It deals with the general
impression of the bank held by the general public, other organizations, interest groups, including
employees, and it touches virtually all aspects of the bank’s activities
The purpose of managing corporate identity is to achieve clear and effective identification of all activities,
consistent with strategic plans for communicating programs.
The bank’s identity should convey a sense of purpose, quality and integrity. It is a task that requires the
full support of senior management and the active involvement of those concerned
Definition and Significance of Logo
It’s a graphic representation or image that triggers memory associations of the target brand
The word ‘logo’, is a short form of the Greek word, logogram, meaning “sign or character representing a
word” that is, logos “word” plus gram “what is written.”
“Our logo is a very valuable asset. We must treat it nicely. Never abuse our logo, it doesn’t have arms so
it can’t fight back (our lawyers however, are another story).
Shows working together and strong symmetry.
Shows building identity and competitive advantage of the bank around cooperative movement
The full color version of the logo (CYAN) is the primary logo often used in print reproductions. The white
& black version of the logo is used with special approval from RCC and when the primary color logo is
not visible

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2.1 Methodology of the project:

This project will follow a systematic approach that involves both qualitative and quantitative research
methods. Initial data gathering and analysis will be carried out using both primary and secondary sources.
Primary sources will mainly consist of interviews and surveys with key stakeholders at Cooperative Bank
of Oromia, including management, employees, and customers. Secondary sources will involve reviewing
relevant documents and databases, including Cooperative Bank of Oromia annual reports, IT policies, and
manuals of operation. After gathering the data, appropriate statistical tools will be employed to conduct a
comprehensive analysis.

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3.1 Literature Review

General overview of strategic management

This review provides an overview of a few of the key topics that have defined the strategic management
field since the later twentieth century. Strategic planning, strategic planning frameworks and strategy
implementation issues are discussed both from a historical and modern perspective. Michael Porter’s
frameworks and generic strategy provide an excellent backdrop for formulation of strategy but scholars
argue that the current environment of business may require new or altered frameworks.

Keywords: Strategic management, strategy implementation, Michael Porter Introduction The single most
important intellectual asset in any company outside of its employees is its strategy. Leaders are defined
by the strategies they create and execute. Poorly designed strategy can be devastating to firms and many
years of hard work can disintegrate when strategic plans are not properly implemented. Developing
consistency in strategy is very important to proper implementation of the core elements. Ultimately the
strategy must become centrally integrated and externally oriented in order to define how the business will
achieve its objectives.
One of the most common reasons for firm bankruptcy is improper implementation of strategy (Hosiery,
Chambermaids, Onerous, & Saudi, 2013). Strategy is largely defined by adaptation to a constantly
changing marketplace which seems to get more and more complex. True strategy is about making complex
bets and following up with hard choices (Martin, 2014). Historically stable markets allowed managers to
rely on complex strategies that were built on future predictions (Eisenhower & Sulk, 2001). But in the
current fast moving marketplace and with the rise of the millennial billionaires, opportunity seizure may
require a different approach.

3.2 Crafting strategy

The process of creating a business strategy forces an organization to thoroughly analyze and structure its
business. A structured business strategy process should explore the external trends and the industry logic
as well as the strengths and weaknesses in the present business. The Business Strategy should reflect the
fundamental issues that determine long-term success and describe the desired development of the
company (Campbell, 2002) as cited by Dinberu Girma (2016).

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3.3 Mission, Vision, Goals and Objectives of an organization

Thompson (2004) stated that a company’s strategic plan typically lays out its mission, vision and future
direction, performance targets (objectives) and strategy, for it to be effective therefore, (Drucker, 1999)
emphasizes that strategic plans must be designed to support corporate mission, vision and objectives. Both
Thompson (2004) and Drucker (1999) agreed that mission, vision and objectives are vital for any
organization to have coordinated and purposeful business direction.

3.1.1 Mission
According to (Pitts, 2003) a firm’s mission describes the organization in terms of the business it is in, the
customers it serves and the skills it intends to develop to fulfill its vision. Daft (1991) agrees it is the firm’s
reason for existence and (Ritson, 2008) affirms its linkage with vision.

3.2.1 Vision
Vision describes the firm’s aspirations of what it really wants to be. Pitts (2003) notes that vision
statements are designed to capture the imagination of the public and as well galvanize the efforts of
employees at all levels such that its emotional appeal challenges them to commit their full energies and
minds to believe it is the best.

The conceptual distinction between mission and vision is that a mission statement describes the present
scope of an organization’s business and purpose (what we do, why we exist and where we are now). The
vision on the other hand portrays a company’s future business scope; where we are going or want to be
(Thompson et al, 2004).

3.3.1 Goals and Objectives

Goals are the broad, long-term accomplishments that an organization wants to attain, achieve or where it
wants to be. It provides the overall context for what the vision tries to achieve (Nickels et al 2000). They
are powerful tools that break the vision statement into specific tasks and actions to attain desired results
across the organization. They function as the yardstick for tracking an organization’s performance or
progress (Thompson et al, 2004).

They must be measurable and time specific as against having vague objectives like “maximize profit‟,
“reduce costs‟, become more efficient or “increase sales‟. These specify neither how much (figures) nor

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when (time) an objective is to be achieved. They thus do not challenge employees to work hard to meet
performance targets. Objectives must be realistic and achievable.

3.4.1 Basic components of Strategy

Strategic management is the domain of top level management and involves four basic components;

 Environmental scanning
 Strategy formulation
 Strategy implementation and
 Monitoring and control (Alkhafaji, 2003)

Ahlstrand and Lampel (1998) and Zafar, et.al, (2013) also noted that strategy passes through four stages
environmental scanning, strategy formulation, strategy implementation and evaluation or monitoring. All
of these four components are crucial to successful business (Baroto, Arvand & Ahmad, 2014)

3.4 Environmental Scanning

Environmental scanning is the monitoring, evaluating, and disseminating of information from the external
and internal environments to key people within the corporation. Its purpose is to identity strategic factors
– those external and internal elements that will determine the future of the corporation. For Alkhafaji

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(2003) success of a strategy depends on its alignment with the company’s environment. This is done using
environmental scanning.

3.5 Strategy Formulation

Charles and Gareth (2012) defined strategy formulation as analyzing the organization’s external and
internal environments and then selecting appropriate strategies. Similarly, (Azhar, et.al., 2013) stated that
strategy formulation is the process of developing long term plans to deal effectively with environmental
opportunities and threats. It starts when a leader tries to change the thinking of people. It incorporates
decision as to which business to pursue and how to allocate resources. It comprises the articulation of a
mission, vision and a set of long term objectives to be achieved within the stated mission and selection of
strategies

3.6 Strategy Implementations

The stage of strategic management that involves the use of managerial and organizational tools to direct
resources toward achieving strategic outcomes according to (Daft, 2010). Arguably it is the most
demanding and time-consuming part of the strategic management process. It requires preparing a strategic
plan that sets out annual objectives, establishes an effective organizational structure, fixes a budget,
develops a viable information system and generally devices a work plan for job execution. It also involves
motivating employees, creating a supportive culture, allocating resources and linking employee
compensation to the organization objective (Thompson, 2004).

3.7 Evaluation and controlling

Alkhafaji (2003) defines evaluation and control as the step succeeding implementation and entails
monitoring the organization’s performance to ensure that the chosen strategy achieves the desired
objectives. This final step of the strategic management process includes analysis of the effect of internal
and external factors on present strategies, measuring performance, and taking remedial or corrective steps.
It is a tool to ensure effective implementation of the process (Zafar, et.al., 2013). Strategic control involves
monitoring the extent to which the strategy is achieving the objectives and suggesting corrective action or
a reconsideration of the objectives (Johnson, et.al., 2007).

3.8 Organizational Performance

Organizational performance is the measure of standard or prescribed indicators of effectiveness, efficiency,
and environmental responsibility such as, cycle time, productivity, waste reduction, and regulatory

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compliance. Performance also refers to the metrics relating to how a particular request is handled, or the
act of performing; of doing something successfully; using knowledge as distinguished from merely
possessing it. It is the outcome of all of the organization’s operations and strategies (Aaltonen and Ikavalko,
2002).

3.9 Organizational Performance Measurement

Probably the best known of the multi-dimensional performance measurement frameworks is the “balanced
scorecard” Kaplan and Norton (1996) identified four components of the balanced scorecard, each of equal
importance, and each having associated goals and measures.
The four components are:
 Financial perspective – it focusses on financial performance of an organization. It normally covers
the revenue and profit target of commercial companies as well as the budget and costsaving targets
of not profit organizations. the financial health of an organization is a critical perspective for
manager to track
 Customer perspective – the customer perspective addresses the question of how the customer
viewed by its customers and how well the firm is serving its targeted customer in order to meet the
financial objectives. Generally, customers view the firms in terms of time, quality, performance
and cost. Most customer objectives fall into one of those four categories.
 Internal business perspective – internal business process objective addresses the question of which
processes are most critical for satisfying customers and shareholders. These are the processes in
which the firm must concentrate its efforts to excel.
 Innovation and learning perspective –innovation and learning in address the question how the firm
must learn, improve, and innovate in order to merits objectives. Much of this perspective is
employee-cantered.
It is also a management system that enables organizations to clarify their vision & strategy and
translate them into action. As a performance management system it enables an organization to translate
its vision and strategy into objectives and measurements (Lawson, et.al., 2008). Generally speaking,
BSC is a communication tool, measurement system and strategic management system. According to
Niven (2006) BSC provides the framework for an organization to move from deciding to live its
strategy to doing it since it is crucial in translating mission into concrete objectives that align all
employees. (Lawson, et.al., 2008).

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2.2 Industry analysis Using Porter Five Force model

According to Michael Porter, the business while analyzing the environment should be considered more
with the intensity of competition determined by substitutes, potential entrants, rivalry among firms,
suppliers and buyers.

A. Threat of Substitute
Substitutes for the banking industry are;
I Microfinance and credit union; there are many microfinance and credit union in the country.
Their lending rate is higher compared to banks, which minimizes the threat of substitute in the
industry.
II Stock /share market; until now there is no stock /share market in the country. Therefore, the
threat of stock/share market is zero. In general threat from substitute is minimal in the banking
industry

B. Threat of new entry

The minimum paid up capital requirement for new entrants is birr five billion for the time being as per
the national bank of Ethiopia directive no SBB/78/2021 that entered in to force as of Apr 12, 2021
created entry barrier for new banks.
There is also Restriction to Foreign Bank to operate in the country.
Therefore, from the above points we conclude that threat of new entrants is low in the industry.

C. Rivalry between Banks

There are 29 banks in Ethiopia, 2 government owned and 27 private banks. There is high rivalry among
these banks because;

 There is no significant Product differentiation between banks.

 National bank of Ethiopia sets minimum bank’s deposit rate that is 7%. In most banks the saving rate
is 7% for normal saving accounts.
 The banking sector is more profitable and high growth.

D. Bargaining Power of buyer (Borrower and FCY user, in case of banks)

Bargaining power of borrower and FCY user is high due to the following circumstances;
 Scarcity of financial resources.
 There is Huge demand of FCY and loan.

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E. Bargaining power of Supplier (Resource Owner)

In the banking industry depositor and exporter are considered as suppliers of money, because banks lend
the money which is collected from the customers.
 Exporter have high bargaining power;
 Depositor bargaining power is growing;
 Undifferentiated service.
The overall industry trend suggests that Banking in Ethiopia is growing, where there is still wider scope
to increase asset and profitability, as the potential of the economy is rich to expand business.

2.3 SWOT Analysis

Organizations use SWOT analysis to assess their current position before they decide on any new strategy.
They can use SWOT Analysis to make the most of what they have got, to their organization's best
advantage. And they can reduce the chances of failure, by understanding what they are lacking, and
eliminating hazards that would otherwise catch then unexpectedly.

A. Strength
Strengths are things that organizations do particularly well, or in a way that distinguishes the organization
from its competitors.

Cooperative bank of Oromia has many strengths that helps the bank for growth. Here under are among
the banks strong side.

 Business among members-the bank focuses on development of its members

 Trust within Members trust is the key factor for effective functioning of cooperative bank of
Oromia.
 Affordable interest rates-the bank offers loans at reasonable interest rate to its members.
 Large organizational size and scale-
 Wide scope of financial services
 Strong brand reputation for customer service.
 Strong brand name.
 Digital banking Convenience-It’s now easier than ever to do banking online. You can deposit
your check, pay your bills, and apply for debit card without stepping foot into your bank’s branch.
However, for more “in-depth” services, you’ll likely still need to make an appointment with a
financial advisor. Some things are better handled in- person than electronically.

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 High service levels

 Easy access to capital and funding
 Solid financial reserves
 Effective sales and service culture
 Focus on internal marketing
 Team-based culture
 Clear segments targeted effectively
 Clear value proposition
 Effective CRM program
 Good understanding of the customer journey
 Strong share-of-customer
 Broad product range
 Clear positioning
 Seen as having strong corporate social responsibility

B. Weakness
o Lack of infrastructure: the bank lacks implementation of latest technologies such as ATM’S,
computers, and printing machines for effective customer service
o Layout: the banks internal arrangement is not satisfactory and areas branch opening doesn’t
considered well in cooperative bank of Oromia
o The bank is operating in a limited area confined to a region
o Although highly networked, the number of branches is limited
o The employee turnover appears to be on higher side
o Lack of proper technology driven services when compared to other private banks in Ethiopia.
o Employees show reluctance to solve issues quickly due to higher job security and customers
‘waiting period is long when compared to other private banks
o The bank spends a huge amount on its rented buildings
o In spite of modernization, the banks still carry the perception of traditional bank to new age
customers
o Not Attractive store design/layout
o Inconvenient branching locations
o Poor cost efficiencies

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o Mixed quality staff

o No distinct product features
o Undifferentiated products
o Limited engagement from marketing communications
o Limited online advertising experience
o Limited social media success
In order to survive in the market and to take a competitive advantage over other competitive banks
implementing technological oriented products and services is inevitable and being late adopter of
electronic payment projects made the bank to learn from the existed experience of banks who adopted
these products earlier. Yet, being late adopter made the bank to lose the potential market available at the
first phase of entry.

C. Opportunities
 Large untapped area for expansion: In Ethiopia the major part of the population resides in rural
areas .so that the bank has many opportunity of opening branches in the area in order to pool up
the resource to itself.
 Trust in cooperatives: there is better understanding among members and rural area customers.
Since the bank originated from farmers, it has a great acceptance in front of rural customers
 Linkage of cooperatives: the bank has a great connection with different cooperatives to work
with.
 Move into rural Regions-It’s an opportunity to get more customers, but achieving such a move
isn’t a small feat. It may take dozens of years before this approach is successful.
 Offer more or lose customers- keeping up with consumer demands and demographic changes in
a sense that if cooperative bank of Oromia fails to address the demands and desires of customers,
it will lose them. After all, there’s always another bank they can easily go to.
 To face stiff competition, the bank can innovate new products and services and achieve high
customer satisfaction
 With full computerization, they can offer cost-effective services like ATMs, Electronic Fund
Transfers
 Leverage our big data
 Develop a customer relationship culture
 Attract new customers through special offers

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 Shift to a customer-centric marketing outlook

 Target more price inelastic markets
 Expand its product mix and branches
 More clearly differentiating its product offering
 Broadening its geographic reach
 Build relationships with influencers
 Expanding its number of stores/outlets
 Strengthening /clarifying its value proposition
 Building online engagement with its brand
 Advertise on online comparison websites
 Build/acquire digital marketing expertise
 Creating more engaging social media content

D. Threats
Competition-increasing focus of commercial banks towards untapped rural sector that may make
the bank out of the game
Increasing interest rate-increasing inflation and liquidity fluctuation results in rising interest rate
by banks in varied proportion letting the customers make shift to the one paying high interest on
their deposit
Small network for operation-unlike commercial bank of Ethiopia
Competition with firms of various types and sizes
Cyber-attacks and IT security breaches related to Internet/mobile banking
High cost structure.
An unfulfilled customer need in the bank
Arrival of new technologies in other commercial banks
Recessions- It’s the most critical threat that can make or break a business. If small and
big businesses fall, it’ll have a direct consequence on cooperative bank of Oromia as a
threat.
So much Competition-Banks have a ton of competition; not just with other banks, but
with other alternative finance companies. This includes mutual fund companies and
insurance companies.

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Rise in inflation figures which would lead to increase in interest rates.

Increase in the number of Private players would pose a threat to CBO
Uncertain market conditions
Growing competitive set
Many emerging new entrants

2.4 External strategic analysis

After the company reviewed and completed its internal analysis, then the bank moves to the external
review. The bank believes that many external factors can act as a roadblock to the company’s growth.
The external environment affects the strategic planning, market position, sales and management
abilities and skills to compete effectively in the changing business environment (Campbell, and Edgar,
2011). The external environments have different political, economic, social, technological, ecological,
and legal factors (PESTEL) competitors’ analysis, and analysis of its own company, market analysis,
and the managers form strategies to achieve goals and objectives and achieve competitive advantage.
 PESTEL Analysis
1.1 Political -The political situation of Ethiopia can be said to be stable for banking industry after
reform has made. Ethiopian's government has strived to improve private sectors including
banking development w/c help its operation in a stable area. Under an environment of
relatively stable, it might be able to attract many eyes of investors to operate banking industry,
which will help the development of the banking sectors.
1.2 Economics- As is well known, Ethiopia is one of rapid economic developing country in
Africa and sub Saharan countries. Sustained domestic economic growth is expected to
stimulate the banking services even further; Growth of the middle income class continues to
create more demand for modern banking services, Implementation of GTP2 and its stimulating
effect in playing a catalyst role, huge untapped market. But Ethiopia's economy is almost all
dependent on imports it may cause the irregularity of foreign currency
1.3 Social cultural – Ethiopia is a multi-ethnic country. Expansion of education and high
population growth and expansion of urbanization are likely to induce greater demand for
banking products. But poor saving habit and unfair practices may consider as threat.
1.4 Technological– Cooperative bank of Oromia continues to adopt and use of state of art modern
technology and improve its capabilities by creating effective technology vendors and suppliers.
Cooperative Bank of Oromia identifies its opportunities as: economic stability and strong GDP

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growth relatively low level of banking service in the country by any standard, low penetration
of banking service particularly in rural areas, existence of Untapped market including informal
sector, high population growth, greater possibility of serving the unbanked rural population through agent
banking, large unbanked population that calls for financial inclusion, growth of per capita income of the
society, growth of domestic saving as a share of GDP, existence of a significant amount of cash outside
banks), government plan on establishment of industry parks in different regions

Though Cooperative Bank of Oromia recognized these factors as threats such as: unfair competition of
banks in deposit mobilization, low financial literacy and awareness of banking service, stiff competition
among banks and non-banking financial institutions.

2.5 Strategic plan Perspective

To formulate its strategy, Cooperative Bank of Oromia has chosen the Resource Based View (RBV). The
RBV offers a framework that promises a profound understanding of the Bank’s resources and capabilities;
and the relative strength of those resources and capabilities when compared with domestic competitors
and sample world class banks. Cooperative Bank of Oromia with a view of accelerating its transformation,
has initiated the institutionalization of a management tool that would enable it to formulate and implement
its strategy and track its performance—the Balanced Scorecard.

The four perspectives of Balanced Scorecard are Financial(emphasizes the stakeholder concern about
how efficient and effective the unit is at using its resources), Customer(emphasizes satisfying the needs
of customers), Internal Business Process(Perspective emphasizes excellence at performing internal
processes) and Learning and Growth (emphasizes continuous improvement, enhancing employees
capacity, building information system capabilities , identifying and capitalizing the intangible capabilities)
were considered robust for the Bank since they capture the interests of the major stakeholders that are vital
in formulating the Bank’s strategy.

2.6 The bank’s strategic implementation review

Strategic plan implementation concern with considering past, present and future internal and external
factors of an organization then analyze the gap between “as is” and “to be” and finally build a strategic
plan at high level which can bridge seen gap. Planning and implementing of strategic plan needs the
managerial exercise of putting a freshly chosen strategy in to place,

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supervising the how the strategic plan is implementing, revising the plan when it needed at the time of
execution, and measure progress in achieving the targeted result. The process is the most complicated and
time consuming part of strategic management. In time of execution of the strategic management bodies
are ultimately responsible for seeing whether it is implemented successfully or not.

The process typically affects every part of the firm from the biggest operating unit to the smallest frontline
work group. (Thompson & Strickland, 2004:28) One of the key to successful implementation is for
management to communicate the case for organizational change so clearly and persuasively to
organizational member that there is determined commitment throughout the ranks to carry out the strategic
and meet performance target. And also organization should develop, utilize and amalgamate
organizational structure, control system, and culture to follow strategies that lead to competitive advantage
and a better performance.
Not only these but also right person must be place at right time and all necessary resource have to be
allocated. In addition, the reward system has to be appropriate for the entire position and there must be
monthly meeting schedule to assess everyone is on the track and review progress report. But in modern
business environment firms faces different problems related with strategic implementation. These
challenges come from internal and external. When we come to Cooperative Bank of Oromia, to assist the
five-year Growth and Transformation plan (GTP) of the country Cooperative Bank of Oromia has built
its five-year Strategic plan with four Balanced Score Card perspective with alignment of GTP and doing
on its implementation.

2.7 Strategic evaluation and control perspective of the Bank

Cooperative Bank of Oromia conduct Strategic measures in order to track its progress in achieving the
company’s objectives and goals. In order to improve its ability to measure the implementation, the bank
has developed effective measuring tools such as Introducing Strategy Maps and the Balanced Scorecard.
The bank measures its strategy by evaluating what objectives and goals achieved, what extent its
implementation meets the corporate strategy, w/c activities are performed well and w/c is not, what is its
fault and weakness in the system, how well expected objectives meet with actual results and by measuring
results. The bank’s control system exercised through the formulation of contingency strategies and by
establishing various teams that follow up various situations and crises management. The bank adopted
strategic control system by monitoring and taking actions in the light of gap existed between intended
results and actual results. Then the bank takes corrective action to address performance gap. Corrective

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actions take through conducting various situations such as by finding any deviation, by evaluating methods
used, by examining process followed. This process helps the company for feedback, appraise and reward,
to check on the validity of strategic choice, to congruence between decisions and intended strategy, and
to create inputs for new strategic planning.

2.8 . Conclusion
This section summarizes the general condition of CBO’s strategic issues aligning various strategies to
the analyzed SWOT
 In light of strength, the bank provides Affordable interest rates offering loans at reasonable
interest rate to its members, has Large organizational size and scale, Wide scope of financial
services, Strong brand reputation for customer service, Strong brand name, and has Digital
banking convenience.in addition to this, Easy access to capital and funding, Solid financial
reserves, Effective sales and service culture, Focus on internal marketing, Team-based culture,
Clear segments targeted, effectively Clear value proposition, Effective CRM program, Good
understanding of the customer, Strong share of-customer and Broad product range, Clear
positioning and having strong corporate social responsibility are among the strong side of the
bank that is to be continue as it is.
 On the other hand, there are also enormous weakness in the bank. For example, Lack of
infrastructure: the bank lacks implementation of latest technologies such as ATM’S, computers,
and printing machines for effective customer service, the banks internal arrangement is not
satisfactory and areas branch opening doesn’t considered well in cooperative bank of Oromia.
The bank is operating in a limited area confined to a region. Although highly networked, the
number of branches are limited, e employee turnover appears to be on higher side Lack of
proper technology driven services when compared to other private banks in Ethiopia.
Employees show reluctance to solve issues quickly due to higher job security and customers
‘waiting period is long when compared to other private banks. likewise Limited online
advertising experience, Undifferentiated products, Inconvenient branching locations, bank
spending a huge amount on its rented buildings are out of the listed problems.
 CBO has many opportunities to grow more, the banks competitive advantages on other private
banks in Ethiopia are, the bank has Large untapped area for expansion: In Ethiopia the major
part of the population resides in rural areas .so that the bank has many opportunity of opening
branches in the area in order to pool up the resource to itself, there is a big trust in cooperatives

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that is there is better understanding among members and rural area customers. The bank can
Move into rural region since the bank originated from farmers, it has a great acceptance in
front of rural customers to face stiff competition, the bank can innovate new products and
services and achieve high customer satisfaction. Additionally, CBO can develop a customer
relationship culture, attract new customers through special offers, shift to a customer-centric
marketing outlook, expand its product mix and branches, and make More Advertise on online
comparison websites in order to compete with others and get a competitive advantage on them.
 Threat that resulted from Competition-increasing focus of commercial banks towards untapped
rural sector that may make the bank out of the game .Increasing interest rate increasing
inflation and liquidity fluctuation results in rising interest rate by banks in varied proportion
letting the customers make shift to the one paying high interest on their deposit. Cyber-attacks
and IT security breaches related to Internet/mobile banking, High cost structure, an unfulfilled
customer need in the bank, Arrival of new technologies in other commercial banks, and
Recessions-which is the most critical threat that can make or break a business can influence
the banks operating system thereby profit.

2.9 Recommendation
In order to stand strong in business CBO have to keep up all its strength, correct its weakness, stay safe
from threats through use different opportunities issuing acceptable business strategies. This section set
down strategies helpful to in SWOT analysis.

 Differentiation involves making products or services different from and more attractive than those
of your competitors.as much as possible the bank has to differentiate its products that is provided
to customers. This can solve the weakness the bank have in its products.in another way the bank
have to expand its branches, fulfil infrastructure needed in branches, implementing of latest
technologies such as ATM’S, computers, and printing machines for effective customer service,
and correct areas of branch opening. Any weakness that are raised in context of the report are all
expected corrected by the bank.
 The bank have to use untapped resource because in Ethiopia the major part of the population
resides in rural areas .so that the bank has many opportunity of opening branches in the area in
order to pool up the resource to itself, there is a big trust in cooperatives that is there is better
understanding among members and rural area customers. Before other competent entrant. The

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bank should have to develop customer relationship culture, attract new customers through special
offers, shift to a customer-centric marketing outlook, expand its product, and enhance online
advertise to increase its sustainability thereby its profit.
 As porter indicated Focus"(offering a specialized service in a niche market) is another generic
strategy that is to be considered in managing SWOT. In order to get competitive advantage, the
bank is advised to make specific concern to provide special services to its customers. This is why
the bank is categorizing its customers in to corporates, cooperatives, and IFB customers providing
special service to them. But, this is not enough the bank have to add more since it is in competitive
environment. Being cost leadership is another helping strategy to the bank since it Increases profits
by reducing costs, while charging industry-average prices and Increase market share by charging
lower prices, while still making a reasonable profit on each sale because of reducing costs. As it
can be seen from financial statements of the bank from 2021/22, the banks net asset and equity
had been increasing too. This was related to strong performing and new system development in
the bank. This forwards the bank to next step growth in line of its vision as compared to others.
But, it is not enough and the bank have to find ways of development and differentiation to increase
its profit.

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2.10 Reference
 L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School,
 1970) R. E. White, Generic Business Strategies, Organizational Context and Performance: An
Empirical Investigation, Strategic Management Journal7 (1986)
 https://www.coopbankoromia.com.et/index.php/en/about
 "Cooperative Bank of Oromia". Www.coopbankoromia.com.et. Retrieved 2020-01-30
 https://shodhganga.inflibnet.ac.in/bitstream
 https://www.marketingstudyguide.com
 Cooperative bank of Oromia annual report (2021-2022

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