Komerční Banka 2014 New Business Investment Evaluation

A Overview of the Investment Evaluation Strategic Financial Management

MBA 540Paulina JaswiecTeacher: Hostak

Content

1. Company Summary

2. Company Vision

3. Opportunity

4. SFDC Approach

5. Financial Stance Page 12

6. Conclusion

7. PowerPoint Presentation Page 21

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1. Company Summary

Komercni Banka is one of the most leading banks in Eastern Europe and main banks in the Czech Republic. Currently it serves close to 1.5 million customers and has an equivalent of approximately 400 blanches. The bank provides a wide range of services in the following: retail, corporate, and investment banking. The services offered have a wide range of spread starting from private funds, insurance, lending and much more. KB Products:

1. People Accounts Payment Cards Internet, Phone, Email Credit Saving and Investing Insurance and Security

2. Companies: Accounts Payment Cards Internet, Phone, Email Financing Services for Trade and Export

(Foreign Payment Transactions)

3. Public Administration Payments Operations Electronic Banking Foreign Payment Transactions Investment (Term Deposit)

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KB Is broken down into 4 Financial Groups

Komercin Bank, a.s.- KB Financial Group- Other Ownership

SG Group- Czech Republic - Slovakia

Co-operation - KB Groups - SG Groups

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2. Company Vision

KB announce its first executing of their vision at the Andel branch: “enhanced privacy, faster service, new technologies and innovation design for clients” ~ Wednesday, October 23, 2013 (KB Bank company website: ‘Press Room’)

“We expect the new design of our branches to consolidate these primacies and also, in particular, to result in further tangible improvements in services for our clients and their higher satisfaction with our products and services,” said Albert Le Dirac’h, Chairman and CEO of Komerční Banka. (KB Bank company website: ‘Press Room’)

The goal of these changes was to build stronger customer retention, and to overall improve customer service (by making processes more user-friendly & quicker, with the addition of self-service kiosks). The new concept started first location in location-Prague 5, and has already been getting positive feedback. Customers have been impressed with the changes claiming them as ‘major improvements.’ Currently within the lending/ financing industry we already see changes that have diversified the way we do business and see the world. The KB Corporation has decided to continue to consolidate and remodel internally and virtually, branch-by-branch. Current future plans are to look into further avenues to improve service, quality, customer retention, and receive higher satisfaction in both products and service offered. (KB Bank web)

Introduction to NEW Investment Opportunity:Since social media plays highly important role in a customer brand preference and choice of their service providers KB should look into improving their CRM (customer relationship management). The investment will be in the industry of cloud computing, with a fast data migration/ integration, strong security, real-time results of finance and investments, to use any time and any place.

KB Bank company website: ‘Press Room’: Enhanced privacy, faster service, new technologies and innovative design for clients: KB presents its new concept at the Praha 5 - Anděl branch. Retrieved from: http://www.kb.cz/en/about-the-bank/press-room/press-releases/enhanced-privacy-faster-service-new-technologies-and-innovative-design-for-clients-kb-presents-its-new-concept-at-the-praha-5-andel-branch-1732.shtml

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3. Opportunity SALESFORCE.COM

Why:We believe that social media channels and unprecedented power of the information you get to own is the most significant and efficient way to analyze your target audience and to successfully meet their needs and expectations which would improve chances for a new route to be successful both in occupancy and profit terms. Nowadays the social media landscape provides a rich and always-available source of information that can change the performance of marketing, sales and customer support. Other major benefit of the integrated social media strategy is the ability to quickly adapt strategy to customer needs and changes in behavior of both; segments and individual travellers. Real-time analyses provide a great insight to customer behavior and preference in time and can help identify major trends that can be used in target messaging. (salesforce.com)

Social Revolution: from Cloud, to Mobile Finding new ways for you to connect with your customers (salesforce.com)

1. Appeal to your customers: high technology= sophisticated customers2. Innovative and Competitive: endless customer options3. Scalability: to complex, broader portfolios, with complex regulations4. Transparency: internal connectivity and real-time results 5. Application: specific ability to develop apps6. Connectivity: to customers, employees, systems, and decision makers

Gartner’s results for Salesforce.com:- 40% Improved Customer Retention - 33% Higher Customer Satisfaction - “Quick, efficient, and social”- GE was build in records time- two weeks.- 21% Improved cross-selling - 64% faster application deployment

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4. SFDC’s approach

“Salesforce.com is the leading global web-based software and cloud computing company best known for its customer relationship management (CRM). Offering solutions that offer everything you need to grow your company, whether you’re a small or large enterprise with offices in many countries. With no software or hardware to install you’re up and running directly able to perceive positive impact on your business- quickly. It specializes in software as a service (SaaS), to help users handle all of their business needs like managing marketing campaigns, analyzing performance, and tracking spending and sales.” (salesforce.com/ wiki/ other online sources)

We believe that the most effective social marketing strategies are tightly integrated with CRM (Customer Relationship Management) systems. Social media is one of many channels where customers interact with the company. (salesforce.com)

The integrated social marketing approach is comprised from following steps.

LISTEN ENGAGE SCALE TARGET

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1. LISTEN

Listening to your customers is the basic step that helps you to identify the appropriate strategy that promotes active engagement with your target audience through social media channels. It also helps you to tailor messages that will significantly increase chances of converting people you listen to your loyal customers. (salesforce.com)

Here are some examples of how to use social media to gain customers insight, their needs, behavior and persona:

Media Where and how you get the customer insight?

Twitter Interests in…, Reasons to ..(Tweets), Post from ..(GPS data)

Facebook Posts. Has the customer already been to this branch?

Linkedin Who is your Banker? Find out about what he or she does and what is their position? (C-Level, Director)

Foursquare GPS data – Checked-in ATM, Comments on service

Instagram Posted pictures events, Posted picture with interior

Pinterest Your customer persona. What he or she is interested in (e.g. shopping, culture)

Klout How influential is the persona on social media channels?

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2. ENGAGE

When customer needs, behavior, personas and segments are identified target messages and response templates are created for each type media. Approach to engagement can be either, proactive or reactive. (salesforce.com)

Proactive – identify potential customers and connect with them, for example on Facebook (sponsored stories on target users wall) or Twitter (sponsored tweets). There are many ways to interact on social media, major recommendation depends on the results of analysis and should be adjusted from based on constant listening to customers. (salesforce.com)

Reactive – may be either a reaction on positive events (on social media) or negative (complains about on social media). The same approach can be used for competitors – you can listen for positive (what customers like about competitor services) or negative (what makes them unhappy with their services). Again as in the proactive listening, you can react by sending messages and replies to social media users. (salesforce.com)

Social Media Command Center let you engage with users on mass scale.

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3. SCALE

The Internet is a fast moving environment that changes every second. Successful social marketing strategies are those that allow you to scale with changing needs and behavior of your customers, competitors and trends. Our social media strategy allows you to scale and adjust to change in the ways of communication (media) and type of the content (interaction). (salesforce.com)

Social media engagement is not of campaign but continuous process that allows you to stay on top of your customer needs and strive for competitive strategies. It is your real-time insight that will scale with your business. You can start with one route and adjust to any new one. (salesforce.com)

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4.TARGET

Just like in the old days of One to One sales where companies were close to their customers, with a help of social media, you can wisely target not just only one broader customer segments, such as Frequent or Business travelers, but also micro segments (e.g. Leisure travellers visiting destination for particular event). (salesforce.com)

Each message could be tailored to specific customer needs and delivered to media of choice of the customer. Some of them may prefer communication on Twitter; others Facebook while someone would love to receive your e-mails. Whatever channel your customer chooses you can easily manage all of them from one source – connected to our CRM. (salesforce.com)

Precise targeting is about knowledge – Social CRM provides 360-degree view on your customer.

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Client Needs & Our Solution

Right now KB has a budget and to improve retail and online sales by 2014

This is why the Sales Cloud is recommended: Everything you need and in 1 Place

All-inclusive and easy to customize it delivers information in real-time. Either in the office, on your mobile, or offline, you’ll find the tools the build stronger relationships, be more productive & save steps to close more deals. As we read in recent articles and intervies regarding KB customer satisfaction; clearly customers are loosing patient.

Chatter – Internal collaborate tool that shows data instantly from posts, downloads, and uploads.

Accounts & contacts – Maximize sales rep productivity with a 360-degree view of each customer for deep knowledge of every account and contact.

Marketing & leads – Align marketing with sales to close deals faster, and see which of your marketing efforts leads to the most sales with a single system for managing and tracking multi-channel marketing campaigns from lead to close.

Opportunities & quotes – Turn sales opportunities into closed business with a single place for updating deal information, recording customer interactions, tracking competitors, and creating quotes.

Jigsaw data services – Your CRM data just got a whole lot better with real-time contact info and automated data hygiene. Discover new contact data, and turn previously unusable records into new leads.

Workflow & approvals – Get greater control over routine activities, eliminate redundant tasks, automate approvals, and experience widespread adherence to your business processes.

Email & calendaring – Remove the barriers to CRM by combining the desktop apps your reps already use in one spot. The Sales Cloud works seamlessly with Microsoft Office, Lotus Notes, and Google Apps.

Partner management – Get unparalleled, real-time visibility throughout the full partner life cycle. Share information and collaborate instantly with partners on leads, accounts, opportunities, and cases.your business. Managers, executives, and reps are only a few clicks away

Analytics – Empower every user with a comprehensive, real-time view offrom the insight needed to make smart business decisions and accurately

estimate

future sales.

Mobile – Don’t miss any activity, even when you’re out of the office.

AppExchange – Extend the Sales Cloud throughout your organization. Browse among 1,000+ applications on the AppExchange, salesforce.com’s popular marketplace for cloud computing apps.

Force.com platform – Tailor the Sales Cloud to work for your business with the leading cloud platform for business applications. Customize with clicks, add any business process, or build your own apps and websites to extend your solution.

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5. Financial Stance

KB Group Financial Results as of 30 September 2013 Company (FinCentrum)

According to International Financial Reporting Standards, consolidated, unaudited

Three main points: In the segment of citizens grew portfolio of mortgages to individuals by 7.2 % to

CZK 137.3 billion. The total volume of loans (medium and large) KB to corporate clients in the

Czech Republic and the Slovak Republic increased by 5.3 % to CZK 205.5 billion. Revenues decreased by 8.3% to CZK 15.5 billion

From KB Company website:

- Gross volume of loans to clients expanded by 2.9% to CZK 475.7 billion

- Client deposits rose by 4.8% to CZK 592.0 billion (excluding repo operations with clients)

- Net loans-to-deposits ratio at 79.6% (excluding client assets in transformed pension fund)

- Basel II Core Tier 1 ratio at 16.7% solid in light of the new CNB capital requirements

- Revenues decreased by 5.8% to CZK 23,282 million. Excluding one-off impacts, underlying revenues declined by 3.8% mainly due to low market interest rates which limit returns from reinvested liquidity and lower prices for certain banking services

- Operating expenditures reduced by 1.7% to CZK 9,675 million. Cost-to-income ratio at 41.6%

- Cost of risk flat (-0.1%) at CZK 1,344 million- Attributable net profit decreased by 12.5% to

CZK 9,558 million. - Net profit excluding one-off items was down

7.7%

The costs in the item "Depreciation, impairment and disposal of fixed assets" increased by 1.4% due to higher depreciation of software applications.

This is the main reason why proposed plan is to introduce Salesforce.com

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a. KB Company Conclusions: part 1

MY NOTES: Their income is in overall slightly going down. Some changes or reorganization has to be decided to inverse this tendency.

MY NOTES: They have a higher liquidity in comparison to 2012They sold a part of their assets (other assets from 43853 to 37937) in order to improve their liquidity (from 8000 to 50000). They have transformed illiquid asset into cash. Better reactivity in order to invest or spend money quickly. Their derivatives have also sunk (195000 to 179000). All their effort are concentrated on improving their liquidity. They have higher liabilities  (771470 to 804125), that means they prefer to contract debts than use their liquid money. It is another measure to increase the liquidity of the bank.

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a. KB Company Conclusions: part 2

MY NOTES: Capital adequacy is higher, that means there a slightly higher risk regarding the bank’s capital. We can see with the evolution ROAE, the ROAA from 2012 to 2013,that the company's performance has sunk over a fiscal year. It means the profitability has sunk.

MY NOTES: Shareholders' Equity' is a firm's total assets minus its total liabilities: this drop (6709) means that the situation has gotten worst for KB. The proportion of debts compared to assets has worsened from 2012 to 2013.

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b. My Excel Calculations: part 1

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b. My Excel Calculations: part 2

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b. My Excel Calculations: part 3

d. Total Cost of Ownership: part 1

Comparison between two different competitors Oracle and Salesforce.com (taken from salesforce.com and modified)

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d. Total Cost of Ownership: part 2

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6. Conclusion

The benefit of an appropriate CRM: Knowing more about your customers and their needs helps you to design highly targeted social ads and messages that increase probability of Komercini Banka retain customers and deliver new. This will positively influence both occupancy (more customers will utilize bank) and profitability (reducing cost of IT department, hardware and software prices). The integrated social media strategy allows companies to monitor customers and competitors’ activity on mass scale. This leads to creating segmentation strategy that enables highly specific targeting of users and customer segments across various types of media formats. (salesforce.com)

Financial benefits:The sales cloud has a annual recurring cost of 500,000 USD and I one time cost of 50,000 (as listed in tables above). By using this sales cloud KB can expect increase in leads, which leads to a increase in opportunities, followed by increase in won projects. The sales teams will have better control when forecasting and VP/CEO/CFO/ & other executives will be able to review all the results in real-time. By selecting to go with this investment revenue increase (annual) 580,856 leaving the (annual) expected incremental benefit as 2,995,514.

By making an investment to purchase the CRM Salesforce,, KB will pay higher license fees, but over all ROI will go up 296%. Yes indeed they will pay more upfront but they will have better benefits, be more efficient, and produce quicker industry analysis. Over all annually you can see the administration fees growing, which will decrease but the investment and cause the company to have less error and become more efficient. Eliminating wasteful tasks allowing the company to focus on what’s most important- selling and making more investments. Tools offered save steps, make-work more productive and as a result close more deals, gain real-time, and offer visibility into sales, all whilst having everything centrally located (salesforce.com). Amortization. SanBoxes can be placed to train as the implementation is being processed allowing for the company to not loose any time to stop running departments.

Note: An additional discount rate of 10% will be added annual to the cost of Salesforce.com licenses, only if this document is singed before expiration date of December 10th, 2013

Print name________________________ Sign name________________________

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7. PowerPoint Presentation

Please Click on HTTP below:

http://prezi.com/ipebbmgrjav3/edit/?auth_key=rm88rqy&follow=xgzahad_ofba#0_13415665

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