Oromia International Bank S.

1. Background of the selected organization

Oromia International Bank S.C. (OIB) was established in accordance with the pertinent laws,
regulations and the 1960 Commercial Code of Ethiopia, by the Monetary and Banking
Proclamation No. 83/1994 and by the Licensing and Supervision of Banking Proclamation No.
592/2008. Accordingly, on September 18, 2008, OIB obtained a banking business license. At the
time of its establishment, OIB’s authorized capital was Birr 1.5 billion, whereas its subscribed
capital was Birr 279.2 million, and its paid-up capital Birr 91.2 million. OIB began operation on
October 25, 2008 by opening its first branch at the Dembel City Center. More specifically, its
branch was named Bole Branch. Oromia International Bank’s founding general assembly has
been held on December 29, 2007 at Hilton Hotel with over 2000 attending.

The bank will open its first branch in April 2008. Oromia International Bank is to engage in
commercial banking and to extend banking services in both rural and urban areas. Currently the
bank has more than four thousand registered share holders. The provisional committee took the
responsibility of organizing and facilitating the convening of a more formalized meeting of the
founders and put together proposals that require the approval of the wider body of the founding
members. After deliberating on the criteria of selection, 21 prominent business owners and
academicians were elected as promoters.

The founding meeting has elected a board of directors, which shall be responsible for the
finalization of the licensing of the bank and its consequent commencement of banking services.
The board shall carry out all activities necessary to meet the minimum legal requirements for the
inauguration of the bank. Zonal promoters committees will be elected to further widen the equity
base of the bank. The promoters envisage that the bank has an authorized capital of 1.5 bln ETB,
a subscribed capital of 300 mln ETB and a minimum paid up capital of 80 mln ETB. The paid up
capital is deposited in a bank in a blocked subscription account in the name and account of the
company until it is legally registered and becomes operational.

The shares of the bank shall be ordinary registered shares of the same par value in the name of
the shareholders. Each share shall carry one vote and entities the owner to participate in the net
profits in corporation to his/her paid up share, and to the net proceeds upon the company’s
winding up. The par value of each share is Birr 1000 and a subscriber shall subscribe to and pay
a minimum of four shares. Persons subscribing more than four shares shall have to pay at least
one fourth of the value of the total shares subscribed to at a time of subscription.
Sources close to the establishment process said the bank will have branch offices in every
woreda in the Oromia region. “One of the objectives of the bank is to make farmers
beneficiaries. In addition, to providing service to farmers, there is the possibility that farmers
could buy shares in the bank,” sources said.

Renowned business persons like Yemiru Nega, owner of Dembel City Center, Getu Gelete,
owner of Getas Trading, Alemayehu Ketema, a contractor, Duguma Hunde, owner of DH Geda,
Kebir Hussen, owner of Arsi Agricultural Mechanization, Dr. Likissa Dinsa, owner of Dandi

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Boru school, and Mekia Mamuye of Mekia Enterprises, who have played important roles in
making the bank a reality, make up the board.

1.1. Vision
“To be the Bank of your first choice” A vision statement looks forward and creates a mental
image of the ideal state that the organization wishes to achieve. It is inspirational and aspiration
and should challenge employees. Questions to consider when drafting vision statements might
include:
 What problem are we seeking to solve?
 Where are we headed?
 If we achieved all strategic goals, what would we look like 10 years from now?
There for as the organization of Oromia International Bank S.C, the have clear and power full
vision.

1.2. Mission
“We are committed to providing full-fledged and best quality commercial banking services
within the pertinent regulatory requirement with due diligence to sustainable business while
empowering the missing middle and discharging social responsibility by engaging highly
qualified, skilled, motivated and disciplined employees and state-of-the- art information
technology, adding real value to the shareholders interest and win the public trust. ” A mission
statement is a concise explanation of the organization's reason for existence. It describes the
organization's purpose and its overall intention. The mission statement supports the vision and
serves to communicate purpose and direction to employees, customers, vendors and other
stakeholders. See SHRM's Company Mission Statement Examples for a variety of samples.
Questions to consider when drafting mission statements could include: 
 What is our organization's purpose?
 Why does our organization exist?   
Depending on the above statement Oromia International bank have very interested point in hin
mission.

  1.3. Values
Corporate values of OIB reflects the deeply pursued philosophy of operational excellence,
believes, ground of typical sparkling culture of identity for reputation through which the bank is
well known by others, The Bank is committed to the following values in conducting its day-to-
day business.  Value core principles that guide and direct the organization and its culture. In a
values-led organization, the values create a moral compass for the organization and its
employees. It guides decision-making and establishes a standard against which actions can be
assessed. These core values are an internalized framework that is shared and acted on by
leadership. When drafting values statements, questions to consider might include:
 What values are unique to our organization?

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  What values should guide the operations of our company?
 What conduct should our employees uphold?
Specifically Oromia international bank have the following values:
 value of persistence, endurance and tenacity;
 value  of Customer satisfaction;
 value of Transparency, integrity and confidentiality;
 value of building up of a real team spirit;
 value of groom of potential successors from among its employees to all its jobs including
the managerial ones;;
 value of Total respect to its customers and employees;
 value of Highly competent and motivated human resources, who are committed to
upgrading their skills by taking the types of training that the OIB gives to them;
 value of Making the OIB a perpetually learning and innovative organization;
 value of Encouraging a sense of belonging among all its employees; and
 value of upholding of corporate citizenship.

1.4. Objective Statement explains your organization’s reason for existence. It explains why your
organization began, and why it’s on that journey. It explains what injustice in the world it is
seeking to right or what opportunity it is seeking to leverage. A objective statement can be
answered with that sort of founding story, but often it’s a declarative statement that offers the
same explanation of values and how the organization’s existence is upholding those values.

To succeed and thrive, organizations must adapt, exploit, and fit with the forces in their external
environments. Organizations are groups of people deliberately formed together to serve a
purpose through structured and coordinated goals and plans. As such, organizations operate in
different external environments and are organized and structured internally to meet both external
and internal demands and opportunities. Different types of organizations include not-for-profit,
for-profit, public, private, government, voluntary, family owned and operated, and publicly
traded on stock exchanges. Organizations are commonly referred to as companies, firms,
corporations, institutions, agencies, associations, groups, consortiums, and conglomerates.

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2. 2. Analyzing external competitive of Oromia International Bank

In to day's stiff competitive business environments, organizations of all types and sizes are facing
continually changing situation externally and internally, and how to cope with these ambiguities
and how to achieve competitiveness and expected level of performance is a real challenge for
every organization. In order to adapt to these changing situations, research scholars recommend
the practice of strategic management as it enables organizations to take advantage of new
opportunities that help meet the needs of customers and clients and minimize the threats of the
environment. Oromia International Bank face challenges from their external environment
(include politics, policies of the National Bank, government rules and regulations, customers
banking habits, infrastructures and so on).
According to the above analysis, we can say that the recent situation of the external environment
is very favorable to the ‘OIB S.C as well as in the banking industry well in the island and all
these favorable factors (Economic stability, stabilized political situation, Technological
advancements and the expansion of customer bases) reflects that competitors too will be
attracted to do commercial operations. Overall, currently banking industry is faced with
opportunities to exploit resources; challenges from the competitors that may be unavoidable.
Industry environment Industry Environment is the set of factors that directly influence a firm and
its competitive actions and response.
There are four force analyses for the ‘OIB S.C An industry’s profit potential is a function of the
four forces of competition.
2.1. OIB S.C’s external competitive
2.1.1. Contestability
Contestability has become more important concept to analyze the state of competition in a given
banking system. Though the banking industry in Ethiopia is highly concentrated and dominated
by the OIB S.C, the position of other banks has been improving from time to time. Had the
traditional SCP paradigm been viable, other small banks would have been engulfed by the
biggest bank. The waning in the market share and credible threat of entry (contestability) induce
banks to behave in a competitive manner even when there are few banks in the market. For this
particular study, contestability is briefly explained by legal requirements, financial sector

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development, financial innovation and technological advances, and government’s economic
policy and strategy.
2.1.2. Financial Sector Development
The financial sector in Ethiopia is composed of the banking industry, insurance companies,
microfinance institutions, saving and credit cooperatives and the informal financial sector. The
banking industry accounts for about 95% of the total financial sector assets, implying that the
financial sector is undeveloped, and activities that banks could perform are legally limited, which
in turn contribute to lesser contestability.
2.1.3. Legal Requirements

Monetary and Banking Proclamation No. 83/1994 provides the legal framework under which
commercial banks would operate. The proclamation has given the National Bank of Ethiopia
(NBE) powers and duties to license, supervise, and regulate banks and other financial
institutions. In the context of Ethiopian financial system, currently, fostering stability takes due
emphasis than promoting competition. NBE”s Directive No. SBB/12/1996 put the following
restrictions that reinforce the fact that stability objective is overriding: banks are prohibited from
directly engaging in insurance business and non-bank business, such as agriculture, industry, and
commerce; a bank may hold shares in a non-banking business up to 20% of the company’s share
capital and the total holdings in such business shall not exceed 10% of the bank’s net worth; no
bank shall commit more than 20% of its net worth in real estate acquisition and development
other than for own business premises; a bank may not invest more than 10% of its net worth in
other securities.

The aggregate sum of all investments at any one time (excluding investment in government
securities) may not exceed 50% of the bank’s net worth; and dealing in securities shall be done
by banks only through a limited liability subsidiary company, wherein the holding of the bank
shall not exceed 10% of its equity capital. These prudential measures though deemed important
where financial system is undeveloped, limit the effort of banks (especially new entrants) to
compete vigorously, hence deterring contestability to some extent. In addition, the minimum paid
up capital that required obtaining a banking business license in Ethiopia is seventy five million
Birr, which shall be paid in cash and deposited in a bank in the name and to the account of the
bank under formation. The minimum capital required to establish a new bank is raised with the

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aim of enabling the newly established bank to compete successfully with existing banks and to
maintain a level of capital commensurate with the volume of their business to withstand
operational results (NBE, Directive No. SBB/24/1999). Allowing foreign ownership would bring
about greater contestability rather than merely legal changes. Foreign ownership of banks in
Ethiopia, however, is not yet allowed. The possibility of foreign banking participation would
stimulate contestability in the existing banking industry.
2.1.4. Financial Innovation and Technological Advances

When contestability of a particular banking system is assessed, the effect of financial innovation
and technological advances should be considered. Banks in Ethiopia are currently engaged in
adapting a wide array of financial innovation and technological advances. Some of them were
successful in interconnecting their branches and enabling customers to have account access from
any of the branches. Despite the some rudimentary developments in ATM, VISA card payment
system and telephone banking service for balance enquiry and broadband local money transfer-
using internet, the adoption of financial innovation and usage of technological advances are
narrower in scope. The rate at which information technology diffuses through the market is slow.
All these would imply lower contestability. However, in the future, when basic infrastructures for
information technology are developed widely and in sustainable manner, implementation of
technological advances by banks will become more convenient and easier. It is also inevitable
that customers’ preferences on new innovations and/or electronic delivery channels will be
improving. As a result, barrier to entry will be significantly reduced, which in turn imply strong
contestability.

2.2. Opportunities and treats

2.2.1. Threats of new entrants
New entrants in the banking industry is Impossible to enter the industry and to offering the
trustful and the full range of services. Because they need huge amount of investment and high
level of rules and regulations imposed by the government. Therefore, it is possible to earn higher
level of revenue in the industry.

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 2.2.2.Capital requirement
must spend a lot of money in order to compete in the market. High sunk costs limit
competition - Banks have to commit money up front with no guarantee of returns in the end.
2.2.3. Geographic factors limit competition
If existing competitors have the best geographical locations new competitors will have a
competitive disadvantage. Industry requires economy of scale. Bargaining power of supplier:
Customer Deposits, Mortgage and Loans, Loan from other institutions. Bargaining power of
supplier of ‘OIB S.C will have a long term negative impact on this entity, which subtracts from
the entity's value.
2.2.3. Bargaining power of buyer:
Customers are expecting more profits for their investments and also they are expecting high
quality of services.
And also, if there are large numbers of customers, no one customer tends to have bargaining
leverage. It will have a short term negative impact on this entity. This subtracts from its value.
This will lead to an increase in costs and decrease in profits.
1.2.4. Availability of product substitutes:
Competition is very high in the banking industry. There are Nearly 20 banks and finance
institution available all around the Ethiopia. ‘OIB S.C is unique. It is won customers heart and
trust by standing nearly with local customers. Based on the 4 forces factor, we can conclude that,
the ‘OIB S.C Profitability and Stability is high. Competitor’s environment Competitor
Environment is the final part of the External Environment. It refers how companies gather and
interpret information about their competitors.
Primary competitors Private Banks in Ethiopia and Secondary competitors Financial Institution
like “OALF” (Oromia Association Lending Finance), “ALF” (Addis Lending Finance) and etc.
Possible new competitors Insurance Companies Stock Broking Companies John kells TKS
Securities Rural Banks Co-operative societies. Stakeholder mapping Need and expectation of the
stakeholders: The ‘OIB S.C Bank’ believes it is vital to align strategies with the expectation of
their stakeholders, given the strong and perfect connection between sustainable commitment and
their overall objectives. “OIB S.C’ identifies as key stakeholders, all of whom have an expressed
interest in their economic, social, environmental performance. It includes;

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 3. Oromia International Bank S.C ‘s internal operating environment
3.1. Concept of Internal Environment As OIB S.C
The internal business environment of a firm refers to factors and events within the firm which
have direct and specific implications for the firm. According to the OIB S.C, internal
environment is composed of the elements within the organization such as the employees,
management, and corporate culture, which influence employee behavior.
In its simplest sense, internal environment refers to all the factors which are specific to a
particular firm and influence the operations and performance of the firm. Internal factors are the
strengths and weaknesses of an organization. They are also influenced by policies and decisions
of a bank’s executive management. Equally they reflect differences in policies and decisions of
one bank from the other with regard to the approach to adopt to run a particular deposit bank.
They are easier to control than external the factors of environmental.
Determined by policies, strategies and decisions of each firm, internal environment of each
deposit money bank is unique, specific to and reflective of the policies of the deposit
money bank. While the banks are commonly influenced by the external environment, it is
the internal environment of each bank which defines the ability of the bank to take advantage of
the opportunities and threats presented by the external environment to enhance its performance.

3.1.2. The Internal-External Environments Nexus

Generally, the internal environment of a firm is influenced by the external environment and the

former is adjusted to conform with the dictates of the latter. The adjustment is justified by the
fact that normally the firm has no control over the external environment. The firm can only take
steps to minimize the adverse effects and maximize the opportunities presented by the external
factors. The connection between the two environments lies in the fact that the internal
environment is a sub set of the larger system known as the external environment and there is
constant interaction between them.
The internal-external environment nexus generally drives from the fact that virtually no aspect of
the business internal environment is insulated from the influence of the external environment.
This is more in highly regulated organizations such as deposit money banks which are
constantly regulated by governments through the external environment. It seems that it is this
tendency of the external environment to control the internal environment that gives credence to
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the critical role of the internal environment in a firm’s performance. This position is explained
from the fact it is the strength and weakness of the internal environment which determine how
the firm manages the headwings and exploits the opportunities presented by the external
environment to improve its performance. In this sense, the internal environment of a firm could
be described as the immune system of the firm.

3.1.3. Terminal Benefits as a Concept

Staff terminal benefits could be viewed as an umbrella term referring to pensions, gratuities,
severance entitlements and other terminal benefits paid or payable to an exited or retiring staff of
a firm because of his/her disengagement or retirement. From the internal-external environment
nexus, it is appreciated that the increasingly dynamic and challenging internal environment of the
banking sector in Sub Saharan Africa (SSA) in the recent decades, is influenced mainly by
equally challenging and dynamic external environment. Faced with internal and external
pressures, most deposit money banks in SSA have had to engage in regular un-announced lay-
off/down-sizing of their employees. Consequently, downsizing has become more prevalent
giving rise to issues of payment of terminal benefits such as compensation packages and
severance entitlements. The drive for efficiency and profitability through cost reduction is
generally seen as the motive of the organizations that engage in down-sizing. For instance OIB
S.C seen as a tool employed by firms usually in times of economic crisis with the aim of
reducing overhead costs and enhance productivity, efficiency, profitability and
competitiveness through systematic reduction of the work force of the particular firm.

According to the OIB S.C, the term rightsizing is intended as a long-term strategy to have an
organization run with the right level of talented staff in all its units. In view of the emotional
strain of lay-offs on both the exited and surviving staff, issues bordering on downsizing and
terminal benefits particularly in the banking sector are often echoed and of concern to the
public in SSA region. The amount of staff terminal benefits enjoyed by retiring/exiting
employees is expected to motivate the surviving staff for higher productivity and to enhance their
commitment and loyalty to the organization. However in a case of terminal benefits arising from
down-sizing, these benefits and the performance of the now trimmed firm seem to depend on the
strategic steps by executive management to reduce adverse reactions of both the affected and

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surviving staff in the retrenchment exercise. The survivors have been held to appear worse off
than the laid-off . The down-sized seem better off than the survivors because it is expected that
they would be paid terminal benefits such as severance entitlement and with that they could start
their lives all over and survive.
In the case of the survivors/the retained employees, they are now exposed to fear of the unknown
because of the perceived job insecurity. Thus, the emotional effect of downsizing is brought to
bear on the survivors with serious implications for their productivity and profitability of the firm.
Consequently, there is need to manage the emotional effect of downsizing on the surviving
employees so that the post lay-off performance of the firm would not be worse off.

3.1.4. Concept of Employee Productivity

According to Oromia International Bank S.c productivity is an input-out concept which at its
simplest level refers to efforts and results achieved. The efforts and result are specific to a certain
period of time and within the limits of available resources. Broadly it refers to the quantitative
and measurable contribution of employees- either as an individual employee or a team to
the achievement of certain specific and measurable set objectives of a firm within a specific
period of time and within the limits of available resources. With respect to the banking sector,
employee productivity in a narrow sense could be seen as assigned performance targets/budgets
to an employee and percentage achieved by him/her within a specific period. The targets
represent specified key performance indicators by Executive Management. However,
employee productivity in most literature is usually measured as the natural log of total revenue
(or net operating income) divided by total number of employees within a certain period of
time.

3.2. OIB’S Principal Banking Services

OIB is serving a full-fledged banking business as per the rules and regulations of the nation.
Among these products;

 Different types of saving services;

 ECX related accounts Management;
 Credit/Lending services;
 International Trade Financing services (Import/Export);
 International Remittance services;

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  Foreign-Exchange services;
 Interest Free Banking Services;
 Guarantees Services;
 Local Money Transfer Services;
 Over The Counter Payment (OTCP) Services (Fund transfer Services from online
branch to other online branches)
 Any Branch Banking (ABB) Transaction (Deposit from/to saving or current account
maintained at any online branches);
 Payments instruments (CPO, Demand Drafts, Travelers Checks, etc);
 Cash/Fund Management Services;
 Agency Services;
 Card Banking Services (ATM and POS);
 Mobile Banking Services;
 Agent Banking Services;
 Over Seas Employment Agencies Special Financing Facilities;
3.3. Deposit Services:
 Current/Demand/Checking Accounts;
 Saving Accounts;
 Fixed-Time Deposits;
 Diaspora Accounts;
 N/R Accounts for Foreigners and Foreign Organizations
3.4. Credit/Lending Services:

OIB provides its customers with different types of credit facilities, so long as they are engaged in
the domestic and international trade, agriculture, hotel, and tourism, construction, transport, and
communication, industry, micro-finance, mining, power and water resources sectors, and in any
other legally acceptable and socially desirable business entities. More specifically, the following
are the credit/lending services that OIB renders:

 Terms Loans; Short, medium, Long term;

 Overdraft Facilities
 Merchandise Loan;
 Pre-shipment Export Credit Facilities;
 Bank letter of guarantee;

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  Bind Bond;
 Advance payment;
 Performance Bond;
 Retention guarantee;
 Customs Duty Guarantee;
 International Air Transport Association Oil Companies;
 Trade Credit Guarantee {available only at OIB};
 Education Guarantee;
 Revolving Export Credit Facilities;
 Export and corporate customers financing;
 Advance on Export Bills;
 Import Letter of Credit;
 Import L/C Settlement Loan;
 Advance on import Bill;
 Motor Vehicle and construction Machinery Loan;
 Consulting Firms Financing Loan;
 Co-Financing Loan;
 Financing of Creativity/Ideas;
 Machinery/Equipment-lease financing loan;
 Equity investment Financing Loan;
 Home (mortgage) loan;
 Personal and consumer Durable Loan;
 Automobile loan;
 Education loan;
 Advisory services on lending options;

3.5. International Banking Services:

 Import Facilitation Services {Import by Letter of Credit (L/C), import by cash
against documents (CAD), Import by telegraphic transfers, etc0;
 Export Facilities services (Export by L/C, Export by CAD, Export by advance
payments, etc.);

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  Foreign Exchange Services (the buying and selling foreign currency);
 International Money Remittance Services; and
 Advisory Services with Regard to International Banking;
3.6. International Money Transfer Agents that OIB is working with:

1. Western Union;
2. Money Gram;
3. Trans-Fast Money Transfer LLC;
4. Ria Financial Services;
5. Lari Exchange;
6. Alan Sari Exchange;
7. Money Exchange SA;
8. Kendy Money Transfer;
9. Shift Financial Services;
10. Xpress Money Transfer;
11. Asgori Money Express Pty Ltd;
12. Dahabshil Money Transfer;
13. Golden Money Transfer INC;
14. Instant cash;
15. Mustaqabal UK Ltd;
16. Money Quen Express Corp;
17. Shaka Express;
18. Kemoson Management Assocites;

3.7. Interest Free Banking Services

Interest Free Banking Services (fully sharia-complaint)
3.7.1 Deposit Services
 Wadia Saving;
 Amana Current;
 Labbaik Wadia (For Hajji umrah Pilgrimage);
 Mudarabah Investment Deposit (Unrestricted);
 Diaspora Wadia Saving.
3.7.2 Financing Services
3.8. Electronic Banking Services

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  Mobile Banking;
 Internet Banking;
 Card Banking (ATM and POS);
 Agent Banking
3.9. OIB’S Correspondents Banks;
OIB has made correspondent relations with the following internationally renowned and giant
banks:
 Citibank NA, New York (USD)
 Commerz bank AG, Frankfurt am Main (USD)
 Commerz bank AG, Frankfurt am Main (EURO)
 Deutsche Bank Frankfurt AG, Frankfurt am Main (EURO)
 Deutsche Bank Frankfurt AG, Frankfurt am Main (EURO)

3.10. Success Stories

 It gives us a great pleasure to inform our esteemed customers that in the banking
history of Ethiopia, Oromia International Bank S.C. has been the most successful
bank so far, in that it was able to open a total of 26 branches in only eight months’
time upon commencing operation before nine years. Of these branches, 80% were
opened outside the capital city. In fact, this achievement of OIB has awakened the
banking industry. As a result, the number of OIB’s branches in Ethiopia has since
reached 400 of which about 60% are opened outside of Finfinne. Total number of
branches of all banks in this country was less than 600 during the establishment of
OIB and now it is nearly 4,000 that Oromia International Bank played an
awakening role in the industry to the proliferation of branches across the nation.
 Despite its aggressive outlet expansion and its huge start-up expenditures, OIB has
also been able to break even within its first year of operations;
 In its almost nine years of age, OIB fulfilled paid up capital requirement ahead of
the deadline;
 The Bank has created permanent job opportunities for nearly 3, 060 citizens as of
today. The number will keep increasing pursuant to the Bank’s branch expansion;
 OIB is now working in full gear introducing new bank products and reaching the
unbaked society, regardless of the fact that it is a relatively new comer among the
other banks operating in Ethiopia. For instance, it pioneered IFB operation in
Ethiopia which most banks are now striving to introduce.

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  What is more, OIB has been recognized and awarded by a government for its active
participation and support to the national economy as well as its commitment to
discharge its social responsibilities.
 The Bank has made correspondent relations with internationally acclaimed financial
institutions and its working with over 18 money-transfer agent currently.
 After acquiring a plot of land to build its headquarters whose soil test and
architectural design has been finalized, the bank is on the verge of commencing the
construction of the 26 storey headquarters complex at the premises of the future
financial hub.
 Currently, OIB owns a G+13 twins Building head office on Bole road, around
Olympia immediately beside Getu Commercial Center formerly known as SA
building.
 OIB has successfully implemented BANKS CORE System Technology to almost
all of its operational branches. Therefore, the Bank is providing technology based
services such as ABB (Any Branch Banking), OTCP (Over the Counter payment) to
enable our esteemed customers to be served at all of our branches from a single
branch.
 OIB has also embarked on its Electronic Banking Services such as Mobile Banking,
Card Banking, Agent and Internet Banking to reach its customers with a better and
modern banking products;
 In a nut shell, Oromia International Bank has been able to build a good reputation
and gain the full acceptance of the public at large within a very short period of its
establishment.
3.11. SWOT Analysis of the Organization:
3.11.1 Strength of OIB
 It gives us a great pleasure to inform our esteemed customers that in the banking
history of Ethiopia, Oromia International Bank S.C. has been the most successful
bank so far, in that it was able to open a total of 26 branches in only eight months’
time upon commencing operation before nine years. Of these branches, 80% were
opened outside the capital city. In fact, this achievement of OIB has awakened the
banking industry. As a result, the number of OIB’s branches in Ethiopia has since
reached 400 of which about 60% are opened outside of Finfinne. Total number of
branches of all banks in this country was less than 600 during the establishment of
OIB and now it is nearly 4,000 that Oromia International Bank played an
awakening role in the industry to the proliferation of branches across the nation.

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  The 10th private bank to be formed in Ethiopia, OIB has been recording profits
since it first started operations in 2008. Interest income has grown by 60pc to a
little over half a billion Br, propelling total profits forward to 850 million in the
fiscal year that ended in June 2015.
 OIB is now working in full gear introducing new bank products and reaching the
unbaked society, regardless of the fact that it is a relatively new comer among the
other banks operating in Ethiopia. For instance, it pioneered IFB (Interest Free
Banking) operation in Ethiopia which most banks are now striving to introduce
3.11.2 Weakness of the OIB
 Lack of reach/availability of Branches at some regional zone or woreda;
 Lack of Alternative delivery services or channels or network (technology);
 Lack of awareness the new products/services;
 The internet interruption (or network problem) to services delivery.
4. Build organizational capability to improve strategy implementation
4.1. Enterprise change management (ECM) and organizational project management
(OPM)
Successful strategy implementation should be the appropriate answer to permanent changes of a
company. But organizations often fail with their strategic initiatives and do not achieve the
expected results and benefits. The maturity level regarding change and project management is
too low to manage changes on a regular basis. Leading organizations are embedding professional
project and change management and building a true organizational change capability.

To be competitive, companies must implement their strategies successfully by programs/projects.

They must manage the permanent change. Unfortunately, strategic initiatives to implement
strategies fail often! Why? What are the success factors to implement strategies successfully?
Enterprise Change Management (ECM) and Organizational Project Management (OPM) are the
preconditions for organizational capability needed for successful strategy implementation.

The purpose of this white paper is to explain how a company can transfer the means, the links,
and the differences of ECM and OPM as a precondition for organizational capability that is
needed for strategy implementation. The white paper answers the question, “Is my company and
are our people capable and willing to realize the important requirements to implement ECM and
OPM?”

4.1.1. ECM – Enterprise Change Management

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ECM is the discipline and process of deploying change management broadly across an entire
organization. Leading organizations are now beginning to make the shift from applying change
management in single projects toward embedding change management and building a true
organizational change capability.

“Successful execution of strategy requires an emphasis on organizational change management. A

lack of change management skills are the biggest barrier to successful strategy implementation,
according to 38 percent of PMOs. High performers are committed to understanding key factors
of successful change such as communications (69 percent versus 54 percent) and stakeholder
satisfaction (68 percent compared with 44 percent) (PMI, 2014c).

With the critical nature of success on change projects and initiatives, many organizations are
starting to build organizational change management capabilities and competencies. Instead of
addressing change management one project after another, these organizations are investing time,
energy, and resources to build organizational change management capabilities and competencies.

Organizations are moving from a project-by-project view toward deploying change management
broadly across the organization with an enterprise view. With an enterprise perspective,
organizations are institutionalizing “effective change management” as common practice on all
projects and initiatives. Tactics like adopting a standard approach, creating a Change
Management Office and integrating change management activities into a standard project
delivery process are just some of the steps that can be taken to institutionalize change
management, making “managing the people side of change” the norm and common practice.

“ECM is the structured and intentional deployment of change management across and
throughout an organization. With Enterprise Change Management, effectively managing the
people side of change becomes more than a business practice; it becomes a core competency,
competitive differentiator and cultural value of the organization”.
4.1.2. Organizational project management (OPM)
OPM is the execution of an organization's strategies through projects. OPM is the combination of
portfolio management, program management, and project management. It pertains to the
translation of corporate strategy into the projects of an organization through portfolio
management, and the execution of corporate strategy through programs and projects.

A strategic initiative could be one program with related projects or could contain several
programs with related projects. It should be managed with proper program management.

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4.1.3. Change Management Maturity Model

A company can apply a Change Management Maturity Model for assessment to determine its
organizational maturity in change management. With a Change Management Maturity Model
and the resulting analysis, a company can accurately and effectively present the state of change
management in its organization and create targeted and customized plans to institutionalize
change management practices, processes, capabilities, and competencies.

5. Implementation strategies of OIB S.C

Statement of directors’ responsibilities For the year ended 30 June 2019 In accordance with the
Banking Business Proclamation No. 592/2008, the National Bank of Ethiopia (NBE) may direct
the Bank to prepare financial statements in accordance with international financial reporting
standards, whether their designation changes or they are replaced, from time to time. The
Directors are responsible for the preparation and fair presentation of these financial statements in
conformity with reporting requirements in Ethiopia and in the manner required by the
Commercial Code of Ethiopia of 1960, and for such internal control as management determines
is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. The Bank is required to keep such records as are
necessary to: a) exhibit clearly and correctly the state of its affairs; b) explain its transactions and
financial position; and c) enable the National Bank to determine whether the Bank had complied
with the provisions of the Banking Business Proclamation and regulations and directives issued
for the implementation of the aforementioned Proclamation.

The Directors accepts responsibility for the annual financial statements, which have been
prepared using appropriate accounting policies supported by reasonable and prudent judgments
and estimates, in conformity with International Financial Reporting Standards, Banking Business
Proclamation, Commercial code of 1960 and the relevant Directives issued by the National Bank
of Ethiopia. The Directors are of the opinion that the financial statements give a true and fair
view of the state of the financial affairs of the company and of its profit or loss. The Directors
further accept responsibility for the maintenance of accounting records that may be relied upon
in the preparation of financial statements, as well as adequate systems of internal financial
control.
6. OIB S.C Controlling Method
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Control is one of the functions of management. In this context, it refers to the process of analysis
and corrective action. When controlling, you are essentially monitoring whether you are
receiving an expected result of a process (or during it) or if the outcome deviates from the
expectation. If there is a deviation, you take corrective action to ensure the expected results
occur. Previously, the concept of control was mainly focused on correction after an error had
occurred. In the example of the shoe production, you would notice there was a deviation when
you count the shoes and instead of getting 1,000, you’ve made 999.

But with the rise of modern technology, control can be used to foreseeing an error. This has
changed the function and made it increasingly important part of the management process. For
example, your shoe production facility might have monitoring systems that help you realize the
shoes are not being finalized as quickly as they should in order to make 1,000 pairs. You are
essentially able to see that you would encounter a problem; instead of just realizing a problem
has occurred. If you consider the process in the forms of steps, control in relation to
management would look like this:

 Setting a goal and establishing desired objectives.

 Measuring the achievements of goals and objectives
 Comparing the achieved goals and objectives with the original goals and objectives
 Analyzing variances and reporting on them. Determining the underlying causes for
the variations
 Taking corrective action to eliminate the variations
 Following up and repeating the process

7. Conclusion
OIB has relatively lowest mean gap score in Empathy service dimension, which is -1.36. The
attribute designated by Empthy4, the bank’s commitment to have customers’ best interest at

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heart, is the lowest negative disconfirmation gap among Addis Ababa University, Collage of
Business and Economics, Department of Management, EMBA program, 2015 Assessment of
Service Quality and Its Influence on Customer Satisfaction: The Case of Oromia International
Bank SC. 41 the Empathy attributes as well as the rest of all the twenty two attributes of the five
service dimensions. This imply OIB is relatively better off in the empathy dimension despite it is
not yet to the customers’ expectation. The demographic characteristics of respondents showed
that the majority of the respondents are male and 65% of respondents are 18 to 40 years of age.
Moreover, the results of the study revealed that the majority of the respondents have banking
relationship for more than 4 years with OIB.
8. Recommendation
The Ethiopian banking sector more than ever is characterized by stiff competition. The sector is
also converging to similar products as newly introduced banking products are easily imitated by
competitors. The fact that availability of banking software off the shelf have also eased product
imitation. These factors compelled banks to look for other competitive advantages in order to
beat the competition.
The close look at the components of the service quality attributes showed that the majority of the
attributes on which the bank has got a negative disconfirmation are related to the quality and skill
of personnel. Therefore, improving the service quality requires development of the knowledge
and skill of these personnel.
This in turn reduces the expectation and perception gap significantly as it improves the
perception scores for about half of the twenty two service quality attributes. Investing on this
segment of the human resources is also the best alternative to OIB to maintain sustained
competitive advantage as the services providers’ skill cannot be easily imitated by the
competitors.
The investment outlay should also prioritize the physical evidences of the services like office
equipment, physical facilities and communication materials since the negative disconfirmation in
this dimension showed significant gap.

RIFT VALLEY UNIVERSITY

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 DEPARTMENT OF BUSINESS ADMINISTRATION

Name ID.NO
1. BERSISA EBISA NEGASA

ADVISOR: (As.pro).

MARCH, 2021
Addis Ababa, Ethiopia

Table of contents
Content page
2. Background of the selected organization…………………………………………………………..1
1.1. Vision…………………………………………………………………………………...………...2

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 1.2. Mission………………………………………………………………………………...……….…2
  1.3. Values………………………………………………………………………………...………...…2
1.4. Objective…………………………………………………………………………………..…..….3
2. Analyzing external competitive of Oromia International Bank………………………………….……....4
2.1. OIB S.C’s external competitive………………………………………………………………..….…...4
2.1.1. Contestability…………………………………………………………………………...…….…4
2.1.2. Financial Sector Development……………………………………………………………….….5
2.1.3. Legal Requirements……………………………………………………………………………...5
2.1.4. Financial Innovation and Technological Advances…………………………………...…………6
2.2. Opportunities and treats………………………………………………………………………………..6
2.2.1. Threats of new entrants…………………………………………………………………….….…6
2.2.2.Capital requirement……………………………………………………………………….……….7
2.2.3. Geographic factors limit competition…………………………………………………….………7
2.2.3. Bargaining power of buyer……………………………………………………………………….7
2.2.4. Availability of product substitutes……………………………………………………….……….7
3. Oromia International Bank S.C ‘s internal operating environment……………………………...………8
3.1. Concept of Internal Environment As OIB S.C……………………………………………...………8
3.1.2. The Internal-External Environments Nexus………………………………………………………8
3.1.3. Terminal Benefits as a Concept……………………………………………………………………9
3.1.4. Concept of Employee Productivity…………………………………………….…………………10
3.2. OIB’S Principal Banking Services……………………………………………………………………10
3.3. Deposit Services……………………………………………………………………...……………….11
3.4. Credit/Lending Services…………………………………………………………………………….11
3.5. International Banking Services…………………………………………………………….…………12
3.6. International Money Transfer Agents that OIB is working with……………………..………………13
3.7. Interest Free Banking Services………………………………………………………….……………13
3.7.1 Deposit Services…………………………………………………………………………..…………13
3.7.2 Financing Services………………………………………………………………….……………….13
3.8. Electronic Banking Services……………………………………………………….…………………13
3.9. OIB’S Correspondents Banks…………………………………………………………..…………….14
3.10. Success Stories………………………………………………………………………..……………..14
3.11. SWOT Analysis of the Organization…………………………………………………..……………15
3.11.1 Strength of OIB………………………………………………………………………..…………15
3.11.2 Weakness of the OIB…………………………………………………………………….………16
4. Build organizational capability to improve strategy implementation………………………………….16
4.1. Enterprise change management (ECM) and
Organizational project management (OPM)…………………………………………….…………16
4.1.1. ECM – Enterprise Change Management…………………………………………..……………17
4.1.2. Organizational project management (OPM)………………………………………….…………17
4.1.3. Change Management Maturity Model……………………………………………..……………18
5. Implementation strategies of OIB S.C………………………………………………………….………18
6. OIB S.C Controlling Method …………………………………………………………………..………19
7. Conclusion……………………………………………………………………………………...………20
8. Recommendation…………………………………………………………………………….…………20

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