1.

2 Background of the company

Malayan Banking Berhad, also known as Maybank, was established by Malaysian

business tycoon Khoo Teck Puat with few partners in Kuala Lumpur on the 31st of May
1960. Maybank is a holding company overseeing the largest bank in Malaysia. Maybank
also has a variety of subsidiary companies within the financial sector. With such a network of
over 450 branches and over 2,500 ATM machines, Maybank offers a wide range of
commercial, corporate and privately owned banking services. The company operates over
20 subsidiaries, including Brunei, Papua New Guinea, Indonesia, and Vietnam, and operates
in Singapore and the Philips, as it also operates in most other south-east markets. The
Maybank does have branches in New York and London as well. Given the substantial and
economically powerful ethnic Chinese population in Malaysia, Maybank was the first
Malaysian bank to grant a branch office in China. Maybank is also operating several
specialised subsidiaries in the insurance, investment, asset and finance sectors in addition
to its commercial banking network. The subsidiary groups include Maybank General
Assurance, Maybank Life Assurance and Maybank Takaful, which are focused on
developing Muslim-law-compatible insurance products, Maybank International Trust and
Maybank Investment Management. However, President and CEO Amirsham A. Aziz headed
the corporation for about two decades. Maybank, Malaysia's largest bank in 2004, with total
assets at $47 billion, making it one of the top 120 banks in the world. Malay Banking is listed
on the stock exchange of Kuala Lumpur.

The values of Maybank are held by the acronym of T.I.G.E.R, which is deliberately like
the company's logo, which is a tiger. It stands for teamwork, integrity, growth, excellent along
with efficiency and relationship building, where it helps them to become the best in banking,
investment and insurance for 10 consecutive years as well as Malaysia’s leading bank for
conventional and Islamic banking, according to their annual report in 2019. They also strive
to serve the community in ways that are transparent, equitable and individual, as well as
embody their mission. Few of the awards won by Maybank in 2019 were given the “A” grade
for seven consecutive years for the evaluation of MSCI ESG scores. Maybank is the only
one to have been ranked “A” among the other five largest peers. Next is the Putra Brand
Award 2019 for Finance, Investment and Insurance Award, awarded the Platinum Award to
the Hall of Fame. Not only that but Maybank was also rewarded as the only Malaysian bank
in Brand Finance’s Global 500 Brands. Finally, Maybank has won the Bronze Award for the
Australian Reporting Award (ARA) Sustainability Reporting Award and the Gold Rank for the
National Centre for Sustainability Reporting (Asia Sustainability Reporting Rating).
2.1 RIVALRY AMONG COMPETITIVE FIRM

Competitive rivalry is generally the strongest of five competitive forces. The

strategies of one business can only be effective if they offer a competitive edge over the
strategies followed by competitor companies. Changes in one company's strategy can be
countered by retaliating measures such as lower prices, increased productivity, technologies
provided, services provided, warranties extended and boosting promotion. Free-flowing
information, along with the common currency, may allow the consumer to compare the
competitor companies. Maybank affects the problem when financial companies provide a
better and less difficult approach to apply for consumer loan. It is essential for Maybank by
improving each PEST factor to become the main consumer choices compare to their
competitors.

According to Maybank Annual Report 2020, Maybank is the largest bank in Malaysia,
operating with 2626 retail branches worldwide, 354 domestic branches, and employing over
45,000 people. The Malaysian retail banking industry is primarily dominated by few
competitors, including major players such as Maybank, Public Bank and CIMB, which
possess a market share of 75% and a small chain of international commercial banking with a
further 25%. For the comparison, Maybank can be compared with other dominated banks in
Malaysia, Commerce International Merchant Bankers Berhad (CIMB). In term of technology,
it can act as the major features in the banking industry. It affects the business module and its
culture, such as in old banks that used blank and white to enter the transaction through
cheques as a tool or for other financial and banking objectives.

Nowadays, e-banking becomes a competitive advantage among competitors that

significantly reduces transaction time, investment information, online registrations etc. As
examples, both Maybank and CIMB had their own internet online banking site which is
Maybank2u and Cimb Clicks. This online transaction requires a secure website to ensure the
consumers personal and financial information remain safe from data breaches. However,
there are some aspects should be considered such as easy to access, mobile-friendliness,
separate product pages, live chat and search engine optimization. For example, Maybank
QRPay is one of the convenient features of Maybank because it allows the consumer to pay
their daily expenses with just a scan of a QR code. It is very sufficient for all consumers,
especially during this current pandemic Covid-19 situation, which is to prevent people from
touching each other. It also a great step for Maybank to introduce a new cashless system
during this pandemic to replace it with the previous cash system.
 Otherwise, for CIMB, if the consumer wants to use the CIMB e-wallet, they must
download a different app that is not very convenient because the consumer cannot do all the
transaction in one app. Maybank is also the first mobile banking app in Malaysia that has
developed three biometric features in a single app: the brand-new face ID, voice ID, and, of
course, quick touch. Lastly, when there are more competitors, rivalry becomes more
strengthens. It means there will be a healthy rivalry between the two companies since
consumers may have more options and may simply switch their choice over the Bank
company they most prefer. Competitiveness among rival companies can lead to industry
revenues being reduced in some situations. This situation benefits consumers because both
rivalries will keep improving all their product and service to their consumer to ensure they
can retain all their consumer’s loyalty despite attracting other consumers to choose their
company.
2.3 BARGAINING POWER OF SUPPLIER

The bargaining power of suppliers influences competition intensity in an industry,

especially when there are a huge number of suppliers, when only a few good substitutes for
raw materials are available or when the cost of changing the raw material is prohibitive. The
best interest of suppliers and manufacturers is generally encouraging each other with
reasonable pricing, better quality, innovative service development, timely delivery and
minimized inventory costs, improving long-term profitability for everybody involved.
Companies could follow a backward integration strategy for controlling or acquiring
suppliers. This strategy is beneficial when providers are inconsistent, costly, or fail to
consistently meet the demands of a company.

Generally, companies can negotiate with suppliers more advantageous terms if

backward integration is a popular approach implemented by competitor companies in an
industry. Mostly, Economic factors affect the economy and include interest rates, tax rates,
exchange rates, economic growth, inflation, price level, and unemployment. Economic
factors connected with goods, services and money. Despite directly affecting businesses,
these variables refer to the financial state of the economy on a greater level. For example, in
Maybank, Covid- 19 controls and restrictions disrupt economies, causing labour market
weakness and business uncertainties.

Bank Negara Malaysia is the largest supplier of legal power to all the Banks in
Malaysia for the banking industry. It gives all banks the power to carry out their businesses
while they comply with banking regulations. In these cases, Maybank must comply with the
standard average interest rate of 3%, increase the statutory reserve requirement from 3% to
4% and ban investments in low-credit rating companies while offering high returns. As the
growth in the requirement for a statutory reservation and the impact of prohibition affects
Maybank revenue, the strategy needs to be diversified by focusing on the principal funds to
generate income. Maybank offers the merchant programme to companies to sell and collect
their products through Maybank2u.

Besides that, these strategic choices have successfully demonstrated assessment of

their stakeholders' and environment acceptance, practicality and suitability. It is reasonable
that the biggest shareholder in Maybank is a national investment agency called Permodalan
National Berhad (PNB). In fact, Maybank can win a higher volume of sales than its
competitor with a smaller operating margin. Maybank's strategic cost leadership offers
environmental performance and is also feasible since the market trend for the banking
industry stabilises as other rivals imitate the products. Therefore, Maybank can deliver its
strategy with sustainability in the long run compared to other lower competitors without
strong capitalisation.

Furthermore, Maybank was associated with domestic significant companies such as

Telekom, City Council, Amanah Saham National (ASN), Lembaga Zakat and others. By
using Maybank Online Portal, it may integrate both resources and consumer benefits.
Maybank also collaborates with Tenaga National Berhad (TNB) by allowing TNB users to
pay their bills through Maybank's Maybank2u online platform. As a result, Maybank benefits
from that term of services, such as a contract with TNB as a supplier and commission for
each payment. It was a great alternative for Maybank to overcome the circumstance for
them in finding a long-term supplier in their company.

Lastly, the substantial consumer negotiating power represents a danger to Maybank

because the consumers have many banks to decide to save, trade, and invest money at low
switching costs. The common economics of the banking industry is basically the service
where its industry supplier is tangible. It includes chequebooks, funds, human capital, etc. In
the banking industry, the Central Bank of Malaysia is the only provider of funds to enable
Maybank to access its funds. Therefore, the case with focused suppliers where the provider
has more control over the consumer.
2.5 THREAT OF SUBSTITUTE PRODUCTS

In many industries, companies compete closely with other companies over substitute
products or services in other industries. The threat of substitutes refers to products or
services that offer similar features through different processes. The availability of substitutes
sets a price ceiling before consumers switch to the substitute product. Price ceilings are
equivalent to profits and increased competitiveness among competitors. Substitutes can
cause heavy competition during a normal economic recession and minimize potential profits
during favourable economic periods. The competitiveness of substitute products and
services is best evaluated by the share of the market of the products obtained and the
companies ambitions for increasing capacity and marketing strategy.

Unfortunately, due to the Covid-19 pandemic, it affects all the business worldwide,
and it also involves the banking industry. For example, the Malaysian government
announced a 6 -month moratorium extension to all banks, including Maybank. Currently, the
banking industry are still recovering from the Covid-19 pandemic economic crisis. Most
companies may offer higher returns to investors such as shareholders and bondholders to
raise their company again. This is a threat to Maybank since consumers will ultimately seek
to get more income. One way for them to get more income is by withdrawing their money
from the savings account or fixed deposit accounts to make an investment throughout a
certain company's shares and look forward to receiving a high return.

Maybank faces substitution of a few companies including private financial

organization as well as the non-banking government financial organization. The political
factor includes the law of the land, taxation policies, rules, regulation, trade restriction, etc.
Maybank has been influenced by the policies, rules and regulation. Political decisions will
implement the business institutions and the business strategy As Employees Provident
Funds (EPF) which offer high-interest rates for consumers compared to the fixed deposit
offered by Maybank. Fortunately, the advantage for all private financial institutions such as
Maybank is that their terms and conditions were more flexible than EPF. For example, the
consumer can choose the period of their investment in Maybank rather than EPF which is
they only able to get the return after their age to reach 55 years old according to Section 54c
(1) of EPF Act 1991.

For Maybank to compete with other private financial institutions, the consumer will
consider which bank was providing the best service out of other financial institutions. The
consumer has the right to choose which one product or services they like to fulfil their
satisfaction. For example, the shareholder would always check if the dividends of Maybank
are reasonable, dividend payments are relatively constant, and the prospects for growth in
income and dividends are good. Maybank's pay-out ratio for most market participants is
within an average range. According to an annual report of Maybank and Cimb, the pay-out
ratio for Maybank Bhd has reached around 91.2% and CIMB Bhd about 40%% in 2020. By
referring to that report, it is shown that Maybank has successfully achieved a higher
percentage in a pay-out ratio for their shareholder.

The power of consumers is the influence that consumers have on the purchasing
process of banking services. If a consumer has a house loan, a car loan, and a bank credit
card, the change to another bank can be incredibly challenging. In order to attract
consumers, banks aim to reduce the changing price, which is Maybank wants to improvise
their product and service to become more efficient and convenient.

To solve the following issues, Maybank has launched e-share applications to

maintain sustainability. It gives users a quick opportunity to request initial public bids (IPO)
called ‘Maybank2u’. By integrating this investment option, Maybank can help clients manage
their wealth and prevent consumers from withdrawing their money and from subscribing to
the IPO with brokers. As a result, Maybank2u also has benefited Maybank by maintaining
supporting customers and attracting many existing consumers. It because internet banking
helps them simplify their work and save time. Consumers can pay online for purchases,
conduct transactions, receive electronic bills and declarations, pay income taxes and make
online investments.
REFFRENCE

https://www.maybank.com/en/about-us/who-we-are/overview.page

https://www.referenceforbusiness.com/history2/41/Malayan-Banking-Berhad.html

Maybank Annual Report 2020 - Corporate (English) (1).pdf

CIMB Annual Report 2020

https://newyorkessays.com/essay-biz-strategy-maybank/