YANGON UNIVERSITY OF ECONOMICS

DEPARTMENT OF COMMERCE
MASTER OF BANKING AND FINANCE PROGRAMME

COMPETITIVE STRATEGIES OF KBZPay

THI HAN NYEIN

ROLL NO – 68
EMBF - 5th BATCH

December 2019
 COMPETITIVE STRATEGIES OF KBZPay

A thesis submitted as a partial fulfillment towards the requirements for

the degree of Master of Banking and Finance (MBF)

Supervised by Submitted by

Daw Khin Nwe Ohn Mg Thi Han Nyein

Associate Professor Roll No – 68
Department of Commerce (EMBF- 5th Batch)
Yangon University of Economics

December 2019
 ABSTRACT

This study is to analyze competitive strategies of KBZPay in KBZ Bank. It

explored the products that are provided by KBZ Bank and analyzed the competitive
strategies towards KBZPay, one of the products of KBZ Bank. In this study inclusive
of two major objectives, which are to identify the strategic approaches used by KBZ
Bank and to analyse the relationship between competitive strategies and competitive
advantages of KBZPay. Competitive approaches have been evaluated using the
standardized approach of Michael Porter, which incorporates four factors: cost focus,
differentiation focus, differentiation, and cost leadership. For this analysis, data
collection was focused on 150 middle and high-level management KBZ employees.
Most of the system of descriptive analysis was used, using both primary and
secondary data. For primary data, standardized questionnaires were distributed by
sampling method approach to 180 KBZ employees for their attitude towards
KBZPay's strategic strategies in KBZ Bank, and interviews were conducted with KBZ
Bank's middle and high-level management. With respect to secondary data collection,
such as the KBZ Bank website, the KBZPay website, previous research articles,
textbooks, research online, other publications and websites have been used. The data
collection period was between October and November 2019. As for survey results, the
highest overall mean for focus strategy is achieved in order to achieve KBZ Bank's
competitive advantages. The bank should provide innovation and creativity, customer
orientation, with banking facilities and services with business focus and customer
satisfaction through innovation and creativity.

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 ACKNOWLEDGEMENTS

First of all, I would like to express my sincere gratitude to Prof. Dr. Tin Win,
Rector of the Yangon University of Economics, for his concern and encouragement to
the candidates of the MBF Programme.
My heartfelt thanks go to the Prof. Dr. Nilar Myint Htoo, Pro-Rector, Yangon
University of Economics, for the supports to have an opportunity to study and to the
Prof. Dr. Soe Thu, Programme Director of the MBF Programme, for the
encouragement and guidance throughout the course of my study.
My deep gratitude goes to my supervisor Daw Khin Nwe Ohn, Associate
Prof., Department of Commerce, for her valuable advice, guidance, assistance and
support during the preparation and writing of this thesis.
I would also like to thank specially my respected professors and lecturers who
imparted their time and valuable knowledge during the course of my study at the
Yangon University of Economics, and my friends and all persons who contributed in
various ways to my thesis.
My special deepest thanks go to the Board of Directors, Management and
staffs of KBZ Bank Limited for their kind supports for providing the data and all the
information needed in this study.
Finally, I thank my family and friends for their continuous support and
patience throughout the course of my study.

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 CONTENTS

ABSTRACT i
ACKNOWLEDGEMENTS ii
LIST OF TABLES iv
LIST OF FIGURES v
LIST OF ABBREVIATION vi
CHAPTER 1 INTRODUCTION 1
1.1 Rationale of the Study 2
1.2 Objectives of the Study 3
1.3 Scope and Method of the Study 3
1.4 Organization of the Study 3
CHAPTER 2 THEORETICAL BACKGROUND 4
2.1 Competitive Strategy 4
2.2 Generic Strategy 6
2.3 Previous Study 9
2.4 Conceptual Framework 12
CHAPTER 3 PROFILE OF KBZ BANK 14
3.1 Background of KBZ Bank 14
3.2 Products and Services of KBZ Bank 16
3.3 Background of KBZPay 21
3.4 Strategic Approaches used by KBZ Bank 22
CHAPTER 4 COMPETITIVE STRATEGIES OF KBZPay 24
4.1 Research Design 24
4.2 Demographic Characteristics of Respondents 24
4.3 Analysis of Competitive Strategies of KBZPay 28
4.4 Relationship between Generic Strategy and Competitive
Advantage 32
CHAPTER 5 CONCLUSIONS 33
5.1 Finding 33
5.2 Suggestion 34
5.3 Need for further study 34
References 35
Appendix – Questionnaires 37

iii
 LIST OF TABLES

Table.No Descriptions Page

3.1 Products and Services of KBZ Bank 17
4.1 Gender of Respondents 25
4.2 Age of Respondents 25
4.3 Working Experience of Respondents 26
4.4 Working Position of Respondents 26
4.5 Education Level of Respondents 27
4.6 Working Department of Respondents 28
4.7 Cost Leadership 28
4.8 Differentiation 29
4.9 Focus 30
4.10 Overall Mean of Generic Strategy 30
4.11 Competitive Advantages 31
4.12 Correlation Analysis 32

iv
 LIST OF FIGURES

Figure No. Description Page

2.1 Generic Strategy 7

2.2 Conceptual Framework of Previous Study 11
2.3 Conceptual Framework of the Study 12
3.1 Organization Structure of KBZ Bank 15

v
 LIST OF ABBREVIATIONS

ATM Automatic Teller Machine

CB Corporative Bank Ltd.,
CEO Chief Executive Officer
FI Financial Institutions
Fintech Finance and Technology
FX Foreign Exchange
GDP Gross Domestic Product
ID Identification Document
KBZ Kanbawza Bank Ltd.,
KYC Know Your Customers
MPU Myanmar Payment Union
POS Point-of-Sales
QR Quick Response
SME Small and Medium Enterprise
UPI Union Pay International
VC Value Center

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 CHAPTER 1

INTRODUCTION

For many years, the payments market is a large and profitable retail banking
segment. However, once technology has begun to evolve, they have changed into a
kind of Trojan horse that opens new business opportunities to other competitors;
increases customer stickiness, and weakens banks ' role in being central to the daily
payment choices of their customers. Technology has made innovations possible;
regulatory intervention and shift in consumer preferences are rapidly re-forming the
payments sector. They paved the way for a more open environment in which even
non-bank players see an enormous opportunity to gain momentum and disrupt
traditional financial institutions, including banks. (Deloitte, 2016)

Fintech startups and mobile network providers are challenging, with their
creative ideas, the position of conventional commercial banks. Modern commercial
banks have introduced creative digital payment technologies in order to remain
competitive and maintain their modern position as payment service providers. (Bose
& Denis, 2017)

The introduction of their own mobile wallet is one such concept embraced by
mainstream commercial banks. A mobile wallet is a secure mobile device payment
framework that can take many different forms depending on the mobile wallet issuer,
the account provisioning and access technology deployed, and the purchase locations
or market segments being addressed. (Nacha, 2016)

The competitive aspect is now crucial for the mobile wallet service operators.
There's so much going on in the industry. Cost leadership is a tactic that a company
uses to differentiate itself from other rivals by selling goods at a lower cost than
competitors. Through operational efficiency, it is usually accomplished, conducting
similar activities better and more effectively than its rivals. Operating in large
markets, it is usually beneficial to consumers with price sensitivity. Differentiation, on
the other hand, is also a technique used by a corporation to differentiate itself from the
rivals. In terms of quality, special features or after-sales service, a business should
provide its customers with unique features of superior value. This operates on large

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markets and enables a client to pay a premium price. The focus strategy is on the third
approach. This technique is used by serving customers with special needs but in
limited (selected) markets to place a business against the competitors. It is impossible
to take care of these consumers with special needs in the large markets. The
implementation of each depends on the type of consumers that a business wants to
serve: whether they are price-sensitive or like goods with unique characteristics

1.1 Rationale of the Study

In recent years, a number of factors have had a profound impact on the

financial services industry, including technological innovation, evolving regulatory
framework and consumer expectations, as well as increasing competition. (Omarini,
2018) The financial and regulatory landscape is crying out for mobile payment
solutions following the opening of the telecom sector in 2014 and the implementation
of mobile financial services legislation in 2016 in Myanmar. Mobile infrastructure has
been growing rapidly; almost 100% of the population knows how to use the mobile
phone and the technology behind it. (Acharya, 2019)

The financial and regulatory landscape is crying out for mobile payment
solutions following the opening of the telecom sector in 2014 and the implementation
of mobile financial services legislation in 2016 in Myanmar. Mobile infrastructure has
been growing rapidly; almost 100% of the population knows how to use the mobile
phone and the technology behind it. (Borst & Creehan, 2017)

Financial institutions have seen their market leadership under attack from
newcomers in many of their core businesses in this fast-paced environment. KBZ,
Myanmar's largest bank, launched its own mobile payment system, KBZPay, in order
to remain competitive and not lose customers to non-bank financial institutions.
KBZPay is the mobile wallet platform that makes banking easier and safer for the
customer. Pay, transfer, cash in, cash out and more–all with a couple of phone taps.
(KBZPay, 2018). The study aims to identify key strategic strategies in the mobile
wallet environment for retail banks and to examine that of KBZ, Myanmar's leading
commercial bank in the launch of its mobile wallet, KBZPay. This study may support
KBZ Bank to deep drive the strategic approach and to be able to provide better
services, which in turn would help expanding the profits for the bank itself.

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1.2 Objectives of the Study

In this study, it includes two main objectives:

(1) To identify the strategic approaches used by KBZ Bank, and
(2) To analyse the relationship between competitive advantages and
competitive strategies of KBZPay

1.3 Scope and Method of the Study

There are total of more than 18,000 employees working for KBZ Bank.
However, as this study is to analyze the strategic approach, the scope of the study is
limited to 50% of total management level staffs in KBZ Bank. There is a total
population of around 80 employees and around 220 employees at the top management
and middle management respectively. For the purpose of the study, 50% of the
employees are selected. 40 employees from top management and 110 employees from
middle management (total of 150 employees) are selected.

The study utilizes both primary and secondary data. The primary data was
collected by structural questionnaire surveys. Structural questions were distributed to
selected respondents from middle and senior management employees of KBZ Bank.
The descriptive research method was used for the study. The secondary data was
collected KBZ website, journal articles and existing literature related to mobile
payment and digital financial services.

1.4 Organization of the Study

In this study, there are five chapters. Chapter 1 is the study's introduction. This
contains the research rationale; study goals; methodology and nature of the study's
analysis and organization. Chapter 2 deals with the theoretical context of competitive
strategy, overall strategy and analysis of literature. This chapter has built up a
conceptual framework. Chapter 3 explains the KBZ bank and KBZPay history. It
includes the KBZ Bank's products and services. This chapter is also intended to
identify KBZ Bank's strategic approaches. Chapter 4 is the survey data analysis. It
also analyzes the strategic approaches and competitive advantages of KBZPay.

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 CHAPTER 2

THEORETICAL BACKGROUND

This chapter contains four parts; competitive strategy, generic strategy,

previous study and conceptual framework of the study.

2.1 Competitive Strategy

Competitive strategy is that part of the business strategy which seeks to create
advantage to a business unit over the competitors. Organizations need competitive
strategies to compete successfully; these may be generic or otherwise. The three basic
strategic development models have been criticized: competitive forces, resource-
based and strategic conflict models; implying that there are other models apart from
these, some of them may have been documented and others are still to be documented.
The model selected will determine how the industry and the industry will compete
challenges it will face.

According to Porter (1988), formulating a competitive strategy at the broadest

level involves taking into account four key factors that determine the limits of what a
company can achieve successfully. The strengths and weaknesses of the company are
its profile of competitor-related assets and skills, including financial resources,
technology position, and brand recognition, etc. An organization's personal values are
the desires and needs of key managers and other workers who are required to
implement the strategy chosen. Combined with principles, strengths and weaknesses
define the internal (to the company) boundaries of a company's competitive strategy.
Industry and another wider world decide the external boundaries. Opportunities and
challenges from the market describe the competitive environment with its related risks
and rewards. Societal expectations illustrate the effect of issues like government
policy, social concerns, and many others on the business.

According to Thompson and Strickland (1992), Strategic strategy is the

smaller part of a business plan that describes a company's strategic approach to
market success: its aggressive moves to gain a competitive edge over rival companies
and its defensive moves to maintain its competitive position. This consists of all the

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actions and strategies that a company has taken and is taking to attract buyers,
withstand competitive pressures and strengthen its position on the market. Managers
adapt tactics to suit the nuances of the conditions and market environment of their
own businesses, making it possible to have as many strategic approaches as there are
companies trying to compete. However, according to Michael Porter’s model, the
generic competitive strategies fall into three categories: cost leadership, differentiation
and focus. (Thompson & Strickland, 1992)

Competitive planning is about being different and it means choosing a

different set of activities intentionally to offer a unique mix of values. (Siddiqui,
2015) Rivalry between existing rivals takes the form of jockeying for positions using
strategies such as price competition, promotional wars, product introductions, and
improved customer service or warranties; according to Porter (1998). Price
competition is highly unstable and from the point of view of profitability is likely to
make the entire industry worse off. Price cuts are easily and quickly matched by rivals
and once matched they lower revenues for all firms unless demand elasticity of the
industry price is sufficiently high. For the benefit of all firms, advertising battles can
increase demand or increase the level of product differentiation in the
industry.(Porter, Competitive Strategy: Techniques for Analyzing Industries and
Competitors, 2008)

This includes a number of possible approaches: positioning the company to

provide the best possible protection against the current arsenal of competitive forces;
manipulating the balance of forces through strategic changes thereby improving the
relative position of the company; or predicting and reacting to shifts in the factors
underlying the forces, thereby exploiting change by choosing a strategy appropriate to
the new competitive balance before rivals recognize it.

Therefore, strategic tactics are targeted at having an edge on the market place
over the rivals. Designing a competitive strategy is designing a framework for how an
organization should survive, what its priorities should be, and what policies are
needed to achieve those goals.

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2.2 Generic Strategy

Michael Porter (1998) created a model of common techniques that businesses

can use to achieve competitive advantage in their industries. The idea means that a
company has distinct and mutually incompatible ways of attracting customers and
gaining competitive advantage. Porter states that a company can enjoy a competitive
advantage solely through one of the two basic generic strategies: cost leadership or
differentiation. These two approaches can be combined with the market scope / focus
in which the company tries to achieve competitive advantage. (Porter, Competitive
Strategy Techniques for Analyzing Industries and Competition, 1998)

The three generic strategies imply differing organizational arrangements,

control procedures, and inventive systems. Similar strategies can also require different
leadership styles and can translate into very different corporate cultures and
atmospheres. The resulting solutions lead to four similar strategies depending on
whether the organization is pursuing a competitive position in the industry as a whole
(broad focus) or whether it will concentrate its efforts on just one market segment
(narrow focus). The four strategic options are: Cost Leadership-Broad Focus, Cost
Leadership-Narrow Focus, Differentiation-Broad Focus, and Differentiation-Narrow
Focus.

Competitive advantage arises out of value that a company can generate for its
customers that exceeds the company's cost of creating it. Value is what consumers are
willing to pay, and higher value comes from offering lower rates than rivals for
similar benefits or offering unique benefits that are more than offsetting.

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Figure 2.1 Generic Strategy

Competitive Advantages
Lower Cost Differentiation

Broad
Cost Leadership Differentiation
Competitive Target
Scope
Narrow Cost Focus Differentiation
Target Focus

Source: Michael Porter’s Generic Strategy (1998)

2.2.1 Cost Leadership Strategy

The company hopes to take advantage of economies of scale and experience

curve effects by producing high quantities of standardized goods. The product is often
a simple no frills product that is manufactured at relatively low cost and made
available to a very large customer base. The related marketing strategy is to achieve
the widest possible distribution. The sales approach also entails attempting to make a
virtue out of the advantages of the low cost product.

The business unit establishes a position in cost leadership strategy that has a
significant cost advantage over all its competitors in the industry. Cost leadership
requires ' aggressive construction of efficient scale facilities; vigorous pursuit of cost
reductions from experience, tight cost and overhead control, avoidance of marginal
customer accounts and cost minimization in areas such as research and development,
service, sales force, advertising, etc...”. (Porter, Competitive Strategy Techniques for
Analyzing Industries and Competition, 1998) . Typically, low-cost producers market a
regular or "no frills" commodity and put significant focus on reaping scale or absolute
cost benefits from all sources.

Risks of cost leadership include the following according to Hitt et al (1997):

the low-cost leaders could become obsolete because of competitors’ technological
innovation; Due to excessive focus on cost leadership companies, shifts in customer
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needs or attempts by rivals to distinguish may not be noticed; and finally, there is a
risk of imitation by competitors. Another risk, according to Porter (1998), is that cost
inflation may diminish the ability of the company to maintain sufficient price
differentials to offset the brand images of competitors. (Porter, Competitive Strategy
Techniques for Analyzing Industries and Competition, 1998)

2.2.2 Differentiation Strategy

Differentiation is aimed at the broad market, involving the creation of a

product or services perceived as unique throughout its industry. The company or
business unit may then charge a premium for its product. This specialty may be
associated with design, brand image, technology, features, dealers, network or
customer service.. Differentiation is a viable strategy for generating above-average
returns in a particular business because the resulting brand loyalty decreases the price
sensitivity of consumers .Increased costs can usually be passed on to the buyers.
Buyers ' loyalty can also act as an entry obstacle. New companies must establish their
own distinctive expertise in order to distinguish their goods in some way to compete
effectively Differentiation Strategy also has two alternatives: Wide and Narrow
Focus. Differentiation Broad Focus seeks uniqueness and premium price in the
industry's overall market, while Differentiation-Narrow Focus seeks uniqueness and
premium price only in one market segment. (Ogolla, 2005)

According to Hitt et al (1997), differentiation risks include the following: a

business can provide differentiated features that surpass customer needs; where
differentiation no longer provides value that consumers are willing to pay; imitation
by rivals; and finally, learning can limit customer expectations of the value of
differentiated goods. (Hitt, Hoskisson, & Ireland, 1997) .Another danger posed by
Porter (1998) is that the cost differential between the low-cost rival and the
differentiated company becomes too high for differentiation to maintain brand loyalty;
consumers will thus sacrifice some of the features, services or photos that the
differentiated company possesses to save large costs (Porter, Competitive Strategy
Techniques for Analyzing Industries and Competition, 1998)

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2.2.3 Focus Strategy

The business focuses on a select few target markets in this approach. It is also
called a concentration strategy or niche strategy. It is hoped that by focusing your
marketing efforts on one or two narrow market segments and tailoring your marketing
mix to these specialized markets, you will be able to meet the company better. Most
of Porter's Generic Competitive Strategies are ideal for relatively small companies,
but they can be used by any company.. It can be used as a concentration technique to
pick goals that are less vulnerable to alternatives or where a market is lowest in order
to earn an above-average return on investment.(a) In cost emphasis, a company seeks
a cost advantage in its target segment (b) Differentiation focus a company seeks to
differentiate in its target segment. (Tanwar, 2013)

Focus strategy means a company is centered on a single customer category,

product line segment or regional market. The focus strategy can be based on a wide or
narrow market scope, where broadly refers to the overall market and narrowly refers
only to one market segment. (Ogolla, 2005)

Competitive risks of focus strategies are the same as for cost leadership plus
the following according to Hitt et al (1997): Competitors may “out focus” the focuser
by focusing on a narrower segment; competitor may pursue the same market and the
needs for customers being focused may become similar to those in the market at large.
(Hitt, Hoskisson, & Ireland, 1997) According to Thompson and Strickland (1992), the
focus risks are many and include the following: the opportunity for competitors to
find ways to match the focused company in serving the narrow target market; the
potential of the niche buyer's preferences and the need to shift to the product attribute
desired by the market as a whole; such erosion opens the way for competitors with a
broad market appeal and the possibility that the segment will become so attractive that
it will be flooded with competitors that profits will be split.. (Thompson & Strickland,
1992)

2.3 Previous Study

Gathoga (2001) researched strategic approaches used by commercial banks in

Kenya, and Gakumo (2006) examined the use by commercial banks in Kenya of

9
Porter's generic strategies. Studies show that strategic approaches implemented by
companies vary depending on the dominant environmental factors in different
industries. The study on competitive strategies adopted by commercial banks
(Gathoga, 2001) looked at commercial banks in Kenya in general. Its findings may
not apply to multinational banks, which in a way are unique. No study was found that
specifically focused on competitive strategies adopted by multinational banks in
Kenya. (Gathoga, 2001)

Njuguna (2009) argued that companies should invest in developing the

potential for ongoing organizational learning in order to remain competitive. He has
developed three strategies that can be used to acquire knowledge to implement
training and development projects, establish a strategic alliance, and appoint more
experienced workers to lead less experienced workers He argued that in order to be
successful, new ideas and approaches on working methods should be experimented on
an ongoing basis and a consolidated and resourceful research and development policy
developed to gain valuable knowledge internally. Furthermore, a company can borrow
ideas from outside professionals and experts and also encourage their employees to
join formal or informal networks of people from outside their organizations. He cited
the non- disponible of empirical data as one of the limitations. (Njuguna, 2009)

Filho, Wanderley, Gomez and Francisca (2010) research on how social

responsibility approaches can establish competitive advantages showed that
competitive advantages resulting from social responsibility can be accomplished by
directly influencing its finances, enhancing credibility and identity, retaining
exceptional people, empowering workers, adding value, better economic performance
provided by social responsibility aligned with corporate strategy, innovative and
efficient projects, better environmental performance, better social performance and
improvement in corporate governance.

Diugwu (2010) works on how collaboration and networking can achieve a

competitive advantage, demonstrating that an enterprise can improve its profitability
by participating in innovation activities, concentrating on specific goods or markets
and implementing network strategy. He cited remaining the most important platform
for improving organizational efficiency by adding value to the activities of an
organization and enhancing productivity by sharing information, skills and resources
effectively. Nevertheless, the ability to create an atmosphere conducive to learning
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and adjusting skills and knowledge faster than one rival to match the prevailing
circumstances could be the only source of sustainable competitive advantage..
(Diugwu, 2011)
In his study to examine the direct effects of implementing business strategy in
Ghana, Acquaah (2011) emphasized that social networking relationships with various
external stakeholders moderate the benefits of cost leadership and differentiation.
Therefore, the social networking relationship built by family business can be both
beneficial and detrimental to business strategy execution. Nevertheless, he cited as
some of the drawbacks the use of subjective measures and the scope of the analysis
(limited to small developing economies). (Acquaah, 2011)
In his research, Mary Wayua Kilonzo (2014) explored the relationship
between standardized approaches and competitive advantages between tourism
industry organizations in Kenya. He found out that the three generic and strategic
advantages were positively correlated. Nonetheless, he cited as some of the
drawbacks the use of subjective measures and the studies reach (limited to small
developing economies). (Kilonzo, 2014)

Figure (2.2) Conceptual Framework of Previous Study

Cost Leadership Strategy

Economies of scale, Tight cost control, Detailed
cost control reports, Policy technology process
choices, Integration, Incentives based on
performance, Less cost distribution systems,
Switching costs, Interrelationship, Linkages Competitive
Advantage
Differentiation Strategy
Tight conformance to specifications, Wide Superior profits,
range of products, Unique product features,
increased market
Unique distribution channels, Wide service
coverage, Exceptional services, Creative flare, share
Buyer training, Switching costs, strong
marketing abilities, Linkages.

Focus Strategy
Loyalty programs, Tailor-made products,
specific buyers, Unique/cost effective
distribution channels, Niche Markets
Dependent Variable
Independent Variables

Source: (Kilonzo, 2014)

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 According to Kilonzo, cost leadership, differentiation and focus strategy are
independent variables and competitive advantage is dependent variable.

Working on strategies adopted by multinational corporations to compete in

Kenya, Ogutu and Samuel (2011) indicate that these multinational corporations have
adopted a number of strategies in Kenya, including improved quality, excellent
customer service, innovation, differentiation, diversification, cost reduction initiatives,
strategic alliances, joint ventures, mergers / acquisitions, lower prices, fair
environment challenges. He cited lack of skilled labor and irregular electricity supply
as some of the limitations as most of these firms are located outside the central
business areas. (Ogutu & Samuel, 2011)

2.4 Conceptual Framework

Conceptual framework for this study was built on the basis of generic
strategies from Porter. The company utilizes the standardized system approaches of
Porter directly or indirectly with the goal of achieving competitive advantage through
cost leadership, differentiation or focus. As shown in Figure 2.3, the study proposes
the conceptual framework.

Figure (2.3) Conceptual Framework of the Study

Cost Leadership Strategy
Tight cost control
Incentives based on performance
Detailed cost control reports
Competitive
Economies of scale
Differentiation Strategy
Advantage
Tight conformance to specifications
Wide range of products
Superior profit,
Unique product features
Increased market
Quality products
Focus Strategy share
Loyalty programs
Tailor-made products, specific buyers
Niche Markets
Independent Variables Dependent Variable
Source: Adopted from Kilonzo (2014)
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 This framework intended address the relationship between Porter’s Generic
Strategy and Competitive Advantages of KBZPay. Dependent Variable is the
competitive advantage but Cost Leadership, Differentiation and focus are the
Independent variables of this study.

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 CHAPTER 3

PROFILE OF KBZ BANK

This chapter explores the background of KBZ Bank, KBZPay together with
products and services that provided by the bank and involves strategic approaches
used by KBZ Bank.

3.1 Background of KBZ Bank

Kanbawza Bank (KBZ Bank) was established in Taunggyi, in the southern

part of Shan State, on 1 July 1994. Initially, the bank catered to the local population in
Taunggyi. In November 1999, our present management obtained the company from
previous owners who were professors and supervise its growth into one of the biggest
private commercial banks in Myanmar. With over 500 branches and 1200 ATM
network, KBZ Bank is now Myanmar's largest private bank. Headquartered in
Yangon, Myanmar, and KBZ Bank has a total of 18,000 employees. KBZ Bank's
dream is to create the world's best-managed bank. Apparently that is what Myanmar
wants and demands. The mission is to rise through banking the quality of life. KBZ
Bank's core values are to be guided by a belief and a culture that runs all over the
organization: being good to people and doing the right thing. That's why three
principles–Metta, Thet Ti, Virya–motivate them to love goodness, perseverance, and
bravery. The slogan of KBZ Bank is "STRENGTH OF MYANMAR." (KBZ Bank,
2018)

KBZ Bank currently accounts for about 40% of the country's retail and
commercial banking market share and has a growing international presence – the first
Myanmar bank to open offices in neighboring markets. The bank is leading the way
for the rapidly developing financial services industry in Myanmar, particularly in
digital and technology, through an approach that understands opportunities for
innovation, the needs of Myanmar's citizens, and the specific background of the
country's economy. (KBZ Bank, 2018)

KBZ Bank sees exciting opportunities to work with international investors as

Myanmar's economy grows and opens up, offering an important and vital link to the
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 fast-growing cities, entrepreneurs and local communities of Myanmar. This will bring
us closer to achieving 100% financial inclusion in Myanmar in order to improve the
quality of life by banking. (KBZ Bank, 2018)

Figure (3.1) Organization Structure of KBZ Bank

Chairman Emeritus
Advisory (Patron)
Panel
Board of
Directors

PMO CEO
Offices

Deputy CEO Deputy CEO Deputy CEO

Value Centers Functions Value Centers Functions Value Centers Functions

-Corporate/FI -Sales -Virtual -Legal & -Secured -Finance
Loans Branch Compliance Consumer
-Human -Risk
-Deposits/ Resources -Trade Finance -Audit -Treasury
Wealth -Credit
-Shared -Payroll -Technology -Cash
-SME/Agent Services
Banking -Transactional -Marketing -Special Assets
Banking
-Unsecured -Corporate -Smart
Consumer -Smart Affairs Branches
Branches (Emerging 600)

Source: (Khaing, 2018)

KBZ Bank has many divisions and branches. Each department has department
head and branch manager for each branch. The board of directors and senior
management teams are formed by KBZ Bank Limited. U Aung Ko Win is announced
as Chairman Emeritus, according to the new organizational structure. U Mya Than is
new Chairman of KBZ Bank Ltd in senior management structure. There are two vice
presidents in the board of directors of KBZ Bank, one independent director, one non-
executive director and one executive director. As of April 1, 2018, the current board

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of directors assumed its positions and organizational responsibilities. (KBZ Bank,
2018)

Under the organizational structure of KBZ Bank, there are 17 value centers
and 11 functions. Other value centers and functions are KBZ Bank departments, with
the exception of Smart Branches (Kamayut), Smart Branches (Emerging 600) and
Smart Branches (Big 28). These include Corporate / FI Loans, Deposits / Wealth,
SME / Agent Banking, Unsecured Consumer Smart Branches (Kamayut),
Commercial Property development, Virtual Branch, Trade Finance, Payroll,
Transactional Banking, Smart Branches (Big 28), Secured Consumer, Treasury, Cash,
Special Assets, Smart Branches (Emerging 600) and Domestic Remittance. In
addition, there are 11 functions including Accounting, Risk, Credit, Legal &
Regulation, Audit, Technology, Marketing, Corporate Affairs, Sales, Human
Resources, and Shared Services. Three Deputy CEOs are responsible for managing
their respective VCs and functions. (KBZ Bank, 2018)

3.2 Products and Services of KBZ Bank

KBZ Bank has different kinds of financial and banking products and services
as the biggest and most branches bank in Myanmar. It offers savings deposit accounts,
escrow accounts, foreign currency accounts, fixed accounts, current accounts, savings
accounts for teenagers, and accounts for call deposits. The lending lines of the firm
include recruiting loans for account holders, SME business owners, and organizations;
loans and overdrafts; personal finance; and credit and debit cards It also provides gift
cards, currency exchange, safe deposit lockers, online banking, and e-commerce
services; cash management services including payroll, billing, and collection services;
remittance services; bank certificates; payment orders; and procurement services. The
financial services of KBZ Bank are designed to achieve the bank's customers '
comfort and satisfaction. The bank delivers the greater number of financial services
year after year. The KBZ bank offers the full range of retail and commercial banking
services including deposits, lending, cash management, bank guarantees and
remittance. The KBZ bank's financial products and services are shown in Table 3.1.

16
Table 3.1 Products and Services of KBZ Bank
No Financial Services Categories
Saving Accounts, Current Accounts, Fixed
1. Demand Deposits
Deposits
2. Loans and Advances Overdrafts, Demand Loans, Hire Purchase
3. Remittances Local Telegraphic Transfers, Payment Order
Receivables Management, Cash payables
4. Cash Management
Management
Automatic Teller Machine (ATM), KBZ Mobile
5. e-Banking Services Banking
KBZ Online Banking
Prestige Banking, Personal Banking, Confidential
6. KBZ Prestige Banking
Banking
7. KBZPay Mobile Money
8. Other Services Safe Deposit Boxes, Bank Guarantee
MPU Debit Card, VISA Prepaid Card, Master
9. Cards Payment Services
Prepaid Card
KBZ UPI Credit Card, KBZ VISA Credit Card
Source: (Khaing, 2018)

International Banking Services: KBZ Bank offers seven international financial

services, including Remittance Services, Payment Services, Foreign Exchange, Import
and Financing Services, Export and Financing Services, Bank Guarantee, and Foreign
Currency Account Opening.
(a) Remittance Facilities: two types of remittance services are available. These are
Telegraphic Transfer of KBZ SWIFT and International Money Transfer Facility.
(b) Foreign Exchange: Foreign Exchange services are two types. They are a facility
for foreign exchange and foreign exchange lines.
Foreign Exchange Services
FX Spot: Customers of KBZ bank may use the foreign exchange service to buy or
sell selected foreign currencies at competitive exchange rates for immediate or spot
delivery.

17
FX Forward: KBZ bank also provides FX Forward for future-oriented customers
who need foreign currency. Customers can hedge their FX risk by using this product
with the premium paid in the Forward Contract.

FX Option: KBZ bank also provides FX Option for customers using international
banking services as for another method. It product is exposed to high risk and is
therefore sold in international banking services to chosen, educated and experienced
customers.

FX Swap: KBZ bank allows FX Swap to satisfy its criteria for the export / import
customer who wanted to hedge their difference time of receipt and payment.

Foreign Exchange Lines: KBZ bank offers forward and swaps buying and selling
foreign currencies in order to lock in profit margins for customers and minimize
fluctuations in the exchange rate. Trading in arbitrage will also be part of the treasury
operations of the Bank.

(C) Import and Financing Services: KBZ Bank's Letter of Credit (LC) is a fast and
efficient service used to facilitate the purchaser / importer's international trade
settlement for the importation of goods to Myanmar. An LC is issued in favor of the
seller / exporter by the issuing bank on behalf of the buyer / importer. At a buyer's
request, the LC is an undertaking to honor the seller's claims by the issuing bank,
provided that the required documents are submitted to the issuing bank within a
specified time and in accordance with the LC's terms and conditions.
Collection Import Bill: KBZ bank has a mutual relationship with reputable
international banks throughout the world and can therefore offer valuable services to
importers who can import from any part of the world. The import bills are issued at
very competitive rates by KBZ Bank. The import bills imposed on customers from
other branches are also collected by some branches.
Financing of Import L / C facility: Import LC is a letter of credit which is payable at
a specified future date after presentation of conforming documents. The L / C facility
of KBZ bank provides an opportunity for the importer to take advantage of credit
from the bank of their manufacturer / supplier.

18
Deferred Payment Guarantee / Standby LC: The Deferred Payment Guarantee /
Standby LC facility of KBZ Bank often provides an opportunity for the importer to
take advantage of credit from the bank of their supplier / supplier.
Shipping Guarantee: Shipping Guarantee: Shipping Guarantees are guarantees
provided by the Bank to the goods carrier so that the goods can be shipped to the
consignee without generating the Bill. It allows the importer to escape demurrage
charges that will otherwise be levied if the items are not shipped due to the lack of
shipping papers.
(d) Export Services and Financing: There are three types of facilities for exporters.
They are as per following:
Export Credit: KBZ bank gives both pre and post shipment credit to the exporters
through Kyat Denominated Loans as well as foreign currency loans in Myanmar.
Credit provisions are punished to exporters who convince credit exposure norms of
KBZ bank. Exporters who have firm export orders or confirmed L / C from a bank
can catch benefit of export credit facilities. Kyat Export Credit is obtainable generally
for a period of 180 days from the date of first expense. In deserving cases extension
may be allowed within the guidelines of Kyat. The corporate may also book forward
contracts with KBZ bank in respect of future export credit drawls, if required, as per
the guidelines/instructions provided by Kyat.
Pre-shipment Credit in Foreign Currency (PCFC): KBZ bank extends PCFC in
the foreign currency to the exporters permitting them to fund their procurement,
inventing, processing and wadding requirements. Such loans are available at very
competitive international interest rates that cover both domestic and export material.
The corporate/exporters with a good follow record can help a running account facility
with KBZ bank for PCFC. PCFC is generally available for a period of 180 days from
the first payment date. In earning cases extension may be allowed within the
guidelines of Kyat.
Negotiation of Bills under L/C: KBZ bank is operative in arrangement/reduction of
sight international export bills under L/Cs available by foreign banks as well as
branches of banks abroad. KBZ bank provides the most competitive rates. These
transactions are undertaken by KBZ branches within the Bank/Country Exposure
ceilings advised by KBZ bank.

19
(e) Bank Guarantees: KBZ bank, on behalf of exporter constituents, supplies
guarantee in favor of beneficiaries abroad. The guarantees may be Performance and
Financial. For Indian exporters, guarantees are issued in compliance to RBI
guidelines.
KBZ bank, on behalf of importer constituents or other customers, issues guarantee in
favor of beneficiaries abroad. The guarantees may be both Performance and Financial.
(f) Foreign Currency Account: KBZ bank’s Foreign Currency Account is a non-
interest-bearing current account and is planned for customers who want to minimize
foreign exchange risk while maximizing payment effectiveness in foreign currency,
.Benefits of using foreign currency account are safekeeping of foreign currencies,
investment in foreign currencies, confining against adverse foreign exchange
fluctuations; KBZ Foreign Currency Account carries out as a settlement account for
foreign exchange purchase and sale; cheques can be allowed for convenient payment
between customers of KBZ bank; KBZ Foreign Currency Account enables customers
to facilitate SWIFT remittances and Letter of Credit transactions.
Benefits of using foreign currency account are safekeeping of foreign currencies,
investment in foreign currencies, hedging against adverse foreign exchange
fluctuations; KBZ Foreign Currency Account serves as a settlement account for
foreign exchange purchase and sale; cheques can be used for convenient payment
between customers of KBZ bank; KBZ Foreign Currency Account enables customers
to facilitate SWIFT remittances and Letter of Credit transactions.
(g) Domestic Currency (Kyat) Account: As deposit products in local currency, it
provides many types of accounts such as call deposit accounts, children’s minor
saving accounts, current account, fixed deposit account, saving deposit account. All
deposit accounts have particular terms and conditions and the difference of interest
rate per annum as per their account types. Savings deposit accounts are desirable for
both individuals and the interest rate are 8%. To open account, it is required initial
deposit of 1,000 MMK and minimum balance 1,000 is required to keep accounts
active. There is no charge of account maintenance fees at KBZ bank. All the accounts
can be controlled by the customers on their mobile and online banking service. (KBZ
Bank, 2018)

20
3.3 Background of KBZPay

KBZPay is a mobile wallet that connects people to a digital economy

previously inaccessible to many. Introduced in October 2018 in line with KBZ Bank's
goal of 100% financial inclusion in support of Myanmar's growth goals and needs,
KBZPay takes financial services beyond the bank's physical branches and into the
hands of its customers. The number of adults with access to at least one formal
financial service and product – Making Access Possible, 2019, has increased
significantly in Myanmar. With low financial literacy, 90% of Myanmar is unbanked.
Cash has considered a convenient and usual lifestyle. Digital payments and poor
digital literacy have low confidence. Increased financial inclusion in emerging
economies could raise national GDP from 9% to 32% anywhere. KBZ Bank
recognizes the enormous opportunity to change many people's lives in Myanmar and
is embarking on a path towards 100% financial inclusion. But to succeed this takes
everyone's collective power.

We launched KBZPay in October 2018, a mobile wallet that makes it more

convenient and safe to purchase everyday products and manage funds. With just a
smartphone, the app allows consumers to conduct daily transactions that were only
offered in a physical branch until this stage, such as sending and receiving money
from friends and family and paying for bills. (KBZPay)

Millions of customers are now enjoying a new banking experience, using

KBZPay to manage their money, pay for goods and services, store cash, hand over to
loved ones and perform daily financial tasks that were once labor intensive and time
consuming. With the help of KBZ Bank's 18,000 staff, KBZPay is now Myanmar's
leading mobile wallet, linking customers with thousands of merchants and agents
across the country on a daily basis.

After KBZPay was introduced, it has extended its features from linking
friends, family and communities via peer-to-peer transactions to connecting them to
the digital economy now. KBZ Bank has launched QR code payments to more than
230,000 retailers, in-app purchases of airtime top-ups, bus tickets and mobile gaming
tokens, and cardless withdrawals from the agent, dealer and ATM network.

21
 With KBZPay, it is no longer necessary for people to carry huge amounts of
cash and drive hours to their nearest stores in order to buy important everyday..
KBZPay has already expanded to more than 3.5 million users in just its first year of
operation, onboard with full e-KYC, with transactions up to $1.8 billion in value.

3.4 Strategic Approaches used by KBZ Bank

KBZ Bank's mission is to improve quality of life through banking. KBZ Bank
placed consumers at the core of change and at the heart of it. Therefore, KBZ Bank
makes faster and more efficient individual and branch decisions and provides better
and more timely customer service. Banking should be accessible and affordable to
all, from extending branch hours to improving financial literacy, to introducing
innovative and digital services that are accessible on mobile. KBZ Bank is motivated
by a conviction and a philosophy that runs all over its organization: being good to
people and doing the right thing. It sounds simple, but for a bank it's uncommon and
innovative.

KBZ bank has three principles–Metta, Thet Ti, Virya–compassion,

perseverance and bravery. Such values are deeply embedded in our actions and
dedication. KBZ Bank claims that it can have a profound impact on cultures and
people's lives through loving kindness, perseverance and courage.. Growth must be
sustainable and fair, and at the right speed for the country and its people. For this
reason, KBZ Bank is contributing to nation-building, working tirelessly to strengthen
communities and institutions, and being here for the long term.

Therefore, KBZ bank is in a strong position to lead this transition and help to
raise the living standards for everyone. KBZ Bank's vision is to reach 100% financial
inclusion in Myanmar. While KBZ Bank is going to lead the way, the combined
power of everyone is required to succeed.

Digital tools help streamline day-to-day activities involving money in a

straightforward and streamlined manner.. It removes the complexity of interacting
with traditional financial services, particularly the costs of using paper-based systems
and cash. It encourages more people to manage their money within the formal

22
financial system and to connect better with each other and companies across the
world.

KBZ Bank's goal is to reach 30 million KBZPay customers by 2028 or half the
population of Myanmar, linking families, friends and communities to a new, mobile-
first financial ecosystem that supports their digital lifestyles.

KBZPay's future plans include: partnership with more travel and ticket
booking platforms; promoting online business e-commerce purchases; partnering with
educational and e-learning platforms; offering future-ready workplace payroll
services; creating a creative payment platform for start-ups on a scale-up basis; every

step of the way is embedded in building a future-proof financial infrastructure with

KYC and security; and providing financial and digital literacy for people.

KBZ Bank is driving secure financial connectivity in the country through

KBZPay, equipping the nation with world-class skills, resources, and experience to
help Myanmar leap into a mobile-first economy. KBZ Bank informs customers and
the wider community about the safe use of these services through programs and
content. It includes conducting a series of workshops on financial literacy across the
country at more than 30 universities. This gives our country's future leaders more trust
and a better understanding of digital environments. This gives them more knowledge
and skills and the ability to understand how it influences their actions and
opportunities in this digital economy. (Sendingan & Gagua, 2019).

23
 CHAPTER 4

COMPETITIVE STRATEGIES OF KBZPay

This chapter discussed research method of the data analysis and discussion of
the relationship between generic strategies and competitive advantages of KBZPay.

4.1 Research Design

A primary survey data was circulated to middle and senior management of the
KBZ Bank, targeting 180 of bank employees, who are currently working at KBZ
Bank. Out of 180 targeted KBZ Bank employees, total 150 employees were
respondent survey accordingly. Primary data was collected through the use of
questionnaires to help gather large data in a large population in a short period.

Questionnaires were divided into two sections. Section A describes

demographic profiles of respondents. Section B focuses on the examination of
competitive strategies of KBZPay.

After collecting the primary data, the completed questionnaires were first
checked for completeness, reliability and validity. Editing, coding and tabulation of
the data according to the research questions were then done. The data was gathered
using five point likert scale ranging from (1) “strongly disagree” to (5) “strongly
agree”. Descriptive statistical tools known as Statistical Package for the Social
Scientist (SPSS) was used to analyze the data in tables.

4.2 Demographic Characteristics of Respondents

This section analyzes the gender, age, working experience, working position,
education and department status of the respondents.

4.2.1 Gender of Respondents

The first analysis of the demographic profile of respondents is the analysis on

the gender of the respondents. Table (4.1) states the result from the analysis of the
respondent’s gender background which is show in percentage of total 150.
24
Table (4.1) Gender of Respondents
Gender No. of Respondents Percent
Female 90 60
Male 60 40
Grand Total 150 100
Source: Survey Data, 2019
From the result of the survey, it was found that survey included 60 number of
males and 90 number of females. The gender of the respondents in percentage is 40 %
of males and 60% of females.

4.2.2 Age of Respondents

Respondents were also requested to answer their age level. Table (4.2) states
the result from the analysis of their age level.

Table (4.2) Age of Respondents

Age No. of Respondents Percent
Below 25 years 81 54
25-35 years 57 38
35-45 years 12 8
Grand Total 150 100
Source: Survey Data, 2019

The above table (4.2) shows that the largest age group is below 25 years of age
with 54% of the total respondents. Second major age group is 25-35 years old with
38% of total respondents. Only 8% of respondents are from 35-45 years and there was
no respondent for age 45-55 years and age above 55 years. It can be seen that most of
the major age groups are below 25 years old.

4.2.3 Working Experience of Respondents

Respondents are further requested to answer on the working experience that

they have been worked at KBZ Bank. Table (4.3) indicates the analysis of the
working experience of respondents with KBZ Bank.

25
Table (4.3) Working Experience of Respondents

Working No. of Respondents Percent

Experience
Below 1 year 81 54
1-3 years 20 13
3-5 years 5 3
5-10 years 32 21
10 years and above 12 8
Grand Total 150 100
Source: Survey Data, 2019
Table (4.3) shows that 54% of the respondents working with KBZ Bank from
below 1-year duration. 21% of respondents have been working with KBZ Bank from
5-10 years while 13% of respondents have been working at KBZ Bank from 1-3
years. Furthermore, 8% of respondents have been working with KBZ Bank for 10
years and above while 3% of respondents have been working at KBZ Bank from 3-5
years.

4.2.4 Working Position of Respondents

Respondents were also requested to provide their working position status and Table
(4.4) states the result of that analysis.

Table (4.4) Working Position of Respondents

Working Position No. of Respondents Percent

Assistant Manager to Manager 80 53
Senior Manager to General Manager 30 20
Senior Management 40 27
Grand Total 150 100
Source: Survey Data, 2019
The above table (4.4) indicates that 53% of respondents are Assistant Manager
to Manager Position which is the largest segment of the respond out of 150
respondents. The second 27% largest group of respondents is Senior Management

26
position. Only 20% of the respondents are Senior Manager to General Manager
Position.

4.2.5 Education Level of Respondents

Respondents were also requested to answer their education level. Table (4.5)
states the result from the analysis of their education level. There are three education
level categories in the sample: Graduated, Master Degree and Master Degree and
above.

Table (4.5) Education Level of Respondents

Education Level No. of Respondents Percent
Graduated 101 67
Master Degree 24 16
Ph.D. and above 25 17
Grand Total 150 100
Source: Survey Data, 2019

According to the table (4.5), the largest segment 67% of respondents have been
graduated from university, follows by Ph.D. and above of 17%, while Master Degree
are 16% of the respondents.

4.2.6 Working Department of Respondents

Respondents were also requested to provide their working department status and
Table (4.6) states the result of that analysis.

27
Table (4.6) Working Department of Respondents

Working Department No. of Percent

Respondents
Back-end Support Function (e.g. Finance, Risk, IT, etc.) 16 11
Branches 14 9
Digital Products Related Department (e.g. KBZPay,
Mobile Banking, Cards, etc.) 117 78
Non-Digital Products Related Department (e.g. Loan,
Deposit, Remittance, etc.) 3 2
Grand Total 150 100
Source: Survey Data, 2019
The above table (4.6) indicates that 78% of respondents are from Digital
Products Related Department which is the largest segment of the respond out of 150
respondents. The second 11% and third 9% largest group of respondents are Back-end
Support Function and Branches respectively. Only 2% of the respondents are Non-
Digital Products Related Department.

4.3 Analysis of Competitive Strategies of KBZPay

In this part, there is the analysis using of 5 points Likert scale measurement on
the cost leadership towards KBZPay in table (4.7).

Table (4.7) Cost Leadership

Cost Leadership Mean Std
Deviation
I feel that KBZ Bank has tight cost control systems in place 2.69 0.56
I feel that KBZ Bank gives incentives to staff based on strict
quantitative targets. 2.63 0.62
KBZ Bank has cost supervision all through the entire process 2.60 0.58
KBZ Bank has budget reviews on quarterly basis. 2.60 0.58
Overall Mean 2.63 0.85
Source: Survey Data, 2019
In table (4.7), the analysis shows that KBZ Bank has tight cost control systems in
place with the highest mean score of 2.69 and standard deviation is 0.56. The lowest
28
mean score of 2.60 and standard deviation is 0.58 shows that KBZ Bank has close
supervision all through the entire process and KBZ Bank has budget reviews on
quarterly basis.

Table (4.8) Differentiation

Differentiation Mean Std
Deviation
In KBZ Bank, there is strong coordination among functions
especially in the Research & Development, Product
Development and Marketing departments. 2.85 0.44
Creativity and innovation are the order of the day in product re-
designing and development. 2.92 0.28
KBZ Bank has a strong research team who guides the company
in producing superior products. 2.84 0.44
KBZ Bank has a wide range of superior products. 2.99 0.09
KBZ Bank is well known for producing quality products 2.97 0.16
KBZ Bank benchmarks with leading bank in banking industry
every year. 2.95 0.33
KBZ Bank has a creative and innovative training program for
staff development. 2.87 0.41
Overall Mean 2.91 0.23
Source: Survey Data, 2019

In table (4.8), the analysis shows that KBZ Bank has a wide range of superior product
with the highest mean score of 2.99 and standard deviation is 0.09. The second
highest mean score of 2.97 and standard deviation of 0.16 is that KBZ Bank is well
known for producing quality products. The lowest mean score of 2.84 and standard
deviation 0.44 shows that KBZ Bank has a strong research team who guides the
company in producing superior products.

29
Table (4.9) Focus
Focus Std
Mean Deviation
KBZ Bank alters specific products to meet specific customer
needs. 3.67 1.05
KBZ Bank has niche markets for its products. 3.69 0.94
KBZ Bank has loyalty programs for frequent customers. 3.74 0.94
Our customers identify themselves very much with KBZ
brand. 3.83 0.86
KBZ Bank has well established distribution network. 3.98 0.82
Service quality of KBZ Bank exceeds that of competitors. 3.91 0.93
Overall Mean 3.80 0.81
Source: Survey Data, 2019

Based on the analysis from table (4.9), the analysis shows that KBZ Bank has well
established distribution network with the highest mean score of 3.98 and standard
deviation is 0.82. The second highest mean score of 3.91 and standard deviation of
0.93 is that our service quality exceeds that of our competitors. The lowest mean score
of 3.67 and standard deviation 1.05 shows that KBZ Bank alters specific products to
meet specific customer needs.

Table (4.10) Overall Mean of Generic Strategy

Overall Mean Std Deviation
Cost Leadership 2.63 0.85
Differentiation 2.91 0.23
Focus 3.80 0.81
Source: Survey Data, 2019

Table (4.10) indicates the analysis on the overall mean of the survey result.
The overall mean score for cost leadership is 2.63 and the standard deviation is 0.85.
The overall mean score for differentiation is 2.91 and the standard deviation is 0.23.
The overall mean score for focus is 3.80 and the standard deviation is 0.81, which is
greater than the standard mean score of 3. It can be seen that many of the employees
have preferred to the focus strategy to get KBZ bank competitive advantages.

30
Table (4.11) Competitive Advantages
Competitive advantage Mean Std
Deviation
I think KBZ Bank to produce products at lower cost relative
to our competitors and sell them at either at lower or market
price 3.63 1.10
I think KBZ Bank to produce unique products and sell them at
premium price. 3.78 0.92
Customers identify well with KBZ brand and able to charge
them a premium price per item. 3.83 0.92
Demand for KBZ products is escalating and able to extend
markets geographically. 3.72 0.85
KBZ produces products for specific customers and able to sell
them at premium price. 3.75 0.90
KBZ produces products for specific markets and able to sell
them at market or lower price. 3.81 0.97
Overall Mean 3.75 0.83
Source: Survey Data, 2019

As regards with table (4.11), competitive advantage has overall mean value of
3.75 which can be interpreted that it is more than average value of 3.0. It is agreed
that KBZ bank is reputable with the brand image and able to charge a premium price
for the products. It has got the mean value of 3.83 with the standard deviation of 0.92.
Also, KBZ has a specific market and able to sell at market with lower price, with the
mean value of 3.81 and standard deviation of 0.97. The fairly mean value of 3.75 and
standard deviation of 0.90 states that KBZ Bank produces products for specific
customers and able to sell at premium price. The least mean value of 3.63 and
standard deviation of 1.10 show that KBZ Bank to produce products at lower cost
relative to our competitors and sell them at either at lower or market price.

31
4.4 Relationship between Generic Strategy and Competitive Advantage

In order to see the relationship between generic strategy and competitive

advantage, correlation analysis is also performed.

Table (4.12) Correlation Analysis

Factor Competitive
Advantages
Cost Leadership Pearson Correlation 0.478**
Sig (2-tailed) 0.000
Differentiation Pearson Correlation 0.215**
Sig (2-tailed) 0.000
Focus Pearson Correlation 0.870**
Sig (2-tailed) 0.000
Source: Survey Data, 2019
** Correlation is significant at the 0.01 level (2-tailed)

Correlation analysis provides information about the degree and strength of

association between two variables and it can take value between -1 and +1 inclusive.
The result of the correlation coefficients is for the relationship between generic
strategy and competitive advantage.

According to the table (4.12), there is a strongly positive significant

relationship between focus strategy and competitive advantages. It has a correlation
value of 0.870. However, differentiation strategy has a weak relationship with
competitive advantages with a correlation value of 0.215. In addition, there is a
moderate relationship between cost leadership and competitive advantages with a
correlation value of 0.478. The result confirms that the focus strategy has the highest
value of correlation with competitive advantages.

32
 CHAPTER 5

CONCLUSIONS

This chapter explores the finding based on the analysis of the data from the
survey together with the suggestion and need for further study.

5.1 Finding

This study investigated the competitive strategies of KBZPay. The two main
objectives of this study are to identify the strategic approaches used by KBZ Bank and
to analyse the relationship between competitive advantages and competitive strategies
of KBZPay. Among the employees of KBZ bank, the survey questionnaires are
through selected 150 employees in Yangon. These survey questionnaires are included
29 questions and some of general information to make better understanding about
study outcomes. From the survey of the demographic factors of the respondents, it is
found that there are more female respondents than male respondents for this survey. It
was also found that the most of the respondents’ age are below 25 years. Furthermore,
the majority of working experience of respondents is below one year. The largest
group of working position respondents is from Assistant Manager to Manager
Position. The result also showed that majority of respondents for education level is
university graduated. According to the survey result, largest portion of the
respondents for working department are from Digital Products Related department.

Employee believed that KBZ Bank has tight cost control systems in place.
And also, KBZ Bank has a wide range of superior product. Along with the over 400
branches network of KBZ bank, it has well established distribution network.
Therefore, KBZ bank customers identify well with the brand image and it is able to
charge them a premium price per item. It did not seem to have any close supervision
all through the entire process with the mean value of 2.60. KBZ Bank requires setting
up a strong research team who guides the company in producing superior products.

The results show that the focus strategy was the only systematic approach with
a clear positive correlation with competitive advantage. Focus approach was the
aspect that most significantly affects KBZPay's competitive advantage relative to the
33
other generic strategies. This indicates that regardless of the overall effect of all other
generic strategies on the competitive advantage of companies in the banking sector,
the focus strategy was the most significant factor in terms of which goods, services
and markets to pursue. It has been found that the concentration strategy is strongly
correlated with the competitive advantage while the others are fairly positively
correlated. Focus strategy was the factor that most significantly affected KBZ Bank's
competitive advantage compared to the other generic strategies, and it can therefore
be inferred that it is one of the strategies that should be given greater consideration
when seeking competitive advantage.

5.2 Suggestion
According to the outcome, KBZ Bank management is advised to put greater
emphasis on the focus strategy in order to achieve competitive advantages and
establish a defensive shield against other banks. Cost leadership and differentiation
approaches after concentrating policy. In addition, a competitive advantage is
suggested, the bank should provide banking facilities and services with innovation
and creativity, customer focus and customer satisfaction, provide banking services
even after customer service, and finally are aware of the needs of people and provide
services compatible with these needs. It is recommended to focus on certain market
segments that are applicant for different and special services, and then provide
customized facilities and services to customers ' specific needs to gain dynamic
competitive advantages and reinforce their market position.

5.3 Need for further study

This research would analyze KBZPay's strategic strategies. Some similar

research to the other digital payment system including CB Pay, Wave Money, OK$,
etc. is suggested. The study used was very small and the total population was not
accurately represented. If there is a wider sample for this analysis, there may have
been a different outcome or a much stronger conclusion may have been drawn to
complement the findings of this research. It is therefore proposed that a greater
number of respondents be included in the survey in the future.

34
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 Appendix – Questionnaires
Competitive Strategies of KBZPay
This survey is part of my MBF thesis to analyze the competitive strategies of
KBZPay. All the data will be strongly kept confidential. Thank you for your
participation.
*Required

Section A: Demographic Profile

Gender *
o Male
o Female

Age *
o Below 25 years
o 25 – 35 years
o 35 – 45 years
o 45 – 55 years
o 55 years and above

Working Experience in KBZ Bank *

o Below 1 year
o 1 – 3 years
o 3 – 5 years
o 5 – 10 years
o 10 years and above

Working Position *
o Assistant Manager to Manager
o Senior Manager to General Manager
o Senior Management

37
Education Level *
o Graduated
o Master Degree
o Ph.D. and above

Working Department *
o Branches
o Back-end Support Function (e.g. Finance, Risk, IT, etc.)
o Digital Products Related Department (e.g. KBZPay, Mobile Banking, Cards,
etc.)
o Non-Digital Products Related Department (e.g. Loan, Deposit, Remittance)

Section B: Examination on Competitive Strategies of KBZPay

Cost Leadership Strongly Disagree Neutral Agree Strongly

Disagree Agree
I feel that KBZ Bank has tight cost
control systems in place. * ( ) ( ) ( ) ( ) ( )
I feel that KBZ Bank gives
incentives to our staff based on ( ) ( ) ( ) ( ) ( )
strict quantitative targets. *
KBZ Bank has cost supervision all
through the entire process * ( ) ( ) ( ) ( ) ( )
KBZ Bank has budget reviews on
quarterly basis. * ( ) ( ) ( ) ( ) ( )

38
Differentiation Strongly Disagree Neutral Agree Strongly
Disagree Agree
In KBZ Bank, there is strong
coordination among functions ( ) ( ) ( ) ( ) ( )
especially in the Research &
Development, Product
Development and Marketing
departments. *

Creativity and innovation are the

order of the day in product re- ( ) ( ) ( ) ( ) ( )
designing and development. *
KBZ Bank has a strong research
team who guides the company in ( ) ( ) ( ) ( ) ( )
producing superior products. *
KBZ Bank has a wide range of
superior products. * ( ) ( ) ( ) ( ) ( )
KBZ Bank is well known for
producing quality products * ( ) ( ) ( ) ( ) ( )
KBZ Bank benchmarks with
leading banks in our banking ( ) ( ) ( ) ( ) ( )
industry every year. *
KBZ Bank has a creative and
innovative training program for ( ) ( ) ( ) ( ) ( )
staff development.*

Focus Strongly Disagree Neutral Agree Strongly

Disagree Agree
KBZ Bank alters specific products
to meet specific customer needs. * ( ) ( ) ( ) ( ) ( )
KBZ Bank has niche markets for its
products. ( ) ( ) ( ) ( ) ( )
KBZ Bank has loyalty programs for

39
our frequent customers. * ( ) ( ) ( ) ( ) ( )
Customers of KBZ Bank identify
themselves very much with KBZ ( ) ( ) ( ) ( ) ( )
brand. *
KBZ Bank has well established
distribution Network. * ( ) ( ) ( ) ( ) ( )
Service quality of KBZ Bank
exceeds that of our competitors. * ( ) ( ) ( ) ( ) ( )

Competitive Strategy Strongly Disagree Neutral Agree Strongly

Disagree Agree
I think KBZ Bank to produce
products at lower cost relative to ( ) ( ) ( ) ( ) ( )
our competitors and sell them at
either at lower or market price *
I think KBZ Bank to produce
unique products and sell them at ( ) ( ) ( ) ( ) ( )
premium price. *
Customers of KBZ Bank identify
well with KBZ brand and we are ( ) ( ) ( ) ( ) ( )
able to charge them a premium
price per item. *
Demand for KBZ products is
escalating and we are able to extend ( ) ( ) ( ) ( ) ( )
markets geographically. *
KBZ produces products for specific
customers and we are able to sell ( ) ( ) ( ) ( ) ( )
them at premium price. *
KBZ produces products for specific
markets and we are able to sell ( ) ( ) ( ) ( ) ( )
them at market or lower price. *

40