This is the hardest yet most useful part of competitor analysis. Good clues about what moves a specifi competitor may make next come from finding out how much pressure the rival is under to improve its financial performance. To succeed in predicting a competitor’s next move, an analyst must get a good ‘feel’ for the rival’s situation, bow its managers think and what their options are. In Bangladesh, leasing industry has undergone competitive pressure under trade liberalization, open-market policy, currency deregulation financial institutions Act. 1993 etc.
New leasing companies are expected to come in force both in local and joint-venture sector. To handle this pressure, competitors will likely to take the following moves. KSFS can serve as the cornerstones on which business is built – frequently, a company can win a competitive advantage by concentrating on being distinctively better than rivals. Identification of Key success factors a top priority strategic consideration. KSFs highlight the things all firms in the industry must pay close attention to- the specific outcomes crucial to success in the market place and the functional skills with the most direct bearing on company profitability.
Lease companies do not get any fund from the govt. DFIs get fund from the govt. at lower rate of interest say at 3% to 4% while leasing companies procure long-term loan from nationalized commercial bank and donor agencies at 11% to 12%. Funding problems include the followings. Leasing companies face the problem with dishonored cheques. In other countries dishonor of cheque is a criminal offense and prestige issue. In Bangladesh most of the users don’t take care of prestige. According to the Negotiable Instruments Act the drawer of the dishonored cheque is likely to be punished with fine.
But this law is not enforced properly. In Bangladesh leasing companies face severe problem to repossess asset. It has to undergo lengthy and tiresome legal process to get repossession of the assets from defaulter lessee. In developing, countries like Malaysia, Indonesia and Korea are repossession agency who take actions to get repossession on behalf of lessor in return of fees. But in Bangladesh there is no such organization to help lessor. Since our country is industrially less developed, finding a buyer for a second hand equipment is difficult. Sometime, leasing companies has to dispose such equipment at much lower price.
In Bangladesh, there is no credit rating agency to evaluate financial solvency of the lease seeking customers. So leasing companies have to depend on Bank statements, Audited Balance sheet to Tax return to judge the credit worthiness of the proposed clients. But in our country none of these reports is reliable. Future prospects of lease financing in Bangladesh. The outlook for the leasing sector is bright due to its comparative advantage over banking and other financing. The other contributory factor would be the reduction in tax rate from 45% to 40% in the FY 98 budget. Which should boost profit margins.
Also, the granting of a merchant banking license to leasing companies would give them an added opportunity to diversity their business portfolios. These are discussed below:Reduction in corporate tax rate from 45% to 40% in the FY 98budget,will boost profit margins to the leasing sector. As a result new investment avenue would be opened for leasing sector. Under financial institutions Act. 1993 leasing company can participate in the activities of merchant bank like underwriting of securities, loan syndication, investment advisory services, corporate finance etc. Which in turn will add opportunity to diversity their business portfolios.