Executive summary

This assignment is base on the Bank of Punjab. Which is one of the oldest bank in Pakistan. This assignment is base on the PEST analysis, SWOT analysis. We have also talk about the five forces model. Since Bank of Punjab is one of the oldest banks so there are some key success factor and external factor evaluation matrix. This all assignment is done with the help of the annual report and we have conduct a small interview with the employee of Bank of Punjab from where we were able to get small amount of information.

Bank of Punjab
Established in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial bank with its network of 284 branches at all major business centers in the country. The Bank provides all types of banking services such as Deposit in Local Currency, Client Deposit in Foreign Currency, Remittances, and Advances to Business, Trade, Industry and Agriculture A wholly owned subsidiary of BOP First Punjab Modaraba (FPM) was established in 1992 and is being managed by Punjab Modaraba Services (Pvt) Ltd.

Vision statement
To be a customer focused bank with service of excellence.

Analysis
The vision statement of BOP is focusing on customers. BOP is only looking to build their customers and for that they using different types of strategies. Likewise launching schemes, provide interest on saving accounts. BOP has understood one thing that to be on the top they should have more customer as compare to their competitors. So when BOP look in the future they think themselves as market leader and to reach their BOP is focusing on the services which they going to provide to their customer. BOP believes in the best so they are always looking to provide excellence services to their customer.

Mission statement
To exceed the expectation of our stakeholders by leveraging our relationship with government of Punjab and delivering a complete range of professional solutions with a focus on programmed driven products and services in the agriculture and middle tier markets through a motivated team.

Analysis
The mission statement of BOP is totally base on their stake holder, government, customer, professional, agriculture department and investing on individuals to starts their own business. As we can see in last year BOP have launch different schemes like yellow cabs and Women Entrepreneur's Finance Scheme. This shows the organization is help societies to improve themselves. BOP is the semi government bank so in Punjab this bank is support by Punjab government. If there is any work happening in Punjab the BOP will be involve in the projects. This is the only bank which also supporting the agriculture sector in Pakistan. As we all know that Pakistan is the agriculture country and BOP is the only bank that supports this department and never the less BOP claim to provide all kinds of the solution for professional.

PEST analysis Economic

It appears that the economy will face tremendous challenges and some difficult decisions in 2008-09, as inflationary risks persist. The uptrend witnessed in CPI inflation during the last few months is largely a result of continued rising food prices. Energy crisis is looming in the country, because of an increase in demand and a rather slow improvement in supply. Economic instability prevailing in worldwide financial markets & investors are loosing their confidence in banks

Technological
Advanced computerized and control system

Growing network of online branches throughout the country Strategic plan 2005-10 of SBP for all Pakistani banks ensures technological advancements in the whole banking sector

Political-Legal
Agriculture contributes to poverty reduction for vast majority of the poor live in rural areas. Government has taken initiatives in agriculture and rural development. Government of Pakistan through SBP has provided backing to the banking industry by decreasing cash reserve requirements (CRR) to 6% from 8%. This has provided liquidity to banks worth Rs. 180 Billion Improvement in law and order and elimination of political unrest are very much imperative for the Government in order to provide investment conducive environment to both local and foreign investors.

Social cultural
Visible chaos in society is prompting people to take out their investments &valuables from banks as there are huge chances of banks liquidation

The huge culture of opening bank accounts, investment making, and credit & debit cards now seems to moving towards declining phase

Analysis of Strategic Factors (SWOT) Strengths

BOP is majority owned (51%) by the government of Punjab. It has an asset base of PKR165 billion & total deposits of PKR138 billion The banks management realizes the necessity of existence of effective internal controls to ensure smooth operations in current technical and swift business environment. The bank has been proactive in adopting measures to monitor and mitigate risks associated with banking industry. Bank has been meticulously following requirements necessitated under Institutional Risk Assessment Framework (IRAF) questionnaire. Bank is fully committed to follow the timelines specified by the SBP in its Roadmap for implementation of recommendations of Basel-II committee for Risk Measurement and Management The financial statements, prepared by the management of the bank present fairly the state of affairs, the results of its operations, cash flows and changes in equity.

Weaknesses
Loosing profit indictor Banks spread & having negative profitability every year but is mainly because the directors & President of BOP played scam with the bank by involving in a fraud of billions of Rupees. Lack of proper internal controls came up when the credit scam was unleashed. The recipients of the huge loans include owners of some companies that do not exist at all. In other cases, fake identity cards were used and over-evaluated properties were pledged as collateral. Advertisement on electronic media has not been seen The State Bank of Pakistan (SBP) has expressed its great concern over the Banks system and controls, terming them quite weak

Opportunities
The year 2009 will prove to be another demanding year for the bank with scattered opportunities and tough competition. Diversification, innovation admission driven approach are the key to success which BOP should adopt

Progressive but cautious business expansion with strategic branch network extension and introduction of innovative products in all areas of business. BOP should emphasize much on e-banking Commencement of new schemes there can even be a greater increase in its deposits

Threats
Economic growth is likely to be slow, as agricultural growth may slowdown due to lower harvests of cotton and rice crop Adverse impact of Credit Crisis can adversely effect BOP Facing a strong competition by its competitors Deposit growth can slowdown due to lack of customer trust in Bop. Constraints Following are the constraints for BOP

Porter five force model Entry barriers

The Pakistani market is highly regulated by the government and also by the central bank. A lot of decisions such as regularization of interest on loans and deposits as well as money supply Is controlled by the state bank of Pakistan.

Rivalry among the existing competitor

When it comes to the banking sector in the country we could include in whole lot of public as well as private banks along with NBFC and micro finance institutes widely spread in the country. The banking sector of the country has 56 banking institutions which include public sector, Islamic banks, foreign banks, development financial institution specialized banks and micro finance institutions.

Bargaining power of suppliers

The supplier of banks is the people from who bank raise funds. So major sources funds come from their customer who becomes the supplier in this case.

Bargaining power of the customer

The customer and the depositors have a high bargaining power in the markets. Any bank giving the higher rate of interest would effects the large number of customer, because there are number of banks operating in the market which offer similar services.

Threat from substitutes

There are number of substitutes in retail finance industry such as money leader NBFC micro finance and also the insurance companies. Banks are seeing there competition rising from unconventional companies. Markets like Pakistan customer have high propensity towards switching to other substitutes.

Key success factor Bank of Punjab announces Women Entrepreneur Financing Scheme
This March BOP familiarizes and project International Women's day, the merits of this scheme, Bank of Punjab has launched the Women Entrepreneur's Finance Scheme (WEFS) a one of its kind financing scheme. Through this scheme, Rs. 2 billion has been allocated for the empowerment of women entrepreneurs, enabling them to launch businesses or expand their operations across Punjab and established a stall at the Women's day function organized by the Government of Punjab at A1 Hamra Cultural Complex, Qaddafi Stadium Lahore. Women had a great response to the scheme, and took a keen interest in the merits and conditions of the facility.

Punjab Yellow cab schemes

Lahore (July 14, 2011) Punjab cabinet which met on Thursday under the chairmanship of Chief Minister Shahbaz Sharif, gave formal approval to the Yellow Cab Scheme under which 20,000 vehicles would be distributed. A forty percent quota has been allocated for southern Punjab compared to its 31 percent population. BOP was in charge of that schemes and that allow the people to take opportunity from that scheme. People of Punjab are has use this scheme to promote themselves to own money for their self and for their family. With the help of this scheme people are welling to get yellow cab and employee themselves.

EXTERNAL FACTOR EVALUATION

External Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing.

OPPURTUNITIES
1. BOP support agriculture and industry sector. 2. BOP focus is on customer satisfaction. 3. Focus on e-banking. 4. Punjab schemes are supported by BOP. 5. Adopting new technology.

weight
0.2 0.12 0.1 0.16 0.12

rating
4 3 2 4 3

weight score
0.8 0.36 0.2 0.64 0.36

Threats
6. Economic growth slow. 7. Lacking of trust in BOP 8. Facing strong competitor. Total 0.1 0.07 0.13 1 3 1 3 0.3 0.07 0.39 3.12

EFE matrix show that company is doing great in terms of getting benefit from opportunity and trying to over come the threats.

Internal Factor Evaluation. Internal Factor Evaluation (IFE) matrix method is a strategic-management tool often used for assessment of current business conditions. Strength BOP 51% share by the government of Punjab. Able to swift business environment. Bank work under (IRAF) questionnaire. Fully committed to follower road map. BOP work fairly with their customer. weight 0.2 0.12 0.1 0.07 0.14 rating 4 3 3 2 3 total 0.8 0.36 0.3 0.14 0.42

Weakness

 Total

Loosing the customer trust due to scam. Lacking of internal controls. No Advertisement on electronic media. The State Bank of Pakistan control is weak.

0.1 0.09 0.08 0.1 1

2 3 4 3

0.2 0.27 0.32 0.3 3.11

Competitive profile matrix BOP Key success factors Advertising Products Management Financial position Customer loyalty Market share Growth Total weight 0.2 0.12 0.13 0.2 0.09 0.11 0.15 1 rating 1 3 3 2 3 2 3 total 0.2 0.36 0.39 0.4 0.27 0.22 0.45 2.29 MCB rating 2 3 4 3 3 3 2 total 0.4 0.36 0.52 0.6 0.27 0.33 0.3 2.78 UBL rating 4 3 4 4 3 3 3 total 0.8 0.36 0.52 0.8 0.27 0.33 0.45 3.53

As we can see in above matrix u can clearly see that BOP is at the lowest side reason for that is due to the scam which has happened in the BOP. And UBL is bank which is doing great as compare to the other bank.

SWOT MATRIX Strength 1. BOP 51% share by the government of Pun jab. 2. Able to swift business environment. 3. Bank work under (IRAF) questionnaire. 4. Fully committed to follower road map. 5. BOP work fairly with their customer. Opportunities OS 1. BOP support (S1,O1) since the bank of agriculture and Punjab is hold by the industry sector. government of Punjab and we 2. BOP focus is on all know Punjab is the customer agriculture land so different satisfaction. kind of finance package 3. Focus on eshould be launch for the banking. famers. 4. Punjab schemes are supported by (S5,O2) since bank of Punjab want to build customer BOP. relationship so they work 5. Adopting new technology. hard and provide satisfaction to them Threats TS 1. Economic growth (T1,S2) BOP always swift slow. with the business 2. Lacking of trust environment but the in BOP economic growth is slow not 3. Facing strong many new business are competitor starting. Weakness 1. Loosing the customer trust due to scam. 2. Lacking of internal controls 3. No advertisement on electronic m edia. 4. The State Bank of Pakistan control is weak

OW (O2,W1) BOP wants to build customer relationship but they are not able to do because of all the scam which has happened in the BOP have effect the reputation of the Bank.

TW (T2,W1) people are not trusting the BOP and the reason for that is because there are huge scams in the BOP cause SBOP control is weak on BOP.

BCG Matrix Relative market share position in the industry High (1.0) High (+20) medium (.50)
BANK OF PUNJAB

low (0.0)

Industry sales
Star question mark

Growth rate

Medium (0)

Low (-20)

Cash cow

Dogs

As we can see in BCG matrix we can see the BOP lies in I quadrant which is base on the market penetration, market development, product development.sin the BOP is the bank of Punjab now it is also opening outside the Punjab and lunching their product to different cities. Grand Matrix Rapid market growth

Quadrant II
BANK OF PUNJAB Weak Competition Position strong Competition Position

Slow market growth As we can see in grand matrix bank of Punjab lies in quadrant II which is totally base on the market development, market penetration, product development, horizontal integration, liquidation. BOP is will to expand in Pakistan. So these banks are opening in different country.

The space matrix FP

Conservative
BANK OF PUNJAB 5 4 3 2 7 6

Aggressive

CP
-7 -6 -5 -4 -3 -2 -1

IP
2 3 4 5 6 7

1 -1 -2

Defensive

-3 -4 -5 -6 -7

Competitive

SP

As we can see in the above matrix you can see BOP is flowering conservative strategy. This is base on market penetration, market development, product development and related diversification.

The internal- external matrix IFE total weight score

Strong (3 to 4) average (2 to 2.99) weak (1 to 1.99)

I
High (3 to 4) BANK OF PUNJAB

II

III

EFE total weight score

IV Medium (2 to 2.99) V VI

Low (1 to 1.99)

VII

VIII

IX

As we can see in internal- external matrix BOP lies in first quadrant. This have been done with the help of the sum of EFE and IFE model

Quantitative strategic planning matrix Alternative strategy Backward integration Forward integration Horizontal integration Market penetration Market development Diversification Product development liquidity SWOT 1 1 1 SPACE 1 1 1 BCG 1 1 1 1 IE 1 1 1 1 1 Grand STRATEGY 1 1 1 1 4 1 TOTAL 1 1 1 5 5

key factor STRENGHT 1. BOP 51% share by the government of Punjab. 2. Able to swift business environment. 3. Bank work under (IRAF) questionnaire. 4. Fully committed to follower road map. 5. BOP work fairly with their customer WEAKNESS 1. Loosing the customer trust due to scam. 2. Lacking of internal controls 3. No advertisement on electronic media. 4. The State Bank of Pakistan control is weak Total Opportunities
1. 2. 3. 4. BOP support agriculture and industry sector. BOP focus is on customer satisfaction. Focus on e-banking. Punjab schemes are supported by BOP. 5. Adopting new technology.

Weight

AS

TAS

AS

TAS

0.2 0.12 0.1 0.07 0.14

3 4 3

0.6

3 -

0.6

0.28 0.42

3 2

0.21 0.28

0.1 0.09 0.08 0.1

0.3

0.4

0.2 0.12 0.1 0.16 0.12 0.1 0.07 0.13 1

4 3 2 2 4

0.8 0.3 0.32

3 4 1 2 4

0.6 0.4 0.16

Threats
1. Economic growth slow. 2. Lacking of trust in BOP 3. Facing strong competitor

0.2 0.52 3.74

0.2 0.52 3.37

Total

So from above matrix we can say that the BOP should focus more on market penetration. BOP is one of the oldest bank of Pakistan so they should me different product which allow them to grow in the market

References
http://www.bop.com.pk/Aboutus.aspx

APPENDIXS