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Strategy formulation

REPORT ON STRATEGIC
MANAGEMENT OF
“MUSLIM COMMERCIAL BANK”

SUBMITTED TO:
SIR MUDDASIR

SUBMITTED BY:
MOMAL RABBANI (GL)

ARJUMAND BANO

ASMA MASOOD

MARIA ABDULLAH

KHADIJA FEROOZ

MBA III

DEPARTMENT OF BUSINESS ADMINISTRATION

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Strategy formulation

TABLE OF CONTENTS:
About MCB………………………………………………………3

MCB history……………………………………………………...3

MCB Tower………………………………………………………4

Corporate profile………………………………………………….5

MCB mission and vision statements……………………………..8

MCB values ……………………………………………………...8

Products and Services…………………………………………….9

External Assessment (opportunities and threats)………………..14

Internal Assessment (strength and weaknesses)………………...15

Strategy formulation

Stage 1: Input stage

External factors evaluation matrix of MCB…………………….17

Internal factors evaluation matrix of MCB……………………..19

Stage 2: Matching stage

BCG matrix of MCB……………………………………………21

The Grand strategy matrix of MCB…………………………….23

IE matrix of MCB ……………………………………………...25

Stage 3: Decision stage

QSPM matrix of MCB………………………………………….26

Results and interpretation……………………………………….29

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Strategy formulation

ABOUT MCB:
MCB Bank Limited formerly known as Muslim Commercial Bank Limited was
incorporated by the Adamjee Group on July 9, 1947, under the Indian Companies Act,
VII of 1913 as a limited company. The bank was established with a view to provide
banking facilities to the business community of the South Asia. The bank was
nationalized in 1974 during the government of Zulfikar Ali Bhutto. This was the first
bank to be privatized in 1991 and the bank was purchased by a consortium of Pakistani
corporate groups led by Nishat Group. As of June 2008, the Nishat Group owns a
majority stake in the bank. The president of the bank is Mr. Atif Bajwa (previously with
Citibank). Founded in 1948, Nishat Group is one of the leading and most diversified
business groups in Pakistan. The group has strong presence in the most important
business sectors of the country such as banking, textile, cement and insurance.

Mian Mohammad Mansha is the Chairman of the group (and also MCB) and has played
instrumental role in its success. In recognition of Mr. Mansha’s contribution, the
Government of Pakistan has conferred him with "Sitara-e-Imtiaz", one of the most
prestigious civil awards of the country.

MCB is Pakistan’s fourth largest bank by assets with deposit base of about Rs.280 billion
and total assets of around Rs.300 billion The Bank has a customer base of approximately
4 million and a nationwide distribution network of 1,026 branches, including 8 Islamic
banking branches, six branches outside Pakistan and over 300 ATMs, in a market with a
population of 160 million.MCB focuses on three core businesses namely Corporate,
Commercial and Consumer Banking. Corporate clientele includes public sector
companies as well as large local and multi national concerns. MCB is also catering to the
growing middle class by providing new asset and liability products.

HISTORY:
MCB has around 50 years of banking experience during the last fifteen years, the Bank
has concentrated on growth through improving service quality, investment in technology
and people, utilizing its extensive branch network, developing a large and stable deposit
base and managing its non-performing loans via improved risk management processes.

In 2005, the management of the bank abbreviated its name from Muslim Commercial
Bank Limited to MCB Bank Limited to explore international markets; they were facing
resistance due to the word Muslim specially from Western Countries to avail license. In
2008 the head office of MCB was shifted from Karachi to Lahore in a newly constructed

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Strategy formulation

building, In 2007, MCB reported a profit after tax of PKR16.4 billion (US$270 million)
and generated a return on average equity of 38% and a net interest margin of 8.08%. The
Bank’s asset quality is strong with a gross NPL ratio of 4.7% and provision coverage of
100%.Pakistan MCB Bank showed 2009 net profit 15.49 bln rupees MCB House located
at Jail Road.

MCB is the only bank in Pakistan that has achieved 7 Euro Money Awards and 5 Asia
Money Awards for being “The Best Domestic Commercial Bank in Pakistan”, along with
several other Awards including the Best Trade Finance of Pakistan for two consecutive
years. MCB won the "Best Bank in Pakistan" in 2005, 2004, 2003, 2001, and in 2000.
MCB has the distinction of winning the Asia Money 2005 & 2004 awards for being "The
Best Domestic Commercial Bank in Pakistan".In May 2008 Malaysian bank, May bank
and MCB signed an agreement, whereby May bank will acquire up to 20% of the
ordinary shares in MCB from Nishat Group. MCB shares are at the top then other banks.

MCB TOWER:

The MCB Tower in Karachi serves as the MCB's headquarters, and is also the tallest
building in Pakistan towering at 116 meters, with 29 levels and 3 basements MCB tower
is a manifestation of MCB’s strong foundation with over 50 years of banking excellence
and represents its commitment to always stay a step ahead. The modern, urbane
architecture and intelligent design of MCB Tower reflect MCB’s pioneering role in the
banking arena, providing cutting edge, innovative banking solution- leading with an edge
of technology. It is a sound representation of MCB’s leadership position in the banking
sector, testified by four “best bank in Pakistan” The tower produces its own power by 1.2
MW gas turbine backed-up by two separate diesel generating sets. The heat recovery
system insured that the heat produced thus is used to operate the chillers for the central
air conditioning system thereby achieving an unprecedented level of power / energy
consumption.

State of the art Fire/Smoke detection Alarm backed-up by a central fire fighting system.
Rooftop garden and gymnasium with unparalleled views of the city skyline

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Strategy formulation

6 high speed Elevators with a unique call system which identifies, allocates and assigns
each passenger to a particular elevator to optimize their wait and travel time.

Double insulated glazing to reduce heat loss by up to 30 % and reduce noise level
significantly. The glass used is specially tempered to increase strength 5 times,
eliminating the risk of damage. construction of the helipad for helicopter access and
egress in case of fire

CORPORATE PROFILE

Board of Directors
Mian Mohammad Mansha Chairman

Mr. S. M. Muneer Vice Chairman

Mr. Tariq Rafi Member

Mr. Shahzad Saleem Member

Mr. Sarmad Amin Member

Dr. Muhammad Yaqub Member

Mian Raza Mansha Member

Dato' Mohammed Hussein Member

Mr. Aftab Ahmad Khan Member

Mr. Abdul Farid Bin Alias Member

Mian Umer Mansha Member

Mr. Muhammad Ali Zeb Member

Mr. Atif Bajwa President / CEO

Audit Committee
Mr. Tariq Rafi Chairman

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Strategy formulation

Dr. Muhammad Yaqub Member

Dato' Mohammed Hussein Member

Mr. Aftab Ahmad Khan Member

Mr. Muhammad Ali Zeb Member

Mr. Malik Abdul Waheed Member

Human Resources Committee


Mian Mohammad Mansha Chairman

Dr. Muhammad Yaqub Member

Mian Raza Mansha Member

Mr. Shahzad Saleemn Member

Mr. Atif Bajwa Member

Risk Management & Portfolio Review Committee


Mr. Shahzad Saleem Chairman

Mr. Tariq Rafi Member

Mr. Sarmad Amin Member

Mian Raza Mansha Member

Mian Umer Mansha Member

Committee on Physical Planning, IT System & Contingency


Arrangements
Mr. Sarmad Amin Chairman

Mr. S. M. Muneer Member

Mr. Tariq Rafi Member

Mian Raza Mansha Member

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Strategy formulation

Mr. Abdul Farid Bin Alias Member

Mr. Atif Bajwa Member

Business Strategy & Development Committee


Mian Mohammad Mansha Chairman

Mr. S. M. Muneer Member

Mr. Shahzad Saleem Member

Mian Raza Mansha Member

Dr. Muhammad Yaqub Member

Dato' Mohammad Hussein Member

Mian Umer Mansha Member

Mr. Atif Bajwa Member

Chief Financial Officer


Mr.Salman Zafar Siddiqi

Principal Office
MCB 15 Main Gulberg, Lahore

Registrar's and Share Registration Office


MCB 15 Main Gulberg, Lahore
M/s. THK Associates (Pvt.)
Limited
State Life Building No.3,
Dr. Ziauddin Ahmed Road,
Karachi

MCB VISION & MISSION:


Vision Statement
To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.
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Strategy formulation

Mission Statement
We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so,
we ensure that our shareholders can invest with confidence in us.

MCB VALUES:
Integrity
We are the trustees of public funds and serve our community with integrity. We believe
in being the best at always doing the right thing. We deliver on our responsibilities and
commitments to our customers as well as our colleagues.

Respect
We respect our customer’s values, beliefs, culture and history. We value the equality of
gender and diversity of experience and education that our employees bring with them.
We create an environment where each individual is enabled to succeed.

Excellence
We take personal responsibility for our role as leaders in the pursuit of excellence. We
are a performance driven, result oriented organization where merit is the only criterion
for reward.

Customer centricity
Our customers are at the heart of everything we do. We thrive on the challenge of
understanding their needs and aspirations, both realized and unrealized. We make every
effort to exceed customer expectations through superior services and solutions.

Innovation
We encourage and reward people who challenge the status quo and think beyond the
boundaries of the conventional. Our teams work together for the smooth and efficient
implementation of ideas and initiatives.

PRODUCTS AND SERVICES:

1. Personal Banking
• Deposit Accounts
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Strategy formulation

Khushali Bachat Account

Khushali Bachat Account, a Rupee savings account is one of MCB Bank’s most popular
products. Due to the low initial deposit, the account can be opened by people from all
walks of life and still avail the facility of daily product profit calculation.

Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every month.

Pak Rupee Savings Account

MCB’s Pak Rupee Savings Account offers you attractive returns on your Pak Rupee
investment.

Pak Rupee Current Account

MCB’s Pak Rupee Current Account offers you the convenience of unlimited withdrawals
i.e. access to your funds whenever you want without any notice. There is no limit on the
number of transactions you make in a day plus you can avail finance facility up to 75% of
the total deposit.

Pak Rupee Term Deposit

MCB Pak Rupee Term Deposit gives a higher rate of return. It gives you choice of 1
month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.

Saving 365

The MCB Saving 365 calculates profits on a daily product basis and gives you the facility
of unlimited withdrawals.

Foreign Currency Savings Account

MCB’s Foreign Currency Savings Account offers you attractive returns on your Foreign
Currency investment. § You can invest in any of the four currencies i.e. US Dollar, UK
Pound Sterling, Japanese Yen or Euro

Foreign Currency Current Account

MCB’s Foreign Currency Current Account offers you the convenience of unlimited
withdrawals i.e. access to your funds whenever you want without any notice. There is no
limit on the number of transactions you make in a day.

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Strategy formulation

MCB Foreign Currency Term Deposit

MCB Foreign Currency Term Deposit gives a higher rate of return. It gives the choice of
1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.

Dollar Khushali Account

The Dollar Khushali Account, a Dollar based account was introduced in 1993 at selected
MCB Bank branches. Today, you can open a Dollar Khushali Account at over 200
branches in Pakistan.

• Loan Products
MCB Business Sarmaya

“MCB Business Sarmaya” is the best Running Finance facility against your residential
property which empowers you to manage your business dealings better.

MCB Car4u

MCB CAR4U Auto Finance is the power move that assists you in more ways than you
ever imagined. It is affordable, with lowest mark up, flexible conditions, easy processing
and above all, no hidden costs.

MCB Pyara Ghar

MCB Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,
Renovate or Construct your home the way you have always wanted. Having your own
home was never so easy

Easy Personal Loan

MCB Easy Personal Loan provides you with the financial advantage to do things you've
always wanted to but never had the sufficient funds for. Take that much-needed holiday.
Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your
children.

• MCB Master Card

Since the beginning of time, people have tried to find more convenient ways to pay, from
gold to paper money and cheque. Today, money is moving away from distinct hard
currencies and towards universal payment products that transcend national borders, time
zones, and, with the Internet, even physical space. Plastic or "virtual" money, credit,

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Strategy formulation

debit, and electronic cash products, inevitably will replace cash and cheques as the
money of the future.

• MCB Rupee Traveler's Cheques

MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling
and travel related purposes. The product has been extremely popular and is preferred over
cash by customers while traveling and in all walks of life.

2. Corporate Banking
• Cash Management Services

MCB’s network of over 1000 branches in Pakistan enables it to collect and disburse
payments efficiently with its cash management services. This also enables it to offer you
a choice of paper based or electronic fund transfer solutions including collection
amounts, cross branch on- line transactions etc.

• Working Capital Loans

Based on the customer’s specific needs, the Corporate Bank offers a number of different
working capital financing facilities including Running Finance, Cash Finance, Export
Refinance, Pre-shipment and Post- shipment etc. Tailor- made solutions are developed
keeping in view the unique requirements of your business.

• Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditure and short term
working capital requirements of our customers. The loans are structured on the basis of
underlying project characteristics and cash flows of the business.

• Trade Finance Services

Under Corporate Banking MCB offers trade finance services that include an entire range
of import and export activities including issuing Letters of Credit (L/Cs), purchasing
export documents, providing guarantees and other support services.

3. Online Services
• MCB ATM Services

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Strategy formulation

450 MCB ATMs in 41 cities nationwide are available for the easiest way to get access
cash. This success has been possible because of a never-ending drive to achieve higher
levels of excellence, constantly striving to raise the level of performance.

• MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB MOBILE


BANKING. The convenience of accessing your account balance information and mini
statements whenever you want or wherever you may need them, with comfort and peace
of mind.

• MCB Call Center

Just dial our Call Centre from the comfort of your home or office or wherever you
happen to be. It offers basic banking services for convenience, eliminating the need for
you to make unwanted trips to your branch.

• MCB Smart Card

MCB now brings you MCB Smart Card -a secure and convenient instrument of payment
with unmatched functionalities. It provides 24-hour direct access to your bank account.

• MCB Debit Card

Now MCB brings a secure, convenient and quick payment facility that enables you to do
purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.

• MCB Internet Banking

Bill payments and Funds Transfer. Bank Account Statement and Cheque Book Request.

• MCB SMS Banking

Balance Inquiry details. Last 4 transaction details.

4. Virtual Banking
MCB Virtual Internet Banking offers you the convenience to manage and control your
banking and finances – when you want to, where you want to. MCB’s Virtual Internet
Banking facility is simple and secure. And its free of cost. With MCB Virtual Internet
Banking you can access any of the banking services, 24 hours a day, 7 days a week and
throughout the year.

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Strategy formulation

MCB Virtual Internet Banking offers a wide range of online services which makes your
banking accessible anytime and from anywhere.

• Detailed Account Summary of all listed accounts.


• Mini-statements of each of the listed accounts showing recent transaction history for
that account.
• Statement-by-Period of each of the listed accounts, based on the period specified.
• Immediate or Scheduled Transfer of Funds between your own accounts, as well as to
third-party accounts setup as beneficiaries, maintaining accounts with MCB.
• Scheduling of ‘One-Time’ as well as ‘Recurring’ Funds Transfers.
• Payment of utility bills for registered Utility Companies.
• Immediate or Scheduled Bills Payment. Scheduling of ‘One-Time’ as well as
‘Recurring’ bill payments. Option for ‘Full’ or ‘Partial’ payment based on the
payment conditions specified by a particular Utility Company.
• Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to
the corporate employees, who maintain accounts with MCB.
• Bulk Funds Transfer for Corporate Customers.
• Cheque Book Request for any of your listed accounts.
• Payment/Transfer Alerts for reminding, in advance, prior to the processing of
specified payments and transfers.
• Personal Alerts for reminding of pre-specified events and occasions.

5. Islamic Banking
• Deposit Schemes

For customers who are looking for a deposit opportunity where they can purse their funds
and reap halal returns on it, we offer the following products:

· Al-Makhraj Saving Account

· Al-Makhraj Ianat Account

· Al-Makhraj Term Deposit

• Fund Based Facilities

Ijarah Products

MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa
Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has
matured. Under this scheme, MCB will be the owner of the asset, and the customer
(lessee) will be given the asset to use for a certain period of time in return for monthly
rental payments.

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Strategy formulation

Types of Ijarah

o Car Ijarah o Equipment Ijarah

THE EXTERNAL ASSESSMENT:


PEST Analysis:
Political: Political instability in Pakistan can lead to changes in laws and policies
which can be in favor or against the banking sector.
Economic: Economy of Pakistan is facing issues about employment, inflation,
illiteracy, which hinders business growth.
Social: Cultural issues can be there but still as there are a number of multinational
companies there, therefore, cultural issues are not prominent.
Technology: People are highly skilled and MCB can introduce new technology to
increase competencies.

Opportunities and Threats:

Opportunities:

1. Due to largest ATM network, MCB can expand its 24 hours cash facilities to the far
off cities of the growing market demand.
2. They can capture a large portion of the market, if they expand its ATM and branch
network to other countries of the as well.
3. Good position of shares in stock exchange and many companies..
4. Increasing focus/target on different types of customers, MCB can open women
branches, especially in those areas where women class want to get involved but
couldn’t due to environmental restriction.
5. Growing policies of government on business and commerce sector provides MCB
and opportunity to efficiently meet with the business people’s requirement of instant
cash and financing facilities.
6. MCB has also an opportunity to expand its new technological advancement like; tele-
bank and Internet banking efficiently.
7. Stronger position to recover bad debts
8. Benefits from incoming expertise and competition.
9. Focus on small business, export/ import sector.
10. Launching of new products like Mala Maal and Cash Card platinum cards etc type of
product in future
11. To open overseas branches throughout the world like National Bank of Pakistan and
Habib Bank Limited or merger with other foreign banks outside Pakistan.
12. New schemes should be introduced to finance commodity operations.
13. The formation of new and energetic marketing teams can increase the disbursement
of loans and new customers can be searched out.
14. It can expand its Islamic banking.
15. Listed on the London stock exchange.

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Strategy formulation

Threats:

1. Increasing foreign banks in the country.


2. Privatization of other domestic banks has also increased their services.
3. Highly specialized and attractive services provided by foreign banks to their
customers.
4. Inconsistency in government policies regarding to business and economic sector.
5. Growing global technological advancement.
6. Strict regulations by the government over credit facilities to the customers as to meet
the prudential regulations.
7. Loss of confidence of the customers due to freezing of accounts
8. Rising customers expectations
9. Concentration risk is involved with the credit department.
10. Slower economic growth rate of the country.
11. Return on deposits is very low.
12. Inflation rate is high.
13. GNP and GDP rates are low and so the savings are low.
14. It has threat from Alfalah, UBL and NBP in car and house financing.

THE INTERNAL ASSESSMENT


Internal work, planning and strategies of MCB are included in it.

Strength and weaknesses:

Strength:

1. The largest private sector bank in Pakistan with a network of 941 domestic and 5
foreign branches.
2. MCB has long-term vision, which plays a very important role in organization’s
success.
3. First bank to privatize, which has, now become the leader in market with largest on
line ATM network in the country.
4. Bank’s emphasis on consumer banking by providing them with innovative saving
schemes, products and services suiting best to their life style.
5. Extension and improvement in services to domestic as well as foreign customer.
6. Best and optional policies and attractive compensation packages, for employees,
which has really improved their commitment, dedication and hard work, towards the
accomplishment of banks objectives.
7. MCB instant financing products for customer wanting instant loan facility at MCB
branches.
8. 24 hours cash access through ATM.
9. Pioneer in introduction of MCB Master Card and RTC, which minimize the degree of
risk.
10. Attention and sensitivity to competition prevailing in the country.

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Strategy formulation

11. Easy access to the customers at their residential localities through a large number of
branches.

12. Recognition of critical condition and need for Drastic immediate change.
13. MCB has a brand name and recognition and owned by Pakistan’s richest group of
company.
14. It is well aware of the Market and adopts strategy according to the competitor’s
strategy.
15. MCB has now started Mobile banking, which is definitely a truly innovative product
and according to the needs of the customers.
16. The current customers list of MCB is very large and having a large number of
deposit.
17. As a consequence of continuing growth and consistently outstanding performance,
MCB has received the Euromoney Award 2006 for the “Best Bank in Pakistan”.
18. MCB also had the privilege of being the first Bank in Pakistan to launch the
comprehensive bill payment facility through its alternate delivery channels which
include Internet Banking, ATMs and MCB Call Centre.
19. Deposit base of all amounts of accounts than other banks from 10000 so on .
20. special term deposit system for higher depositary companies like LNH.

Weaknesses:

1. Customers having account, with small amounts are not given some services and
dealing to those with high accounts.
2. Number of branches is decreasing because of low profitability.
3. A sense Insecurity of jobs, with the down sizing, among the employees is found.
4. Experienced but old staff, who are not aware of using modern technologies/
equipments?
5. Political pressure from vested interest group selection..
6. A very small foreign network..
7. Financial weaknesses i.e. excess operating cost.
8. Human Resources i.e. low morale due to following factors: Under compensation, No
accountability, No development ,Political interference ,No database ,Untapped
markets.
9. No marketing of advances.
10. No training for advances in-charge.
11. Not many advances to agriculture sector and small and medium enterprises.
12. Internal political issues.
13. Data storage is weak, only financial statements are recorded and other data is being
deleted with in 5years.

STRATEGY FORMULATION
STAGE 1: INPUT STAGE

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Strategy formulation

EFE MATRIX
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic,
social, cultural, demographic, environmental, political, governmental, legal, technological and
competitive information.

Below given is an External Factor Evaluation (EFE) Matrix of MCB where rating is assigned to each
external factor to indicate how effectively the firm’s currently MCB respond to the factor where:
4 = response is superior
3 = response is above average
2 = the response is average
1 = response is poor
EFE Matrix for MCB bank
Key External Factors weight rating weighted

score

OPPORTUNITIES

1 Due to largest ATM network, MCB can expand its 24 hours 0.04 3 0.12
. cash facilities to the far off cities of the growing market
demand.

2 Increasing focus/target on different types of customers, MCB 0.03 1 0.03


. can open women branches, especially in those areas where
women class want to get involved but couldn’t due to
environmental restriction

3 Growing policies of government on business and commerce 0.06 2 0.12


. sector provides MCB and opportunity to efficiently meet
with the business people’s requirement of instant cash and
financing facilities.

4 MCB has also an opportunity to expand its new 0.05 3 0.15


. technological advancement like; tele-bank and Internet
banking efficiently

5 0.02 2 0.04
Focus on small business, export/ import sector
.

6 To open overseas branches throughout the world like 0.07 2 0.14


. National Bank of Pakistan and Habib Bank Limited or
merger with other foreign banks outside Pakistan.

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Strategy formulation

7 The formation of new and energetic marketing teams can 0.04 2 0.08
. increase the disbursement of loans and new customers can be
searched out.

8 0.06 3 0.18
. It can expand its Islamic banking.

9 0.04 2 0.08
. Stronger position to recover bad debts

1 0.07 4 0.28
0 They can capture a large portion of the market, if they
. expand its ATM and branch network to other countries.

THREATS

1 Privatization of other domestic banks has also increased 0.06 3 0.18


. their services.

2 Highly specialized and attractive services provided by 0.04 3 0.12


. foreign banks to their customers.

3 Inconsistency in government policies regarding to business 0.05 4 0.20


. and economic sector.

4 Growing global technological advancement. 0.03 3 0.09


.

5 Strict regulations by the government over credit facilities to 0.06 3 0.18


. the customers as to meet the prudential regulations.

6 Rising customers expectations. 0.05 3 0.15


.

7 Slower economic growth rate of the country. 0.06 2 0.12


.

8 Inflation rate is high. 0.04 3 0.12


.

9 GNP and GDP rates are low and so the savings are low. 0.06 2 0.12
.

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Strategy formulation

1 It has threat from Alfalah, UBL and NBP in car and house 0.07 3 0.21
0 financing.2
.

Total 1.00 2.77

Interpretation:
By external factors evaluation matrix we realize that MCB is perfectly working and making its strategies
properly. MCB got the weighted score of 2.77 for it external opportunities and threat from its
competitors, economically, socially and politically ,in all these factors MCB working in better position,
and is aware of its opportunities and threats and sorting them out. Besides this score MCB can further do
better and more perfectly to get the better score and survive in industry.

IFE MATRIX
A step in conducting an internal strategic management audit is to construct an Internal Factor
Evaluation (IFE) Matrix. This summarizes the major strengths and weaknesses in the functional areas
of business, and it also provides a basis for identifying and evaluating relationships among those areas.
We have made intuitive judgment in developing IFE Matrix, which is given below:
1 = Major weakness
2 = Minor weakness
3 = Minor strength
4 = Major strength
IFE Matrix for MCB bank
Key Internal Factors weight rating weighted

score
STRENGTHS
1 The largest private sector bank in Pakistan with a network 0.06 4 0.24
. of almost 1000 domestic and foreign branches.

2 First bank to privatize, which has, now become the leader 0.08 4 0.32
. in market with largest on line ATM network in the country.

3 Bank’s emphasis on consumer banking by providing them 0.07 4 0.28


. with innovative saving schemes, products and services
suiting best to their life style.

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Strategy formulation

4 Extension and improvement in services to domestic as well 0.04 3 0.12


. as foreign customer.

5 MCB instant financing products for customer wanting 0.04 3 0.12


. instant loan facility at MCB branches.

6 24 hours cash access through ATM. 0.03 3 0.9


.

7 Pioneer in introduction of MCB products Cards and RTC, 0.05 4 0.20


. which minimize the degree of risk.

8 Attention and sensitivity to competition prevailing in the 0.04 4 0.16


. country.

9 Easy access to the customers at their residential localities 0.03 4 0.12


. through a large number of branches.

1 MCB has a brand name and recognition. 0.06 3 0.18


0
.

1 The current customers list of MCB is very large including 0.07 4 0.28
1 govt authorities and large companies and having a large
. number of deposit of around 280.

WEAKNESSES
1 Customers having account, with small amounts are not 0.03 2 0.6
. given some services and dealing to those with high
accounts.

2 Number of branches is decreasing because of low 0.03 2 0.06


. profitability.

3 A sense Insecurity of jobs, with the down sizing, among 0.05 2 0.10
. the employees is found.

4 Experienced but old staff, who are not aware of using 0.05 1 0.05

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Strategy formulation

modern technologies/ equipments?

5 Political pressure from vested interest group selection. 0.06 1 0.06


.

6 A very small foreign network 0.04 1 0.04


.

7 Financial weaknesses i.e. excess operating cost 0.05 1 0.05


.

8 Human Resources i.e. low morale due to following factors 0.05 1 0.05
. No development
No database
9 Not many advances to agriculture sector and small and 0.04 2 0.08
. medium enterprises.

1 Untapped markets due to HR and marketing 0.03 1 0.03


0
.

Total 2.67
1.00

Interpretation:
In internal factor evaluation matrix we concluded that MCB also working better for its strength and
weaknesses and trying to overcome its weaknesses and make them its opportunities. MCB planning and
strategies for its internal factors need more attention and need to be maintained then its external factor as
its external factor score is higher than its internal factor score .

STAGE 2: MATCHING STAGE

BOSTON CONSULTING GROUP MATRIX OF MCB


The BCG Matrix made a significant contribution to strategic management and continues to
be an important strategic tool used by companies today. The matrix provides a composite
picture of the strategic position of each separate business within a company so that the

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Strategy formulation

management can determine the strengths and the needs of all sectors of the firm. the BCG
or growth- share matrix imposes a two- dimensional analysis on management of Strategic
Business Units: a comparative analysis of business strength and an assessment of the
environment. The business strength measure is the business Relative Market share. The
environmental measure is the Market Growth Rate. BCG Matrix: The market growth rate
measures industry attractiveness.

The Boston Matrix categorizes opportunities into four groups, shown on axes of Market
Growth and Market Share:

1.0 .05 0.0

-20

Dogs: Low Market Share / Low Market Growth


It should be divested, liquidated or trimmed down through retrenchment

Cash Cows:
High Market Share / Low Market Growth
product development or diversification are attractive strategies for them. Retrenchment and
divestiture are also appropriate strategies for them.

22
Strategy formulation

Stars:
High Market Share / High Market Growth
Forward, backward, and horizontal integration along with market penetration, market
development and product development are appropriate strategies for these divisions.

Question Marks (Problem Child):


Low Market Share / High Market Growth
They aren't generating much revenue right now because you don't have a large market
share. But, they are in high growth markets so the potential to make money is there.
Intensive strategies are market penetration market development and product development.

MCB DATA

Division Relative Market share Industry Growth rate BCG matrix


MCB High Low Cash cows
Corporate banking High Low Cash cows
Islamic banking High Low Cash cows
Online services High High Stars
Personal banking High low Cash cows
Virtual banking Low high ?

Interpretation
The MCB bank made substation progress, recording strong growth in revenues and
earnings. MCB is one of the leading banks of Pakistan with a market share of 12.5% in the
industry. MCB was once in stars but it didn’t utilize its profit, there was a chance of
horizontal integration by purchasing RBS shares which wasn’t availed due to problem in
rates of shares from RBS Hence MCB lie in cash cows they generate cash in excess of their
needs product development and diversification may be attractive strategies for MCB,
however retrenchment and divestiture are appropriate strategies.

THE GRAND STRATEGY MATRIX FOR MCB

23
Strategy formulation

This matrix is a tool used to formulate alternative strategies. There are four quadrants of the
Grand Strategy Matrix. The matrix uses only two factors, competitive position and market
growth; to decide which quadrant a company is in. The most ideal position to be in is
quadrant one. Here a company is well positioned to take full advantage of market growth.
Companies in quadrant two because of their weak competitive position are unable to take
advantage of market growth. Companies in quadrant III are in trouble because there is not
much market growth and they are in a compromising situation something has to be done
quickly to avoid further losses. In quadrant IV, these companies are major players, but
there is not much growth in their industries. These companies need to look to create
markets in areas of high growth.

The banking Industry has slow market growth rate. MCB has an extremely strong position
by having major market share. As result of these two factors MCB is in the fourth quadrant.
The company should consider concentrating on related diversification, unrelated
diversification & joint venture. Also product development is an appropriate strategy.
Because of their competitive position the company is able to more aggressive the risks
which they take.

Interpretation:
As MCB is having strong competitive position but the growth of banking sector in
Pakistan is low, so MCB lies in quadrant IV

24
Strategy formulation

Reason:
MCB just got award of “Best bank of the Asia” on providing best services. Most of Govt.
employees got their salaries from MCB. I.e. most of govt. companies have accounts in
MCB. It issues prize bonds in local market.

IE MATRIX:

Grow & Build

Market Penetration
Market Development
Product Development
Backward Integration
Forward Integration
Horizontal Integration

Hold & Maintain

Market Penetration
Product Development

25
Strategy formulation

Harvest or Divest

Retrenchment
Divestiture
Liquidation

IE MATRIX FOR MCB:

Interpretation:
As EFE score of MCB is 2.67 and IFE score is 2.77, so according to IE Matrix MCB lies in V cell.
Which is hold and maintain And MCB should implement incentives strategy this includes market
penetration and product development to do further better and perfectly and again to move in stars
position by increasing its growth rate also.

STAGE 3: DECISION STAGE


THE QUANTITATIVE STRATEGIC PLANNING MATRIX
26
Strategy formulation

The QSPM takes the conclusions drawn from the previous analysis and helps to determine the
relative attractiveness of feasible alternative actions.

The format of the QSPM consists of the listing on the left column the factors. These factors are
divided into opportunities, threats, strengths, and weaknesses. This information is taken from the
EFE and IFE Matrix. In the next column the weights used for each factor in the EFE and IFE
Matrices are listed. The top row of the QSPM is made up of strategies derived from the IE, Grand
and BCG Matrix. The range for Attractive score (AS) is given by 1 = not attractive, 2 = somewhat
attractive, 3 = reasonably attractive, 4 = highly attractive. dash (-) is used to indicate that the key
factor does not affect the choice being made. The Total Attractiveness Score is obtaining by
multiplying the weights by attractive score. For MCB bank, there are two strategies the company
should consider.

1.Market Penetration (increase number of employees) because from IFE and EFE matrix we
concluded that as its IFE score is less that its EFC score so MCB need to work on its SW from
which no of employees is one strategy which is selected from its IE matrix, product development is
not considered because MCB product and services are already in perfect and better condition.

2.Related diversification (formation of software) selected from the result of its BCG and grand
strategy matrix MCB cant do the unrelated diversification because its market share in the industry
is already in stronger position it have to do something for the betterment of its industry sales
growth rate.

A QSPM FOR MCB


STRATEGIC ALTERNATIVES
Market penetration Related diversification
Increase number of Formation of software
employees house
KEY FACTORS WEIGHT AS TAS AS TAS
OPPORTUNITIES
1. Largest ATM network 0.04 --- --- 4 0.16
2. MCB can open women 0.03 3 0.09 --- ---
branches
3. Growing policies of 0.06 --- --- --- ---
government on business
4. Expand its new technological 0.05 --- --- 4 0.20
advancement
5. Focus on small business, 0.02 2 0.04 --- ---
export/ import sector
6. To open overseas branches 0.07 4 0.28 3 0.21

7. The formation of new 0.04 3 0.12 2 0.08


marketing teams
8. It can expand its Islamic 0.06 3 0.18 2 0.12

27
Strategy formulation

banking.
9. Stronger position to recover 0.04 --- --- --- ---
bad debts
10. They expand its ATM &
branch to other countries. 0.07 3 0.21 4 0.28
THREATS
1. Privatization of other domestic 0.06 --- --- 1 0.06
banks
2. Services provided by foreign 0.04 2 0.08 4 0.16
banks to their customers.
3. Inconsistency in government 0.05 --- --- --- ---
policies regarding to business
and economic sector.
4. Growing global technological 0.03 --- ---- 4 0.12
advancement.
5. Strict regulations by the 0.06 --- --- 2 0.12
government over credit
facilities to the customers as to
meet the prudential
regulations.
6. Rising customer’s 0.05 2 0.10 3 0.15
expectations.
7. Slower economic growth rate 0.06 2 0.12 2 0.12
of the country.
8. Inflation rate is high. 0.04 3 0.12 2 0.08
9. GNP and GDP rates are low 0.06 3 0.18 --- ---
10. Threat from Alfalah, UBL and 0.07 2 0.14 2 0.14
NBP in car and house
financing.
TOTAL 1.00 1.66 2

STRENGTHS
1. largest private sector bank with 0.06 4 0.24 3 0.18
a network of 1026 branches.
2. 1st bank to privatize, now 0.08 2 0.16 4 0.32
become the leader in market
3. Bank emphasis on consumer 0.07 --- --- 3 0.21
banking by saving schemes
4. Extension in services to 0.04 3 0.12 3 0.12
domestic & foreign customer.
5. MCB instant financing. 0.04 --- 2 0.08
6. 24 hours cash access through 0.03 --- --- 3 0.09
ATM.
7. Pioneer in introduction of 0.05 1 0.05 2 0.10
MCB products Cards and RTC
8. Attention and sensitivity to 0.04 2 0.08 3 0.12

28
Strategy formulation

competition prevailing in the


country.
9. Easy access to the customers 0.03 2 0.06 --- ---
localities through branches.
10. MCB has a brand name and 0.06 --- --- --- ---
recognition.
11. The current customers list of 0.07 2 0.14 3 0.21
MCB is very large including
large number of deposits 280.

WEAKNESSES
1. Customers having account, 0.03 --- --- 3 0.09
with small amounts are not
given some services
2. Number of branches is 0.03 2 0.06 2 0.06
decreasing because of low
profitability.
3. Insecurity of jobs, with down 0.05 3 0.15 --- ---
sizing, among employees
4. Experienced but old staff, no 0.05 3 0.15 3 0.15
awareness of modern tech
5. Political pressure from vested 0.06 --- --- --- ---
interest group selection.
6. A very small foreign network 0.04 3 0.12 3 0.12

7. Financial weaknesses i.e. 0.05 --- --- 3 0.15


excess operating cost
8. Human Resources i.e. low 0.05 3 0.15 2 0.10
morale due to, No
development No database
9. Not many advances to 0.04 2 0.08 2 0.08
agriculture sector
10. Untapped markets due to HR 0.03 2 0.06 --- ---
and marketing
Total 1.00 1.62 2.18
SUM TOTAL 2.00 3.28 4.18
ATTRACTIVENESS
SCORE
Since related diversification (Formation of software house) has greater total attractiveness
score, we have planned to implement related diversification for MCB bank.

RESULT:

Related diversification strategy:


29
Strategy formulation

A related diversification strategy seeks to adding new but related products or services.

As MCB has bought software for data base SYMBOL from Malaysia, which cost high. As
MCB is trying to add new but related product or service into product and service line, for this
purpose, MCB can start its own software house. So, that cost which expands on buying software
from other countries or companies can be saved.

Else MCB has many products which lie in cash cows and generate excess cash, so the excess cash
can be used in formation of MCB’S software house. In future it is hoped that due to KIBOR
banking sector growth will be increased in Pakistan. Many banks will jump into banking sector,
they will need software’s and they will come to MCB software house definitely which will be
profitable for MCB in market share position as well as in industry growth rate..

MCB is pursuing related diversification strategy because:-

1. MCB already has excess cash which needs to be investing some where.
2. As the growth of banking sector in Pakistan is low due to many factors i-e
inflation, GDP, GNP rate etc. so, it needs to be diversified, to increased
market share.

Suggestions:
1. Training can be provided with job rotations so each of the employees is capable of doing others
work in case of emergency, this will ensure no delays are met.

2. As MCB earning a lot of profit stock options should be given to every employee.

3. Workers need more computer training.

4. MCB needs to invest more in technology and bring all banking procedures up-to-date.

5. They should implement advance technology and make it one window shopping or one window
service where each teller is capable of handling every transaction for example payments, deposits,
transfers, bill payments, foreign exchange, ATM card issue and opening of new account. This will
make MCB more proficient in customer service.

6. ATM network needs to be updated more to handle transfers, deposits, bill payments and print
statements. This will free up a lot staff time.

30