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 bank’s 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 “Bank’s 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 Bank’s “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 weight rating weight score

1. BOP support agriculture and industry sector. 0.2 4 0.8

2. BOP focus is on customer satisfaction. 0.12 3 0.36

3. Focus on e-banking. 0.1 2 0.2

4. Punjab schemes are supported by BOP. 0.16 4 0.64

5. Adopting new technology. 0.12 3 0.36

Threats

6. Economic growth slow. 0.1 3 0.3

7. Lacking of trust in BOP 0.07 1 0.07

8. Facing strong competitor. 0.13 3 0.39

Total 1 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 weight rating total

BOP 51% share by the government of Punjab. 0.2 4 0.8

Able to swift business environment. 0.12 3 0.36

Bank work under (IRAF) questionnaire. 0.1 3 0.3

Fully committed to follower road map. 0.07 2 0.14

BOP work fairly with their customer. 0.14 3 0.42

Weakness

Loosing the customer trust due to scam. 0.1 2 0.2

Lacking of internal controls. 0.09 3 0.27

No Advertisement on electronic media. 0.08 4 0.32

The State Bank of Pakistan control is weak. 0.1 3 0.3

Total 1 3.11

Competitive profile matrix

BOP MCB UBL

Key success factors weight rating total rating total rating total

Advertising 0.2 1 0.2 2 0.4 4 0.8

Products 0.12 3 0.36 3 0.36 3 0.36

Management 0.13 3 0.39 4 0.52 4 0.52

Financial position 0.2 2 0.4 3 0.6 4 0.8

Customer loyalty 0.09 3 0.27 3 0.27 3 0.27

Market share 0.11 2 0.22 3 0.33 3 0.33

Growth 0.15 3 0.45 2 0.3 3 0.45

Total 1 2.29 2.78 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 Weakness

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.

1. Loosing the customer trust due to scam.

2. Lacking of internal controls3. No

advertisement on electronic media.

4. The State Bank of Pakistan control is weak

Opportunities OS OW1. 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.

(S1,O1) since the bank of Punjab is hold by the government of Punjab and we all know Punjab is the agriculture land so different kind of finance package should be launch for the famers.(S5,O2) since bank of Punjab want to build customer relationship so they work hard and provide satisfaction to them

(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.

Threats TS TW1. Economic growth

slow. 2. Lacking of trust

in BOP3. Facing strong

competitor

(T1,S2) BOP always swift with the business environment but the economic growth is slow not many new business are starting.

(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) medium (.50) low (0.0)

High (+20)

Industry sales

Growth rate

Medium (0)

Low (-20)

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 strong

Competition Competition

Position Position

BANK OF PUNJAB

Star question mark

Cash cow Dogs

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 7 Aggressive

BANK OF PUNJAB 6

5

4

3

2

CP 1 IP

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

-1

-2

Defensive -3 Competitive

-4

-5

-6

-7

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 II III

High (3 to 4)

BANK OF PUNJAB

EFE total weight score

IV V VI

Medium (2 to 2.99)

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

SWOT SPACE BCG IE Grand STRATEGY

TOTAL

Backward integration

- - - 1 - 1

Forward integration

- - - 1 - 1

Horizontal integration

- - - 1 - 1

Market penetration

1 1 1 1 1 5

Market development

1 1 1 1 1 5

Diversification

- - 1 - -

Product development

1 1 1 - 1 4

liquidity - - - - 1 1

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 controls3. No advertisement on electronic media.4. The State Bank of Pakistan control is

weak

Total

Opportunities

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.

Threats

1. Economic growth slow. 2. Lacking of trust in BOP3. Facing strong competitor

Total

Weight AS TAS AS TAS

0.2 3 0.6 3 0.6

0.12 - -0.1 - -

0.07 4 0.28 3 0.210.14 3 0.42 2 0.28

0.1 - -

0.09 - -0.08 - -0.1 3 0.3 4 0.4

1

0.2 4 0.8 3 0.6 0.12 - -0.1 3 0.3 4 0.40.16 2 0.32 1 0.160.12 - -

0.1 2 0.2 2 0.20.07 - -0.13 4 0.52 4 0.52

1 3.74 3.37

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

APPENDIX’S