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ASKARI BANK LIMITED

STRATEGIC MANAGEMENT

DEPARTMENT OF MANAGEMENT SCIENCES

LAHORE COLLEGE FOR WOMEN UNIVERSITY

TABLE OF CONTENTS

HISTORY AND BACKGROUND .............................................................................. 3 SWOT ANALYSIS.................................................................................................. 4


STRENGTHS.................................................................................................................................. 4 WEAKNESSES ............................................................................................................................... 7 OPPORTUNITIES......................................................................................................................... 9 THREATS .................................................................................................................................... 11

PESTEL MODEL .................................................................................................. 14


POLITICAL ANALYSIS .................................................................................................................. 14 ECONOMIC ANALYSIS ................................................................................................................ 15 SOCIAL ANALYSIS ....................................................................................................................... 16 TECHNOLOGICAL ANALYSIS ....................................................................................................... 16 ENVIRONMENTAL ANALYSIS ..................................................................................................... 16 LEGAL ANALYSIS ........................................................................................................................ 17

HISTORY AND BACKGROUND


Pakistan Armed Forces has established several organizations such as Army Welfare Trust (AWT), Fauji Foundation and Shaheen Foundation for running industrial and commercial enterprises. These organizations have been established with the aim to provide employment for exservicemen, besides creating job opportunities for others. The story of AWT is that of perseverance, innovation, business acumen and going beyond the frontiers in agriculture, cement, pharmaceuticals, leasing, insurance, banking, energy, information technology and many other diverse fields. Being a subsidiary business unit, ABL Limited is powered by Army Welfare Trust (AWT).

21 years of banking
ABL was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operations on April 1, 1992, and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges and its share is currently the highest quoted from among the new private sector banks in Pakistan. ABL has expanded into a nationwide presence of 245 branches / sub-branches, including 31 dedicated Islamic banking branches, and a wholesale bank branch in the Kingdom of Bahrain. A shared network of 5,319 online ATMs covering major cities of Pakistan, internet banking (i-net) and call centers operating on 24/7 basis supports the alternate delivery channels for customer service. As at December 31, 2011 the Bank had equity of Rs. 17.8 billion and total assets of Rs. 343.8 billion, with 919,096 banking customers, serviced by our 5,994 employees. Askari Investment Management Limited and Askari Securities Limited are subsidiaries of ABL primarily engaged in managing mutual funds and share brokerage, respectively.

Askari Commercial Bank Limited was the first bank in Pakistan to offer Internet banking Services and B2B e-commerce (Business to Business electronic Commerce) solutions for merchants looking to purchase on credit. ABL is the only bank with its operational head office in the twin cities of Rawalpindi-Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. This created its own challenges and opportunities, and forced as to evolve an outward-looking strategy in terms of Askari market emphasis. As a result, Askari developed a geographically diversified assets base instead of a concentration and heavy reliance on business in the major commercial centers of Karachi and Lahore, where most other banks have their operational Head offices.
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SWOT ANALYSIS
SWOT analysis is one of the most expedient technique or tool used in the Strategic Management process for conducting the situation analysis of an organization. The proper analysis of the firm is given in the form of Strengths, Weaknesses, Opportunities and Threats (SWOT) the company presently facing or can be forecasted for the future. It is a common approach to make assessments in terms of internal and external environment of the organization, and to formulate strategies analyzing its internal strengths and weakness, external opportunities and threats, coming up is the SWOT analysis for the ABL. Such an analysis is very important for the management in retaining the strength, overcoming the weaknesses, capitalizing over the emerging market opportunities, and carving ways to successfully tackle with the threats and ultimately converting them in the strengths for the organization.

STRENGTHS
First we analyze the strengths of ABL that are as follows:

COMPUTERIZATION
The main strength of ABL Limited is that all of its branches are fully computerized and they have latest softwares available to keep the records of their customers account and other important information up-to-date. It reduces manual work and provides good customer services.

WELL-KNITTED BRANCH NETWORK


ABL has a well-knitted and adequately equipped branch networking system that efficiently covers both the domestic and international markets. ABL has the largest branch networking in Pakistan comprising of 245 branches/sub branches.

LARGEST PRIVATE BANK


ABL is one of the largest private banks with deposit base of Rs.167.68 billion/- showing constant growth over the period 1999 till day and with many online branches in major cities of Pakistan.

CUSTOMERS FEEDBACK
Customers are allowed to give suggestions regarding banking services. If there is any complaint by the customer the bank authorities investigates the reasons for complaint.
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Complaint monitoring system is excellent at ABL that shows bank values more to its customers.

INTERNATIONAL MARKETS
ACBL is actively participating in international markets and has recently introduced credit cards in UAE, Bahrain and Qatar, being backed by 24 hours call center out of UAE.

THE ABL ATM SWITCH-NET


I.T group of ABL has been able to create the largest network for secure electronic financial transactions in Pakistan.

INFORMATION SYSTEM
ABL has also invested heavily in information technology resources, which has now allowed bank to develop one of the most comprehensive and advanced system available. With the help of this system ABL has now achieved an online status via real time facilities and features available through nationwide network. With the team of highly qualified professionals, ABL is able to use its real time system resources to provide customers with comprehensive account of their transaction on a daily basis. ABL is one of those few banks who are reaping the benefits of electronic transaction.

LEADERSHIP IN ATMS
With over 5,319 online ATMs network ABL is again an undoubted industry leader with connectivity extended to above than twenty five cities of Pakistan . ABL ATMs not only serve 24 hours cash convenience but also improve on the counter services and turnaround time at cash counters.

WORLDWIDE MASTER CARD


The ABL ATMS Master Card has become a global service furthering the convenience to the customers. Traveling customers can access their accounts from a large number of internationally deployed ATMs and point of sale unit.

STRONG REPUTE
ABL is a subsidiary of ARMY WELFAE TRUST (AWT) so it has a strong army background and it definitely adds to its prestige and provides it an edge over the competitors.

EASY ACCESS
ABL has a widespread network providing easy access to its customers where ever they are. ABL has a network of 245 branches extended throughout Pakistan. ABL branches are located in the commercial area, so that the customers face no problems in reaching to the bank.

TRANSPIRANCY OF ACCOUNTS
ABL has won several national awards in recognition to the transparency with which it presents its annual reports. The annual financial statement are prepared by the bank in accordance with the international accounting standard and are also published quarterly and half yearly accounts to provide information to their stakeholders for taking well informed decisions.

INCORPORATING NEW IT PRACTICES


ABL management is quite prepared to adopt the latest advancements in technology resulting in revolution in the banking operations such as check clearing process, computer based teller equipment and electronic funds transfers among the others.

PHONE BANKING SERVICE


In order to save their customers time, ABL provides the good Phone banking service that is very attractive especially for those customers who dont have time to personally visit to the bank.

SOCIAL RESPONSIBILITY
The organizations showing concern for the people, ethics, and environment enjoy good public reputation and are able to reap the benefits in the long run. ABL management is quite sensitive to this issue.

PERSONALIZED SERVICES
ABL offers personalized services of the staff to the employees. The management of the bank believes in customer oriented banking rather than the product oriented banking. The products and services designed by the bank are specifically tailored to the individual needs of its customers.

CUSTOMER ORIENTED BANKING


ABLs vision is to be the bank of first choice. In order to achieve its vision, ABL offers the very highest levels of personalized banking to match customers unique status. The priority banking centers of the bank offer an unmatched where the customer receives highly privileged services in a highly elegant environment. It gives the chance of experiencing new standards in banking. Designed especially for those who appreciate only the finest things in life.

INTERNET BANKING
ABL is the first bank to introduce i-banking which provides convenience to our customers by enabling them to gain access to their account and carry out any transaction sitting at home.

MOBILE ATM BUS SERVICE


ABL has launched its Mobile ATM Bus Service, which is the Pakistans First Mobile ATM Bus Service. No other bank has taken initiative of mobile ATM Bus yet.

WEAKNESSES
The weaknesses of ABL are listed as:

IRREVOCABLE DEBTS
Due to risks such as political economy and legal the bank has suffered losses the main reason was piling up to of large amount of irrevocable debts.

TRADITIONAL WAYS OF RECORDING TRANSACTIONS


The bank has still some of the traditional ways of operations in this advanced technological environment. ABL has use computerized accounting system but, still the bankers use to make their entries in the accounting register also. For example account opening registers, manual checking of vouchers.

INDIVIDUAL DIFFERENCES
In Askari Bank the individual difference has strong impact on the organization s performance due to wrong criteria of selection of employees. So with the passage of time individual differences start increasing which undermine the goodwill of the organization.
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LACK OF PROPER EQUIPMENT AND PROCEDURES


No availability of sophisticated equipments in branches and lengthy credit processing and documentation procedures.

POOR MARKETING CAMPAIGN


Banks marketing department is not very strong. Accumulated losses pushed the bank to cut down its promotional activities in order to reduce expenses for last few years. The advertising media used by Askari bank for publicity include mostly newspapers and journals. But the most powerful and effective media is of television through which people in Pakistan as well as outside Pakistan can have instant information about new products and developments of ABL.

JOB ROTOTATION
The employees of ABL are constantly subjected to job rotation. It keeps back from gaining complete know-how about a particular department.

CENTRALIZED MANAGEMENT PRACTICES


The management system in ABL is quite centralized leaving all the decision-making activities to the upper management only. Employee empowerment is also over looked due to such management policy. I personally observed that delay occurred in the operations of the employees only due to the fact that they had not got any instructions from the head office.

LACK OF TRAINING PROGRAMS


There is no specific training program arranged for the new recruiters. They have to learn based on their observations and also their mistakes. It takes a bit time for the fresh one to learn the banking the result is huge amount of blunders, mistakes etc. resulting in monetary and nonmonetary losses for the bank. There is pressure not only on the new learner but also on the person placed upon with this responsibility.

LOW JOB SATISFACTION


Understanding and the effective management of the human resources is the most difficult challenge faced not only by the bank but by all the organizations. Even though the people have been sacrificed in the new organizational developments, it is becoming clear that the true lasting competitive advantage comes through human resources and how they are managed. ABL seems to not focusing on this highly critical issue as the job satisfaction level of the employees working at ABL, was quite low.

OPPORTUNITIES
These are positive external environmental factors affecting the ABL:

EXPANSION OPPURTUNITIES
ABL growing business requires further expansion of branch network which would, in return, open great opportunities for ABL for the expansion of its business. ABL can also extend its network in other countries. Increasing the product range to fulfill customer requirements and ATM network, ABL can expand its 24 hours cash facilities to other cities of the country in order to meet growing market demand. ABL as a largest Pvt. Bank can also increase its market share by producing good, market oriented and customer needs satisfying products.

NEW MODES OF BANKING SERVICES


Askari Bank is now looking into new ways of providing banking services to its customers. New concept of mobile banking has been introduced by the bank, which will prove to be remarkable success in the field of consumer banking.

OPPORTUNITIES IN LOAN BUSINESS


Askari bank is an active player in the loan business. Its strength in loaning stems from its ability to forge strong relationships not only with borrowers but also with bank investors. Bank can capture more markets by introducing new products for business community, as it is the only group, which can contribute more towards increasing the assets of the bank.

FOREIGN REMITTAMCES AND TRADE


Foreign remittances are another area as present worldwide control system over transfer of currencies through illegal channels has facilitated the area for the banks. Foreign Trade is the focus of quite a lot banks. It has become an ideal bank for the importers and exporters but still a lot of opportunities are yet to be discovered.

RECRUITING PROFESSIONALS
There is a large pool of free MBA graduates who can be hired to achieve professionalism on its organizational culture.

TARGETTING THE COMPUTER LITERATE SEGMENT


Now computer literacy rate is increasing and its really big opportunity for Askari Bank that when public will have more knowledge about computers than they will be more attractive to the innovative products of Askari bank.

GROWING DEMAND IN LEASING BUSNESS


Increasing need and potential of leasing in Pakistan provide ABL an opportunity to utilize its skills and efficiencies in leasing business as well.

TECHNOLOGICAL ADVANCEMENTS
IT has become the future of many organizations in this 21 st century. ABL also has an opportunity to expend its new technological advancement like, Tele banking and Internet banking facilities in order to serve the customers more efficiently.

FOREIGN INVESTMENT
Due to efficient and experienced management group, ABL can also improve well and expend its foreign operation successfully. It is external opportunity for Askari commercial bank to avail it and take a competitive edge and create a strong identity worldwide.

BRANCHES IN REMOTE AREAS


ABL can expand its market segmentation geographically by extending its banking services to remote areas where the banking needs of people have not been previously met.

OFFERING ISLAMIC BANKING IN ALL BRANCHES


Currently, ABL entertains Islamic Banking in only a few of its branches. By offering its Islamic Banking services in all of its branches, ABL can definitely have an edge over its competitors.

INCREASING CUSTOMER DEPOSITS


It is opportunity for Askari commercial bank to steady increase customer deposit by adopting new marketing and promotion scheme and lunch new scheme for their customer.

USE OF ATM AS A CREDIT CARD


It can be an opportunity for ABL to introduce ATM also as a credit card which will invite a different segment and which will improve profitability. They can also cut costs in this way.

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E-BANKING
ABL should emphasize on E - Banking. In which Bank can design a universal account like other foreign banks, to enhance online facilities.

TARGETTING ILLITERATE SEGMENT


Illiterate people are also an opportunity for ABL in regarding this service. ABL can serve these people by giving instructions in Audio and in Urdu. They can a l s o h a v e instructions written in Urdu on card or even they can have a display in Urdu. This way they can increase their target market, market share and profitability.

THREATS
POLITICAL INSTABILITY
Political instability is also threat for the bank because instability leads to lower business. The same situation is prevailing in Pakistan.

INFLATION
In our county, the rate of inflation is increasing along with the unemployment. So due to increase in price of the products, the savings of the nation is decreasing with passage of time. So it is threat for the banking sector. In the future, the deposits of the bank will decrease.

COMPETITION BY FOREGN BANKS


Increase in competition due to increasing number of foreign banks offering highly specialized and attractive services.

CHANGING TRENDS IN IT
Growing global technological advancements and adaptation of modern style of management in banking sector.

PROMTIONAL ACTIVITIES OF COMPETITORS


Extensive promotional campaigns run by competitors are another threat for ABL.
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COMPETITION BY LOCAL BANKS


As the ABL leading in the domestic commercial banking sector in Pakistan, as such there are no close competitors of ABL but every commercial bank is the competitor for each other. But mainly these are Habib Bank Limited, Bank Al-Falah, MCB etc. they are threats for ABL. At any time they can capture the clients of ABL by providing any benefit more than that.

LOW ATTRACTION FOR INVESTORS


As the banking procedures are complicated that is why general public takes interest into other options of investments like in shares of companies and in Term Finance Certificates.Being a commercial bank, ABL faces considerable competition in attracting deposits from individuals or small investors.

HIGH EMPLOYEES TURNOVER


Employee satisfaction level is very low in ABL due to stiff managerial policies. Thus, its employees shift to other organizations whenever they get an opportunity resulting in high turnover which is not a healthy sign for the bank. If this continues in the long run, then ABL may lose its repute.

RECRUITMENT PROCEDURES
ABL high employee turnover creates a need for fresh recruitment. Recruitment is a quite expensive, time-consuming and complicated procedure.

HIGH CHARGES
The charges of the services that the bank receives from the customers are higher than their competitors. So it loses many customers for this reason. The schedules of charges indicate that the fees charged by the bank on the various services it provides are extremely high. It may result in decrease in the number of its existing customers.

LESS EXPERIENCED STAFF


ABL is short of experienced and well trained staff owing to high turnover. Majority of the staff working in the bank branches is quite young and inexperienced. If the bank fails to bring down its high employees turnover, then it would be lacking the most important resources of any organization i.e. the experienced staff.

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EXPENSE BASE
The expense base will be a major threat to the ATM because it will impact the need to spend in order to modernize ABLs customer interface. Expenditure has to be incurred on Branch rationalization and computerization. This expenditure is essential, given poor infra structure at Branch level resulting from years of underinvestment. Because 90million is sufficient money to invest to open an ATM there should be a strong expense base to support the expansion of ATM.

LEGAL REGULATION
Frequent change in government policies creates new challenges for the top management. ABL also faces such threats particularly when policies regarding taxation are subjected to changes. It is always threat for commercial banks. Because SBP is the role authority of Government, which monitors all commercial banks affairs, whenever it feels any regulation, it imposes without consideration of commercial banks plans etc.

The SWOT analysis is a mirror image of the banks present conditions. The management can elaborate strategic plans for capitalizing the available opportunities. ABL is continuously introducing new innovative products so as to cope with changing environment. It has a diversifiable culture. It has been leader of introducing many new ideas, products which are earning a lot for the bank and this struggle is still continuous with same acceleration. No bank has given such a comprehensive motive so if we want to look at the future of Askari bank they are going to touch new horizons of technology.

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PESTEL MODEL
PESTEL is an acronym that stands for Political, Economical, Social, Technological, Environmental and Legal. It is used to describe an analysis that is used for determining the opportunities and risks of global expansion. Sometimes it is described as a PEST or PESTLE analysis. Askari bank identified sustainability as a means of recognizing and managing the economic, social and other environmental issues across the groups and at the same time, contributing to the wellness of society. PESTEL analysis helps in identifying the external factors that are or may affect the operations of an organization. PESTEL analysis of ABL is as follows:

POLITICAL ANALYSIS
Over past 10 years, Pakistan has been a victim of political instability. The main reasons behind it are war on terror, martial law, American interference in Pakistan and corruption. Operating in such a volatile political environment, ABL is facing numerous challenges. ABL has been surrounded by political factors such as Unpopular and weak government High level of corruption at all political levels Intense political activities throughout the country Violence in Karachi Military operation in SWAT And FATA Talibinization affecting Pakistan repute in the world High tax rates Frequent changes in taxation policies

Due to the currents law and order situation, ABL business was negatively affected as people particularly foreigners lost their confidence in Pakistan and hesitated to keep their deposits in Pakistan. Since Askari bank is part of Askari Welfare Trust which is run by Pakistan Army so it has the advantage of not being interfered directly by the government but political forces impact Askaris business through consumers and businesses which are affected directly by political instability.

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However, ABL has been successful in meeting all these political challenges as it has the advantage of a strong army background and also because it is considered as the most safe bank in the eyes of the customers.

ECONOMIC ANALYSIS
ABL belongs to an agro-based economy dwelling in a developing country Pakistan. So there are number of opportunities waiting for ABL as being a developing nation, investment potential is very high and also high loan-business may be expected. The outlook for the Pakistani banking sector remains relatively downbeat despite the potentially vast consumer market in the country. Pakistan has several characteristics that make for a favorable banking sector outlook for instance buoyant demographics, a domestic economy geared towards private consumption and an extremely under-banked population. But unfortunately, the economic conditions of Pakistan are not that ideal. ABL, like other banks has been bombarded with frequent economic loops and bounds namely: High rate of inflation Substantial decrease in foreign direct investment Fluctuating interest rates High cost of living Huge gap between different income groups A decrease in disposal income Immense increase in government debt Energy crisis High rate of interest

Due to high rates of inflation, people have been driven away from the culture of savings as the cost of living has increased and thus customers have few or no savings to deposit with bank. The gap between different social classes has also grown strong and vast thus it has become quite a challenge for ABL to meet the needs of all income groups. Energy crisis on the other hand has negatively affected many businesses who are also the customers of ABL. Loans accepted from the World Bank by our government have led to huge national debt, which is the cause of many economic ills, particularly the depreciation of Pak rupee and stiff tax policies. Thus ABL is forced to increase its prices charged for the services and products that it offers.

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Credit department of ABL has also experienced a slight decrease in its business as a reaction of high rates of interest that the customers have to pay for the loan that they advance from the bank.

SOCIAL ANALYSIS
Being a socially responsible bank, ABL takes a keen interest in analyzing and then anticipating social changes taking place in the society. In the past few years, customers have become more conscious about Islamic modes of banking and therefore, ABL has introduces Islamic banking in some of its branches. Also as mentioned earlier, saving culture has somewhat faded in Pakistan so ABL has taken initiatives to offer other products as well in order to keep its business going. People have become more comfortable with IT based products and services as it ensures convenience. There has been a marked increase in the use of credit cards in Pakistan but the usage is currently limited to educated middle class only. At the same time accelerated by the spread of internet in the country people are more inclined to us the net to do banking transactions specially bill payments and within the bank transactions. Owing to this, ABL was the first bank to introduce ATM-bus service, I-banking and tele-banking. Since Askari bank has the reputation of being a conservative bank so its consumers are quite loyal and will stay with the bank even under tough economic situation or in the presence of alternatives.

TECHNOLOGICAL ANALYSIS
IT has made the world a global village where everything is just a click away from your hand. . Askari has recently been investing heavily in Information Technology as a means of competitive advantage against large Pakistani banks and has now gained the status of ONLINE BANKING enabling real-time transactions to be made. The technology makes it possible to empower the system and establish a competitive advantage. Customers readily accept technological products such as ATM, Master card, and I-banking.

ENVIRONMENTAL ANALYSIS
As Pakistan is an agro-based economy, so the operations of ABL also affected by the way agricultural products are affected by environmental factors such as climate and weather conditions. The product of Askari bank named agricultural loans is specially affected by it.

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People have now also become more conscious about green products so they value the organizations taking active part in it. ABL has launched many awareness programs in this regard. Recently when floods hit many parts of Pakistan, ABL was again seen active in helping the victims.

LEGAL ANALYSIS
ABL has also been facing challenges as the legal priorities shifted time to time due to changes in government policies. Although the procedure of preparing financial reports has been the same but taxation policies, security concerns and legal papers regarding trade business have been changing due to trade legalities. Increase in minimum wage rate, rights given to minorities in Pakistan has also affected ABLs operations.

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