SWOT Analysis of MCB

Strengths

MCB Bank has earned a reputation in the market for extending quality services to the market vis-
à-vis its competitors. It has earned a strong Brand name in banking in a very short span of time.
As customer confidence in MCB escort it towards achieving their goals and objectives. It has the
premier number of linked branches in the country. The bank operates through a network of 1026
BRANCHES and over 300 ATMs across Pakistan, hence enabling them to serve customer in
superior way. MCB Bank has all the products under its belt, which help it to extend the
relationship with existing customer. MCB Bank has umbrella of products to offer their
customers, if once customer has relationship with the bank. Some Products, which MCB Banks
offering are Retail Banking, Business Banking, Merchant Establishment Services (EDC
Machine), Personal loans & Car loans, Demit Services with E-Broking, Mutual Fund (MCB
Banks the Distributor of all Mutual Fund), Insurance and Housing Loans. MCB is having an
edge over other banks in case of Salary Accounts. Most of the companies are having their Salary
Account with MCB even if their Current Account is with any other Bank. This is mainly because
of the huge network of ATMs and branches of MCB. MCB is only Bank which is having its
working hours from 8 to 8 for some branches which is one of the major strength of MCB Bank
with respect to nationwide business Industry. MCB Banks known for its aggressive marketing of
its products. Recent Endorsement of its product by famous celebrities and superior advertisement
to attract more customers. From its inception, MCB Bank has adopted a policy of selecting
internationally proven and specialized Packaged Systems for its technology. MCB bank’s
technology platform has been acknowledged globally as one of the best in terms of robustness,
flexibility and cost efficiency. MCB Banks in a position to leverage this platform to further build
cost and service advantage. MCB has a strong management team and have a very impressive
cash flow with an excellent financial performance. As MCB was awarded 1st Asian bank
providing good return on saving and current account to its customers.

Weaknesses

The bank targets only the top grade of clients and does not cater to the needs of small customers.
Due to this reason the bank may sometimes loose good clients. As well they have to concentrate
on their online banking to attract more customers as their online banking service has a weak
image in front of customers. MCB Bank has a defensive approach in lending. Mainly to IT &
ITES companies Bank do not provide loan as these companies are not having collaterals so bank
hesitate in giving loans to them. Because of this policy companies prefer nationalized banks and
MCB Banking turn sometimes loose potential customers. MCB Banks having little presence
Outside Pakistan, because of which companies prefer MNC Bank, mainly united bank limited
(UBL). So if MCB Bank tries to emerge outside Pakistan then it has a huge potential of
customers. MCB aggressive marketing has rapidly increasing its customer base. They are not
however, increasing the number of employees accordingly. This is leading to corrosion of the
standard of customer service.

Opportunities
MCB can improve insurance services to compete in market. MCB insurance premium is high
and return on claim is less in percentage. As other insurance companies are convincing their
customers to buy insurance policies. It has been noticed that MCB has not been recruiting
properly and their business need experts in various tax policies and service of bank. MCB has
associated itself with various social causes such as helping poor people for food and medical
treatment on low charges. MCB can improve their customer service as there is always a room to
add innovative techniques and polices which could lead to additional proficiency of the
institution. MCB recently introduces Mobile banking service, but most of the customers are
unaware of the service and MCB could work on adverting it to give benefits of it to their clients.

Threats

MCB is having sturdy competition in market with its competitors as some of them having their
branches nationwide and internationally as well. MCB is ready to provide all kind of services to
their clients online but they have to make it confidential that the data is being protected and
secure and cannot be leaked to third party. Branch managers are allowed to take decisions on
their own in regard to their branch but decisions made by individuals will be different and a
single wrong decision could escort towards intense losses to the institution. MCB has been
facing trouble in providing good service to uneducated customers to use electronic and
computerized machines.

PEST Analysis of MCB

The analysis of MCB will take in to account the general environment analysis, the competitor’s
analysis by comparing the products offered by the competitive banks and the departmental
analysis.

The general environment of takes in to account the external factors like politics, economy of
Pakistan, socio-cultural factors and technology. Now we will analyze these factors one by one
and check how these affect the working of MCB:

Political

The current situation of the government in Pakistan is directly affecting the policies of banks.
However, MCB tries hard to keep its business away from the politics but it is not an easy task.
MCB has no accounts of political leaders or parties. However, its Customer Service Department
faces peer pressure from such political parties.

As MCB is trapped in dual sanctions from the State Bank of Pakistan (SBP) and from the
European Union so the changing political environment is not so beneficial for the bank to
operate freely. The changing policies of the government, affects SBP which in return affects the
MCB rules and policies.

The government of Pakistan has privatized most of the banks. The number of government owned
banks have declined constantly, so these changes directly affect MCB.
Economical

The economy of any country has deep impact on any financial organization. Economic indicators
include Gross Domestic Product (GDP), inflation, balance of payment, debt of the government.
These below graphs will explain how economic conditions of Pakistan are adversely affecting
the banking system of Pakistan.

The pitiable economy of Pakistan and instable government is adversely affecting MCB and its
different departments; recently MCB has redundant many of its employees. The economy of our
Pakistan is very poor. Due to poor economy businesses are showing low profits and Pakistan
stock market is in great danger. Pakistan’s foreign debts are rising day by day, so such a situation
is a huge challenge for MCB to survive. Due to financial crisis in Pakistan the management of
MCB has to face stressful situations and also working environment. At present the MCB is not
extending loans but recovering the existing ones.

Social

MCB has been influenced by the socio-cultural factors. At present most of the European
countries are keeping their eyes on Pakistan as being the terrorist country, so people of Pakistan
are emotionally getting affected by it. Most of the foreign investments have been stopped in
Pakistan. Pakistani people are traditionalists who do not like the modern banking environment of
MCB. Some of the customers do not use ATMs they still prefer cash counters, so these kinds of
socio-cultural factors affect the banking environment and its operations.

Technological

Technology has a deep influence on different kinds of organizations whether banks or any kind
social welfare organizations. In MCB technology has great effect on the working environment.
Mostly all banks use computers none of the banks keep data manually so the bank has to be
continuously in touch with the modern ways of task performance. MCB is always ahead to
introduce new computer systems for keeping its staff up to date. The intranet facility is playing
an important role in enhancing the knowledge of staff. Due to technology that bank staff keeps in
touch with the customers through e – mail; ATMs and online banking is only possible due to
technology. In this way technology is playing its key role in and is helping management to
further improve its functions.

Conclusion:

Overall we can say that MCB is influenced by the economic position of Pakistan, which has
stopped it from extending loans to the customers. After that the policies of MCB are also
affecting its performance and free functioning. Social and technological issues are of secondary
importance but they also cannot be neglected. MCB is focusing positively regarding
technological issues but it should also keep its eye on the social cultural factors also.

Porters Five Forces Analysis of MCB

For further analysis of MCB environment, Porters Five Forces Analysis is also applied on the
bank. This analysis takes in to consideration the following factors:

Substitutes

Substitution of one product with another one increases the competition within an industry.
However, the perfect substitutes of banks are not available in the market at present, but people
still have choices of saving or investing their money. The people can save their money in their
own houses or they can deposit their money in the National Saving Centers (Banking
Intermediaries) which give protection to their assets. Aside from saving one can invest money in
stock market in form of shares / bonds or in real estate. These kinds of substitutes increase the
competition in the banking sector.

Competition

There is tough competition between different banks. There is a huge variety of public and private
banks already exist in the market, offering products on competitive prices. If we look at banking
products (loans, savings and current accounts) then Alfalah Bank, Meezan Bank, Habib Bank
and many others are offering wide range of products in this sector. The tough competition
between these banks increases the challenge which the MCB have to face. The competition
among various banks increases the switching of the customers form one bank’s product to the
other bank.

Threat of new entrants

The banking sector of any country has always potential of growth and competition. Mostly
foreign banks step in the developing countries for expanding their branches, not only this
mergers between foreign and local banks take place at large scale but Pakistan’s present
economic condition and government instability has arose the feelings of awe and terror among
most of the foreign banks to enter in the market. In future due to uncertainty and security
problems in Pakistan investors will not be willing to invest here. Due to overall financial
problems in the whole world new banks will not be entering in to the banking industry.

Power of buyer

Bargaining power of buyer is low where the products substitutes are not available and customers
are large in number. In case of banks there are lots of other banks and banking intermediaries,
having wide range of products, so power of buyer in banking sector is high. The bank cannot
force any customer to buy the desired product because this directly affects its reputation.
However, the bank can convince its customers by giving them special discount or rewards. If we
look at MCB we will find that the competitors are also offering products due to which customer
feel in power by saying that they can go to some other bank in case of dissatisfaction.

Bargaining power of suppliers

The lending power of bank is enhanced by its depositors as they are suppliers of the bank. It
allows bank to involve in other business activities to invest such as personal and business loans.
The suppliers then get interest on their amount as profit earned by the bank. Banks need to
concentrate on their policies as bargaining power of suppliers is very high and they move
towards highest interest rates.

Conclusion

According to Porters Five Forces analysis we can say that MCB has no fear of new entrants due
to the poor economic position of Pakistan. However, it should keep its eyes open regarding
mergers of various banks. There are two big threats; firstly from the buyers who can go to the
other banks and secondly form the substitutes like investment in stock market, so MCB should
carefully examine its task environment