BUSINESS POLICY AND STRATEGY

BANK ALFALAH LIMITED

Submitted To:
PROF. AMJAD HUSSAIN
Submitted By:
Saqqal Gondal (L1S14MBAM0008)
Ayesha Anwar (L1S14MBAM0055)
Maryam Mushtaq (L1S14MBAM1098)
Zahra Naqvi (L1S14MBAM0065)

UNIVERSITY OF CENTRAL PUNJAB
Date: 21 May, 2014









BANK ALFALAH LIMITED

Vision And Mission Statement Analysis
Vision :
To be a premier financial services organization, operating both locally and globally, offering a
complete range of financial products and services to diverse segments under one umbrella.
Mission :
To develop & deliver the most innovative products and deliver exceptional service quality which
contribute to strengthening brand equity strength and maximize value for the stakeholders of
the Bank.
COMPONENTS OF MISSION STATEMENT
Customer : Customers are mentioned in mission statement as stakeholders.
Products and Services : Products and services are mentioned in statement.
Markets : Markets are not clearly mentioned.
Technology : Technology is not mentioned.
Concern for Survival, Growth and Profitability : Factor of profitability is mentioned.
Philosophy: philosophy of bank is not clearly mentioned.
Self Concept : The firms distinctive competence is its quality services.
Concern For Public : This component is not mentioned in mission statement.
Concern For Employees : This component is not mentioned .

MISSING COMPONENTS OF MISSION STATEMENT
Markets
Technology
Philosophy
Concern For Employees
Concern For Public


Restated Vision
To be a market leader in financial sector by offering wide range of products and services to
diverse segment at both domestic and international level
Restated Mission Statement
The introduction of private sector bank in Pakistan with an international presence , to deliver
quality products and service through innovative technology and motivated workforce which
contribute to maximize value for customers of the bank.
COMPONENTS OF RESTATED MISSION STATEMENT
Customers : We have mentioned the customers in our mission statement because
customers are key part of an organization.
Products and Services: We have clearly mentioned the products and services of bank
because it is the most concerned area and customers are most interested in products
and services of organization.
Markets : We have defined the markets of the bank. Bank Alfalah is an international
bank.
Technology: we have mentioned the component of technology in mission statement
because technology is an important factor and customers are concerned about this
factor and they are conscious about technological enhancements.
Concern for Survival, Growth and Profitability : Factor of profitability is mentioned
because if the organization aim for profitability the customers will ultimately get the
profit.
Philosophy: component of philosophy is not mentioned
Self Concept : The firms distinctive competence is its quality services.
Concern for Public Image : This component is not mentioned.
Concern for Employees: This component is mentioned.






SWOT ANALYSIS
Strengths
The Banks Deposits increased by 15% in 2013 advances growth clocked 11% YoY;
faster than industry average of circa 78%.
Islamic banking division (Bank boasts a nation-wide network of 110 Islamic banking
branches and is ranked the no.2 Islamic Bank in Pakistan)
Backed by strong Abu Dhabi Group ( strong Abu Dhabi group having Warid telecom ltd,
wateen telecom ltd and Alfalah insurance etc)
High investment in information technology(Mobile, internet and ATM platforms).
PACRA, a premier rating agency of the country, has rated the bank AA (double A),
Entity Rating for long term and A1+ (A one plus) for the short term. These ratings denote
a very low expectation of credit risk, strong capacity for timely payment of financial
commitments in the long term and by highest capacity.
Leading position in SME, Consumer and Islamic banking
International branch network ( bank have 11 international branches in countries like
Bangladesh, Afghanistan, Bahrain )
Credible management team of experienced Professionals

Weaknesses
Lack of advertisement through electronic media
It is slow in introduction of new products
Functional base organization lack of coordination
Lengthy and extensive documentation
Waiver of charges (Currently the middle management of bank Al-Falah is the big reason
for waiver of charges. Bank Al-Falah loosing a lot of its income likes (Cheque book
charge, online charges, statement charges, and other things) because of management.
Most of the employees are overloaded with work. There is uneven distribution of work
and promotions are not very timely
Lack of innovative marketing
Less compensation packages for employees

Opportunities
Growing trend of Islamic banking (There is a very good growth trend in the Islamic
banking in the country and in the world as well. BAL has the advantage of having full
fledged Islamic Banking network and the growth in this particular field can be very
fruitful for the bank.
Growth in textile sector ( already bank is providing 17% advances to textile sector bank
should increase in this % and introduce more attractive packages for this sector)
Unavailability of financial institution in rural areas so Bank Alfalah has an opportunity to
take advantage of low competition within this sector(one third population belongs to
rural areas)
Huge demand for consumer financing (The increase in per capita income and overall
economy has resulted into a great demand for the consumer financing especially for
home finance and car financing and it is said that this trend will increase more in future.
The bank can earn a lot by focusing on its consumer financing sections.
Increased demand of Mega projects financing (As the increase in overall business
activity in the country, the investors are launching various types of Mega Projects
especially in housing and textile the bank has a great opportunity to finance these
projects at very profitable term.
Government focusing and support of enhancing overall exports
Merger with UBL (After the privatization of United Bank Limited, the management of
the BAL has purchased the majority shares of the UBL, and it is planning to merge these
two banks. As UBL is the second largest bank in the country, this merger can make the
bank the largest bank of the country)
Spending Practices of Mass (As the Pakistanis are known for their extravagant practices,
and to fulfill their funds requirements they dont hesitate from getting loans from banks.
Thus there is a very good scope for the bank to run successful business in such
circumstances)



Threats
Intense competition in banking sector (there is much more competition in convetional
banking)
Rising of inflation rate (The inflation rate of the country has gone to 9.2% in April
2014.This can result into an unfavorable situation for the bank. And especially when the
ownership of the bank is UAE based, the net spread for them can substantially decrease.
Trend of Mergers (There is a trend of mergers among the banks to become prominent in
the market and to get the maximum market share. This trend can result into the union
of some leading banks which can give tough time to the bank and it will become difficult
for the bank to compete with them)
Risk of Defaults (there is a trend of launching mega projects in the country. And every
one is involved in this trend without taking any measure for the successfulness of these
projects. This can result into the failure of this project which can make it difficult for the
banks to recover their funds from these defaulters)
Uncertain economic and political conditions
Low foreign investment ( due to unstable political and economic conditions)
Increasing SBP regulations in banking industry
Large business parties have fewer attractions in being a client of Bank Alfalah, as it
mainly because of excessive amount of documentation.

PESTLE ANALYSIS
POLITICAL FACTORS
Stability and law and order situation under the political regime is very important for the
economy as a whole. The present state of the government in Pakistan is directly affecting the
policies of the bank. Continuous political changes have disrupted the policies and objectives as each
regime brings with it its own agenda. Organizations need time to adjust one regime and then work
with it towards economic enhancement. Due to wrong policies of government, the Talibanization also
develop in Pakistan And become the international issue in Pakistan and badly affected the Pakistan
repute in the world and promote the uncertain conditions for the business in Pakistan. Due to this the
investors are not interested in the Pakistan.
ECONOMIC FACTORS
The economy of any country directly influences any financial organization. Economic indicators
include Gross Domestic Product (GDP), inflation, balance of payment, debt of the government.
Pakistans economy witnessed the most challenging period. However, the strong fundamentals
were compromised to prevailing global crisis thats shacked the confidence of global investors
and FDI flowing in the country. The increase in oil prices, inflation added to the economys
move to an unstable growth trajectory. The load shading is another factor that affects the
Pakistan economy badly. This is not the end of the story after this Pakistan economy face lot of
problems like bomb attacks in Pakistan no electricity and the unstable government, due to this
investors are not investing in Pakistan and the existing business men are loosing their business
units due to loss. Due to this poor economy businesses are reaping low profits and stock market
is in great danger. Pakistans foreign debts are increasing day by day so such a situation is big
challenge for banking institution to survive. The financial crisis in Pakistan has made the
management of Bank Alfalah Limited tensed to work in such a situation.
SOCIO CULTURAL FACTORS
A low saving culture has offset the huge population advantage enjoyed by the Pakistan. Also
culture is dedicated by the religion, and in Pakistan a significant segment of the population is
reluctant to accept interests for their deposits due to religious implications of such an act.
About 70% of the Pakistans population is based on rural areas and literacy rate of the country
is very much low, thus making it harder for banks to mobilize their deposits within these
regions. However in todays world, the customers are becoming more intelligent and through
media they keep themselves up to date. Thus, the lifestyle and expectations of the customers
from service provider increasing day by day.

TECHNOLOGICAL FACTORS
Banks in the developed world have been turning to heavy IT investments, which differentiate
their products, provide response times, enhance accessibility and improve customer
satisfaction. Though investing in-state-of-the-art host banking solution, ATM, visa, Master card,
smart card, tele banking, internet banking, and now mobile banking are common IT investment
in the developed world, it is now that these products and services are gaining faster acceptance
in Pakistan. In Bank Alfalah Limited technology has great effect on the working environment.
Bank Alfalah Limited is always willing to introduce new computer systems for keeping its staff
up to date. With the successful implementation of new centralized database system, the bank
also achieved remarkable progress in business process re-engineering, turnaround time
compliance by centralizing outward remittances, account opening and credit administration.
ENVIRONMENTAL FACTORS
As the work environment plays a great role in this competition age, so the bank has good work
environment. All the people work with cooperation. managers are so kind that each problem
can be discussed with them. Internal environment of the bank hugely effects on the functions
of the bank. Internal environment of Bank of Alflah consists of:

1.Deposits
1.Advances
2.Competitors

1.Deposits

Depositors are the main source of profit generation for the bank. Alflah offers depositors
number of incentive by virtue of which they too care make same money. Alflah relies on
depositors & workers to enhance their volume every year. This is proof from the fact that the
growth rate enhanced 48.40% during 2002-03, as this growth rate is satisfactory it is a must
that this environment of deposit growth should not decrease.

2.Advances

Advances are basically what Alflah give to people asking for money. If there shall be more
people depositing money. There will be more asking for advances as well. Banks tend to make
profit by giving advances at a rate higher than what they owe to the depositors. The difference
is the banks profit. If the environment is healthy then more and more people will be asking for
advances for business and other options. It is also evident from the fact that during the year
2002-03 the advances growth rate is 71.12%.

3.Competitors

Competitors should always be studied with great care, because competitors, can greatly influence an
organization position. Bank Alfalah has a lot of competitors because in a short span of 5 year it has
achieved what not many banks had achieved. This leads to competitions. Similarly Bank Alfalah should
keep a tag on the competitors move or any other new technology it is introducing, because instability in
the micro environment, a competitor has to be viewed with a lot of care.


LEGAL FACTORS
A Prospectus or an Offering Document is a legal document, approved by the Securities &
Exchange Commission of Pakistan which highlights details about the mutual fund for the benefit
And knowledge of potential investors. It provides information about a mutual fund covering its
establishment, investment strategy, borrowing restrictions, trustees profile, auditors profile,
risk profile, expense profile, management company profile, procedures relating to purchase /
redemption / conversion of units, fees / charges payable by investors, fees payable by the
mutual fund, mode of unit price announcement etc. in order to facilitate informed decision
making by potential investors.
INPUT STAGE
Internal Factor Evaluation Matrix (IFE)
Key Internal Factors Weights Ratings Weighted
Score
STRENGTH
Highly qualified employees 0.06 4 0.24
Conducive environment 0.04 3 0.12
Fastest growing financial institution 0.06 3 0.18
Efficient internal communication system. 0.07 4 0.28
Backed by strong Abu Dhabi consortium. 0.05 4 0.2
Documentation system is so accurate as
compare to other banks.
0.08 4 0.32
Islamic banking division 0.06 3 0.18
Young and energetic workforce 0.08 3 0.24
High investment in information
technology
0.09 4 0.36
Online banking 0.05 3 0.15
WEAKNESS
Lack of innovative marketing 0.07 1 0.07
Inexperienced workforce 0.03 2 0.06
Slow in introducing new product. 0.06 1 0.06
Functional base organization lack of
coordination
0.05 2 0.1
Employees frustration due to excessive
work burden
0.02 2 0.04
Weak branch network across country 0.06 1 0.06
Market share declining due to increased
competition
0.05 2 0.1
Waiver of charges 0.02 2 0.04
Total 1 2.8





External Factor Evaluation Matrix (EFE)
Key External Factors Weights Ratings Weighted
Score
OPPORTUNITIES
Growing trend of Islamic banking 0.08 4 0.32
Establishing foreign branches 0.07 3 0.21
Local setup expansion 0.08 3 0.24
Huge demand for consumer financing

0.05 1 0.05
Mega projects financing 0.06 3 0.18
Increased interest rates 0.05 2 0.1
Internet based banking application 0.05 2 0.1
Govt. focusing and support for
enhancing the overall exports
0.07 3 0.21
BAL should introduce new innovative
products to sustain its position in market
0.08 4 0.32
THREATS
Intense competition in banking sector 0.08 4 0.32
Rising of inflation rate 0.06 3 0.18
Unemployment 0.04 2 0.08
Government destabilization 0.03 3 0.9
Corruption 0.04 2 0.08
Low foreign investment 0.06 3 0.18
Provincial issues and war on terror 0.04 2 0.08
Large business parties have fewer
attractions in being a cline of Bank
Alflah, as it mainly because of excessive
amount of documentation.
0.06 3 0.18
1.00 2.92















COMPETITVE PROFILE MATRIX (CPM)

The CPM value of Bank Alfalah Limited 3.04 which shows good competitive position.

MATCHING STAGE

BCG MATRIX of Bank Alfalah:
Competitors BAFL HBL MCB
Critical Success
factors
Weight Rate Weighted
score
Rate Weighted
score
Rate Weighted
score
Financial Position 0.16 4 0.64 4 0.64 4 0.64
Service Quality 0.14 4 0.56 3 0.42 3 0.42
Market Share 0.09 2 0.18 4 0.36 3 0.27
Customer loyalty 0.10 4 0.40 4 0.40 3 0.30
Bank charges 0.12 2 0.24 4 0.48 3 0.36
Advertising and
promotion
0.08 2 0.16 3 0.24 2 0.16
Work force
motivation
0.07 2 0.14 3 0.21 3 0.21
Online/ATM
services
0.11 3 0.33 4 0.44 4 0.44
Geographic
coverage
0.13 3 0.39 4 0.52 4 0.52
Total 1.00 3.04 3.71 3.32
Products Relative Market share Industry Growth
Deposits 52.5% or 0.525 16% or 0.165
Loans 35.29% 0r 0.3529 7.75% or 0.077
Lending to Financial Institutions 32% or 0.32 34% or 0.34


Products Sales(in 000) Profit (in 000 RS) Profit %
Deposits 525525770 2337975 50%
Loans 260779850 1776861 38%
Lending to Financial
Institutions
2522022 561114 12%
4675950 100%


BCG Matrix Diagram:













Products Relative Market share Industry Growth Sales(in 000) Profit %
Deposits 52.5% or 0.525 16% or 0.165 525525770 50%
Loans 35.29% 0r 0.3529 7.75% or 0.077 260779850 38%
Lending to
Financial
Institutions
32% or 0.32 34% or 0.34 2522022 12%
100%


Stars (i) Question Marks (i)





Cash Cows (iii) Dogs (IV)

I
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s
t
r
y

S
a
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e
s

G
r
o
w
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R
a
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High+40
Medium
0
High
1.0
Medium
0.5
Low
0
Relative Market Share Position

1
2
3







Space Matrix of Bank Alfalah

Internal Strategic Position External Strategic Position
Financial Position (FP) Stability Position (SP)
Y Axis: Industry Sales Growth Rate

X Axis: Relative Market Share Position

Low -40
Internal and External Strategic Positioning Indicators/Factors of Bank Alfalah
Earnings per share
Return on assets
Leverage/ debt
Net income
Net Profit Margin
Liquidity
Working Capital
Cash flow
Technological changes
Rate of inflation
Barriers to entry into market
Competitive pressure
Taxation
SBP Policy
Price range of competing products
Risk involved in business


Competitive Position (CP) Industry Position (IP)
Market share
Belongs to strong business group
Brand recognition in consumer products
Consumer loyalty
Technological know how
Quality services
Online networks/ ATMs
Competition resource utilization
Growth potential
Profit potential
Resource utilization
Ease of entry into market
Financial stability
Technological know how
Access to financing
Consolidation



Competitive Position


Average Of CS = -23/8
= -2.875

Environmental Stability/Economic Position

Factors Ratings
Technological changes -1
Rate of inflation -2
Barriers to entry into market -2
Competitive pressure -4
Taxation -4
SBP Policy -3
Price range of competing products -3
Risk involved in business -5
total -24

Average Of ES = -24/8
= -3


Factors Ratings
Market share -3
Belongs to strong business group -1
Brand recognition in consumer products -3
Consumer loyalty -4
Technological know how -2
Quality services -2
Online networks/ ATMs -4
Competition resource utilization -4
Total -23
FINANCIAL POSITION

Factors Ratings
Earnings per share +4
Return on assets +3
Leverage/ debt +3
Net income +3
Net Profit Margin +4
Liquidity +2
Working Capital +5
Cash flow +3
Total +27


Average of FS = +27/8
= +3.375
INDUSTRY POSITION

Factors Ratings
Growth potential +3
Profit potential +4
Resource utilization +4
Ease of entry into market +2
Financial stability +5
Technological know how +5
Access to financing +4
Consolidation +2
Total +29


Average of IS = +29/8
= +3.625


Numerical rating:

For FP and IP
+7 = Best
+1 = Worst
For SP and CP
-1 = Best
-7 = Worst
Conclusion:
FP average = +3.375
IP average = +3.625
SP average = -3
CP average = -2.875

`DIRECTIONAL VECTOR COORDINATES

Y-axis X-axis
Financial Position + 3.375 Industry position +3.625
Stability Position -3 Competitive position -2.875
0.375 0.75

Directional Vector Coordinates on X-axis: -2.875+ (+3.625) = 0.75
Directional Vector Coordinates on Y-axis: -3+ (+3.375) = 0.375
"BANK ALFALAH SHOULD PERSUE AGGRESSIVE STRATEGY"

FP
+7
+6
+5
+4
+3
+2
+1

CP -7 -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7 IP
-1
-2
-3
-4
-5
-6
-7
SP


INTERPRETATION:
The bank should adopt the MARKET DEVELOPMENT and MARKET PENETRATION strategy
as the Financial position and industry growth both have started growing so the bank should
adopt these strategies.
Conservative

Aggressive

Competitive

Defensive

(0.75, 0.375)

Bank Alfalah Deposits

IFE Matrix of Bank Alfalah Deposits
Weights Rates Weighted Scores
Strengths:
Financing facility up to 90% of the deposited amount 0.09 4
0.36
Customers Invest with a minimum deposit of Rs.
50,000 for1 year term deposit & Rs. 100,000 for 3
years term deposit

0.06

3
0.18
Attractive rate of 8.5%* on 1 year term deposit & 9%*
on 3 year term deposit
0.07 4
0.28
electronic transfers to move money in and out of the
account.
0.06 3
0.18
provide a very safe investment and guaranteed
returns/profit every month.
0.07 4
0.28
provides Customers to deposit cash in customers
account
0.06 3
0.18
The cash department is given special importance as
they have liquidity at all times.
0.06 3
0.18
Depositsstructured for savings products, choose the
option that best suits customers needs and start
enjoying their daily banking services through vast
branch network and self service banking solutions.

0.07

4
0.28
Weaknesses:

Liquidity Risk.of security/asset cannot be traded in a quick time 0.09 1 0.09
frame in the market.
some of the funds that deposit into deposit account are not
immediatelyavailable.
0.07 1
0.07
Penalty on deposits that are withdraw prior to the maturity
date.
0.05 2
0.1
banks in particular offer lower rates of return on fixed deposits.
If interest rates go up, you may be locked in at a lower rate. The
funds are not at call, they are locked into a contract for a certain
term agreed by you and the bank.

0.06

1
0.06
Interest penalties will apply in emergency availability of
deposits.
0.06 2
0.12
Deduction of Zakat and withholding Tax @ 10%. 0.06 2
0.12
banks charge monthly service fees that you incur if your account
balance falls below a certain level.
0.07 1
0.07
TOTAL 1
2.55

EFE Matrix of Bank Alfalah Deposits
Weights Rates Weighted
Scores
Opportunities:
Customers can earn high rate of returns on your fixed deposits
with the benefit of monthly profits by Alfalah Mahana Amdan.
0.07 4
0.28
With a demand customers can withdraw all available funds at
any time.
0.06 3
0.18
Bank alfalah has numerous opportunities in future to increase
the volume of business
0.06 3
0.18
The money is not safe in corporate fixed deposits which earn a
higher interest rateas it would be in a bank
0.09 4
0.36
Bank Al-Falah Limited also issues Call Deposit Receipts (CDR).It is
an instrument like Cheque issued by the bank on account of a
customer & in favor of a person, to pay the specified amount.

0.06

3
0.18
The bank enjoys the benefit of keeping funds deposited until the
payment is not made.

0.06

3
0.18
Customers do not have to carry cash when they have a demand
deposit account because they use electronic transfers to move
money in and out of the account.

0.07

4
0.28
Threats:

if bank fall behind on depositsthen depositor can go to court
and ask a judge to recover deposits.
0.07 2
0.14
some banks do offer a floating rate option. 0.06 2
0.12
Political situation in Pakistan is not good. Investors and
businessmen are shifting their assets outside Pakistan. Most
important of all is that the policies of Pakistani Government are
not consistent.

0.07

1
0.07
The privatization of other banks is thread fo bank alfalah 0.05 2 0.1
Reputation Riskof the bank loosing its repute among the
customers
0.07 1
0.07
systematic risk of bank deposits is often beyond the control due
to the macroeconomic factors
0.06 1
0.06
Credit Riskfor the bank as he fails to repay the money to the
depositors.
0.07 1
0.07
All the banks are providing deposits facility so the competition
is high.
0.08 2
0.16
TOTAL 1 2.43



Bank Alfalah Loans

IFE Matrix of Bank Alfalah Loans
weight Rate Weighted
Score
Strength
1.Speedy loan approval process 0.05 4 0.2
2.Affordable tailor-made financing option 0.06 3 0.18
3.Flexibility to choice the repayment plans 0.05 4 0.2
4.Long tenure system 0.04 3 0.12
5.Modernization banking system(online)for loan customers 0.08 3 0.24
6.No hidden charges 0.07 3 0.21
7. Minimum down payments complete payment at any point of
time.
0.09 4 0.36
8. Loans can be obtained in U.S dollar, pound sterling Euro
Japanese.
0.06 3 0.18
Weaknesses
1.Do not announced a loan scheme for all talented individuals
and upcoming talent
0.07 1 0.07
2.It provides loans to already successful business .It does not
help
In minimizing the ever growing gap between rich and under-
privileged.
0.08 1 0.08
3. Do not play an active role in prime minister youth loan. 0.06 2 0.12
4. Bank ignores the public sector. 0.06 2 0.12
5. Business loans are not given to middle and lower class as
compares to upper level class.
0.09 1 0.09
6. Market department is not doing well performing poorly in
impressing or even reaching the target audience.
0.07 1 0.07
7. Banking language is not convenient so ordinary citizen could
not conveniently understand how their bank is performing.
Most of the form of loan also difficult to understand for
common people.
0.07 2 0.14
TOTAL 1 2.38


EFE Matrix of Bank Alfalah Loans
weight Rate Weighted
Score
Opportunities

1.High velocity of people growth 0.09 4 0.36
2.Information technology 0.07 3 0.21
3.Local setup expansion 0.05 2 0.10
4.Increasing scope of small and medium enterprise 0.06 3 0.18
5.Small farmers need loan or finance for latest purchase of
equipments and fertilizers
0.09 4 0.36
6.Business class need loan for business expansion 0.07 3 0.21
7. Less cost and harsh policies. 0.08 3 0.24
Threats
1. When loan is given to any customer there is always include
of defaulting.
0.09 3 0.27
2.Uncertain economic condition 0.08 4 0.32
3. Competition in banking sector. 0.09 3 0.27
4. Government policies pose unpleasant role. 0.10 2 0.20
5.Some banks offers a floating rates 0.06 2 0.12
6. Increasing SBP regulation in the banking industry. 0.07 3 0.21
TOTAL 1 3.05

Lending to Financial Institutions of Bank Alfalah
IFE Matrix of Bank Alfalahs Lending to Financial Institutions
Weights Rates Weighted
Scores
STRENGTH
Up to 90% financing against security deposit. 0.10 4 0.4
The amount of financing under Alfalah Quick Finance ranges
from Rs. 50,000 to Rs. 75,000,000 and up to Rs. 100,000,000
for corporate.
0.08 3 0.24


Affordable markup rates.


0.07 3 0.21
Offer a wide range of trade services designed tomeeta range
of our corporate clients needs.

0.12 4 0.48
Business loans and solutions to meet your specific short-term
or long-term funding and business expansion requirements.
0.05 3 0.15
Financing facility up to 70% of assessed market value of
mortgaged property; 35% of sales turnover or 40% of the
projected cash flows over the period of finance.


0.08 3
0.24


Weakness


1) Penalty on late payment of the loans.

0.08 2 0.16
2) Bank charge extra charges for deductions. 0.10 .2 0.2
3)Bank favors the old clients and gives fewer opportunities.


0.07 2 0.14
4) Bank offered suitable rates other than banks but not on
flexible conditions.

0.12 1 0.12
5)Large business parties have fewer attractions in being
a client of BAL-IBD, mainly because of excessive amount of
documentation.
0.05 1 0.12
6) Business loans are not given to lower class as compared to
upper class.
0.08 1 0.08

TOTAL 1 2.52
EFE Matrix of Bank Alfalahs Lending to Financial Institutions
weight Rate Weighted
Score
OPPORTUNITY
Increasing scope of small and medium enterprise
0.09

3
0.27
Peace and security conditions if favorable.

0.07 4
0.28
The bank enjoys the benefit of keeping funds deposited until
the payment is not made.

0.09

3

0.27
Bank Alfallah has numerous opportunities in future to
increase the volume of business.

0.08

4
0.32
local set up expansion
0.07

4
0.28
High population growth rate


0.08

3
0.24
THREATS


Some banks do offer a floating rate option.
0.07

2

0.14
If bank fails to provides the finance , shares and trade finance
illegal then debtor can go to court .

0.08

1
0.08
Economic condition is not good in Pakistan for business thats
why difficult for bank to charge high rates of return.


0.08

2 0.16
Systematic risk of bank loans is often beyond the control due
to the currency fluctuations and economic factors.

0.09

2
0.18
All the banks are providing loan at flexible rates so the
competition is high.

0.12

1
0.12
Debit Risk for the bank as he fails to repay the money back to
bank.

0.08

1
0.08
TOTAL 1 2.42



Product
Division
Products of Alfalah
Bank
Sales(in 000)

Profits % IFE EFE
1 Deposits 525525770

50% 2.55 2.43
2 Loans 260779850

38% 2.38 3.05
3 Lending to Financial
Institutions
2522022

12% 2.52 2.42














Deposits
IFE= 2.55
EFE= 2.43
Loans
IFE= 2.38
EFE= 3.05
Lending to Financial
Institutions
IFE= 2.52
EFE= 2.42



IE Matrix
















I II

III





IV




V

IV

VI




VII

XI


Strong Average Weak
3.0-4.0 2.0-2.99 1.0-1.99

4.0 3.0 2.0 1.0


High
3.0-4.0

3.0

Medium
2.0-2.99

2.0

Low
1.0-1.99
1.0

The EFE
Total
Weighted
Score

The IFE Total Weighted
Score

Grow and Build
Backward, Forward and Horizontal
Integration.
Market Penetration
Market Development
Product Development

L.F.I
IFE= 2.52

EFE= 2.42
Deposits
IFE= 2.55
EFE= 2.43
Loans
IFE= 2.38
EFE= 3.05


Quadrants I, II and IV
Grow and build
Backward, Forward and Horizontal Integration.
Market Penetration
Market Development
Product Development
Quadrants III, V and VII
Hold and maintain
Market Penetration
Product Development
Quadrants VI, VIII and IX
Harvest or divest
Retrenchment
Divestiture


Strategy Recommended:
Bank Alfalah position lies in Sector-II and it have strong IFE as well as High EFE score. Therefore
bank should apply the Grow and BuildStrategies which includes:
Backward, Forward and Horizontal Integration.
Market Penetration.
Market Development.
Product Development.



SWOT MATRIX:
Strengths Weaknesses
1. Highly qualified employees
2. Conducive environment
3. Documentation system is so
accurate as compare to
other banks
4. Fastest growing financial
institution
5. Islamic banking division
6. Young and energetic
workforce
7. Efficient internal
communication system
8. Backed by strong Abu Dhabi
Group
9. High investment in
information technology
10. Online banking

1. Lack of innovative
marketing
2. It is slow in introduction
of new products
3. Inexperienced
workforce
4. Functional base
organization lack of
coordination
5. Employees frustration
due to excessive work
burden
6. Weak branch network
across country
7. Market share declining
due to increased
competition
8. Waiver of charges

Opportunities SO Strategies WO Strategies
1. Growing trend of
Islamic banking
2. Establishing
foreign branches
3. Local setup
expansion
4. Huge demand for
consumer
financing
5. Mega projects
financing
6. Increased interest
rates
7. Internet based
banking
application
8. Government
focusing and
support of
enhancing overall
exports
9. BAL should
introduce new
innovative
products to
sustain its
position in market


1. As trend of Islamic banking
increasing so bank should
launch few more branches
of Islamic banking
division.(S4,S5,O1)
2. Bank can open more
branches in other countries
as bank is backed up by
strong Abu Dhabi
group.(S4,S8,O2)

3. Using the information
technology in e banking and
new centralized database
system to attract
potential new customers
(S9,S10,S4,O7)

4. BAL introduce new
products as there is
demand for consumer
financing so to introduce
innovate and attractive
products.(O9,O4,O6,S4)

5. BAL is to advertise its
department which is
dealing in exports and
imports. (O8,S8,S4)
1. For improving branch
network of BAL, launching
few conventional and
Islamic branches. (W6,
O1,O3)

2. By introducing innovative
products consistently
gaining market share
(W2,W7,O3,O9)

3. By using e banking facility,
centralized database and
new computer system,
reduce the frustration in
employee and improve
organizational
coordination(W4,W5,O7)

4. Arrange training programs
for employees to
understand internet based
banking(W3,O7)


Threats ST Strategies WT Strategies


1. Intense
competition in
banking sector
2. Rising of inflation
rate
3. Unemployment
4. Government
destabilization
5. Corruption
6. Low foreign
investment
7. Provincial issues
and war on terror
8. Large business
parties have
fewer attractions
in being a cline of
Bank Alflah, as it
mainly because of
excessive amount
of
documentation.
9. Stock market
development
1. Stable and grow the foreign
and national investments in
better information technology
for creating good financial
system, stock market
development.(S9,T6,T9)
2. BAL is to open foreign branches
and increase Product line to
cope up with intense
competition.(T1,S4)


1. increase foreign
investments for sustain the
market share.(W7, T6)
2. BAL is to advertise its
products through electronic
media to be in
competition.(W1,W2,T1)



diminishes.




DECISION STAGE

QSPM (Quantitative Strategic Planning Matrix)
Alternative Strategies

BAL should
increase
market share
by advertising
its products
and services
(market
penetration)
BAL should
increase its Islamic
banking share by
opening more
branches in other
cities (market
development)
BAL should
introduce new
products to cope
up with demands
and
competition.(pro
duct
development)
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities


1: Growing trend of Islamic
banking
0.08
2 0.16 4 0.32
1 0.08
2: Establishing foreign branches
0.07
- - - -
- -
3: Local setup expansion 0.08 1 0.08 3 0.24 2 0.16
4: Huge demand for consumer
financing
0.05
3 0.15 1 0.05
4 0.20
5: Mega projects financing 0.06 - - - - - -
6: Increased interest rates 0.05 1 0.05 2 0.10 3 0.15
7: Internet based banking
application
0.05
- - - -
- -
8: Govt. focusing and support
for enhancing the overall
exports
0.07
1 0.07 2 0.14
4 0.28
9: BAL should introduce new
innovative products to sustain
its position in market
0.08
1 0.08 2 0.16
4 0.32
Threats



1: Intense competition in
banking sector
0.12
3 0.36 1 0.12
4 0.48
2: Rising of inflation rate 0.06 - - - - - -
3: Unemployment
0.04 1 0.04 3 0.12 2 0.08



4:Government destabilization - - - - - - -
5:Corruption - - - - - - -
6: Low foreign investment - - - - - - -
7: Provincial issues and war on
terror
-
- - - -
- -
8: Large business parties have
fewer attractions in being a
cline of Bank Alflah, as it mainly
because of excessive amount of
documentation.
0.04 2 0.08 1 0.04



3



0.12

1


Strengths


1: Highly qualified employees 0.06 - - - - - -
2: Conducive environment 0.04 - - - - - -
3: Fastest growing financial
institution
0.06 2 0.12 4 0.24
3 0.18
4: Efficient internal 0.07 - - - - - -
communication system.
5: Backed by strong Abu Dhabi
consortium.
0.05 3 0.15 2 0.10

1

0.05
6: Documentation system is so
accurate as compare to other
banks
0.08 - - - -


-


-
7: Islamic banking division 0.06 1 0.06 4 0.24 2 0.12
8: Young and energetic
workforce
0.08
- - - -
- -
9: High investment in
information technology
0.09
2 0.18 1 0.09
3 0.27
10: Online banking 0.05 - - - - - -
Weaknesses



1: Lack of innovative marketing 0.07 4 0.28 1 0.07 2 0.14
2: Inexperienced workforce 0.03 - - - - - -
3: Slow in introducing new
product
0.06
2 0.12 1 0.06
4 0.24
4: Functional base organization
lack of coordination
0.05
- - - -
- -
5: Employees frustration due to
excessive work burden
0.02
- - - -
- -
6: Weak branch network across
country
0.06
1 0.06 3 0.18
2 0.12
7: Market share declining due to
increased competition
0.05
2 0.10 1 0.05
4 0.20
8: Waiver of charges 0.02 - - - - - -
Total 1

2.14

2.32 3.19

The last stage of strategy formulation is decision stage. In this stage it is decided that which way
is most appropriate or which alternative strategy should be select. This stage contains QSPM
that is only tool for objective evaluation of alternative strategies. A quantitative method used
to collect data and prepare a matrix for strategic planning. It is based on identified internal and
external crucial success factors.
Following strategies are resulted from matching stage:
Space: Aggressive strategy (backward, forward, horizontal integration, market
penetration, market development, product development)
BCG matrix: Star and question mark ( which represents the long run opportunities for
growth and profitability and market penetration,market development and product
development strategies)
IE matrix: Quadrant II (grow and build : market penetration, product development,
market development, integration strategies).
SWOT matrix there is a set of alternative strategies to be evaluated in the decision
stage.
In QSPM Bank Alfalah Limited should emphasize on Product Development toward conventional
banking. By offering New products and better use of their resources and more use of
technology such internet banking, and new data base system. Overcome the weakness and
threat like Slow in introduction new products, Not use of electronic media for advertisement
and low foreign investments BAL work more this at the its weakness convert into strength and
threat convert into opportunities so its get more investment and market share than their
competitor