THE S.W.O.T ANALYSIS OF BANK ALFALAH LTD.

Key External Forces:

External forces can be divided into four broad categories:

 Social, cultural, demographic, and environmental

Forces
 Political, governmental, and legal forces
 Economic forces
 Technological forces, and
 Competitive forces

Following can be some of the key opportunities and threats for Bank Alfalah.

Opportunities

The opportunities on which bank Alfalah can capitalize can be explained as under.

1) Extension of Local Branch Network

2) Establishing Foreign Branch Network
3) Capitalizing On Information Technology
4) Unexplored Market of Multinational Corporations
5) Customers are more willing

THREATS

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The predominant threats Bank Alfalah is facing at the moment are discussed in the
following lines.

1) Private Sector Banks

2) New Trade Polices
3) Network Expansion By Foreign Banks
4) If Pakistani Banks having Huge Network Improve the Service They Give And
Their Employee Skill Set
5) Terrorist Image of the Country
6) Inconsistency in Government Policies

STRENGTHS

The predominant strengths of Bank Alfalah Limited are

1) Humble Management
2) Strength And Commitment Of Sponsors
3) ‘Kaizan’
4) Phenomenal Growth In Profitability, Branch Network And Deposit
Portfolio
5) Vastly Experienced Management
6) Highly Trained Human Resource Department; Transformation Of Work
Force Into Human Capital
7) Superior Consumer Finance
8) Crucial Location Of Branches
9) Image Building Activities

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WEAKNESSES

The chief weaknesses are listed as under

1) Small Size
2) Lack of Research Cell
3) Uneven treatment with customers
4) Skill Set Of Employees Is Not Up To The Mark As There Is No Job Rotation
5) Foreign Banks Still Are A Little More Prestigious
6) Bank Alfalah Limited Does Not Possess Foreign Network
7) No Advertising in Electronic Media

INDUSTRY ANALYSIS:

If we see the banking Industry in Pakistan, the overall industry is at the

maturity stage. The whole world is passing through the economic crisis,
which has affected the banking industry, the most. Many famous banks
around the world got bankrupted. That’s why the overall industry is at the
maturity stage.

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 1) External Factor Evaluation (EFE) Matrix

External factor evaluation matrix is a very useful tool for assessing as to what are the factors that
constitute the set of the most significant opportunities and threats. It has two dimensional approach towards
assessing an organization i.e. this matrix not only considers the relative importance of the opportunities and
threats by assigning them weights but it also allots the factors rates on a one to four scale depending upon
the kind response the organization is giving to the opportunities and threats.

We went to the bank in order to get some views from the members of the organization as to what
do they think about the relative importance of the factors and what is their view point regarding their
organization’s response to these opportunities and threats. Mr.Kashif gave us information

WEIGHTED
OPPORTUNITIES WEIGHT RATING
SCORE
Extension Of Local Branch Network 0.15 3 0.45
Establishing Foreign Branch Network 0.10 1 0.10
Capitalizing On Information Technology 0.10 3 0.30
Unexplored Market Of MNC’s 0.10 3 0.30
More customers are willing 0.05 1 0.05

WEIGHTED
THREATS WEIGHT RATING
SCORE
Private Sector Banks 0.10 3 0.03
New Trade Policies 0.05 1 0.05
Network Expansion By Foreign Banks 0.10 3 0.30
Pakistani Banks Improve Their Services 0.05 3 0.15
Terrorist Image Of The Country 0.10 2 0.20
Inconsistency In Government Policies 0.10 3 0.30

TOTAL 1.00 2.23

Sore =1 or less (poor),score=2 or less(Average),

Interpretation: The resultant score of 2.23 shows an average External position of the bank. Business has
average ability to respond to external factors. So, it should follow defensive strategy

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 2) Internal Factor Evaluation (IFE) Matrix

The IFE matrix is constructed for the Internal Audit / Assessment. Its basic purpose is to list down the
major Strengths and Weaknesses of an organization. Other than these factors, its construction is more or
less similar to that of the EFE Matrix.

We have taken the Strengths and Weaknesses of Bank Alfalah Limited to construct this matrix with the
consultation of Mr.kashif and other employees

WEIGHTED
STRENGTHS WEIGHT RATING
SCORE
Humble Management 0.06 3 0.18
Commitment Of Sponsors 0.08 3 0.24
‘Kaizan’ 0.10 4 0.4
Phenomenal Growth In Profitability 0.05 4 0.2
Vastly Experienced Management 0.02 2 0.04
Highly Trained HR 0.05 3 0.15
Superior Consumer Finance 0.10 3 0.3
Crucial Location Of Branches 0.02 4 0.08
Image Building Activities 0.02 1 0.02
WEIGHTED
WEAKNESSES WEIGHT RATING
SCORE
Small Size 0.15 3 0.45
Lack of research cell 0.05 4 0.2
Uneven treatment with customers 0.05 2 0.1
Skill Set Of Employees Is Not Up To The Mark 0.15 3 0.45
Foreign Banks Still Are A Little More Prestigious 0.04 4 0.16
Bank Does Not Possess Foreign Network 0.02 1 0.02
No Advertising In Electronic Media 0.04 4 0.16
TOTAL 1.00 3.15
Interpretation: The resultant score of 3.15 shows the strong position of the bank internally.

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3) Competitive Profile Matrix

The Competitive Profile Matrix identifies a firm’s major competitors and their
particular strengths and weaknesses in relation to a sample firm’s strategic position. First
of all the critical success factors are determined and examined. Rates and weights are
assigned to each factor. Rate are company based which means the significance and
importance of such factors with in a firm whereas weights are industry based which
means their relative importance in an industry. So weights from 0.0 to 1.0 are assigned to
each critical success factor and the total of such weights should not exceed 1. On the other
hand rates are assigned from 1 to 4, 1 being the minimum and 4, the maximum. Each
factors weight is multiplied by the factors rate and hence the weighted score is observed.
Here advertising, turnover, organizational culture, market share etc are considered to be
the various critical success factors.

For comparison with Bank Alfalah Limited, We have chosen Askari Commercial Bank
and Muslim Commercial Bank. The reason for such a choice is simple. As Bank Alfalah
Limited is a local bank; its primary competitors are the other local private banks. Other
than Bank Alfalah Limited, these two banks are providing the best services to the general
public.

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 BANK ASKARI
ALFALAH COMMERCIAL MCB
Sr. CRITICAL SUCCESS LIMITED BANK
WEIGHT
No. FACTORS
Wt. Wt. Wt.
Rating Rating Rating
Score Score Score
1 Market Share 0.03 2 0.06 2 0.06 3 0.09
2 Price Competitiveness 0.02 3 0.06 2 0.04 2 0.04
3 Advertising 0.15 3 0.45 3 0.45 3 0.45
4 Financial Position 0.03 4 0.12 4 0.12 3 0.09
Variety 0.02 4 0.08 2 0.04 3 0.06
5
Of Products
6 Online Banking 0.05 0 0 3 0.15 4 0.2
7 Location 0.15 3 0.45 1 0.15 1 0.15
8 Domestic Networking 0.1 4 0.4 2 0.2 2 0.2
9 International Network 0.05 0 0 4 0.2 4 0.2
10 Customer Loyalty 0.1 4 0.4 3 0.3 3 0.3
Environment 0.05 3 0.15 4 0.2 3 0.15
11
& Decor
12 Customer Relationship 0.15 4 0.6 3 0.45 2 0.3
Efficiency 0.05 3 0.15 3 0.15 3 0.15
13
of Staff
14 Brand Recognition 0.05 2 0.1 2 0.1 3 0.15
TOTAL 1 3.02 2.61 2.53

Interpretation:

4) The Strengths-Weaknesses-Opportunities-Threats SWOT matrix:

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 SWOT matrix is formulated by considering and evaluating the strengths, weaknesses, opportunities and threats of an
organization. Through proper observation, we have found the following factors for the SWOT analysis of Bank Alfalah Ltd.

STRENGTHS WEAKNESSES

1. Small Size
2. Lack of research cell
3. Disproportionate Presence Of Old
1. Humble Management Staff
2. Commitment Of Sponsors 4. Skill Set Of Employees Is Not Up
3. ‘Kaizan’ To The Mark
4. Phenomenal Growth In Profitability 5. Foreign Banks Still Are A Little
5. Vastly Experienced Management More Prestigious
6. Highly Trained HR 6. Bank Does Not Possess Foreign
7. Superior Consumer Finance Network
8. Crucial Location Of Branches 7. No Advertising In Electronic Media
9. Image Building Activities
OPPORTUNITIES SO STRATEGIES WO STRATEGIES

1. Extension Of Local Branch Network 1. Increase Branch Communications

2. Establishing Foreign Branch 1. Expansion of branch network to Network
Network increase profitability 2. Product development
2. Capturing the market currently held 3. Expansion to foreign countries to
3. Capitalizing On Information by the foreign banks facilitate Expatriates in transmitting
Technology 3. More investment in the projects of money
4. Unexplored Market Of MNC’s Multi National companies 4. Training of the existing employees
5. More customers are willing 4. More Advertisement to promote the to increase their efficiency and
increasing branch network effectiveness

THREATS ST STRATEGIES WT STRATEGIES

1. Private Sector Banks 1. High customer loyalty and 1. Increase the marketing to the
2. New trade policies experience can be use to avoid customers to meet the competitors
3. Network Expansion By Foreign disasters and breakdown in service claims
Banks 2. More effective leadership to 2. Decrease the number of personnel to
4. Pakistani Banks Improve Their increase competitive and relative avoid the threat of takeovers
Services advantage 3. Increasing employee retention
5. Terrorist Image Of The Country 3. Increased profits to be used to open through the introduction of attractive
6. Inconsistency In Government new branches to compete with pay and benefits
Policies competitors
4. Opening new branches in
business related hubs

Space Matrix:

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This matrix indicates whether aggressive,conservative,defensive or competitive strategies are most appropriate for an
organization. The axis of the SPACE matrix represents two internal dimensions (FS and CA and tow external
dimensions ES and IS. These are most important factors of an organization strategic position. We have drawn matrix
by using following critical success factors

Ratings Average

Financial Strength (FS)

Bank’s revenue increased by 74 %
4

Bank’s profits increased by 43.5 %

4

Return on assets have also increased showing effectiveness of bank in proper utilization of its
assets 3.50
3

Return on equity has increased indicating that the bank has become more attractive for its
investors
3

Industry Strength (IS)

Growth and Profit potential 4
3.50
Deregulation provides geographic & product freedom & increases competition in banking industry 3
Environmental Stability (ES)
High inflation and Technological changes
-4
Political instability -3 -3.33
Competitive pressure and Demand variability
-3
Competitive Advantage (CA)
Becoming increasingly Competitive
-2
Bank’s customer base is expanding and strong Customer loyalty -3 -2.67
Providing services all over Pakistan -3

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 DIRECTIONAL VECTOR COORDINATES

X - axis:
Industry Strength + Competitive Advantage
3.50 + (-2.67) = 0.83

Y - axis:
Financial Strength + Environmental Stability
1.50 + (- 3.33) = 0.17

Conservative 4 Aggressive

-4 -3 -2 -1 0 1 2 3 4

-1

-2

-3

Defensive -4 Competitive

-5

From the examination and evaluation of the above mentioned SPACE matrix for Bank Alfalah Ltd.,it can be
represented that the bank is currently been falling into the region of being AGGRESSIVE, which shows the
banks is in an excellent position to use its internal strengths to take advantage of external opportunities
overcome internal weaknesses and avoid external threats

6) Boston Consulting Group (BCG) Matrix

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This matrix

• Graphically explains differences among divisions

• Focuses on market share position and industry growth rate
• Manages business portfolio through relative market share position and industry
growth rate

Relative market share position is defined as

“Ratio of a division’s own market share in a particular industry to the market share held
by the largest rival firm in that industry”

Relative Market Share Position

High 1.0 Medium 0.5 Low 0.0

High 1.0
Industry Sales Growth Rate

Stars Question Marks

II I
Bank
Alfalah
Medium 0.5 Limited

Cash Cows Dogs

III IV

Low 0.0

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 Grand Strategy Matrix:
The upcoming details and evaluation will show a grand strategy matrix for Bank Alfalah Ltd. based on
the observation.
RAPID MARKET GROWTH

Quadrant II Quadrant I

1. Market development 1.Market development

2. Market penetration 2. Market penetration
3. Product 3. Product development
development 4. Forward integration
4 Horizontal 5. Backward integration
integration
WEAK 6. Horizontal integration STRONG
5. Diversification
COMPETITIVE 7. Concentric COMPETITIVE
6. Liquidation
POSITION diversification POSITION

Quadrant III Quadrant IV

1. Retrenchment 1. Concentric
diversification
2. Concentric
diversification 2. Horizontal
diversification
3. Conglomerate
diversification 3. Conglomerate
diversification
4. Divestiture
4. Joint Venture
5. Liquidation

High Market Growth

Weak Market Growth

SLOW MARKET GROWTH

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 INTERPRETATION:

According to our observation Bank Alfalah Ltd. lies in the first quadrant of the Grand Strategy Matrix, i-e,
Quadrant I. This is because Bank Alfalah is enjoying a moderate rapid growth in the market and the
competitive strategy position as well in the industry. So for this purpose, we can say that Bank Alfalah is in
an excellent strategic position. So continued concentration on current markets and products are appropriate
strategies. Also Bank Alfalah Ltd. can afford to take risks and advantages of external opportunities in many
areas, this is the reason that now Bank Alfalah Ltd, has started the ISLAMIC banking in the countries like
Afghanistan and Bangladesh. So market development, market penetration and product development are
appropriate strategies.

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 RECOMMENDATIONS

Here We are putting some suggestions, which will enable the bank to compete with other banks more
effectively & efficiently.

It is observed that the employees were overburdened so they have to stay at branch till
late at night. In this way their efficiency is affected and hiring more employees can reduce
their work.

The employees should be signed jobs for specific period and than they should shifted to
other department so that they gain knowledge of other jobs.

Bank
 Alfalah Limited should properly advertise and Communicate to public about the
services provided by it, so that more customers will be attracted.

The bank’s management should give more incentives and pay scale of officers should
be revised & improved.

S
 ystem and operations should be more defined and organized.

IT draw backs should be improved.

Administration drawbacks should be improved by the strict control of general issues.

Audit should be held internally. Rather there should be an Audit Department in the
branch to make audit on daily basis. This can become as helpful as different banks are
having this department of their own.

Lockers, ATM, all these facilities should be provided to attract more customers.

Expenditures must be control, which are very high.

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 CONCLUSIONS

Bank Alfalah is a good Organization in the way that anybody can join it for his/ her long-term career.
Overall working environment is comfortable. Management of branch cares a lot of its employees and
considers them as the Asset of bank. Behavior of senior executive of bank is very polite and they are caring
about the individual’s career and their growth.

However management is very demanding about the targets but good reward at the achievement of assigned
targets is awarded.

Employees at Bank Alfalah are quite efficient.Therefore, they work more than their working hours and it is
all according to their will. It also shows their loyalty, commitment to organization.

Employees are given the benefits like bonus, gratuity funds, loans, increments, and medical.

All the customers are entertained individually. Same kind of behavior and attention is given to all the
customers. Getting ideas for improvement from customer side is a new idea and that is working very well in
Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of the bank are
improved through them.

In bank, all the work is done on computers. All the entries are made in computer. Balance is fed into the
computer. This increases efficiency of the bank.

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