It is the first stage of Strategy-Formulation Analytical Framework the following techniques are used to gather information: EFE Matrix

rix IFE Matrix CPM Matrix

THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX OF HABIB BANK LIMITED

KEY EXTERNAL FACTORS: OPPORTUNITIES

1 WEIGHT RATINGS WEIGHTED SCORE

Develop value added services combined with corporate banking relationships, cash management services to large and medium sized corporate clients. Expand its new technological advancement like; tele-banking and internet banking facilities in order to serve the customer more efficiently. Further reduction in intermediation costs possible, with improving technology. Improve and expand its foreign operations successfully. Simplifying procedures and policies will help reduce waste of time. HBL needs to focus on the untapped segments in its target market such as: Educational institutes. Telecommunication. Proper training of staff can help in capturing a larger market by providing excellent customer services. To strengthen its Human Resource Policy in order to increase job satisfaction of its employees.

0.10

0.3

0.05

0.15

3 4 5 6

0.025 0.025 0.05 0.05

2 2 3 2

0.05 0.05 0.15 0.1

0.10

0.4

0.10

0.4

THREATS
9 10

Growing global technological advancement The threat of inconsistency and government policy regarding to political and regional situation which makes the environment uncertain. Consolidation in the banking sector resulting in increased competition. New standards of customer services resulting in the provision of outstanding customer services by other banks in the market. The Rupee Travelers Cheque (RTC) sales volumes may be affected on account of regulatory restriction imposed by SBP on issuance of large value denominations. Economic instability and worldwide recession. TOTAL

0.10 0.10

3 3

0.3 0.3

11 12

0.05 0.10

2 4

0.1 0.4

13

0.05

0.1

14

0.10 1

0.4 3.2

EXPLNATION: Opportunites: Developing value added services is crucial for the survival of HBL as is the case with any service organization. Continuous changes and improvements is the need of the day and therefore it has been rated 4 which shows that it has been considered the most appropriate opportunity for HBL to strive at. Expanding its technological base is yet another important opportunity as no organization can stay long in the market without advancing its ways of doing business therefore it is rated as 3 which is reasonably important. Reducing costs through technology is also essential but technology improvement alone is a better opportunity, and HBL already has tried to reduce costs through technology therefore it is a comparatively less opportunity and has been rated as 2. Expansion of foreign operations is definitely considered a great opportunity but HBL has already become international quite largely therefore, in the present date, that opportunity is considered less important and rated as 4.

 Simplifying tasks, processes and procedures is very important for the easy running of the bank, therefore it is rated as 3. Targeting untapped market segments is a fair enough opportunity but not very essential for HBL right now as it has already touched certain market segments and is in no need for extensive penetration in diversification so its rated as 2. Training is very important in todays world as every aspect of a service organization lies in the hands of front desk representatives therefore it is rated as 4 being the most important opportunity. HR policys revision is highly required now a days as job motivation and satisfaction are crucial to the success of any firm therefore this is an important opportunity and is rated as 4. These opportunities show that HBL should focus more on training employees, providing value added services to customers and motivating employees through improved HR policy. Threats: Growing global technology is imperative and a very significant threat and therefore its rated as 3 because technology is a lethal weapon if used in the right way. Government policies fluctuate greatly and simultaneously affect the firms success greatly therefore it is rated as 3. Consolidation in the banking sector resulting in increased competition but competition is already fairly large in the banking sector so it is a less intense threat and rated as 2. Customer services by other banks are improving that attracts a large customer base so it a very important threat and rated as 4. The Rupee Travelers Cheque sales volumes is affected on account of regulatory restriction imposed by SBP but there are bigger threats than affected sales volumes of RTCs therefore it is rated as 2. Economic instability and worldwide recession are acting as a major threat to any industry therefore its rated as 4. Threats faced by HBL show that economic instability, better services by competitive banks and changing government policies with technological advancements are most feared and should be confronted and overcome by providing better services and competencies The weighted score from 1 (weakest) to 4 (strongest) is 3.2.

THE INTERNAL FACTOR EVALUATION (IFE) MATRIX OF HABIB BANK LIMITED

KEY INTERNAL FACTORS: STRENGTHS

1 WEIGHT RATINGS WEIGHTED SCORE

The brand name HBL has a well established credibility associated with it.

0.10

0.30

Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest in experience. The Banks Rupee Traveler Cheques have been market leaders for the past six years.

0.15

0.45

0.10

0.40

Veteran and experience private management group also involved in other interests like, textile and cement industry.

0.05

0.15

HBL has forged strategic alliances with international banks for expanding its network further, both locally and Internationally.

0.10

0.40

WEAKNESSES
6

HBL follows complex procedures which are not only wastage of time for the bank itself but also for the consumers.

0.15

0.30

Sense of insecurity in the employees serving at low profitable branches due to the down sizing.

0.05

0.05

Lack of proper training has resulted in a nonprofessional attitude in some employees.

0.15

0.30

Now as it is a privatize bank that is why government support to HBL decreased as it was in past.

0.05

0.05

10

Highest number of branches effecting the proper maintenance and difficulty in providing same working environment at the each branch TOTAL

0.10

0.20

2.6

EXPLANATION: By analyzing above factors it is noted that HBLs credibility due to its brand name is an important factor to consider. HBLs oldest and richest experience in banking has positively impacted a large range of customers. Moreover, HBL training programs for its employees and same working conditions among branches are an important indicator which needs a lot of attention by its management. Overall HBL receives a 2.6 total weighted score which on a 1 to 4 scale shows more than average, indicating HBLs strong internal position but needs some considerations on part of employees training, customer services, and proper maintenance of branches.

COMPETITIVE PROFILE MATRIX OF HBL:

As we know that this matrix identifies a firms major competitors and its particular strengths and weaknesses in relation to the firms strategic position. The ratings are given to each critical success factor, where 1 = major weakness 2 = minor weakness 3 = minor strength 4 = major strength

After analyzing HBL and its 2 competitors United bank limited and Bank Al Falah, their major critical success factors we came up with the following matrix. Competitive Profile Matrix Habib Bank Weights Ratings Scores 0.2 0.15 0.15 0.17 0.15 0.08 0.1 1 2 3 4 4 2 2 3 0.4 0.45 0.6 0.68 0.3 0.16 0.3 2.91 United Bank Ratings Scores 3 4 2 1 2 1 1 0.6 0.6 0.3 0.17 0.3 0.08 0.1 2.15 Bank Al Falah Ratings Scores 3 4 2 1 3 1 3 0.6 0.6 0.3 0.17 0.45 0.08 0.3 2.5

Critical Success Factors Customer Service Product Diversification Electronic Commerce Market Share Global Expansion Profits Offered Advertising

EXPLANATION: Customer service: Customer service of HBL is not that satisfactory and they need to improve on this aspect. As compared to HBL, the service of competitors is good and their customers are happier with them. Product diversification: The variety of products being offered to customers is more impressive of UBL and Al Falah. HBL have a satisfactory product base. But it still have room for improvement. Electronic Commerce: HBL have the facility of online banking almost in every branch in big cities and much of this facility in smaller cities as well. UBL and Al Falah dont have sufficient online facilities even in big cities. Market share: HBL have market share of more than 50% where as UBL have approximately 9% and Al Falah 7% of the market share.

 Global expansion: Global expansion of HBL and UBL are relatively just ok but Al Falah is an international bank so it have more global expansion than others. Profits offered: HBL offer higher profits than its competitors that is how it is able to attract higher customer base. But UBL and Al Falah offer lower rates thats why its their major weakness. Advertizing: HBL and Al Falah have many advertising campaigns going on (i.e. commercials, newspaper adds etc). That is why people recognize them. UBL doesnt stress that much on advertizing. Thus, form the total we can see that HBL have more score than its competitors. And so, it is performing more successfully than its competitors, that are United bank limited and Bank Al Falah.