UNDERSTANDING

MANAGEMENT
STRATEGY OF NATIONAL BANK OF PAKISTAN

SUBMITTED TO:

MS. SANA IRFAN

SUBMITTED BY:

AQSA GHAZAL

MEHREEN FAZAL

RABIA TAYYAB

ROZINA HASSAN KHAN

SEEMA ALI

BS-ENGLISH VI (2015-2019)

DATE OF SUBMISSION: DECEMBER 17, 2018

1. Introduction
Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy
can also be defined as “A general direction set for the company and its various components to
achieve a desired state in the future. Strategy results from the detailed strategic planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce
resources within the organizational environment so as to meet the present objectives. While
planning a strategy it is essential to consider that decisions are not taken in a vacuum and that any
act taken by a firm is likely to be met by a reaction from those affected, competitors, customers,
employees or suppliers.

Strategy is a well-defined roadmap of an organization. It defines the overall mission, vision

and direction of an organization. The objective of a strategy is to maximize an organization’s
strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

1.1. Corporate level strategy

In business, corporate strategy refers to the overall strategy of an organization that is made up of
multiple business units, operating in multiple markets. It determines how the corporation as a
whole supports and enhances the value of the business units within it; and it answers the question,
"How do we structure the overall business, so that all of its parts create more value together than
they would individually?"

Corporations can do this by building strong internal competences, by sharing technologies and
resources between business units, by raising capital cost-effectively, by developing and nurturing
a strong corporate brand, and so on.

Characteristics of Corporate Strategy

 Corporate level strategies are formulated by the top management with inputs from middle
level management and lower level management in the formulation process and designing of
sub strategies
 Decisions are complex and affects the entire organization
 It is concerned with the efficient allocation and utilization of scarce resources for the benefit
of the organization
 Corporate level strategies are mapped out around the goal and objectives of an organization.
They seek to translate these goals and objectives to reality
 Typical examples of decisions made are decisions on products and markets
Types of corporate Strategy:
The three main types of corporate strategies are Growth strategies, stability strategies and
retrenchment.

Growth Strategy
Like the name implies, corporate strategies are those corporate level strategies designed to
achieve growth in key metrics such as sales / revenue, total assets, profits etc. A growth strategy
could be implemented by expanding operations both globally and locally; this is a growth
strategy based on internal factors which can be achieved through internal economies of scale.
Aside from the illustration of internal growth strategies above, an organization can also grow
externally through mergers, acquisitions and strategic alliances.

The two basic growth strategies are concentration strategies and diversification strategies.

Concentration strategy: This is mostly utilized for company’s producing product lines
with real growth potentials. The company concentrates more resources on the product line to
increase its participation in the value chain of the product.

Diversification Strategy
Richard Rummelt, a strategy guru at UCLA Anderson School of Management, is of the opinion
that companies think about diversification strategies when growth has reached its peak and there
is no opportunity for further growth in the original business of the company. What then is this
diversification strategy we speak of? A company is diversified when it is in two or more lines of
business operating in distinct and diverse market environments.

Stability Strategy
Stability strategies are mostly utilized by successful organizations operating in a reasonably
predictable environment. It involves maintaining the current strategy that brought it success with
little or no change.

1.2. Introduction to National Bank of Pakistan and its strategy

The National Bank of Pakistan (NBP) is a commercial bank of Pakistan and it is owned by the
government of Pakistan. The headquarters of NBP are located in Karachi while it has its branches
all over Pakistan. NBP operates as a service provider on the behalf of State Bank of Pakistan and
SBP is the major shareholder of NBP. While it continues to act as trustee of public funds and as
the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has
diversified its business portfolio and is today a major lead player in the debt equity market,
corporate investment banking, retail and consumer banking, agricultural financing, treasury
services and is showing growing interest in promoting and developing the country's small and
medium enterprises. The bank provides both commercial and public sector banking services. The
Bank's services are available to individuals, corporate entities and government.

National Bank of Pakistan is distinct from other banks in that it has a non-profit and service
oriented motive, which has manifested itself in the area of salary deposits of government
employees and payment of utility bills. Nevertheless, the bank is committed to serving small savers
and the general public of the country. National Bank of Pakistan is everyone’s bank and does not
only serve corporate customers.

The senior management of bank includes a president and directors; there are different groups like
Information Technology Group, Financial Control Group etc. these are controlled by their
respective group chiefs. There are also regional heads to cater the banks located in a specific region
and regional offices are located in main cities. In each Branch of NBP there is a manager, an
operations manager and cashiers, tellers and accountants according to the needs of that branch.

Today, NBP is a progressive, efficient, and customer focused institution. The bank has developed
a wide range of consumer products in order to enhance its business capabilities and
cater to the different segments of the modern society. Some schemes have been specifically
designed for the low to middle income sectors of the population. For NBP’s clear introduction I
will explain its History and also its Mission, Vision, Values and Goals.

THE STRATEGIC MANAGEMENT PROCESS:

ORGANIZATIONS PLANNING AND STRATEGIES
Planning determines the organizational goals and the means of achieving them. The main objective
and goal of a commercial bank is to earn profit. National Bank of Pakistan’s current strategy is to
value the customers, and provide services which people can trust. NBP has a big advantage of
distributing Government Salaries and Pension.

SWOT ANALYSIS:
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves specifying
the objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieving that objective. If SWOT analysis does not start
with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis
may be incorporated into the strategic planning model.

Strengths:
Major Strength of National Bank is its Brand Image and its Brand Name. NBP is considered to be
the Pillar of Pakistan’s economy. NBP has the caliber to compete with Pakistan’s best Multi-
National Banks and has the ability to keep up with the newly emerging trends of modern banking
and computer systems. Over the years, NBP’s reserved funds have been increased. NBP is
expanding business worldwide which truly is an advantage over rest of the Banks in the Business.
NBP holds a vast group of customers globally and locally. Online Banking is also strength of N.B.P
because it has more than 150 branches is online. It helps the fast service to the customers and we
also check the balances and daily transactions just at one key press.

National bank is the only government bank it acts as state bank where State bank doesn’t have a
presence it has a sound financial base. The National Bank of Pakistan plays a key role in the
strategic national development. The bank has historically been the financial arm of the government
and has enjoyed the blessings of state support in the form of huge public sector funds and deposits.

Weaknesses:
It is a slow moving institution due to government interference it has slower management
implementation and lack of strong technological infrastructure. In this organization the
organizational structure is bureaucratic which a barrier in rapid and effective decision making.
Lack of computerized network which cause the more time consume, energy and mental stress in
rush face the employee. The bank lacks the modern equipment, outdated systems and procedures.
Being Govt. bank political pressure affects the negative way and provides the loan to the customer
under pressure which creates the negative affect on bank employee. Resistance to change and
decision making process are slow.

Opportunities:
It is the major business partner for the Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally,
internationally and representative offices

The bank wishes to effectively utilize the financial assistance being extended by the Government
of Pakistan for banking sector reforms aimed at reducing operating costs and improving
profitability. To extending and targeting research to improve bank earnings, through customer
focus of bank’s commercial and corporate branches, and by enhanced efforts towards the
development of human capital, the bank shall very soon transform from a bureaucratic
Organization to a fast paced, modern, and competitive bank. In conclusion, the National Bank of
Pakistan have the vision, which will enable it to achieve even better results, safeguard the interest
of their customers and to assist them in their march towards progress and prosperity in future.

Threats:
Other banks can prove to be a competitor for NBP, by providing better services and attracting the
customers. In our country, the rate of inflation is increasing along with the unemployment. So due
to the increase in price of the products, the savings of the nation is decreasing with the passage of
time. So it is the threat for the banking sector. In the future, the deposits of the bank will decrease.
On NBP Govt. policies have strong impact. A slight change in Govt. policies may affect the
performance of the bank. The bank has to work within the regulation frame work.

Recommendations:
Keeping in view the above mentioned analysis the strong points can be utilized to overcome the
threats and weaknesses .Technology can be improved, systems can be more efficient, and human
resources can be made efficient by hiring trained IT staff and recruiting young talented individuals
on the basis of merit. Training programs can be developed to upgrade the core banking skills of
the existing staff.

Moreover development is required for serving major sectors of the economy. Infrastructure should
be improved and maintenance of the branch offices should be checked. Modern banking system
should be incorporated. Another important thing that I noted is that a help desk should be there in
branch for helping customers as the staff is too busy to guide each and every customer; it’s difficult
to handle the customers in rush hours. It can give a good impression to customers as well. NBP
should upgrade their services timely to provide the maximum satisfaction to their customers. Bank
should launch advertising campaigns throughout the year to promote the habits of savings in the
people.

NBP POLICIES & STRATEGIES

The policies and strategies of NBP, their working and what are the basic rules.

Policies:
Policy is a projected program consisting of desired objectives and the means to achieve them.
Following are some policies implemented by NBP.

1. Provide job satisfaction to their employees.

2. Allow the employees to participate in the decisions that affect them.
3. Good performance reward is also in the form of hajj and umrah package.
4. Use goals and feedback.
5. Developing a benefit package.
6. HR policies are in the form of circulars and instruction forms.
7. Organizing 6 weeks internship for the students.
8. NBP has no gender bias.
Marketing Policy:
The branch has adopted various marketing strategies and promotion strategies to promote the bank
and its product. The most important in my opinion is personal marketing; it is the most effective
of all when you think in term of branch level. But on the whole organization level, they should
arrange the seminar within the bank and outside the bank. They should introduce various prizing
schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly income earning
scheme) and various others. They should do more advertising through newspaper and media and
through channel of personal contacts.

Strategies:
1. Development required for serving major sectors of the economy
2. Productivity improvement and benchmarking with the competition

3. Bringing the institution on international banking landscape in the coming five years, not to speak
of the seven years which the current management has already served.
4. Inducting and leveraging specialized human capital
5. Infrastructure to support planned growth and vision

BUSINESS -LEVEL STRATEGY:

PORTER’S FIVE COMPETITIVE FORCES:

These forces help to determine a company’s position and competitors in the industry environment.

1) Potential new entrants

Capital requirements and economies of scale are examples of two potential barriers to entry that
can keep out new competitors. Competitors for NBP are all the emerging banks of Pakistan like
Habib Bank Limited, United Bank Limited, Allied Bank Limited, Askari Commercial Bank
Limited Bank Al-Habib Limited, Standard Chartered Bank Limited, and the Bank of Punjab etc.

2) Bargaining power of buyers

Well-versed customers become empowered customers. The Internet provides easy access to a wide
array of information about products, services, and competitors, thereby greatly increasing the
bargaining power of end consumers. N.B.P has a lot of deposit of the customer among the other
bank in the market. Being the People’s bank and having trust of the customers is a great advantage
for the Bank to achieve new horizons of Banking and success.
Customers of NBP include:
1) Gov. Employees
2) Overseas Pakistanis
3) Agricultural Sector
4) Revenue Collection Agents (Got. Inst.)
5) Institutional Investors

3) Bargaining power of suppliers

The concentration of suppliers and the accessibility of standby suppliers are significant factors in
determining supplier power. NBP has reliable suppliers in the form of State Bank of Pakistan and
government of Pakistan.

4) Threat of substitute products

The power of alternatives and substitutes for a company’s product may be affected by changes in
cost or in trends such as increased health consciousness that will deflect buyer loyalty. In NBP
there is lack of modern financial/banking products, the bank falls far behind when innovative and
new schemes are considered. There are no proper systems for advertisement & marketing of
products. N.B.P needs to launch new products and services to their customers.
Existing market scenario:
NBP is participating in Consumer Banking, Corporate Banking, Agricultural Banking, Islamic
Banking, Investment Banking and Over Seas Money Transfer.

5) Rivalry among competitors

Rivalry among competitors is influenced by the preceding four forces, as well as by cost and
product differentiation. Number of commercial bank are opened, operating their business and
provide same facilities and product to the customer which provide N.B.P so It is threat for N.B.P.
the bank is currently focusing on New product development, Improve service quality, Image
building, Forceful marketing for deposit and Islamic banking.

COMPETITIVE STRATEGIES:
Porter suggests that a company can adopt one of three strategies: differentiation, cost leadership,
or focus to compete. We will first define three competitive strategies and look at the bank’s
competitive strategies to see which one of these strategies is evident.

Differentiation:
A type of competitive strategy with which the organization seeks to distinguish its products or
services from that of competitors.
Cost leadership:
A type of competitive strategy with which the organization aggressively seeks efficient facilities,
cuts costs, and employs tight cost controls to be more efficient than competitors.

Focus:
With a focus strategy, the organization concentrates on a specific regional market or buyer group.

According to the plans and strategies of NBP they are focusing to introduce new and convenient
products and services like Saibaan scheme, Advance Salary, Karsaz SME, Cash n Gold, Kisan
Dost etc. so their competitive strategy seems to be differentiation. Being a government bank
Employees have Job security and benefits so we don’t find the strategy of cost leadership here
because NBP unlike other private sector banks has financial support by government so there is no
need to cut costs or compromise to compete. Lastly we can also find a bit of focus strategy in
NBP as most of the accounts in NBP are of government employees so the bank also focuses on
this particular buyer group. A large number of their investors and customers come from this group.

CORPORATE LEVEL STRATEGY

NBP is also following corporate level strategy.
Growth strategy
NBP has adopted growth strategy by expanding its operations. As it is already stated that NBP
actually have different products and services for both individuals and business customers. NBP
product and services for individual customers are credit cards, debit cards, and deposit accounts.
NBP product and service for business customer are commercial banking, cash management and
asset management.

Related Diversification
NBP has also adopted related diversification strategy, because at first function of NBP was only
accepting deposit and advancing loans but now NBP has many related functions like flexi loans,
ATM and credit cards.

NBP also follows corporate level strategy which consists of different product lines. It includes
different services and products offered for the potential customers. It recognizes the importance of
efficient and effective business delivery.
Following is the list of the products that are offered by NBP.

 NBP Muhafiz Rupee Travellers Cheques

 NBP Auto Finance
 NBP Flexi Loans for salaried personnel
 NBP Lifestyles Financing Scheme
 NBP I-Card
 NBP House Financing Loans
 NBP Easy Access
 NBP Fast Transfer
 Haryali Agricultural Loans
 NBP E-Bank

List of services provided by NBP are as follows.

 Retail banking
 Commercial banking
 Corporate banking
 Phone banking
 Islamic banking
 Cash management
 Asset management
 Agriculture loans
 Commercial banking
 Corporate banking
 Islamic banking
 Investment banking
 Working capital
 Procurement of inventory
 Procurement of machinery
 Expansion of production facilities
 Import of raw materials
 Exports
 Guarantees
 Project finance,
 Debt capital markets & syndications
 Equity capital markets & advisory by NBP.
Detail of some of important services and products is given below.

 Demand Drafts
NBP offers Demand Drafts to all persons whether they are account holders of the bank or not.
These drafts are available easily on reasonable prices and it helps the customers to get a reliable
and fast way of transferring money.

 Commercial Finance
NBP is also providing services for different sectors which includes professionals, agriculturalists,
large and small business corporations and other segments of economy. For these sectors, NBP has
made best products and services since they are important part of our society.

 Foreign Remittance
NBP has also taken a number of measures in the area of Foreign Remittance to provide effective,
efficient, simple and reliable home remittance services to Non-Resident Pakistani’s at overseas
branches.

 Mail Transfers
NBP offers most competitive rates in the market for quick and safe transferring of money by using
Mail Transfer’s service.

 Pay Order
NBP offers different services for money transfer, out of which pay order is also one of them. It
allows secure and easy way of transferring money from one place to another.

 Traveller’s Cheque
Traveller’s cheque is a service which allows the customers to carry their money. There are no
limitations on its purchase and it can be encashed at all the branches of NBP.

 Letter of Credit
Another service for cash transfer is letter of credit. This service is exclusively for business
transactions as it is save and there is ease of transaction through this service.

 Swift System
This system is introduced for fast services in the area of home remittances. It is a speedy system
as it is completely computerized. It allows swift transfer of money for different purposes.

 Short Term Investments

NBP is also ahead of other banks in providing excellent short term investment schemes. These
schemes offer excellent profit rates and along with it, NBP also provides security services.

 Equity Investments
To get investor’s confidence, NBP has provided enormous services for the development of stock
exchange. It involves investment into the capital market system. This service ensures better returns
to account holders which makes it a useful service.
  Trade Finance
NBP also provides different services and products for various sectors in society. Agriculture
Finance is one of the services that is considered useful. It helps in providing various loans to
farmers who in return invest in the NBP. Apart from this, NBP also provides corporate finance.
NBP provides project finances, cash finances, pre-shipment and post-shipment loans. It also
provides long term finances which helps employees to expand their businesses properly.

 Student’s Loans Scheme

NBP also provides interest free loans to students who want to continue their education but are
unable to do because of financial constraints.

 Saiban Scheme
Another scheme that attracts the attention of most customers is Saiban scheme that provides
finances for home renovations, and purchase as well as construction of houses.

On the basis of given information regarding different products and services, a rough BCG Matrix
of NBP can be shown as follows.
 STARS QUESTION MARKS

Home Financing Islamic banking

Car financing Debit cards
Advance Salary

CASH COWS DOGS

Deposits Rupees travels’ check

Investments
Credit cards
CONCLUSION:
National Bank of Pakistan is distinct from other banks in that it has a nonprofit and service oriented
motive, which has manifested itself in the area of salary deposits of government employees and
payment of utility bills. Nevertheless, the bank is committed to serving small savers and the general
public of the country. National Bank of Pakistan is everyone’s bank and does not only serve
corporate customers.

In conclusion we can say that the global economic environment has changed, creating challenges
and opportunities for the world’s policy makers. NBP remains committed to the interest of all stake
holders including its employees, owners, regulators and Pakistani nation. NBP has well defined
strategy on where and how we want to proceed in the years to come. With the implementation of
the new strategies, NBP will completely automate its functions which in turn will appreciably
enhance work efficiency. N.B.P is more trustable being a government bank so it has opportunity
to improve itself and increase market share among other banks. It has ability to become number
one bank in Pakistan due to vast operational network, large number of customer area and
government of bank. With proper planning can hunt more and more business from the public and
private sector as people still trust over it.

REFERENCES:

https://nbp.com.pk/index.aspx

https://www.slideshare.net/Altmash/national-bank-of-pakistanstrategic-management

https://www.slideshare.net/SamreenLodhi/nbppptx-samy

https://www.nbp.com.pk/services/