EFE- External Factor Evaluation Matrix

S.# Keys External Factors Opportunities 1 Introduction of innovative products 2 State Bank increases Paid up Capital which ultimately opportunity for larger banks 3 Government focusing and support for enhancing the overall exports. Implementation of Enterprise Resource Planning (ERP) & Customer Relationship Management 4 systems. 5 Investment opportunities increases in banking sector through Joint Ventures 6 Increasing scope of small and medium enterprises. Incessant investment in recruiting, retaining and training to high achievers and experienced 7 professionals by banking sector. 8 Extension of International network of the branches Weight 0.1 0.05 0.08 0.15 0.07 0.05 0.08 0.05 Rating 3 3 4 2 3 3 3 3 Weighted Score 0.3 0.15 0.32 0.3 0.21 0.15 0.24 0.15

9 10 11 12 13 14 15

Threats Intense Competition in banking sector. Uncertain economic conditions Unstable political & Law & Order situation in Pakistan Government allows union activities in organizations Inflation is still on high trend of around 20% Fluctuation in State Bank of Pakistan's Fiscal Policy Increasing SBP regulations in the banking industry Total Score

0.04 0.08 0.03 0.03 0.1 0.04 0.05 1.00

3 2 2 3 3 3 2

0.12 0.16 0.06 0.09 0.3 0.12 0.1 2.77

Note: The rating Value are as follow: 1= 2= 3= 4= Poor Response Avg. Response Above Avg. Response Superior Response

CPM - Competitive Profile Matrix

ABL Weighted Score 0.45 0.2 0.42 0.24 0.28 0.08 0.18 0.05 0.16 0.48 2.54 Faisal Bank Rating Weighted Score 3 0.45 3 0.3 2 0.28 2 0.16 3 0.42 3 0.24 2 0.12 2 0.1 2 0.16 3 0.36 2.59 Bank Alfalah Rating Weighted Score 3 0.45 3 0.3 3 0.42 3 0.24 2 0.28 4 0.32 3 0.18 3 0.15 2 0.16 4 0.48 2.98

S.# 1 2 3 4 5 6 7 8 9 10

Critical Success Factor Product/service Quality Govt. Supported products Competitiveness Quality Management Financial Position Advertising Customer Loyalty Global Expansion Market Share Branch network Total Score

Weight 0.15 0.1 0.14 0.08 0.14 0.08 0.06 0.05 0.08 0.12 1.00

Rating 3 2 3 3 2 1 3 1 2 4

Note: The rating Value are as follow: 1= 2= 3= 4= Major Weakness Minor Weakness Minor Strength Major Strength

IFE - Internal Factor Evaluation Matrix S.# Keys Internal Factors Weight 0.10 0.08 0.10 0.12 0.07 0.05 Rate 4 4 3 4 4 3 Weighted Score 0.40 0.32 0.30 0.48 0.28 0.15

Strengths Bank is in its growing stages so there is good financial position. 1 Professional and Committed workforce 2 Low cost than other major banks 3 Increasing the number of branches in the country 4 Successfully launching new Product Lines 5 6 Efficient internal communication system Weaknesses 7 Less market share 8 Lobby system in management 9 Slow in introducing new products 10 Losses in consumer products 11 The staff is not satisfied with the salary structure 12 Employee retention policy is very weak. Note: The rating Value are as follow: 1 2 3 4 = = = = Major Weakness Minor Weakness Minor Strength Major Strength

Total Score

0.10 0.08 0.09 0.08 0.07 0.06 1.00

2 2 1 2 2 2

0.2 0.16 0.09 0.16 0.14 0.12 2.80

SWOT Matrix Strength-S

Bank is in its growing stages so there is good financial position. 2 Professional and Committed workforce
1 3 4 1

Weaknesses-W
Less market share 2 Lobby system in management
3 4 5

Low cost than other major banks

Slow in introducing new products

Increasing the number of branches in the country 5 Successfully launching new Product Lines 6 Efficient internal communication system

Losses in consumer products The staff is not satisfied with the salary structure 6 Employee retention policy is very weak.

Opportunities-O
1

SO Strategies

WO Strategies

Introduction of innovative products State Bank increases Paid up Capital which ultimately opportunity for larger banks Government focusing and support for enhancing the overall exports. Implementation of Enterprise Resource Planning (ERP) & Customer Relationship Management systems.

2 3 4 5

Foreign Investment has been in increasing trend so we To increase the participation in Exports Policy due aggressive growth in deposit 1 1 require strong fund manager to invest the bank money in it's mean bank will strategies to increase their exports in Pakistan. (S3,O3) fund market according of Banking & SECP law.(W3,O4) Branches will increase in 2008 due to increase the Paid-Up Capital by SECP Require attractive package and Facilities to Exporters to 2 2 (S1,O1) transit the money.(W3,O3) Try to Retain the talented staff to increase the bank Bank has increase the transaction of Mutual Fund Industries to increase the Capital 3 3 efficiency and banks has also investing in training of staff. Adequacy (S2,O5) (W6, O8)

Investment opportunities increases in banking sector through Joint Ventures 6 Increasing scope of small and medium enterprises. Incessant investment in recruiting, retaining and training to high 7 achievers and experienced professionals by banking sector. 8 Extension of International network of the branches

Threats-T
1 2 3 4 5

ST Strategies
Increase the branches network in rural areas because also strong competitors 1 available in Urban areas. (S1,T8) Interest on Deposit should be require revision due to strong policy of SBP for deceasing differences between loan and deposit interest.(S3,T7) Require increasing network of Consumers Financing to incrementing % of Bank. 3 (S4,T1,T8)
2

WT Strategies
Inflation will be in increasing trend and its is effect on 1 direct bank profit.(W3,T5) GDP Growth expected low in 2008-2009 (6.5% to 7%)its 2 require to reduce the staffing(W6,T3) Provision of Non-performing is big threat during 3 competition environment.(W5,T1)

Intense Competition in banking sector. Uncertain economic conditions Unstable political & Law & Order situation in Pakistan

Government allows union activities in organizations Inflation is still on high trend of around 20% 6 Fluctuation in State Bank of Pakistan's Fiscal Policy 7 Increasing SBP regulations in the banking industry
8

SPACE Matrix
S. #

Factors Financial Strength (FS)

Rating

1 2 3

Cash and Balances with treasury bank increase by 23.81% in last year Total Assets increase by 3.01% in last quarter of 2008 as compare to 2007 Balance sheet size increase by 15.2 % in 2008 as compare to 2007 Total Rating of FS

4 5 4 13 2 2 3 4 11 -1 -4 -3 -1 -9 -4

Industry Strength (IS)

1 2 3 4

New Regulation of increased paid-up capital up 6 bn. provides the capital advantage. Banking sector growing Increasing Demand of Islamic Banking Profit Potential in commercial sector Total Rating of IS

Environmental Stability (ES)

1 2 3 4

Inflation in Pakistan Political instability in Pakistan Banking deregulation has created instability throughout the industry like decreasing rate on deposit of customer account and increase in interest rate Technological Changes Total Rating of ES

Competitive Advantage (CA)

1 2 3

Brand recognition in consumer products Belongs to strong business group Total Rating of CA ES Average is -9/4 = -2.25 CA Average is -12/3= -4.0 IS Average is 11/4=2.75 FS Average is 13/3=4.33

-5 -3 -12

Directional Vector Coordinates: X-axis: 2.75+(-4.0)=-1.25 Directional Vector Coordinates: Y-axis: -2.75+(4.33)= 2.08

Bank AL-Falah
SPACE Matrix

Conclusion:
ES Average is -9/4 = -2.25 CA Average is -12/3= -4.0 IS Average is 11/4=2.75 FS Average is 13/3=4.33
+1 (worst) to +6 (best) -1 (best) to -6 (worst)

Directional Vector Coordinates: X-axis: 2.75+(-4.0)=-1.25 Directional Vector Coordinates: Y-axis: -2.75+(4.33)= 2.08
Financial Strength

FS +Y
+6 Conservative +5 +4 +3 +2 Competitive Advantage Industrial Strength Aggressive

(-1.75,+2.00)

+1

CA -X
-6 -5 -4 -3 -2 -1 -1 -2 Defensive -3 -4 -5 -6 Competitive +1 +2 +3 +4 +5 +6

+X IS

-Y ES
Environmental Stability

Strategies Recommended: Bank Alfalah is in a position of Conservative (2nd Quadrant) where it has achieved. Hence bank should follow the conservative strategies such as utilize their resources carefully, concentrate market penetration and product development.

BCG Matrix for Bank Alfalah

S.# Segment Details Revenues Net Income Net Income Market Share IG Rate

in 'Billion PKR 1 Bank Alfalah 25.783

in 'Billion PKR 3.1300

in % 12%

in %
15

in %
+10

BOSTON CONSULTING GROUP (BCG) MATRIX

Relative Market Share High 1.0 High +20 Stars Medium 0.50 Question Marks Low 0.0

Industry Sales Growth Rate

Medium 0 Cash Cows

Dogs

Low -20

Strategy Recommended: As Bank Alfalah lies in Ist quadrant and it has relatively low market share but high Industry growth. Therefore Bank Alfalah should apply the Strategies like Market penetration & Product development.

THE INTERNAL - EXTERNAL (IE) MATRIX

IFE Total Weighted Score Strong 3.0 to 4.0 High 3.0 to 3.99 Average 2.0 to 2.99 Weak 1.0 to 1.99

II

III

EFE Total Weighted Score

Medium 2.0 to 2.99

IV

VI

Low 1.0 to 1.99

VII

VIII

IX

Location: Quadrants I, II and IV Quadrants III, V and VII Quadrants VI, VIII and IX = = =

Strategies: Grow and build Hold and maintain Harvest or divest

Division Bank AlFalah

Revenues in Billion PKR 25.783

Net Income in Billion PKR 3.130

Net Income (%)

IFE Score

EFE Score

12%

2.8

2.77

Strategy Recommended: Bank AlFalah position lies in Sector-V and it has strong IFE as well as High EFE score. Therefore bank should apply the Hold and maintain strategies ( Market penetration an product development are two commonly employed strategies for these types of division.

GRAND STRATEGY MATRIX

RAPID MARKET GROWTH Quadrant II Quadrant I

WEAK COMPETITIVE POSITION

STRONG COMPETITIVE POSITION

Quadrant III SLOW MARKET GROWTH

Quadrant IV

Recommended Strategy: The evaluation reveal following the factors to be followed, because it fall in 2nd Quadrant: 1 2 3 4 5 6 7

Market Development Market Penetration Product development Forward Integration Backward Integration Horizontal Integration Concentric diversification

QSPM - Quantitative Strategic Planning Matrix

S. # Key Internal & External Factors Weight Product Development (Conventional Banking) AS 4.00 4.00 3.00 4.00 4.00 3.00 TAS 0.40 0.48 0.30 0.32 0.28 0.15 Market Penetration (Islamic Banking) AS 3.00 3.00 3.00 4.00 3.00 3.00 TAS 0.30 0.36 0.30 0.32 0.21 0.15

1 2 3 4 5 6

Strengths Bank is in its growing stages so there is good financial position. Professional and Committed workforce Low cost than other major banks Increasing the number of branches in the country Successfully launching new Product Lines Efficient internal communication system Weaknesses Less market share Lobby system in management Slow in introducing new products Losses in consumer products The staff is not satisfied with the salary structure Employee retention policy is very weak.
SUB TOTAL

0.10 0.12 0.10 0.08 0.07 0.05

7 8 9 10 11 12

0.10 0.08 0.09 0.08 0.07 0.06 1.00

2.00 1.00 1.00 3.00 1.00 3.00

0.20 0.08 0.09 0.24 0.07 0.18 2.79

2.00 1.00 2.00 1.00 2.00 2.00

0.20 0.08 0.18 0.08 0.14 0.12 2.44

1 2 3 4 5 6 7 8

Opportunities 0.12 3.00 0.36 3.00 Introduction of innovative products State Bank increases Paid up Capital which ultimately opportunity for larger 0.08 3.00 0.24 2.00 banks 0.15 4.00 0.60 4.00 Government focusing and support for enhancing the overall exports. Implementation of Enterprise Resource Planning (ERP) & Customer 0.07 2.00 0.14 4.00 Relationship Management systems. 3.00 0.24 2.00 Investment opportunities increases in banking sector through Joint Ventures 0.08 0.05 3.00 0.15 2.00 Increasing scope of small and medium enterprises. 0.08 0.24 Incessant investment in recruiting, retaining and training to high achievers and experienced3.00 professionals by banking 1.00 sector. 0.05 3.00 0.15 3.00 Extension of International network of the branches Threats Intense Competition in banking sector. Uncertain economic conditions Unstable political & Law & Order situation in Pakistan Government allows union activities in organizations Inflation is still on high trend of around 20% Fluctuation in State Bank of Pakistan's Fiscal Policy Increasing SBP regulations in the banking industry
SUB TOTAL SUM TOTAL ATTRACTIVENESS SCORE

0.36 0.16 0.60 0.28 0.16 0.10 0.08 0.15

9 10 11 12 13 14 15

0.04 0.03 0.03 0.03 0.10 0.04 0.05 1.00

3.00 2.00 2.00 3.00 3.00 3.00 2.00

0.12 0.06 0.06 0.09 0.30 0.12 0.10 2.97 5.76

2.00 3.00 3.00 2.00 2.00 2.00 2.00

0.08 0.09 0.09 0.06 0.20 0.08 0.10 2.59 5.03

4-highly attractive 3-reasonable attractive 2-somewhat attractive 1-not attractive

Recommendation: Bank Alfalah should emphasize on Product Development toward conventional banking.

Strategy Evaluation Assessment Matrix

S. #

HAVE MAJOR CHANGES OCCURRED IN THE FIRMS INTERNAL STRATEGIC POSITION?

HAVE MAJOR CHANGES OCCURRED IN THE FIRMS EXTERNAL STRATEGIC POSITION?

HAS THE FIRM PROGRESSED SATISFACTORILY TOWARD ACHIEVING ITS STATED OJECTIVES?

Result

NO

YES

NO

Take Corrective Actions

Nowadays, Monetary Policy have changed (increase discount rate) the economic factors like GDP, Inflation etc. changes. Government emphasizing to increase Pakistan export and try to maintain Rupee value against Dollar.