Strategic Management report on Askari Bank

Submitted to:-Mr. Chaudhry Fazl-e-MuqeemSubmitted by:-Mohammad Hammad FarooqMohammad Nauman KhalidQasim Ali

Table of ContentsACKNOWLEDGEMENT.................................................................................................................................5

STRATEGIC MANAGEMENT … AN OVERVIEW..............................................................................................6

IMPORTANCE OF STRATEGIC MANAGEMENT..........................................................................................6

INTRODUCTION TO THE ORGANIZATION.....................................................................................................7

Mission Statements.....................................................................................................................................7

Strategic process in Askari Bank..................................................................................................................7

Strategic Goals.........................................................................................................................................7

Strategic planning....................................................................................................................................8

Evaluation................................................................................................................................................8

Review.....................................................................................................................................................8

Report......................................................................................................................................................8

Management Committee........................................................................................................................8

Executive Committee...............................................................................................................................8

Final Report.............................................................................................................................................8

STRATEGIC MANAGEMENT EXPLAINED.......................................................................................................9

STRATEGIC POSITIONING OF BANK INTERNALLY...................................................................................11

HUMAN RESOURCE...............................................................................................................................12

THE BOARDS MANDATE........................................................................................................................12

Training and Development of Occupational groups..............................................................................12

Recruitment and Selection....................................................................................................................13

On-line Job Application System.........................................................................................................13

Recruitment Procedure.....................................................................................................................13

Recruitment and selection of Management Trainees........................................................................14

LEADERSHIP...........................................................................................................................................16

TEAMS & NETWORKING........................................................................................................................17

STRATEGIC POSITIONING OF THE BANK EXTERNALLY...........................................................................19

PEST ANALYSIS...................................................................................................................................19

PORTER FORCES MODEL........................................................................................................................21

THREAT OF NEW ENTRANTS..............................................................................................................22

COMPETITION....................................................................................................................................22

SUBSTITUTES.....................................................................................................................................22

IFAS MODEL...........................................................................................................................................23

Analysis and evaluation.....................................................................................................................23

SWOT ANALYSIS.....................................................................................................................................23

Strengths...........................................................................................................................................23

Weaknesses.......................................................................................................................................24

Opportunities....................................................................................................................................24

Threats...............................................................................................................................................25

STRATEGIC POSITIONING OF BANK BY OFEERING INNOVATIVE PRODUCTS..............................................26

E-banking...............................................................................................................................................26

Mobile ATM Bus....................................................................................................................................26

Overall Analysis and Evaluation.............................................................................................................26

Five Facets of Strategic Management........................................................................................................27

GOAL SETTING.......................................................................................................................................28

ANALYSIS...............................................................................................................................................28

STRATEGY FORMULATION.....................................................................................................................28

STRATEGY IMPLEMENTATION...............................................................................................................28

STRATEGY MONITORING.......................................................................................................................28

The Strategic Management Process (benchmark).....................................................................................29

Step One: Agreement on the process....................................................................................................30

Step Two: Identification and clarification of the organizations.............................................................30

mission, objectives and current strategies............................................................................................30

Step Three: Identification of the organization’s internal strengths.......................................................30

and weaknesses.....................................................................................................................................30

Step Four: Assessment of threats and opportunities in the external....................................................31

environment..........................................................................................................................................31

Step Five: Identification of key constituents and stakeholders,.............................................................32

their expectations and resources..........................................................................................................32

Step Six: Identification of key strategic issues.......................................................................................32

Step Seven: Design, analysis, and selection of strategy alternatives.....................................................32

and options to manage issues identified in Step 6................................................................................32

Step Eight: Implementation of the strategy...........................................................................................33

Step Nine: Monitoring and review of performance...............................................................................33

RECCOMENDATIONS.................................................................................................................................33

REFRENCES................................................................................................................................................35

ACKNOWLEDGEMENTWe owe great many thanks to great many people who helped and supported us in completion of this project.

Our deepest thanks to the course instructor CH. FAZLE MUQEEM for guiding and correcting various mistakes of us with attention and care. He has taken pain to go through the project and make necessary correction as and when needed.

My deep sense of gratitude to Mr. Asim (Vice President; Strategic Management Department),

ASKARI BANK for his support and guidance. We would also thank our Institution and our faculty members without whom this project would have been a distant reality.

STRATEGIC MANAGEMENT … AN OVERVIEWStrategic management is the set of managerial decision and action that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long range planning), strategy implementation, and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of external opportunities and threats in lights of a corporation’s strengths and weaknesses.

IMPORTANCE OF STRATEGIC MANAGEMENTStrategic management has now evolved to the point that it is primary value is to help the organization operate successfully in dynamic, complex environment. To be competitive in dynamic environment, corporations have to become less bureaucratic and more flexible. In stable environments such as those that have existed in the past, a competitive strategy simply involved defining a competitive position and then defending it. Because it takes less and less time for one product or technology to replace another, companies are finding that there are no such thing as competitive advantage. Corporations must develop strategic flexibility: the ability to shift from one dominant strategy to another. Strategic flexibility demands a long term commitment to the development and nurturing of critical resources. It also demands that the company become a learning organization: an organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights. Learning organizations avoid stability through continuous self-examinations and experimentations. People at all levels, not just top the management, need to be involved in strategic management: scanning the environment for critical information, suggesting changes to strategies and programs to take advantage of environmental shifts, and working with others to continuously improve work methods, procedures and evaluation techniques.

INTRODUCTION TO THE ORGANIZATION Askari Bank was founded in 1992, and in the 15 years since, the growth and success patterns have far outgrown industry standards. It is a matter of pride for Askari Bank to be able to offer one of the widest arrays of products to customers through extensive branch network all over the country. The bank principally deals with banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from among the new private sector banks in Pakistan. Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. As on December 31, 2007, the bank had equity of PKR 12.27 billion and total assets of PKR 182.17 billion, with over 800,000 banking customers, serviced by our 6,808 employees.

Mission StatementsThe concept of mission has become increasingly fashionable in discussions of strategy. Indeed, some analysts go as far as asserting that a good ‘mission statement’ can provide an actual worthwhile alternative to the whole task of corporate planning. The definition of a firm’s strategic mission encapsulated in the mission statement can be thought of as the first stage of the strategy process .The mission statement of Askari Bank goes somewhat like this

“ To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stake-holders, and contributing to society ”

Strategic process in Askari BankWhenever strategic department has to make strategic plan, they ask all business division for the coming years and Strategic department in Askari bank divide whole organization in three categories:

Operational support services. Sales & services. Professional support services.

They follow the following flow to carry out their strategic planning for the coming year:

Strategic GoalsFor the first, they define the strategic goals for each of the departments for the coming year. A strategic goal forms part of an organization's corporate strategy, and should act as a motivating force as well as a measure of performance and achievement for those working in an organization. The specific target towards which an organization is striving. Well-defined

goals play an important part in the motivation of employers and employees, enabling individuals to direct their energies towards something tangible.

Strategic planningThe process of determining a company's long-term goals and then identifying the best approach for achieving those goals. A step by step guide, created by an organization to map out how it will reach goals, and set a foundation so the entire company knows what will happen and what is expected of them. Essentially, it provides a recipe or of how to achieve a stated vision, for the chosen target market, and how a company serves customers consistently, effectively and profitably every time.

EvaluationDepartment evaluate the goals and planning, are the goals align with the economic conditions?Are these goals achievable in present economic conditions? Evaluation is collecting or analyzing information about something in order to make necessary decisions about it. Basically they use to correlate their goals with economies of scale.The point which should be kept in mind is that the whole process is interlinked with three categories

ReviewAfter evaluation they go through to the process just to see the things with an eye of criticism and then make it correct.

ReportAfter consensus of opinion, they finalized it into a report, in which each and every goal is defined in accordance with the planning for prospective department. Along with guidance how they will measure the performance of each department by using BSC approach along with the working and standards of the approach.

Management CommitteeReport is sent to management committee for further process. There are no specific numbers for management committee members, but committee consists of Chairman (president), and 1st layer of bank who directly reports to chairman. Committee discusses the different directions regarding report and come up with their opinions.

Executive CommitteeFurther report is sent to executive committee for approval. Executive committee consists of the Directors of bank.

Final Report

Strategic department can only give the recommendation for any prospective, it’s the executive committee who has to take the decisions in accordance to their recommendations. After the approval of executive committee, report is up graded if needed and ended up with the final document.

STRATEGIC MANAGEMENT EXPLAINEDThe Strategic Management can be explained at Askari Bank with the help of grid mentioned below, however the grid portrays an overall picture of how the process will be discussed .As we believe that strategic management process is the result of strategic positioning within any organization .Therefore three main core areas are the Strategic positioning internally; which would be explained with the help of STAR Model. Strategic positioning externally ; which would be explained with the help of PEST , PORTER , SWOT & IFAS analysis .Lastly it would explain how the strategic positioning is done with the help of innovative products e.g. e-banking and ATM bus.

Strategic Managment

STRATEGIC POSITIONIONG

INTERNALLY

STAR MODEL

STRATEGIC POSITIONING EXTERNALLY

PEST, PORTER, SWOT, IFAS

STRATEGIC POSITIONING BY DIFFERENTIATD

PRODUCTS

E- BANKINGATM BUS

STRATEGIC POSITIONING OF BANK INTERNALLYWhen discussing the stimulus with reference to strategic management , Askari Bank has maintained the internal environment so strategically focused that the strategies , policies & procedures are aligned with the objectives and mission of the organization .When discussing internally we decided to ponder upon STAR MODEL .It would further concentrate on three main areas which include ; HR practices , Leadership & Teams and Networks.

Star Model

HR practises

Recruitment and selection

Training and development

Leadership Teams and networking

HUMAN RESOURCEAskari Bank has a progressive and a dynamic human resource (HR) philosophy. The Bank believes in transforming its human capital into a key source of competitive advantage. There is a strong value system in place, which is driven by result orientation, adaptability to change, humility and respect for subordinates and peers. The Bank believes that investment in human capital is critical for achieving and sustaining growth. The Bank’s constant endeavor is to create a performance driven work culture with focus on employee satisfaction and retention. The human resource objectives which are designed keeping in view the strategic approach are:

THE BOARDS MANDATE

a. To contribute to organizational effectivenessb. To ensure optimal utilization of human resourcesc. To maintain the Division’s contribution at a level appropriate to the

organization’s needs.d. To be ethically and socially responsive to the needs and challenges of the

society.e. To assist the employees in achieving their personal goals, in as far the goals

enhance the individuals’ contribution to the organization.Strategic mission statement regarding the HR speaks out that:-

“We strongly believe that the interests of the Bank and the employees are inseparable. At Askari we try to create a ‘we’ culture where there is mutual trust and respect for each other. We encourage ownership behavior so that everyone feels responsible for the performance and reputation of the Bank. We are committed to develop and enhance each employee’s skills and capabilities through extensive in-house and external training programs and job rotations.”

So analyzing and evaluating overall, the mandate of the organization is also clear, what it wants to be in the future.

Training and Development of Occupational groupsTaking in view the strategic aspects of the organization the staff classification for the training purpose is divided as follows; Operational staff, Junior management, Middle management and Senior management .However the sub staff falling in operational staff are as Officer grade 1, Officer grade 2, and Officer grade 3 and Cash staff. The nature of the training being provided includes Technical and operational skills, product knowledge, and Attitude building.

Junior management staff includes MTOs, Managers and Assistant Managers. Training is provided regarding Technical and Operational skills, Product knowledge and Attitude building

and basic management skills.

Middle level training is provided to staff which includes Assistant Vice President and Vice president. The training comprehensively includes Leadership skills, Team Building Skills, Human Relations, Core Values, Corporate Culture, Change Management, TQM, Advanced level workshops on Branch Operations, Credit, and FOREX.

Senior level training is provided to the Personalities which fall in cadre of Senior Vice President .The main agenda of the training is Strategic level Management Development Training Programs , Good Corporate Governance, Corporate Culture, Change Management , National and international level conferences on banking and management related topics .

Recruitment and Selection Induction takes place at following levels

1. Technical / Support Staff

It actually includes Secretaries/cashier/clerks/peons and drivers)

2. Fresh Inductees

This constitutes a hybrid of Operation Officers (OG-III/II/I), Management Trainees Officers

3. Experienced Bankers

These are the personas who have experience in particular field of banking, these include

officers & Executives.

On-line Job Application SystemThe bank has introduced on-line job application system. It actually helps people to interact with the HR managers basically it is a Computer based system where candidates drop their CVs through Internet. Among very few banks having introduced such system, so this translates that bank holds its strategic positioning in terms of customer services .Candidates can build their CVs any time into the Database and post it against specific vacant positions on the website of the Bank. Candidates can update their CVs time to time. The system is a step towards paper-less office environment.

Recruitment Procedure

In case of fresh inductions, short-listed candidates are called for written Test, followed by interviews. In case of MTOs, short-listed candidates are called for written test followed by preliminary interview by CH-HRD and final interview by the Selection Committee headed by President.

. In all other cases, the approving Authority is as under:o SEVP( Senior executive vice president ) - BOD ( Board of directors )o EVP ( Executive vice president ) - EC ( Executive

Committee )o VP/SVP (Vice president & senior vice president) - Presidento AVP & Below ( Assistant vice president ) - CH-HRD ( country head human

resource ) Selected candidates are issued employment offer letters. Confidential references are

obtained from previous employers and documents are verified from issuing authorities.

Recruitment and selection of Management TraineesThe process of hiring the management trainees at Askari Bank is the ideal, which may be the preference of any local organization that has the aim of recruiting the best possible hunt in order to assure efficiency and effectiveness in achieving the objectives mentioned in mission statement.

It starts with the proper HR planning, the assistant managers of the human resource department usually identify the slots where is to be filled in by the management trainees. Basically four types of people can apply for the management trainee programmed i.e. people having the Masters degree of MBA, MPA, M-COM, MA economics and a bachelor’s degree of BBA and BSC making a total of 16 years of education. The management trainee is a general level training program which consists of such exercises which helps the trainees build up appropriate leadership skills and provide the recruits with that knowledge which each and every department of the organization demands. There are some requirements for the Management Trainee at Askari Bank which includes that ;

1. GPA should not be less than 3.2. Fresh MBAs are preferred who have completed their degree in last two years 3. However the age limit should be not more than 26 years.4. If the candidate has already appeared for the MT exam and has failed twice,

he is not eligible for the third time.

Next step comes when the identified slots are made aware to the managers of the

human resource department .The managers are very keen to observe that the slots identified are in accordance with the expansion plan of the banking policy .However the managers had to make assure that the recruits that are being hired are not more or less in quantity than the identified hiring policy of management trainees .The managers at Askari Bank prefer both internal and external recruitment.

Once the decision has been made that these specific levels (quantity) of trainees need to be hired, the next step comes where the advertisement managers are involved in designing the advertisement campaign. In big organizations such as multinationals, this is done by the advertising managers or agency but unfortunately Askari bank has no advertisement department so generally brilliant minds of the human resource department are responsible for carrying out such tasks .However one more aspect; while talking to recruitment and selection manager Mr. Asif, we found that the organizations tends to adopt much more cost effective approach.

Drafting of advertisement campaigns usually takes place so that maximum of the knowledge can be provided in less possible place on the newspaper in order to avoid extra ordinary costs. Moreover making the use of electronic technology, the advertisement are also made on the internet by Askari Banks own private portal. However the main portions in the advertisement campaigns include the qualification and skills required to go for a management trainee.

Before the due date the HR manger receives the applications .The applications received are in form of hard copies and electronic mails on computers.

After when the applications are received the short listing of the applications takes place. The HR manger is already aware of the key areas which an ideal management trainee expertise .He taking in view the qualification and skills required, shortlist the candidates for the management trainee aptitude test.

Aptitude Test is conducted by the Askari Bank all over the Pakistan by making different test centers. The test basically consists of three major areas i.e. English , Mathematics and Analytical skills .The test needs to be passed and the passing percentage is about 60% and above .However it does not mean that the person acquiring 60% would qualify for the interview but the more is the competition the more , the percentage rises .

After when the test has been conducted and marks have assigned to each candidate

the merit list is prepared .The merit list consists of the names of each candidate along with his marks obtained .The merit list is send to the HR manager who takes in view the whole scenario and post the interview invitation letters to the candidates mentioned on the merit list.

Interviews are conducted at the main Head Office at Rawalpindi. There are two round of interviews i.e. the preliminary interview and the final interview. Under the preliminary interviews which is conducted by the Country Head HR, candidates are selected on the basis Physical Appearance, communication skills, confidence level, maturity level at decision making, academic knowledge and last but not least the professional skills .The first interview makes the decision of 3 candidates for 1 vacancy position, which further translates that if the vacancy is for 50 candidates then top 200 are called for the preliminary interview.

The selected candidates are then undergone by the Final interview which is conducted by the board of directors which are mostly from the Army professionals .Under this interview procedure candidates are given a tough time and may have to face some hard questions .70 candidates are selected, if the need is of 50 candidates and joining letters are send to them; the remaining 20 are on awaiting.

LEADERSHIPEmployee performance in Askari Bank is an important building block of an organization and factors which lay the foundation for high performance must be analyzed by the bank. Since every bank cannot progress by one or two individual’s effort, it is collective effort of all the members of the bank. Performance is a major multidimensional construct aimed to achieve results and has a strong link to strategic goals of an organization. Managers at all the levels have to input their efforts and make maximum use of their abilities which sometimes are produced under supervision or without it. However, there are many expectations from managers working for an organization. Leadership development is becoming an increasingly critical and strategic imperative for organizations in the current business environment. Leadership development is an important area which is considered and implemented in organizations to increase human capability and some other benefits like to gain competitive advantage. The 6L framework characteristics of a leader are;

1. Leads and encourage change2. Lives by example3. Lauds achievement4. Lends a vision5. Leverages learning and development

6. Looks out for others

According to the Vice President of strategic management department (Askari Bank) Mr. Asim, leadership cannot be created or injected; it actually comes through diversified professional experience. As already discussed that consensus of opinion is taken into account before going into execution of some particular policy .Basically the top supreme authority is the president of the bank who has the vision and mission for the upcoming future years and goals are designed with such an strategic approach that they are made achieved well in time .The leadership is important because it helps in achieving targets in such an manner that goals are triggered by Mr. President , then they are intimated to business managers they further formulate the strategy to achieve those goals and work is distributed to the sub ordinates accordingly .Overall the leadership style experienced here is more democratic in nature .

TEAMS & NETWORKINGAlthough there are any number of different networking groups and events you can attend, some of the best networking can occur within your organization. To build your profile and reputation internally and understand "who's who in the zoo" it is worth investing time to get to know the people around you. Whereas Team work, effective work teams, and team building are popular topics in today’s organizations. Successful teams and team work fuel the accomplishment of your strategic goals. Effective work teams magnify the accomplishments of individual employees and enable you to better serve customers. Networking helps increase the ability of organizations and communities to speak out about issues. Within a network, ideas can develop and then be shared in ways which pass on the thinking of many people.

In Askari Bank the provision of both is very important in order to achieve strategic objectives and goals. The business manager develops the teams and encourages networking to take place in between them. The President assigns the task to the business manager , the business manager further orders the team head ( VP ), and VP further formulates the business strategy and distributes the work to the reporting officers , these includes Managers , Asst. Managers , OG1& OG2.Refer to following chart:-

Analysis and Evaluation of above sectionPondering on the main stimulus of strategic management within organization the recruitment and selection process provides an edge to the bank in such an manner that the candidates who are recruited are talent hub because organization has an employer branding because of good working environment and because of the fact that it is Army under control organization , so satisfaction on the part of employees that screening process is transparent .Moreover the salary packages are much ,more competitive .One another most important aspect that organization has more job security as compare to other banks . It is the project of Army Welfare Trust and AWT has more than 200 other projects so a bad performance by bank in any given period would not threaten the jobs of people working because loss by bank may be compensated or set off by any other successful projects such as Askari Cement and Askari Insurance.

Leadership has been discussed as an important component in Askari Bank as it helps to achieve desired targets but in my opinion is this the only one reason why leadership is important?

President

Business Manager

Vice President

ManagersAssistant Managers

Officer grade

Askari Bank somehow has not proved in making out the standards of being a good leader. Being the president is the highest privilege but along with that being at a higher post doesn’t mean to only deliver orders to subordinates but under the caption of being a good leader one needs to pass on the leadership traits to its subordinates so that the process continues but people here are afraid because this might make the subordinate to get strengthened and again a major threat of job security.

However again criticizing the team and networks portion, the networking is taking place between different designations but is this the true definition of networking? Net working is said to take place in situation where people sit together share their experiences. This might be the picture in some fortune 500 but not in commercial banks such as Askari Bank.

STRATEGIC POSITIONING OF THE BANK EXTERNALLYThis would include the respective models of PORTER, PEST Analysis & SWOT Analysis.

PEST ANALYSISPEST analysis of any industry sector investigates the important factors that are affecting theindustry and influencing the companies operating in that sector. PEST is an acronym for political, economic, social and technological analysis. Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. The economic factors relate to changes in the wider economy such as economic growth, interest rates, exchange rates and inflation rate, etc. Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc.The technological factors relate to the application of new inventions and ideas such as R&D activity, automation, technology incentives and the rate of technological change.

POLITICAL ASPECTSThe events in the last couple of years; ever since the sacking of Chief Justice Iftikhar Choudhary, Pakistan has faced crisis after crisis, including the lawyers¶ movement, violence in Karachi, the Lal Masjid debacle, militancy in FATA and NWFP and its impact on other parts of the country, the return of Benazir Bhutto and her subsequent assassination, and current ongoing military operation in Swat all the above events indubitably made a huge impact on the economy.

The VP of the strategic management department was not very open in discussing the aspects politically which may affect the working or strategic decision of the bank. Overall the organization has a strong and a keen view on the working , whether the advancement is not being made to the influential parties such as politicians and army officials under low interest rates .Sometimes they also manage to control the defaults in the bank by different parties .Till

now strategic working of the bank has not been effected by such an issue .The VP also said that there is provision of influential groups in almost every industry so you can say that Askari Bank is also effected by such an disease .As far as government is concerned the sometimes during martial law some great influential groups may have a good control .Taxation policies can never be judged upon , every new government comes with its own new taxation policies .

ECONOMIC ASPECTSThe economic aspects are somewhat related to the economy of Pakistan. Increase in inflation actually makes the overall operational expenditure to get increase .This also has an adverse effect on the working capital availability to run day to day expenses such as diesel for operation of generators .Moreover the fluctuation of interest rates has also created some undesirable consequences for the bank. With the positive upward growth of the economy of the country the growth is also experienced in the bank.

SOCIAL ASPECTSSometimes bank has to pronounce the statement of “NO CREDIT DICIPLINE”.

People are eager to enjoy the amount of loan but at the same time feel pain in giving it back and this makes bank to use their unethical tool to recover it.

Being a Muslim state sometimes the cultural practices make people to stay away from Reba and this ultimately leaded to avail a strategic opportunity to start Islamic banking, which showed a growth .Some people also with the fear that they would be unable to return back the money don’t use the services such as credit cards, which has also increased the opportunity cost of having high profits.

TECHNOLOGICAL ASPECTS The bank has most of the excellent services which are based upon the use of heavy technology such as ATM machines .These are backed by heavy systems that’s why they are able to deliver high quality service .Sometimes if the systems breaks down then it requires the IT experts which take some time to get it back on running position, as it decreases the transactions and effects the goodwill of the bank.

Analysis and EvaluationThe analysis could be concluded that political aspects which are internally related did not proved to be outstanding in defending the caption of good strategic management .Some of the political aspects such as loan not given to influential parties can provide an edge but this can be a normal practice carried out by any bank .Something out of box needs to be done in order handle the situation more strategically .Economic factors cannot be negligible as they are uncontrollable and bank must prepare itself good to handle such issues of inflation and interest

rates . Social aspects cover a large area as RIBA is prohibited in Islam so many people don’t prefer taking loan so advances are affected, for this purpose the strategic step of Islamic Banking was taken which has been started and still on the road to success. Technological aspects are up to date, as bank has to compete in severe competition so ATM machines play an important role in gaining a customer share as more frequent operation of machines more customers would prefer using the some banks ATM.

PORTER FORCES MODELPorter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979.Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit.

THREAT OF NEW ENTRANTSThe banking industry is now at the saturation stage, the bank might not feel the threat of new entrants because it has developed so much with the development of the economy that the new banks which are willing to enter in the competition would have to think 100 times .Definitely there are many other competitors of Askari bank that’s why the bank is operating at economies of scale in order to provide maximum of the services to the customers with the lowest price possible. The evident lies from the fact that it has more than 200 branches so wide span which provides them advantage of being much more price competitive .However the products offered by the bank does not have the tag of being differentiated , more or less the same it has the provision of same nature of products .Switching cost is also another issue , as the industry depicts a saturation stage so many of the banks have portray their image in such an manner that “they are the best services providers” , but in reality no difference exist which leaves no reason for customers switching cost.

COMPETITION Askari bank has one branch in Bahrain , so we can call it as international bank but the as compare to its competitors such as Alfalah and Allied bank these are operating at small level .The banking industry of Pakistan is rules by 5 big banks , these are also the GIANTS banks .Among these is the National bank of Pakistan , which has the highest deposit and gives a competing edge for its name .As far as Askari bank is concerned it is operating at such an level that it can maintain its competition well and can fight for its odd .

SUBSTITUTESAs already discussed that the industry is at saturation stage, so the nature of the products is actually the same, some of its products provide them the competitive advantage e.g. I-net banking and ATM bus service.

Analysis and EvaluationComplete porter analysis has been and all the important forces are discussed properly one more component of other stake holders also needs to be discussed .Basically the regulatory authority is the State Bank of Pakistan , it provides the frame work and bank has to play role accordingly. Other stake holders who can affect the decision making is the board of directors and the share holders , basically the share holders nominate their board of directors and can sometimes show there power as influential groups in the organization .

IFAS MODELThis model shows the relative competitive advantage to Askari bank as compare to National Bank Of Pakistan:-

Key success factors Weightage Askari Bank Weighted Score

National Bank

Weighted Score

Personal Loan 0.3 3 .9 3 .9Credit card 0.1 1 .1 0 0Mortgage Financing 0.4 4 1.6 4 1.6Autos 0.2 2 .4 0 0Total 1 3 2.5

Analysis and evaluationThe comparison of National Bank of Pakistan has been made with Askari Bank; the IFAS model has key success factors on extreme left. However each key success factor is given a desired weight age according to the banking sector standard requirement .Then taking in view the performance of each bank with relative to their key success factors an evaluation has been reached which shows Askari Bank a bit more than National Bank Of Pakistan. This concludes that there must be strategic vision on part of Askari Bank, which is in case of provision of credit cards and autos which provides it a competitive edge over National Bank Of Pakistan.

SWOT ANALYSIS

StrengthsStrong network complimented by a substantially upgraded technological infrastructure. For example the recent acquisition of the Oracle Financial Services Software. Moreover the provision of efficient and effective twenty four hour ATM service makes it to get edge over its competitors.

Culture of customer service and satisfaction, based on establishing and retaining a strong customer relationship, pertinent for a service firm. For this purpose customer relationship department is also engaged. Diversification of markets via an international presence through regional centers established in UK, Europe, Africa, Asia Pacific, the US and the Middle East.Long term credit rating of AA and short term rating of A1+ by PACRA which indicates high credit quality .So it also provides Askari Bank a strategic competitive edge. A strong culture of supporting community which creates goodwill, via patronage and sponsorship of sporting events like Golf and Polo championships, social causes such as the special program for mentally handicapped in association with Agha Khan Hospital and for educational and environmental causes as well. So Corporate Social Responsibility is also a strategic aspect and a part being at

Askari Bank. Adequate provisions for bad loans recognized at the close of the financial crisis days, accounting for 94% of the NPLs which allows for most of the uncertainty to be accounted for. Increasing preference of financing against collateral which reduces risk. Strong emphasis on personnel training emphasized by a range of operational training academies, the latest one being opened in Karachi.

WeaknessesPromotional activities of the bank have not traditionally been as strong as some of the competitors. The all time big example is Allied Bank which spends a major part of its budget to advertisement campaigns and has proved efficient in gaining a health market share. Same is the case with Bank Alfalah .So Askari Bank should also spend some part of its budget on advertisement .However basically it is an Army Governed organization holding the maximum number of Army officials accounts so it captures a major Army share .Limited ATM installations at its branches, hampering service .High rate of technical faults in ATM machines compared to competitors. However we need to understand that machines are also manmade so there are chances of spoil work but the efficient staff must be responsible in case of such emergency as this might also effect the customer satisfaction and goodwill might also be affected in a negative manner.A decline in the deposit base that continued at the close of 2008 after reaching a historic low in mid of 2008. During last 4- 5years the economy has totally collapsed and this has also effected the functioning of bank, crises have made the deposits to get decreased.Increasing number of non performing loans leading to rising provisions for bad debts which has a direct impact on after tax profits. However it is actually playing a multiplier effect, at one side the slump in the economy and on other hand the rising situation of Bad Debts.Rising costs of provision of banking services from previous years. The economy fluctuation and the increase in the level of inflation has made the overall customer service cost to get increase. The same situation is faced by the others banks as well.

OpportunitiesA singular smart card with ATM and credit card functionality could be a better option. However as already discussed that the market within the banking sector is at its saturation stage, so product diversification is important in order to survive in the market of banking sector.Expansion of the internet banking side of the business to capture an entirely different segment. However internet banking has been started recently but proper expansion has yet to be done, however this might help bank to capture and entirely different market.The KSE appears to be attractive stable investment on the back of capital attracting policies of the State Bank and under pricing of stocks. It could be explored as an avenue for investment and greater return, although has to be treated with caution. However for this purpose Askari Investment management is recently started in order to take strategic advantage from the

opportunity. The recovery in the KSE could lead to increasing profitability from the mutual funds sector.The Islamic banking sector bore fewer losses during the fiscal crisis compared to commercial banking and the Askari’s Islamic division also noted a strengthening in its assets base. This could be an area of potential expansion as a significant market exists in the region.

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ThreatsDeteriorating economic conditions in the country, hitting the financial sector. Increase in inflation, fluctuation of interest rates and exchange rate has been a major threat to economy of Pakistan, which is also indirectly affecting the banking business.Worsening political situation, acting as a threat to the individual branches of the bank, moreover the threat of suicide bombers as already a branch in Lahore city has been targeted and bank has to face major loss of assets.Circular debt influenced withdrawals remain a particular threat, particularly in relation to investment in the energy sector which cannot be completely avoided as it remains one of the most dynamic sectors to invest in Pakistan. National savings schemes offered higher rates compared to the profit accounts offered by the private banking sector which hits deposits.Askari has a range of financial products for the agricultural sector which could suffer a hit due to the water shortage threatening the sector. India has already started the construction of Bagliar dam and this would probably stop a major portion of water coming to Pakistan, which could severely affect the agriculture sector of Pakistan and indirectly banking agriculture sector would also be effected.

Analysis and EvaluationIt doesn’t matter how strong your evaluation is in making any companies SWOT, the SWOT of any fortune 500 may also look alike the same as of Askari Banks. So there are some loop holes which needed to be filled. Doing a business in banking and the bank having poor and ineffective ATM service could damage the reputation of the organization .At some situations bank has taken some strategic steps such as maintain strong customer relationships .However another strategic aspect of providing corporate social responsibility is the best tool which portrays a pleasant image of an organization .However in my opinion opportunities available to bank are first step on the ladder of success , it would take time to turn these opportunities into success.

STRATEGIC POSITIONING OF BANK BY OFEERING INNOVATIVE PRODUCTS

E-bankingE-banking is a phenomena created as to facilitate customers to a new level. Due to an increase in business transactions, Askari Bank has developed the concept of e-banking as to lower their cost of branches and employees and on the other hand help the customer to conduct his transaction quickly and effectively.

The e-banking facility is very user friendly. For using the e-banking facility, first you need to inform the bank on your intent. After a small procedure, they provide you with a username and password. By using that username and password, you can log on to their site which is www.askaribank.com/e-banking. On logging on to this site, you can perform a number of functions. You can transfer money from one Askari account to the other Askari account. Then you can check your previous transactions and check your balance of account with just one click. We can conclude that bank has a strategic vision about the customer needs and demands and they are making money out of it.

Mobile ATM BusThis is a very unique service provided by Askari Bank. As mentioned earlier, Askari bank is all about providing convenience to its customers through which they lower their cost. All the ATM’s of every bank work under the 1LINK banner. Through an ATM you can in cash money using an ATM card of any bank.

The main motive of starting Mobile ATM Bus service was to provide convenience to its account holders and create awareness (marketing) to the ATM holders of other banks. Usually on pay days and on some occasion like funfairs etc., people rush to ATM’s and banks to withdraw cash. To reduce this load on banks and on a single ATM, mobile ATM bus has been launches. Askari bank is the only bank which operates this service. The ATM machine is installed on a moving bus and it parks it is parked on places where they are required. A procedure is there through which Askari Bank sends the bus to the required place.

Overall Analysis and Evaluation Being a local bank and not even operating at a multinational level the organization is still not doing bad .The targets are being met timely , moreover the competitive and the talented staff which has excellent level of competencies are contributing up to their maximum efforts .But one needs to analyze that once a business starts ,the environment makes the business to grow by itself and a time would come when the bank would try to expand out and go as a multinational company .So under that particular situation the bank might ponder on a standard

process of strategic management .Bank would need to understand that what does Strategic Management actually means because bank has to prepare itself for a cut throat competition .

Askari Bank needs to focus on the diagram mentioned in the next page .This diagram gives a clear picture to the bank about the five facets of strategic management, and further a whole benchmark or a standard process which strategic management department of Askari bank should consider.

Five Facets of Strategic Management.

ANALYSIS

STRATEGY FORMULATION

GOAL SETTING

STRATEGY MONITORING

STRATEGY IMPLEMENTATION

STRATEGIC

MANAGEMENT

GOAL SETTINGIt refers to overall goal of an organization in terms of its market position in the medium or long-term. A strategic goal forms part of an organization's corporate strategy, and should act as a motivating force as well as a measure of performance and achievement for those working in an organization. ANALYSIS

ANALYSISAfter when the goal setting has been done one must need to carry out analysis and evaluation of goals needed to be done .However under such an situation the business managers analyze whether the goals mentioned are realistic or not .They do also take into account the time period allocated for achieving the desired goals .

STRATEGY FORMULATIONStrategy formulation is both a leadership skill and a process that leaders use to focus their organizations on where they need to go, to adapt to their customer needs and to align their team. You make fundamental decisions about your product offerings and business design. Strategy formulation is iterative: the key players assess, decide, act, and review how they are doing. The decisions are fundamental to the success of a business. The process prepares key people to take responsibility for the chosen route.

STRATEGY IMPLEMENTATIONStrategy implementation is the action stage of strategic management. It refers to decisions that are made to install new strategy or reinforce existing strategy. The basic strategy - implementation activities are establishing annual objectives, devising policies, and allocated resources. Strategy implementation also includes the making of decisions with regard to matching strategy and organizational structure; developing budgets, and motivational systems

STRATEGY MONITORINGIt refers to the inspection of aftermath effects of strategy implementation .Under this particular stage the results are monitored to know whether the targets are being achieved as planned. However in case the monitoring report is negative, then whole process needs to be repeated again.

The Strategic Management Process (benchmark)

Step One: Agreement on the process.The first step in the benchmarked strategic management process is to get agreement—not only to carry out the process but also to get agreement on how and when and by whom it will be carried out.

Who should be included in the strategic management process? At least three different types ofindividuals should be considered for inclusion:

the organization’s top decision-makers and those officials who will have direct responsibility in implementation of policy;

those who have a major stake in the outcome of the policy, whether from within or outside the organization, whether supportive or oppositional, clients or resource suppliers;

those with specialized knowledge that can add to the analysis of the policy to be decided or implemented.

Although relatively broad involvement in the process should be encouraged, care must be taken that such groups not be expanded to the point of incapacity to make agile decisions.

Step Two: Identification and clarification of the organizationsmission, objectives and current strategies.Once an organization has agreed to engage in a strategic process, the first task is to determine;what and where the organization is? What are the needs that the organization attempts to satisfy,whose needs are they, and what is the value of satisfying those needs? All too often organizations develop a service or a product and then fail to periodically examine whether or not that product actually satisfies a demand or whether satisfaction of that demand actually matters.

Who are the people that compose the organization, what are their values, and what needs does the organization satisfy for them?

What are the objectives of the organization and how well do they mesh with the needs and demands of clients, stakeholders and constituents?

What strategies does the organization employ to achieve the objectives it has set for itself?

Is the organization being asked to make fundamental changes in what it does, or in the kinds of clients it benefits? If so, what are those changes

Step Three: Identification of the organization’s internal strengthsand weaknesses.One way to examine these is to look at the organization’s resource base (skill base, capital orfinancial resources, etc.)

Does the organization have the wherewithal to achieve its stated objectives or to put into motion its strategies?

What are the levels of internal resources possessed by the organization? How available are they?

Analysis of resources by itself is not sufficient; the organization must also look at its task performance. What tasks does it do well, which does it not?

This will give a better idea of how the organization’s resources are organized and how effectively those resources are put to use. An organization may well have excellent research skills, but if its primary tasks are in service delivery, then such skills may be more a weakness than strength. However, one should not automatically make the assumption that since idle capacity exists, it should be dispensed with. Such skills may well be quite useful if the organization should need to make changes in order to be more compatible with its environment.

Step Four: Assessment of threats and opportunities in the externalenvironment.While there is frequently a tendency on the part of managers to focus on the internal dimensions of the organization, policy change and the often volatile nature of politics in countries undergoing major policy changes requires conscious exploration of the environment outside the organization. Political, economic, social, and technological changes will influence the direction and shape of an organization’s policies and objectives.

What are the major trends that can be detected in each of these areas that will have some bearing on the activities of the organization?

How might macro-economic measures being instituted affect the financial resources of the organization?

What is the nature of political support for the policy under consideration? How politically stable is the current regime? Is policy leadership about to change? Will key officials within the cabinet be changed and what will that mean to the

development and implementation of the proposed policy change? To what extent have the government’s primary political coalitions begun to change? Does this signify impending changes in policy priorities? How effective is the political opposition? What role do international forces or actors play

in the determination of policy? To what extent has the social composition of the organization’s primary clientele group

changed? Has it outgrown the resources of the organization? Have its needs changed over the years?

Step Five: Identification of key constituents and stakeholders,their expectations and resources.The expectations and demands of constituents are key ingredients for decisions about what anorganization will do and how it goes about carrying out its tasks. Stakeholders or constituentsare those who have a direct interest in and are capable of influencing in some measure the outcomes or actions of the organization. A rather wide range of actors might be included: competitors, beneficiaries, directors, employees, political parties, consumers,international donors, etc.

What do these particular groups want from the organization? Are they satisfied with the current array of services and level of performance? Are their interests shifting? In which direction? And if so, will the organization be able to react favorably?

Step Six: Identification of key strategic issues.The information generated by the preceding steps should identify a set of fundamental questions or key problems regarding the fit of the organization with its environment. These problems might concern the organization’s mission, its products or services, its clients, financing mechanisms, management, or relationship to certain stakeholders. Strategic issues are the principal problems that must be dealt with effectively or the organization can expect undesirable results. The effective treatment of strategic issues can signify fundamental change in how the organization goes about its business. Such issues may generate conflict within the organization since their resolution will produce winners and losers both internally and externally. The organization must be prepared to deal with that conflict.

Step Seven: Design, analysis, and selection of strategy alternativesand options to manage issues identified in Step 6.Once issues and problems have been identified, strategies to solve those problems need to beidentified. Generally, more than one option for dealing with the problem will be identified; thenoptions must be examined for their comparative viability, feasibility, and desirability.

Can the strategy work from a practical as well as theoretical stance? Is the organization capable of carrying out the strategy? Is the strategy acceptable to those carrying it out and to those to whom it is directed? Does the organization have the human and material resources, does it have the know-

how necessary, and is the appropriate organizational structure available for implementing the strategy?

Step Eight: Implementation of the strategy.Implementation of a strategy is not an automatic process; there are two major parts to the process.

The first step is the development of an action plan, which is a statement of what, who, when, and how the actions necessary to carry out the strategy will be done. Performance goals and objectives will also be specified. Much of the information needed to develop the action plan will have been generated in Step Seven.

The second part of implementation consists of actions aimed at marshaling and applying resources. In the context of policy change these actions may consist of (but are not limited to), changes in organizational structures, shifts and reclassification of personnel, the establishment of new routines, tasks, and procedures; installation of new incentive systems; retooling production for new products or services; marketing of new services or creation of demand among new beneficiaries or consumers.

Step Nine: Monitoring and review of performance.Strategic management assumes continual change. Therefore mechanisms must be developedfor monitoring and analyzing the performance of the organization with respect to achieving thegoals and objectives set in the action plan. As the environment undergoes changes, as ministerschange, elections occur, or budgets go up or down, priorities will also change. Resource flowsmay be uneven. All of these elements can alter performance, priorities, and the desirability ofcertain policies. If the organization wants to maintain a good “fit” with the environment, itmust first be able to track these changes in order to adjust.

The monitoring process should be continuous, regular, and capable of feeding into the decision-making process. The manager should develop control mechanisms to gauge the efficiencyof resources used and impact mechanisms to gauge the effectiveness of its actions. Finally, it isvital that the monitoring process be timely and usable.

RECCOMENDATIONS By analyzing and evaluating the whole report we concluded that having an eagles eye view on the current political and economic instability in Pakistan the bank is doing pretty well .The strategic management department is newly established and it is climbing the ladder of success by keeping a good pace in terms of customer service and satisfaction .The strategic management process seems to be a little bit informal , however the word “informal” would not be appropriate , we can say that it is not that much professional in approach .The benchmarked strategic management process has been discussed in great detail, applying this approach would make the bank to get a formal process of strategic management; moreover it would also provide the people working for the bank a way to think and then act.

Japanese model of Kaizan may be implemented here .The model talks about the following four things i.e.

Plan Do Check Act

The strategy being made should be planned out, it should not be the opinion of a one single higher authority but it should be the consensus of opinion of more than one people so that risks involved could be sort out. The strategy should be then implemented it has been already discussed in strategic implementation. The results should be monitored, merely bank may have already decided the target levels to achieve in next coming time period, so strategy should be monitored whether it would help us to achieve the desired level of objectives or not .The example could be taken of e-banking or ATM bus .Askari Bank needs to monitor the proper functioning of e-banking and ATM bus whether it would help them to attract the target market.However lastly the strategy should be a continual process, it should be amended with respect to change in environment and then acted upon.

Some other strategic measures should be taken for instance the top management should immediately start thinking in terms of rotating the employees in various departments, as this transforms work force into human capital, if a particular individual keeps on employing his\her efforts in one sphere of banking it would not only create a sense of monotony, but also not help improving the skills of Askari Banks employees.

Askari Bank should evolve a very serious management policy to attract multinational corporations as its clients. This action, if actualized, would not only prove to be highly profit generating, but it would also contribute a lot of goodwill to Askari Bank.

REFRENCES

MR. ASIM ( VICE PRESIDENT , ASKARI BANK )

Askari banks official website. (www.askaribank.com ).

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