Analysis of Values, Expectation and Environment of National Bank of Pakistan

The balance sheet of NBP is better than all other banks operating locally. The services of NBP are accessible to the government of Pakistan, business units and individuals.

NBP has shown a remarkable financial performance in 2006 with an estimated total asset of over 634 billion PKR. The overall deposits of NBP have grown-up to approximately 502 billion PKR. According to the annual report of year 2006 the bank earned 26 billion rupees before tax profit and the per share value increased to 24.01 rupees.

The boost in revenue was attained due to the huge central banking returns. The bank issued more loans and income received by bank on these loans increased by Rs.10 billion. Bank enjoyed an increase of Rs.268 billion in its advances.

To offset the threat of credit alarm NBP retains a strong hold of loans. The bank issues these loans to different range of people/ businesses. For example NBP karobar is a scheme of NBP to help people increase their business, bank also gives loans to S&M enterprises and also in agriculture field as well as large business companies.

The signed agreement in year 2002 with Western Union is one example of different channels that bank is facilitating for Pakistani living overseas. It provided them a convenient and competent way to transfer their funds to Pakistan.

Currently bank has started an efficient online system to track the complete inward clearing. This system ensures that all the branches have complete record of every step of inward remittance until its final acknowledgment of receiving.

Learning Outcome 1

Types of values, Links to Values, Vision and Mission

One of the key drivers of strategic purpose in an organisation is its values.

Values are part of the organisation’s culture – those subconscious assumptions and beliefs that frame its view of itself.

TYPES OF VALUES

Lencioni , (2002)noted four types of company values

Core Values

These are the deeply ingrained principles that govern all the organisation’s actions. These values are the source of a company’s distinctiveness.

Aspirational values

Aspirational values are those principles that are essential for prospect achievements. Here is where conventional morals might be out of step with a planned value.

Permission-to-play values

These values are also called as entrance values; these are non-core and non-distinctive values. These are the minimum principles of manners that are given in employee’s instruction manual.

Accidental values

Accidental values are those intellectual standards that are engaged for approval however these standards do not actually reflect the central or inspirational principles.

Core values of National Bank of Pakistan

NBP believes in reliability of premier standard

Superiority in customer’s service is another core value of NBP

NBP admits the teamwork and it has a performance based culture i.e. rewards are given on performance base

NBP improves its expertise for upcoming confronts

It builds an understanding of public and neighbourhood responsibility

NBP creates ethics for its stakeholders

Morals work collectively with visualization to produce the structure of your tactical aim, and from your structure come your exact plan and objectives.

At times difference between vision and mission is unclear. A vision is an inspiring declaration of anywhere the company desires to be, while the mission is a declaration of present strategic situation.

The Vision

A vision declaration is occasionally identifies an image of your business in the prospect however it’s so much further than an image. Your visualization is your idea, the outline for your calculated arrangements.

The Mission

A mission declaration is a concise explanation of a business’s primary intention. It answers the question WHAT IS OUR PURPOSE OF EXISTANCE.

The mission enounces the company’s aim together for those in the company and for the community.

Vision of NBP

“To be known as a leader and a product identical with belief, uppermost standard of service and excellence, worldwide best exercise and public duty.”

Mission of National Bank o Pakistan

The mission of NBP is to seek the ethics that will enable the bank “Infect the bank of realm” it will focus on the following

NBP will institutionalise a value and performance based culture.

Will create a unique brand name by offering top class services.

NBP will adopt the premium management strategies.

It will focus on maximising the value of its stakeholders.

Evaluation of NBP’s Vision against its suitability

There are many ways/ tools to evaluate the mission statement of an organisation. I have chosen the five ways suggested by HAMEL and PRAHALAD in year 1994.

These are:

Foresight

NBP has a strong and powerful vision statement. The flow in its vision is very logical and arranged.

All the three parts of the vision are in steady relation in an attractive way. It demonstrates the strength of the banks planning for future. The primary element of the banks vision statement says ” to be known as the leader” face the foreseeing part of its vision.

Breadth

NBPs vision is vast enough to appreciate different topics. The vision is about giving answer to the continuous changing market. By covering the top international practices its vision shows its wideness.

Uniqueness

The desire to continue its participation to provide best global practices gives its mission statement uniqueness.

Consensus

As it is possible to fulfil the vision statement of the bank its vision is also consensus more over all the assembly like board of directors, chief executive officers and voice presidents are agreed on it.

Action-ability

Its vision clearly mentions the future opportunities in a proper manner. To enjoy being a leader in banking field NBP is applying top quality management skills. The excellent team work, high standard service and its sincerity with its work makes it well qualified to face the upcoming confront and to create values for its stakeholders.

Evaluation of Mission Statement

To evaluate the mission/ objectives of NBP I have chosen the SMART tool. The SMART analysis of NBP is as following:

S – Specific

The mission statement of the NBP is to the point. It is very clear and understandable. Every point of its mission statement is well defined and logical.

M – Measurable

Here measurable means quantity. To the best of my understanding and knowledge the term Measureable can best fit “if NBP has achieved the targeted revenue, number of branches, number of customers etc. And I think the answer is yes even more than that. Because it is a purely government organisation people have trust in it.

A – Achievable

As one can clearly see that NPBs mission statement recaps the basic strategy to realize the goals of the organisation it states the key goals that the workers should struggle to meet. This declaration is given in very clear points and I think it’s very much attainable/ achievable.

R – Realistic

The approach of NBP towards its mission/ objective is very realistic. I mean there is sense of what it states. Like its says to maximise its stakeholder’s value, means by providing top quality services and providing its stakeholder continuous profit NBP will do its best to increase its stakeholders’ value and improve their life.

T – Time-bound

The time bound factor means it should specify the time when it’s going to get these objectives/ missions. As far as my knowledge about the company is concerned NBP has not given any time limit for achieving its missions/ goals.

Learning outcome 2

Stakeholder Analysis; managing expectations

Definition of Stakeholder

Freeman and Reed (1983) suggested two definitions of an organisation’s stakeholder i.e. narrow and broad.

The broad definition says that “a stakeholder is a group or individual who can either affect the achievements of the organisation or is affected by the achievement of the organisation’s objectives”.

The narrow definition says “a stakeholder is an individual or a group of individuals on which the organisation depends for its continuous survival”.

(A stake holder rationale for risk management 1st edition 2008 – Gregor Gossy)

Stakeholders of National Bank of Pakistan

As NBP is a very big organisation so are its stakeholders. There is a long list of its stakeholders some important stakeholders are mentioned in the list below.

Shareholders

Employees

Government

Its Creditors

Board of Directors

Other Businesses

SBP

Unions

Commercial banks

Depositors

Influence of Stakeholders

The bank’s shareholders have a great impact on the decision making process of the bank as they participate in the voting for the selection of directors after the previous term is expired. They are involved in the top meetings with the general secretary of the bank.

Board of directors influence the company’s decision as they are the strategy formulators of the bank.

The State Bank of Pakistan (SBP) is the central bank and so has a powerful authority on all banks serving in Pakistan. SBP keeps a check on all the operations of NBP. Clearly SBP has a sturdy control on the strategy of National Bank of Pakistan.

The employees of NBP also have a great impact on the strategy of the bank. They influence by the efficiency and effectiveness of the service they are providing. For example if they are motivated and working hard it will help the bank achieving its vision in a superior way. So employees at NBP affect the profitability of the banks.

Competitive analysis of NBP

The company’s competitive analysis begins by focusing the overall industry in which a firm competes before market segment or sector level issues are considered. For the competitive analysis of NBP I have chosen the famous porter’s five forces analysis.

Porter’s FIVE FORCES MODE

Competitive Rivalry

It is very commanding force amongst the company and its competitors. A strategy followed by a company is successful to an extent it gives to its competitive advantage to its opponents. The strategy could be providing best service, or reducing the price against its competitor’s price as far as NBP is concerned it is charging very low fee on DDs, transfer by telegraphy, and by post transfer it is also giving many added facilities to the clients and to the country as it states it is a nation’s Bank

Threat from new entrants

When new businesses can simply come in the particular market the number of competitor increases and so is the competition. As far as banking is concerned this industry is previously very much located in Pakistan. There are many banks that provide high quality service at a very low fee. So there isn’t any risk to National Bank of Pakistan from possible new entrance. NBP as well a community sector bank and there is no chance of being taken over by any new bank.

Threat from substitutes

The substitute threat is the 3rd factor that can affect the competitions. It means there could be some other services that can be an alternative of the product/ service of the company. In banking sector for example they offer saving schemes, but the general post offices in Pakistan are also providing this service so there is an alternative of the service. The banks should beat their offer of saving in order to take control of the market.

Another example could be the Automated Teller Machines (ATMs) which are a substitute of presenting cheques at the cash counters in banks. ATM saves the time but NBP is lacking in this ground. It should look up in this field to compete its rival.

Bargaining Power of Suppliers

The strength of competition is affected by the bargaining influence of the suppliers particularly when you have a great number of contractors. If you are a bank your suppliers are your customers who supply you money. So as a bank you should offer them quality services, peace of mind, gain their trust at an affordable fee. B/C offer superior services to the customers. B/C charges less on transfer of funds. As a result there is a competition between B/Cs and banks.

Bargaining Power of Consumers

When clients are strong or in big numbers, or the buy in huge quantity, their purchase influence signifies a key force affecting strength of opposition. Keeping that fact in mind we see that banks have a large number of customers in Pakistan and banks are offering different products to their customers. NBP as well have a big number of clients. So it should offer superior services and good products to its clients to draw their attention to NBP.

LEARNING OUTCOME 3

External environment

Now we will discuss the external factors affecting the strategic plan of NBP. I have used the most commonly used tool for this purpose that is the PEST analysis.

PEST ANALYSIS

PEST analysis is a study of the huge outside environment of the company. It is helpful for realising the Political, Economical, Social & Technological surroundings that accompany works in. This analysis can be used for measuring market development or slump, to check where you business lays in the market.

(The business environment 6th edition 2009 IAN WORTHINGTON & CHRIS BRITTON)

THE PEST ANALYSIS OF NBP

Political

Impact of economic science striking and NCB’s

Denationalization strategy of the authorities and SBP’s deregulating

Work patterns, Unions and affiliations

Governmental obstructions and torment

Commotions of high tax on banking business

Economical

Restraints in mobilisation of civic investments due to inflation

Staff pays and other costs

Operating expense is higher due to manual dealing

Rising of debts

Social & Cultural

Unsatisfactory HR

Ethnical strain to investments

Going down educational and employment morals

Poor liability

Debtor lobby

Satisfactory empowerment

Technological

Poor communication base

Inadequate I.T services

Insufficient I.T training

Lack of information technology tools

SWOT ANALYSIS

The usage of SWOT analytic thinking lets businesses to make the most of their strengths, reduce their weak points, take benefits of their chances and conquer their disadvantages.

It begins by defining the aims of the project or business actions and describes the inner and outer elements that are crucial to achieve those goals. Advantages and disadvantage are generally internal to the company, whereas opportunities and risks are typically external.

(The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats)

Author: Lawrence G. Fine

Publisher Booksurge Llc, 2009

SWOT ANALYSIS OF NBP

STRENGTHS

Oldest Organization

National bank of Pakistan on of the matured banks operating in Pakistan and so has large number of customers which is strength of it. People trust and believe in the bank. Being an old organisation it’s an additional value for the bank.

Rotation of Duties

If for some reasons state bank of Pakistan is not in operations NBP works as an alternative of SBP. Being a government bank and working as an alternative of SBP is strength of the bank.

More Deposits than Competitors

NBP has the proportional capability in holding additional deposits as compared to other banks. This is due to the trust that clients have in NBP.

Employee Benefits

Reasonable financial remuneration is given to the employees on both EID events in form of cash bonuses. This provides an extra help and proficiency for NBP & a cause of inspiration for the workers.

Wide Network

One more strength of NBP is its wide network all over the country. It has most number of branches than any other bank in most productive cities. Due to large network of branches NBP provides best quality service to its customer’s at their nearest branch.

Professional Competence

The bank has hired very professional graduates in different fields like banking, business administration, economics, finance etc these are highly skillful professional. Their professionalism enables the bank to realize and achieve the goals of the organisation in a superior way.

Healthy Environment

The working environment at NBP is extremely conductive and supporting for more sizeable output. The relaxing environment manipulates the performance of the workers in a supporting manner.

WEAKNESSES

Less Marketing Effort

NBP do not support its industry stature & its services in an aggressive manner. Therefore it lacks in selling efforts. Now a day every organisation is in need of aggressive marketing A need for aggressive marketing in there in the era marketing in now becoming a part of every organization.

Political Pressure

The strong political grip of some companies & government and its authorities are impacting NBP negatively. The bank sometimes has to issue loan under agencies’ demands that leads to odd and accommodated feelings in its employees.

Discrimination

The senior’s often influence in the promotion system of the bank by forcing their favoritism and their own willingness and decision. This behavior leads to denomination of the employees which leads to performance degradation and lack of confidence in the employees.

A Few Financial Product

If we consider the innovation and announcements of new schemes NBP is far behind from its competitors. NBP did not involve itself in the competition of offering customers new products, ideas and services. It is a major weakness of the bank.

Bad Service at Busy Time

Another weakness of the bank is its poor management in serving the customers in busy hours. It is been often noticed that people are topping out of the doors and windows and they are not happy because they are not been serviced timely and efficiently.

Lack of Network & Equipments

Another weakness of the bank is the lack of computer networks that could have saved the time and energy of its employees. Moreover the I.T staff is not well trained they are old aged and don’t have necessary know-how of computers. If proper tainting and network is provided bank can convert this weakness into its strength.

Uneven Workload

The pressure of work at NBP is more on some workers than others and it is unevenly distributed. Some employees escape from their job responsibilities while others bear work overload. This is not fair and leads to de-motivation among the employees who are working hard.

OPPORTUNITIES

E- Banking

The advancement in communication sector has made this world a global village. Now technology is very important for any business specially banking now a day depends on efficient an effective service which is impossible without technology. National bank of Pakistan can make use of technology to perform better and have a competitive edge over its competitors.

Micro Finance

In today’s word there is a need of finance on micro level NBP can avail this opportunity as its competitors are already arrived in this field. NBP should realize this opportunity as soon as possible in order to provide current demands.

THREATS

New Competitors

The mergers of new banks, especially foreign banks are a threat for NBP. These banks are well prepared with exceptional and innovative technology and heavy finance. They know how to promote their product and how to perform well. NBP should take steps to compete with these foreign banks to tackle this threat.

Political Pressure

As the government is not stable in Pakistan different political parties are coming in power. They are affecting the banks overall performance by putting pressure for issuance of unfair loans. Politically dominant people are creating a sense of anxiety and discouragement in the customers and its employees.

Downsizing

The current policy of the bank is to cut the staff which is a threat to its employees as they are feeling insecure about their jobs. This is affecting their overall performance negatively.

Customer’s Complaints

The customers are everything for a business but there is no formal service to deal with customer’s complaints. This behaviour is annoying the customer and they are heading towards other foreign banks. This is a threat for the bank.

Conclusions and Recommendations

National Bank of Pakistan is one of the oldest and largest banks in Pakistan. This bank is in partnership with Government of Pakistan and has largest assets than any other commercial bank. This bank has a unique part in the economical growth as it works as the agent of State Bank of Pakistan. Following are some recommendations for NBP.

National Bank of Pakistan can increase its operational productivity by using latest computer technology.

Employees Training programs are not sufficient. Extensive training will surely increase the effectiveness and efficiency of the employees.

Privatization can have a positive impact on NBP overall performance.

Modern techniques for cost cutting should be adopted by the bank.

There is a strong need to change the outlook and interior lay out of the branches.