In the name of Allah, Most Beneficent, Most Merciful

A TERM REPORT

ON

Submitted to Madam Quratullain Bosan

Submitted byRamiz Ur Rehman MBC-08-31Usman Arshad MBC-08-32M. Zuhair Altaf MBC-08-36Usman Aslam MBC-08-46Aun Ali Khosa MBC-08-54

Institute of Management Sciences Bahauddin Zakariya University

Multan

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Acknowledgement

One is the first the Almighty ALLAH whose blessings are above

each and every thing which make us able to present our tiny

effort. All prays to HAZARAT MUHAMMAD (PBUH) who is the

reason for creation of the universe and whose kindness came

to my heart.

On the successful completion of our report, we wish to

express our gratitude and heart worthy acknowledgement to

the our Madam Quratullain Bosan who helped and guided us in

the completion of this term report.

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Contents

Central Background Information

Company Background

Organizational Hierarchy

Corporate Mission, Vision and Core Values

Objectives and Goals

Corporate Strategies

Pest Analysis

Swot Analysis

Analysis of Competition

Recommendations and Suggestions

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Central Background Information

Banking is one of the most sensitive businesses all over the world. Banks play an important role in the economy and are considered as the backbone of an economy in every country and Pakistan is no exemption. Banks are custodian to the assets of the general masses. The banking sector plays a significant role in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance.

Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. The country started without any worthwhile banking network in 1947 but witnessed phenomenal growth in decades to come. By 1970, it had acquired a flourishing banking sector. Nationalization of banks in the seventies was a major upset to domestic banking industry of the country, which changed the whole complexion of the banking industry. With irrational decision at the top, all the commercial banks were made subservient to the political leadership and the bureaucracy. The commercial banks thus lost their assets management equilibrium, initiative and growth momentum. They ceased to be a business concern and became big bureaucracies. The era of nineties was the climax of privatization, deregulation and restructuring in the domestic banking industry and financial institutions. The Muslim Commercial Bank was the first bank to privatize. Followed by Allied Bank limited, United Bank Limited and Habib Bank Limited have all been privatized.

Today, the banking sector is providing financial solutions to the masses and is growing and becoming a solid partner in the development of the Pakistani economy, this growth potential has seen different acquisitions in the banking sector, with the Standard Chartered and Union Bank being the most prominent.

Company Background

Bank Alfalah has gone through different phases over the years. Its name and been changed in the following sequence.

Bank of Credit and Commerce and International (BCCI)—1972

Habib Credit and Exchange Bank—1992

Bank Alfalah—1997

Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan, Karachi, Lahore and

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Rawalpindi. The Lahore branch was opened on 15th December1978. This branch was opened at that time when some other international banks like Citi Bank, Bank of America, and American Express etc. were already working. But within a few years this branch crossed mostly all the other banks in case of deposits, advances, imports and exports dealings, guarantees, traveler‘s cheque sales etc. In 1991, the BCCI was banned, when it was accused by European countries that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore, the bank was closed due to international pressure.

In July 1991, the branches of BCCI in Pakistan at that time were taken over by The Ministry of Finance and SBP. All three branches were given under Habib Bank Limited after valuation of its assets for 15 million dollars, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited.

Following the privatization in 1997, Habib credit and Exchange Bank assumed the new identity of Bank Alfalah on June 21st, 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The bank is currently operating through 282 branches. This includes 48 Islamic banking branches and 7 foreign branches in Bangladesh, two in Afghanistan and one offshore banking unit in Bahrain with the registered office at B.A.Building, I.I.Chundrigar, Karachi. The bank is listed on the Karachi and Lahore Stock Exchange with a ticker name of “BAFL”.

Credit Rating

PACRA, a premier rating agency of the country, has rated the bank

For long term „ AA‟ (double A)

For short term A1+ (A one plus)

These ratings denote a very low expectation of credit risk, strong capacity for timely payment of financial commitments in the long term and by highest capacity for timely repayment in the short term, respectively. Further, the unsecured subordinated debt (Term Finance Certificates) of the bank has been awarded a credit rating of AA- (double a minus).

Bank Alfalah has expanded its branch network and deposit base, along with making profitable advances and increasing the range of products and services. Bank Alfalah is the 5th largest bank of Pakistan in terms of its assets that are 6% of the total banking sector assets. The banking sector has expanded rapidly in Pakistan along with the fast paced economic growth. The increased competition in the banking sector has encouraged the Banks to come up with services that could satisfy the needs of a large consumer base. The result has been increased profitability of all banks.

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Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates its commitment to culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. It perceives the requirements of its customers and matches them with quality products and service solutions. During the past twelve years, it has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today.

The bank also entered into other dimensions of financial services –brokerage, asset management, and insurance – through its subsidiaries, which are in their development phase and would require sometime before emerging as material contributors to BAL‘s revenue stream.

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Organizational Hierarchy:

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Chief Executive Officer

Co-Chairman Central Management Committee

Group Heads

Regional Managers

Area Managers

Hub Managers

Branch Managers

Officers Grade I, II, III

It’s a general hierarchy of bank which is showing about the main authorities of Bank Alfalah Limited who are controlling its management in Pakistan. Bank’s management is divided into different groups, regions and areas. Co-chairman is providing supervision to group heads that are responsible for controlling the affairs of different groups. After group heads in the hierarchy, there are regional, hub and area managers who are managing and guiding the working of different branches of bank.

Board of Directors

The board of directors has the authority in guiding Bank affairs and in making general policies. Some directors are the personnel of the Bank Alfalah Limited follows.

H.E. Sheikh Hamdan Bin Mubarak Al Nahayan

Chairman

Mr. Abdulla Nasser Hawalileel Al-Mansoori

Director

Mr. Abdull Khalil Al Mutawa Director

Mr.Khalid Mana Saeed Al Otaiba Director

Mr. Ikram Ul-Majeed Sehgal Director

Mr. Nadeem Iqbal Sheikh Director

Mr. Sirajuddin Aziz Director & CEO

Vision & Mission

The Vision of Bank Alfalah is:-

Vision statement identifies where the organization intends to be in the future or where it should be to best meet the needs of stakeholder. Vision statement incorporates a shared understanding of the nature and purpose of the organization and uses this understanding to move the organization toward a greater purpose.

V I S I O N

“To be the premier organizations operating locally and internationally that provided the

complete range of financial services to all segments under one roof”

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Bank Alfalah is one of the leading financial institutes; Bank Alfalah operates in Pakistan, Bangladesh, Afghanistan and Bahrain, and Bank Alfalah day by day increasing its products for all the segments in Pakistan i.e. for Businessmen, Industrialists, Agriculturists and for the Government bodies in the country. Bank Alfalah is trying to reach each segment in Pakistan, and trying to provide its products at lowest charges and with easiest way, under one roof.

Mission statement of Bank Alfalah is:-

MISSION

“To develop and deliver the most innovative products, manage customers experience, deliver

quality service that contributes to brand strength, establishes a competitive advantage and

enhances profitability, thus providing value to the stakeholders of the bank”

In the above Mission the Management of Bank Alfalah emphasis on the following areas:

To provide the new and more innovative products than the other banks to the customers. To take and manage the ideas of the valuable customer for the Bank This is a one of the main component of Bank Alfalah Mission Statement that to deliver

high quality and quick services to the customers, who are keep great value for Bank Alfalah.

Bank Alfalah tries to promote those activities which give the fruitful result to the customers and the stakeholder of the bank.

Core Values

Customer Relationship:“Before we discover we must explore”

Knowing customer and their needs is the key for the success of a bank , Alfalah client relationship managers are well equipped and well trained to provide most efficient and personalized service to each and every customer. Alfalah products are as diverse as the market segment. Alfalah has structured and syndicated financing arrangements, working capital, replacement facilities, financing of international trade, consumer credit small business loans unparalleled investment products for the individual saver.

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“Every Drop Counts”

This shows that Bank Alfalah does not only care its corporate customers but they also treat the individual customer very well.

Dedicated Professionals:

“Unusual efforts on the part of the employees who are apparently ordinary workers is one of the key indicates of the superior enterprise”

Staff is the most valuable asset of any organization. The human resource philosophy at Alfalah bank focus on multi-talent hiring, professional grooming, requisite training and meritocracy based reward system. Staff welfare has been a priority.

Employee productivity enhancement is organized through in-house and external training programs. Bank continues to offer opportunity for people to develop their knowledge, skills and personalities, thus ensuring greater self-fulfillment and progression in the organization.

In short bank Alfalah team comprise of dedicated professionals equipped with a diverse array of skills and vast experience. The management concentrates its energies on making informed economic decisions, translating it into greater returns for their investors and customer. The prudent attitude has created a synergistic organizational structure leading to improvements in profitability and a sustainable competitive advantage for the bank.

Training & Development:

Bank Alfalah is committed to the personal welfare and professional development of all our team members.

Proper training of human resource is essential, not only for the more productive and satisfied work force but for also homogenous corporate culture.

The bank continuous to follow its strategy of hiring batches of young and energetic Management Trainees who are sent to its Training and Development Center for training in all areas of banking. It’s Training and Development Center is a state of the art facility with an impressive faculty.

Technological innovation:

“Modern science is not an option, it is an obligation”

Technology is rapidly changing the way it thinks acts and does business. It has played pivotal role in enhancing customer expectation, particularly with respect to speed and quality of service. Alfalah bank enjoys a strategic competitive advantage overall domestic players by virtue of its leadership in technological innovation. Phone banking service and Internet banking facility

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allows customer to enjoy routine banking services from anywhere in the world. 365 days a year, 24 hours a day.

Ethical values:

“Professionalism without integrity is like a book without pages”

Because the right may not always be obvious, employees are guided in our every action by set of well-defined values, governing our decision.

Alfalah bank understands that its commitment to satisfy customer needs must be fulfilled within in a professional and ethical framework.

GOALS & OBJECTIVES

Goals and objectives are factors through which the company’s devotion and commitment to the job can be seen. If the goals are realistic and achievable, than surely that organization is doing its job.

Bank Alfalah also has certain goals and objectives which it is trying to achieve, through its various strategies and operations. The goals and objectives are mentioned below:

1. To create a sound base, and through efficient systems achieve modern banking through out Pakistan

2. By the end of every accounting year there is an increase in deposits. As a result its deposits are increasing day by day.

3. To create unit banking network in all the branches of Bank Alfalah, the end of the year. This means that all the operations of the bank, i.e. deposits to advances, imports, exports, L/C Opening, foreign currency and many more aspects under one roof, so that the customer can be facilitate in one visit.

4. To promote industrial, agricultural and socio economic processes through the active participation of private and public sector in the country.

5. Islamic Banking is one of the goals of Bank Alfalah though it has been initiated in the 2002 and it is very acceptable for general public. However, there is lot of work to do for successful implementation of the Islamic Banking Plan. In this regard the Bank is opening specific Islamic Banking Branch under the supervision of its Islamic Banking Division.

STRATEGIES

Bank Alfalah has formulated certain sets of strategies to enable it to achieve its goals and objectives. These strategies are mentioned below:

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1. In order to achieve it’s goals of creating a sound base and presence of efficient modern banking system, Bank Alfalah has started operation of Automated Teller Machines in all the major cities like Karachi, Lahore, Multan and other cities of Pakistan.

2. Bank Alfalah is committed to building long-lasting relationships through an assertion to service excellence and providing innovative products to meet the changing needs of our valued customers. Although still in its infancy, compared to the exalted banking standards, Bank Alfalah, backed by a strong Abu Dhabi Group and inspired by the vision of its Board and Management, has built up a strong customer base. The Bank provides a full range of banking services to corporate clients, while applying leading technologies. Today the Bank is well-positioned to provide appropriate banking services to customers.

3. The main focus is building relationships and being known by the way they do business. Management recognizes that a banking relationship requires compatibility, communication, and cooperation and that each customer deserves nothing less than full attention and available resources to meet their financial objectives.

4. Core value and corporate culture is based on the belief that superior personalized service is the most important product. Bank is in the process of getting to know customers by name and understand their business and personal financial needs. This one-on-one, personalized service quality has served as Bank Alfalah's unique signature since inception and continues to separate it from other financial institutions.

5. The Bank Alfalah team comprises of some of the most highly skilled and professional financial experts in banking industry. Managers, lenders and trust advisors offer the unique perspective of knowing and understanding in the local economy. The Management focuses its attention on making informed and feasible economic decisions, bringing better returns and more profitability for investors and customers.

6. Keeping in view the unrest among the Islamic Community on the Interest Bearing Banking the Alfalah is in the process of target marketing and gives its full attention to this segment of a large population over the world.

7. To acquire the reputation and status of bank which operates on international standard, Alfalah Bank was to get the credit rating of Pakistan Credit Rating Agency, which gave it the AA- and A1+ in the long term and short term respectively.

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Strategic Business Units (SBUs)

Bank alfalah limited has following SBUs

1. General Banking

The General Banking Include deposit Accounts, lockers, remittances.

Deposit Accounts

The following are the types of bank alfalah

Current Account

Profit& Loss Saving Account

Basic Banking Account (BBA)

Royal Profit Account

Kifayat Account

Mahana Amdan Account

Alfalah Education

Lockers

Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of their valuables like documents, securities and jewellery etc.

Remittance

Through its international correspondent banking relationships alfalah provides direct and indirect foreign currency remittance facility around the world.

2. Financial Services

Karobar Finance

Alfalah Karobar Finance is short term facility. This facility also has one year validity with markup charged on the amount used. This facility again provides individuals to maintain their working capital management and is again given to individuals for a security. Karobar finance is type of current financing with difference i.e., in karobar finance, the individual has to clear all his balance in his account, once in a year.

Milkiat Finance

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Alfalah Milkiat Finance is a long term facility and there are four main types of facilities provided:

1 Acquisition of rented commercial/industrial property

2 Construction on an owned commercial/industrial plot

3 Purchase of a commercial/industrial property

4 Renovation of owned commercial property

Quick Finance

Alfalah Quick Finance is another short term and a type of current financing facility that is only provided to individuals for the fulfillment of personal or family needs. The financing is given against the deposits and government securities up to the 90% of the cash value of security. Financing is made from 50,000

3. Consumer Financing

Alfalah Car Finance

BAL’s recently introduced car leasing facility for individuals and corporate sector has set new dimensions for the product. Now it is provided with the option of either to get the vehicle leased or financed.

Alfalah Home Financing

With this facility, customers can built, buy, Renovate their homes.

Hilal Debit Card

Bank Alfalah Limited presents the Alfalah HilalCard, a Debit Card which gives unlimited access to current / savings account with a simple swipe at millions of retail shops and ATMs worldwide.

4. Treasury and Investment

Alfalah has investment in followings

Money Market

Foreign Exchange Market

Government Securities

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Other Bonds

5. Bank Alfalah Islamic Banking

Riba is the major undesirable elements of an economic transaction, the others being Gharar (uncertainty) and Qimar (speculation). While elimination of these objectionable aspects in a transaction is indeed a critical aim of Islamic banking system of Alfalah. Alfalah Islamic Banking started in 2002.

PEST Analysis

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A broad view of market is important when management is interested in introducing better services for customers. Rapid technological change, global competition and the diversity of buyers preferences in many markets require the constant attention of the market vouchers to identify promises business opportunities, see the shifting requirements of the buyers, evaluate changes in competitors positioning and guide the choice of which buyers to target and classify them according to respective segments.

Identification of external and macro factors that influence buyers and thus change the size and composition of market overtime involves initially building customer profiles. These influences include:

Political environment

Economic Indicators

Socio cultural environment

Technological factors

Political Environment

The 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.

Stability and law and order situation under the political regime is very important for the economy as a whole. The present state of the government in Pakistan is directly affecting the policies of banks. Continuous political changes have disrupted the policies and objectives as each regime brings with it its own agenda. Organizations need time to adjust to one regime and then work with it towards economic enhancement. Due the wrong policies of the government, the talibanization also develop in Pakistan and become the international issue in Pakistan and badly affected the Pakistan repute in the world and promote the uncertain conditions for the business in the Pakistan. Due to this the investors are not interested in the Pakistan.

Economic Indicators

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The economy of any country directly influences any financial organization. Economic indicators include Gross Domestic Product (GDP), inflation, balance of payment, debt of the government.

Pakistan’s economy has witnessed the most challenging period after posting six consecutive years of healthy economic growth. However, the strong fundamentals were compromised to prevailing global crises that’s shacked the confidence of global investors and FDI flowing in the country. The steep rise in oil prices to U$ 147 a barrel, soaring inflation hitting a 24% mark, huge fiscal deficits and balance of payments issues coupled with plummeting forex reserves added to the economy’s move to an unstable growth trajectory.

Also the load shading is another factor that affects the Pakistan economy badly. This not the end of the story after this Pakistan’ economy face lot of problems like bomb attacks in Pakistan no electricity and the unstable government, due to this the investor are not invest in the Pakistan and the existing business men are loosing their business unit due to the loss.

Due to this poor economy, businesses are reaping low profits and stock market is in great danger. Pakistan’s foreign debts are rising day by day so such a situation is a big challenge for banking institution to survive. The financial crisis in Pakistan has made the management of BAFL tensed to work in such an environment.

Socio cultural environment

A low saving culture has offset the huge population advantage this is enjoyed by Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant segment of the population is reluctant to accept interest for their deposits due to the negative religious implications of such an act. About 70% of Pakistan’s population is based on rural areas and literacy rate of the country is very much low, thus making it harder for banks to mobilize their deposits within these regions.

However, in today world, the customers are becoming more intelligent and through media they keep themselves up to date. Thus, the lifestyle and expectations of the customers from the service provider is increasing day by day.

Technological Factors

Banks in the developed world have been turning to heavy IT investments, which differentiate their products, provide response times, enhance accessibility and improve customer satisfaction. Though investing in state-of-the-art host banking solution, ATM and POS (point of sale) networks, visa, MasterCard, and, smart cards, telebanking, internet banking and now mobile banking are common IT investment in the developed world, it is now that these products and services are gaining faster acceptance in Pakistan.

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In BAFL technology has great effect on the working environment. BAFL is always willing to introduce new computer systems for keeping its staff up to date. With the successful implementation of new centralized database system, the bank also achieved remarkable progress in business process re-engineering, turnaround time compliance by centralizing outward remittances, account opening and credit administration.

SWOT Analysis

SWOT is stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a careful evaluation of an organization’s internal strengths and weaknesses as well as its environmental opportunities and threats. In SWOT analysis the best strategies accomplish an organization’s mission by exploiting an organization’s opportunities and strengths while neutralizing its threats and avoiding its weakness. During my internship I also observe these factors of bank and made a conclusion which is as follows:

Strengths:

Main strengths of bank are describe follows due to which bank is becoming successful day by day and now is on the fifth largest and successful bank in Pakistan in the bank’s ranking after NBP, MCB, UBL and HBL.

Being the private organization its main aim is not to earn profit but also to satisfy its

customers and slogan of BAL is also the representative of this purpose as Bank Alfalah

“The Caring Bank”.

Bank has AA (Double A) and A1+ (A one plus) Credit Rating for long term and short

term loans respectively.

Main source of profit for any financial institution is public saving which only comes from

public confidence and BAL is getting this confidence which is one of the main strengths

of bank

Bank Alfalah is also getting fame in the market due to its name “ALFALAH” which is

leaving the Islamic and favorable impact on the minds of public.

BAL is providing the facility of Money Gram to its entire people who are its customer or

not and through this service it has got the leadership in Money Gram because any other

bank is not offering this service.

With in very short period it has got a superb accomplishment which shows the

competency of top management.

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Personnel of Alfalah are well trained and highly skilled.

Bank Alfalah has a wide network of branches at the ideal locations, catering the financial

needs of its clients.

The management of the bank is very much concerned with the development and

improvement of the working environment. The bank has state of the art and purpose built

branches where all the modern technologies are provided to get the efficiency of the

workforce and the customer satisfaction.

Weaknesses:

Beside all these strengths I also noted some weaknesses in the operations of bank Alfalah which are described below:

BAL is that it is not offering the loan facility to newly established businesses because it’s

the BAL policy that it will loan only to that people who are running their businesses from

3 years.

BAL’s lending procedure is quite complicated that some people hesitate to come as they

are requiring a huge file of documents.

Bank Alfalah is not offering any credit facility for students.

BAL is not offering the online facility to account holders having photo account.

Bank Alfalah is charging online charges for transfer of money but some other banks not

charge online transfer charges.

Majority of the workforce consists of young professional, they lack in their experience.

And sometimes lack of experience becomes a hurdle while serving to the customers. It is

the point where they feel difficulty while competing with the other banks.

It was observed that at present the motivation level of the employees is not very much.

The increased workload has resulted in the reduced efficiency of the employees. Because

now the time required for completing the tasks for a single customer has been increased.

As a result the environment of the branch has become very messy.

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Opportunities:

It is mandatory to try to make progress with consistency as well as to adopt changes with needs of time, in order to cope up with both conditions.

Bank Alfalah is spreading its network outside the boundaries of Pakistan and it has more

opportunities to extend this network as State Bank of Pakistan has prescribed new

policies in the prudential regulations.

In addition to excellent routine banking, it has earned a good name by offering special

products like car, home and credit cards facility. So the penetration of these products

could enhance market shares.

There is a very good growth trend in the Islamic banking in the country and in the world

as well. BAL has the advantage of having Islamic Banking network and the growth in

this particular field can be very fruitful for the bank, bank has an opportunity to introduce

new products and services in Islamic banking.

Threats:

Threats are the negative trends in external environmental factors. As on one side environment provides opportunities to one organization, on the other hand it also has to face some threats. Bank Alfalah also has to face this situation.

Other foreign financial institutions like City Bank, HSBC etc also having strong banking

policies and there’s a chance that people might move toward these financial institutions

to secure their investments, transactions and related services.

For last seven year there is political stability in Pakistan but now again a new layer of

political instability arises which effects almost all industries including Banks.

Due to economic instability like currency depreciation and inflation, the bank is

constantly facing a threat e.g. in case of inflation the people have low disposal income

which means lower deposits in banks.

Other investment opportunities like investment in property and gold are giving people

more return as compare to banks; it can decrease the deposits of bank.

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Analysis of Competition

Market Structure Bank Alfalah Limited

The Bank Alfalah Limited Comes under the Monopolistic Competition Because;

There are large number of Financial Institutions in the Market.

Habib Bank Limited

United Bank Limited

Allied Bank Limited

Muslim Commercial Bank Limited

National Bank of Pakistan

Bank of Khyber

National Saving Centre

Al-Faysal Bank Limited

Saudi Pak Bank Limited

Standard Charted Bank Limited

First Women Bank Limited

Bank Al-Habib Limited

PICIC commercial Bank Limited

KASB Bank Limited

NIB Bank Limited

Citi Bank Limited

There is large number of customers in the Market.

In the Market there are number of substitutes are available

National Saving Centre

Stock Exchange

Government Securities

Advances

The products characteristics are different according to:

Rate of Interest

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Mode of delivery

Duration of delivery

Services

Communication

The products are relatively homogenous

Types of Accounts

Credit Cards

Debit Cards

Car Finance

Advances

Consumer Durables

Foreign Exchange dealings

Porter's 5 Forces Analysis

1. Threat of New Entrants. The average person can't come along and start up a bank, but there are services, such as internet bill payment, on which entrepreneurs can capitalize. Banks are fearful of being squeezed out of the payments business, because it is a good source of fee-based revenue. Another trend that poses a threat is companies offering other financial services. What would it take for an insurance company to start offering mortgage and loan services? Not much. Also, when analyzing a regional bank, remember that the possibility of a mega bank entering into the market poses a real threat.

2. Power of Suppliers.  The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented individual is working in a smaller regional bank, there is the chance that person will be enticed away by bigger banks, investment firms, etc.

3. Power of Buyers. The individual doesn't pose much of a threat to the banking industry, but one major factor affecting the power of buyers is relatively high switching costs. If a person has a mortgage, car loan, credit card, checking account and mutual funds with one particular bank, it can be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but many people would still rather stick with their current bank. On the other hand, large corporate clients have banks wrapped around their little fingers. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get high-margin corporate clients.

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4. Availability of Substitutes.  As you can probably imagine, there are plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony, General Motors and Microsoft all offer preferred financing to customers who buy big ticket items. If car companies are offering 0% financing, why would anyone want to get a car loan from the bank and pay 5-10% interest?

5. Competitive Rivalry.  The banking industry is highly competitive. The financial services industry has been around for hundreds of years and just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred rates and investment services. The banking sector is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. They then have an incentive to take on high-risk projects. In the long run, we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people.

Boston Consulting Group SBUs

Recommendations & Suggestions

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After doing internship of six weeks in Bank Alfalah Limited, I would like to give some recommendations to count over some problems.

Bank should prefer to promote worker on the basis of their talent and avoid going for

personal like and dislikes. It can be harmful for the organization in the long run.

In Bank Alfalah, there is misdistribution of work; some people are over burdened with

the work. So I suggest that there should be fair distribution of work in all the

departments.

Bank Alfalah is only dealing in Money Gram; it should also starting providing the service

of other money transfer lines like Western Union.

BAL should provide loan to students at low mark up rate and easy terms & conditions.

Bank Alfalah Limited needs to use more marketing channels such as radio to make the

public aware of its products and services. In the presence of intense competition Bank

Alfalah Limited has to realize the importance of marketing.

Bank Alfalah has equipped its branches with all major IT tools being used in the industry

like ATM’s, fax machines, photocopiers, printers, latest computers and a good

connectivity architecture, however it has been observed that when its time to work, there

are many failures seen in the different devices used by Bank Alfalah, especially its

connectivity architecture and remains offline with the main server, that creates problems

for the customers

There are no incentive schemes for employees of Bank Alfalah like scholarship schemes

for employees that want to pursue higher education. Bank Alfalah although gives a

number of incentives to its employees, like personal loans at nominal markup but they are

only provided to employees that are in higher ranks. Education fees are also returned by

Bank Alfalah to its employees, after the have finished their studies.

Bank Alfalah Ltd should continuous to expand its business, by increasing its deposit

portfolio through aggressive market penetration strategies.

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

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not only create a sense of monotony, but also not help improving the skills of Bank

Alfalah Limited employees.

Bank Alfalah Limited 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 towards BAFL‘s image

building.

Bank Alfalah limited has the web site, which has not been updated. The web site is very

less informative and it won’t leave a good impression on the visitor. So I suggest that it

should be updated to meet the requirements of the visitors.

Participative management concept should be adopted, where ideas from the employees

should also be taken, not only for developing products but also on service, efficiency,

employee morale etc. in order to improve them.

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