It is the first stage of Strategy-Formulation Analytical Framework the following techniques

are used to gather information:

 EFE Matrix
 IFE Matrix
 CPM Matrix

THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX OF HABIB

BANK LIMITED

KEY EXTERNAL FACTORS:

OPPORTUNITIES WEIGHT RATINGS WEIGHTED

SCORE

1 Develop value added services combined with 0.10 4 0.3

corporate banking relationships, cash
management services to large and medium
sized corporate clients.
2 Expand its new technological advancement 0.05 3 0.15
like; tele-banking and internet banking facilities
in order to serve the customer more efficiently.
3 Further reduction in intermediation costs 0.025 2 0.05
possible, with improving technology.
4 Improve and expand its foreign operations 0.025 2 0.05
successfully.
5 Simplifying procedures and policies will help 0.05 3 0.15
reduce waste of time.
6 HBL needs to focus on the untapped segments 0.05 2 0.1
in its target market such as:
 Educational institutes.
 Telecommunication.
7 Proper training of staff can help in capturing a 0.10 4 0.4
larger market by providing excellent customer
services.
8 To strengthen its Human Resource Policy in 0.10 4 0.4
order to increase job satisfaction of its
employees.
 THREATS

9 Growing global technological advancement 0.10 3 0.3

10 The threat of inconsistency and government 0.10 3 0.3
policy regarding to political and regional
situation which makes the environment
uncertain.
11 Consolidation in the banking sector resulting in 0.05 2 0.1
increased competition.
12 New standards of customer services resulting in 0.10 4 0.4
the provision of outstanding customer services
by other banks in the market.
13 The Rupee Travelers Cheque (RTC) sales 0.05 2 0.1
volumes may be affected on account of
regulatory restriction imposed by SBP on
issuance of large value denominations.
14 Economic instability and worldwide recession. 0.10 4 0.4
TOTAL 1 3.2

EXPLNATION:

Opportunites:

 Developing value added services is crucial for the survival of HBL as is the case with any
service organization. Continuous changes and improvements is the need of the day and
therefore it has been rated 4 which shows that it has been considered the most appropriate
opportunity for HBL to strive at.
 Expanding its technological base is yet another important opportunity as no organization can
stay long in the market without advancing its ways of doing business therefore it is rated as 3
which is reasonably important.
 Reducing costs through technology is also essential but technology improvement alone is a
better opportunity, and HBL already has tried to reduce costs through technology therefore it
is a comparatively less opportunity and has been rated as 2.
 Expansion of foreign operations is definitely considered a great opportunity but HBL has
already become international quite largely therefore, in the present date, that opportunity is
considered less important and rated as 4.
 Simplifying tasks, processes and procedures is very important for the easy running of the
bank, therefore it is rated as 3.
 Targeting untapped market segments is a fair enough opportunity but not very essential for
HBL right now as it has already touched certain market segments and is in no need for
extensive penetration in diversification so its rated as 2.
 Training is very important in today’s world as every aspect of a service organization lies in
the hands of front desk representatives therefore it is rated as 4 being the most important
opportunity.
 HR policy’s revision is highly required now a days as job motivation and satisfaction are
crucial to the success of any firm therefore this is an important opportunity and is rated as 4.
These opportunities show that HBL should focus more on training employees, providing
value added services to customers and motivating employees through improved HR policy.

Threats:

 Growing global technology is imperative and a very significant threat and therefore its rated
as 3 because technology is a lethal weapon if used in the right way.
 Government policies fluctuate greatly and simultaneously affect the firm’s success greatly
therefore it is rated as 3.
 Consolidation in the banking sector resulting in increased competition but competition is
already fairly large in the banking sector so it is a less intense threat and rated as 2.
 Customer services by other banks are improving that attracts a large customer base so it a
very important threat and rated as 4.
 The Rupee Travelers Cheque sales volumes is affected on account of regulatory restriction
imposed by SBP but there are bigger threats than affected sales volumes of RTCs therefore it
is rated as 2.
 Economic instability and worldwide recession are acting as a major threat to any industry
therefore its rated as 4.
Threats faced by HBL show that economic instability, better services by competitive banks
and changing government policies with technological advancements are most feared and
should be confronted and overcome by providing better services and competencies
The weighted score from 1 (weakest) to 4 (strongest) is 3.2.
 THE INTERNAL FACTOR EVALUATION (IFE) MATRIX OF HABIB
BANK LIMITED

KEY INTERNAL FACTORS:

STRENGTHS WEIGHT RATINGS WEIGHTED

SCORE
1 The brand name ‘HBL’ has a well established 0.10 3 0.30
credibility associated with it.
2 Being the pioneer of banking in Pakistan, HBL 0.15 3 0.45
is the oldest and is the richest in experience.
3 The Bank’s Rupee Traveler Cheques have been 0.10 4 0.40
market leaders for the past six years.
4 Veteran and experience private management 0.05 3 0.15
group also involved in other interests like,
textile and cement industry.
5 HBL has forged strategic alliances with 0.10 4 0.40
international banks for expanding its network
further, both locally and
Internationally.

WEAKNESSES
6 HBL follows complex procedures which are not 0.15 2 0.30
only wastage of time for the bank itself but also
for the consumers.
7 Sense of insecurity in the employees serving at 0.05 1 0.05
low profitable branches due to the down sizing.

8 Lack of proper training has resulted in a non- 0.15 2 0.30

professional attitude in some employees.
9 Now as it is a privatize bank that is why 0.05 1 0.05
government support to HBL decreased as it was
in past.
10 Highest number of branches effecting the proper 0.10 2 0.20
maintenance and difficulty in providing same
working environment at the each branch
TOTAL 1 2.6

EXPLANATION:

By analyzing above factors it is noted that HBL’s credibility due to its brand name is an
important factor to consider. HBL’s oldest and richest experience in banking has positively
impacted a large range of customers. Moreover, HBL training programs for its employees and
same working conditions among branches are an important indicator which needs a lot of
attention by its management. Overall HBL receives a 2.6 total weighted score which on a 1 to 4
scale shows more than average, indicating HBL’s strong internal position but needs some
considerations on part of employees training, customer services, and proper maintenance of
branches.

COMPETITIVE PROFILE MATRIX OF HBL:

As we know that this matrix identifies a firm’s major competitors and its particular strengths and
weaknesses in relation to the firm’s strategic position. The ratings are given to each critical
success factor, where

 1 = major weakness
 2 = minor weakness
 3 = minor strength
 4 = major strength
After analyzing HBL and its 2 competitors United bank limited and Bank Al Falah, their major
critical success factors we came up with the following matrix.

Competitive Profile
Matrix

Habib Bank United Bank Bank Al Falah

Critical Success Factors Weights Ratings Scores Ratings Scores Ratings Scores
Customer
Service 0.2 2 0.4 3 0.6 3 0.6
Product Diversification 0.15 3 0.45 4 0.6 4 0.6
Electronic Commerce 0.15 4 0.6 2 0.3 2 0.3
Market Share 0.17 4 0.68 1 0.17 1 0.17
Global
Expansion 0.15 2 0.3 2 0.3 3 0.45
Profits Offered 0.08 2 0.16 1 0.08 1 0.08
Advertising 0.1 3 0.3 1 0.1 3 0.3
1 2.91 2.15 2.5

EXPLANATION:

 Customer service: Customer service of HBL is not that satisfactory and they need to
improve on this aspect. As compared to HBL, the service of competitors is good and their
customers are happier with them.

 Product diversification: The variety of products being offered to customers is more

impressive of UBL and Al Falah. HBL have a satisfactory product base. But it still have
room for improvement.

 Electronic Commerce: HBL have the facility of online banking almost in every branch in
big cities and much of this facility in smaller cities as well. UBL and Al Falah don’t have
sufficient online facilities even in big cities.

 Market share: HBL have market share of more than 50% where as UBL have
approximately 9% and Al Falah 7% of the market share.
 Global expansion: Global expansion of HBL and UBL are relatively just ok but Al Falah is
an international bank so it have more global expansion than others.

 Profits offered: HBL offer higher profits than its competitors that is how it is able to attract
higher customer base. But UBL and Al Falah offer lower rates that’s why it’s their major
weakness.

 Advertizing: HBL and Al Falah have many advertising campaigns going on (i.e.
commercials, newspaper adds etc). That is why people recognize them. UBL doesn’t stress
that much on advertizing.

Thus, form the total we can see that HBL have more score than its competitors. And so, it is
performing more successfully than its competitors, that are United bank limited and Bank Al
Falah.