SWOT Analysis
SWOT ANALYSIS OF MCB Thee acro Th acrony nym m SWOT SWOT stan stands ds for for a firm firm is inte intern rnal al Stre Streng ngth thss and and Weaknesses and its external Opportunities and Threats. The purpose of such analysis analysis is to build on company’s company’s strengths strengths in order to exploit opportunities opportunities and counter threats and to correct company’s weaknesses. SWOT analysis is based on the assumption that if managers carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident. Strengths and weaknesses typically relate to the internal environment of an organization, whereas opportunities and threats are brought about by the external environ environmen mentt of an organi organizat zation ion.. In the follow following ing secti section on both both intern internal al and external analyses of MCB are outlined:
7.1
INTERNAL ANALYSIS:
Internal analysis of a firm is the analysis of its strengths and weaknesses. Unless a firm has internal strengths and controls its weaknesses, it cannot take advantage of opportunities and escape threats which the external environment presents. Following are the main strength and weaknesses of MCB.
7.1.1 Strengths: Strengths: Strength can be defined as an area where a company is best at doing something or a feature that puts the company at an advantage in comparison to its competitors. MCB enjoys the following strengths: i.
MCB MCB is is a well well esta establ blis ishe hed d bank bank enj enjoy oyin ing g long long his histo tory ry of ove overr 55 year yearss of experience and profitable operation.
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SWOT Analysis
ii.
MCB was the first privatized zed bank tha that gives ves it an edge over oth other nation nationali alized zed banks banks as it can develop develop any strate strategy gy consis consisten tentt with with the demand of market and free from any political or bureaucratic influence.
iii. iii.
MCB MCB is the the lar large gest st pri priva vate te bank bank in in Pakis Pakista tan n and thir third d larg larges estt bank bank amo among ng all banks.
iv. iv.
It has the the lar large gest st bra branc nch h netw networ ork k among among priv privat atee bank bankss of Paki Pakist stan an..
v.
MCB MCB is the the mar marke kett lead leader er in in int introduc oducti tion on of ee-bank bankin ing g and and it has has the the largest ATM network in the country.
vi. vi.
Thee Banks Th Banks’’ Rupe Rupeee Trave Travele lerr Cheq Cheques ues have have bee been n mark market et lead leader erss for for the the past past six years.
vii. vii.
MCB MCB rate rated d the bes bestt domes domesti ticc bank bank for two two cons consec ecut utiv ivee years years of 200 2000 0 and 2001 by euro money, a leading international publication.
viii. viii.
MCB has has forge forged d strate strategic gic allia alliance ncess with with intern internati ationa onall banks banks for expan expandin ding g its network further, both locally and internationally.
ix.
MCB has the ability to bri bring innov novative product ucts and services like personali personalized zed service, service, electronic electronic funds transfer, transfer, sophistica sophisticated ted financial financial products products such as electronic electronic banking, auto-teller auto-teller machines machines and evening banking.
x.
MCB has been very effective in controlling costs as it succ uccessfully restructured itself after its privatization. During this process more than 1,600 employees were relieved under a golden handshake scheme and 110 branches were closed.
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SWOT Analysis
xi. xi.
Exce Ex cell llen entt bran branch ches es app appea eara ranc ncee gives gives an edg edgee to MCB MCB over over othe otherr banks banks.. The branches are well furnished even in less developed areas where other banks branches give a poor view. The same is included in the mission statement of MCB in following words: “…and to be the best place to work”.
Weaknesses: A weak weakne ness ss is def defined ined as an area area in an orga organi niza zati tion on wher wheree the the organization is not as good at doing something as its competitors or a thing which an organization lacks thus putting the organization at disadvantage in comparison to its its comp compet etit itor ors. s. Base Based d on the the abov abovee defi defini niti tion, on, MCB MCB has the the foll followi owing ng weaknesses. i.
Miss Missio ion n of MCB MCB is is not not well well def defin ined ed.. It rest restri rict ctss MCB MCB fro from m exte extend ndin ing g its its operations to other countries. This is evident from this sentence of the mission statement “Our mission is to become the preferred provider of quality financial services in the country.. “either it means that MCB will not provide quality service in other countries where it operates or it will not extend its operati operations ons to other other countr countries ies.. In either either case, case, the bank suffers.
ii.
Though MCB is third largest bank in Pakistan, yet the fact remains that it is not market leader as HBL and NBP. Total assets of HBL and NBP are Rs. Rs. 333,7 333,751 51 mill millio ions ns and and Rs. Rs. 415, 415,088 088 mill millio ions ns resp respec ecti tivel vely y as at December 31st, 2001. While total assets of MCB are Rs. 187055 millions. Similar is the case with other financial strengths in deposits and a dvances. MCB does not enjoy the support of government as the other nationalized
bank do. At the time of any financial difficulty, the other banks can easily seek
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SWOT Analysis
support from government while MCB will have to rely on its own resources. One example of that came to the front when it started restructuring to streamline its operati operations ons and to achiev achievee cost cost effici efficienc encies ies,, unlike unlike other other public public sector sector banks, banks, which received assistance from Asian Development Bank to the tune of US$ 250 million, MCB carried out restructuring at its own initiative and without financial assistance from the government. The second example was The rejection of its offer to take over United Bank Ltd. Through its bid was the highest of Rs. 12 billion: almost double of the bids offered by other participant in the bidding. iv. iv.
Thee over Th overse seas as bra branc nch h netw networ ork k of MCB MCB is limi limite ted. d. It It has has only only four four ove overs rsea eass
branches whereas HBL has twenty overseas branches, three subsidiaries, two affili affiliates ates,, and one repres represent entati ative ve office office.. Simila Similarly rly NBP has fiftee fifteen n overse overseas as branches, one subsidiary, and four representative offices. v.
Empl Employ oyee eess at bra branc nch h leve levell are are not not prop proper erly ly mot motiv ivat ated ed to to work work by by hear heart. t.
they take the all routine activities as a boring job. vi. vi.
Most Mo st of the the empl employ oyee eess lack lack manag manager eria iall trai traini ning ng as they they are are not prop proper erly ly
educated. educated. Due to seniority, seniority, they have moved up on the hierarchy hierarchy line to Grade-I, II or III positions having hardly bachelor degrees. This type of senior staff cannot apply the modern and innovative techniques of management in decision making.
7.2
EXTERNAL AN ANALYSIS
An organization has to monitor its environment constantly to keep up with new developments and changes in the environment. A change in the external envi enviro ronm nmen entt may may be eith either er an oppo opport rtun unit ity y or thre threat at.. In eith either er case case the the organization has to properly use it strengths to avail the opportunities and avoid or
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SWOT Analysis
minimize the negative effects of threats. Following are the main opportunities and threats of MCB.
7.2.1 Opportunities Opportunities An opportunity can be defined as a change in external environment which if properly exploited with the organizational strengths will result in enhanced sales market share or income. Using its strengths. MCB can avail the following opportunities. i.
MCB may enhance its Rupee Travelers Cheques (RTCs) sales by searching for new market niches.
ii. ii.
It can can intr introd oduce uce debi debitt car card d sys syste tem m or or may may conv conver ertt the the exi exist stin ing g ATM ATM card cardss into a complete debit card.
iii. iii.
New New produ product ctss like like perso persona nall loans loans mort mortga gage ge and and auto auto leasi leasing ng and and each each management which diversify credit risk and add to revenue generating produc products ts are curren currently tly provid provided ed in big cities cities like like Lahore Lahore,, Islama Islamabad, bad, Karachi and Rawalpindi, these products may be tested for success in other areas like Peshawar, Quetta and Sargodha.
iv. iv.
Deve Develo lopi ping ng netw networ ork k for for elec electr tron onic ic trans transac acti tion on requ requir iree huge huge inves investm tmen entt which cant be made all at once, there exists an opportunity for MCB to enter into agreement with other banks to use each others ATMs which will result in an increased convenience to MCB customers and customers of other banks.
v.
As all all aro aroun und d the the wor world ld remi remitt ttanc ances es of mone money y are are stri strict ctly ly moni monito tore red d so as the money remitted may not fall in hands of so called terrorists for that all conventional money laundering through Hundies have been stopped there
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SWOT Analysis
is an opp oppor ortu tuni nity ty for for MCB MCB to exte extend nd its its branc branch h netw networ ork k to vario various us countr countries ies emphas emphasizi izing ng mainly mainly on introd introduci ucing ng electr electroni onicc fund fund transf transfer er facilities.
7.2. 7.2.2 2 THRE THREAT ATS S
Threat can defined as a change in external environment which if not met with proper strategies will result in loss of revenues market share or income income.. In the contex contextt of MCB’s MCB’s extern external al enviro environme nment nt the follow following ing potential threats exist: i. The Rupee Rupee Trave Travelle llers rs Cheque Cheque (RTC) (RTC) sales sales volum volumes es may be affec affecte ted d on account of regulatory restriction imposed by SBP on issuance to large value denominations. ii. The tax refund refund by CBR CBR to exporters exporters during during second second quarter quarter of financ financial ial year 2002 and excessive remittances from abroad by Pakistan have incr increa ease sed d liqu liquid idit ity y resu result ltin ing g in low low dema demand nd for for cred credit it that that woul would d inevitably have dampening effect on all banks profitability including MCB5. iii. iii. Th Thee freq freque uent nt redu reduct ctio ion n on 6-mon 6-month th and and 12 12-m -mon onth th Trea Treasu sury ry Bill Billss discount rates by SBP may create pressure on the banks profitability. iv. The low discou discount nt rates rates are also negati negativel vely y influe influenci ncing ng the advances advances rates which may affect the banks profits from the other side. Foreig Foreign n banks banks operat operating ing in Pakist Pakistan an are playin playing g a signif significa icant nt role role by incorporating new technologies and providing better quality services thus
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SWOT Analysis
creati creating ng a threat threat to the local banks especia especially lly to MCB which tries tries to deve develo lop p core core comp compet eten ence ce in elec electr tron onic ic base based d prod produc ucts ts.. Poli Polici cies es of privatization, foreign exchange reforms and structural adjustments have increa increased sed the inflow inflow of foreig foreign n resour resources ces throug through h direct direct and portfo portfolio lio invest investme ment. nt. In trade trade financ financing ing the role role of foreig foreign n banks banks is even even more more significan significantt as approximately approximately 30 percent percent of the total trade of the country is tran transa sact cted ed thro throug ugh h them them.. Majo Majorr po port rtio ion n of the the trad tradee fina financ ncin ing g is for for importers to establish letters of credit
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