project of strategic management

Submitted To:

Sir Ateeq-ur-Rehman

Submitted By:

Rabia Shahbaz

12130920-022

Iqra Mushtaq

12130920-038

Iqra faheem

12130920-047

BBA 8th

Section:

“D”

Company:
Strategic management MCB Bank

Contents

Sr # Table Of Contents

MCB Bank Limited

Overview of the company

Chapter 1 Mission & Vision statement

Components in Mission Statement

Corporate Strategy

Revised Mission & Vision Statement

Components in revised Mission Statement

Chapter 2 External Assessment

External Factors Evaluation (EFE) Matrix

Competitors Profile Matrix (CPM)

Chapter 3 Internal Assessment

Internal Factors Evaluation (IFE) Matrix

Chapter 4 Strategies Analysis & Choice

SWOT Matrix

Strategic Position & Action Evaluation (SPACE) Matrix

BCG Matrix

Internal External (IE) Matrix

Grand Strategy Matrix

Chapter 5 Decision making stage

Quantitative Strategic Planning Matrix (QSPM)

Strategic management MCB Bank

Chapter 1

MCB BANK LIMITED

Overview of Company:
Vision Statement:

To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.
Mission Statement:

We are a team of committed professionals, providing innovative and efficient financial

solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.

Components in the Mission Statement:

There are following components exists in the mission statement:

 Focus on customers
 Philosophy
 Concern for survival, growth and profitability

Corporate Strategy:
Our specialized corporate finance teams offer credit solutions tailored to meet working
capital and term loan requirements for corporates. We are committed to understand financing
needs of our customers and to deliver cost effective and practical solutions to your banking
needs in the shortest time possible.

Revised Vision Statement:

“To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.”

Revised Mission Statement:

“We are group of specialized persons providing best products and services with innovative
and efficient monetary solutions to earn profit. We prefer to maintain long term relationship
with our customers. We are providing international facility for banking transaction across the
boundaries. Our focus is to grow internationally so, our stakeholders and share holders invest
with trust in us and as well our employees.”
Strategic management MCB Bank

Components in the Revised Mission Statement:

Following components are added in the revised mission statement:

 Customer satisfaction
 High quality products
 Technology
 Concern for survival, growth and profitability
 Concern for employees

Chapter 2
External Assessment
External factors can be divided into five broad categoties

 Economic Forces
 Social Forces
 Culturral Forces
 Demographic Forces
 Technological forces

External analysis is basically is industry analysis. It is based on I/O view point.

EFE Matrix

External Factor Evaluation (EFE) matrix method is a strategic-management tool often used
for assessment of current business conditions. The EFE matrix is a good tool to opportunities
and threats that a business is facing.

Steps in EFE Matrix:

Following steps are involved in EFE Matrix:

 Identify key opportunities and threats

 Assign weights to opportunities and threats, total weights are always equal to 1 and
are always industry base
 Assign rating on the company base, rating scale is from 1-4 where

4- Superior Response

3- Above Average Response

2- Average Response

1- Poor Response
 Find the weighted score of the threats and opportunities
 Strategic management MCB Bank

 Find the total weighted score and analyze them.

1- EFE Matrix (External Factors Evaluation Matrix)

Opportunities Weights Ratings Weighted score

(0-1) (1-4)

Micro Financing 0.2 4 0.8

Islamic banking 0.1 3 0.3

Car leasing 0.05 4 0.2

Make personal loans 0.1 3 0.3

Reduce transaction charges 0.05 3 0.15

Threats

Direct competitors 0.1 2 0.2

Financial recession 0.1 1 0.1

Foreign Banks 0.2 2 0.4

Downfall of Economy 0.05 2 0.1

High Interest Rate 0.05 1 0.05

Total 1 2.6

Interpretation of EFE Matrix:

The EFE shows that the company has more than average response of 2.5. The company has
2.6 total weighted score which shows that the company is showing good response to external
opportunities and threats so external position of the company is good enough but the chances
are always there for the company to improve itself by availing appropriate opportunities.
Strategic management MCB Bank

2- Competitive Profile Matrix (CPM)

Competitive profile matrix is an essential strategic management tool to compare the firm with
the major players of the industry.

 Competitive profile matrix shows the clear picture to the firm about their strong
points and weak points relative to their competitors.
 The CPM score is measured on basis of critical success factors, each factor is
measured in same scale mean the weight remain same for every firm only rating
varies.
 The best thing about CPM that it includes your firm and also facilitates to add other
competitors make easier the comparative analysis.

Steps of CPM:

Following steps are involved in CPM Matrix:

 Identify key success factors of the company

 Assign weights to them, total weights are always equal to 1 and are always industry
base
 Identify major competitors
 Assign rating on the company base, rating scale is from 1-4 where

4-Major strengths

3-Minor strengths

2- Minor weakness

1- Major weakness

 Find the weighted score for each company

 Find the total weighted score and analyze them

Competitive Profile Matrix of MCB Bank Limited:

The Competitive Profile Matrix for MCB Bank is constructed by using following
information regarding the company.
 Strategic management MCB Bank

Competitive Profile Matrix (CPM)

MCB Bank Allied Bank United bank

Limited limited Limited
Key success factors Weights

Rating WS Rating WS Rating WS

Financial Position
0.2 2 0.4 2 0.4 3 0.60
Management
0.1 2 0.2 4 0.4 1 0.1

Local Branches 0.15 4 0.6 2 0.3 2 0.30

Customer loyalty
0.2 4 0.8 3 0.6 2 0.2
Foreign branches
0.15 2 0.3 1 0.15 3 0.45
E-commerce &
Technology 0.15 3 0.45 2 0.3 2 0.3
Market share
0.05 2 0.1 2 0.1 2 0.2

Total 1 2.85 2.25 2.15

Interpretation of Competitor Profile Matrix:

The CPM matrix of MCB shows that its position as compared to its rival firms of the region
Gujranwala is better as its total score is “2.15” while the ABL and UBL are showing less total
score as compared to MCB bank . The detailed analysis tells us that the key success factors
that create the competitiveness for MCB Bank are customer loyalty, management and product
quality.

Chapter 3

Internal Assessment

The internal assessment is based on the analysis of the factors which lies within the
functional areas of the organization like strengths and weaknesses. This is also called internal
audit. The internal assessment is based on the resource based view (RBV) which says that
“Internal resources are more important than external opportunities to be successful”

Resources are categorized into 3 forms which are (Physical, Human and Organizational
resources) if you have these resources you can be successful. In internal audit the complete
audit of the organization are performed. Following departments are audited:
 Strategic management MCB Bank

 Marketing Audit
 HRM Audit
 Management Audit
 Financial Audit
 Research & Development Audit

IFE Matrix:

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or
evaluating major strengths and weaknesses in functional areas of a business. IFE matrix also
provides a basis for identifying and evaluating relationships among those areas. The Internal
Factor Evaluation matrix or short IFE matrix is used in strategy formulation.

Steps in IFE Matrix

Following steps are involved in IFE Matrix:

 Identify key strengths and weaknesses

 Assign weights to strengths and weaknesses, total weights are always equal to 1 and
are always industry base
 Assign rating on the company base, rating scale is from 1-4 where

4- Major strengths

3- Minor strengths

2- Minor weakness

1- Major weakness

 Find the weighted score of the strengths and weaknesses

 Find the total weighted score and analyze them

Internal Factors Evaluation Matrix (IFE)

Strengths Weights Ratings Weighted score

(0-1) (1-4)

Strong lending position 0.1 4 0.4

Largest online branches

0.1 3 0.3

Solid financial position 0.05 3 0.15

 Strategic management MCB Bank

Fastest growth rate 0.1 4 0.4

Motivated workforce 0.3 3 0.9

Weaknesses

Nonperforming loans
0.05 1 0.05

Increasing lending cost 0.1 2 0.2

Urban area focus only 0.1 1 0.1

No branches attractiveness 0.1 2 0.2

Total 1 2.7

Interpretation of IFE Matrix:

The IFE Matrix shows that the company has more than average response of 2.5. The
company has 2.7 total weighted score which indicates that the company is in good position as
its internal strengths are more and company’s response to weaknesses is quite adequate so the
company’s internal position is good enough but can be much better if company overcome its
weaknesses in an appropriate manner.

Chapter 4

Strategies Analysis & Choice

Comprehensive strategy formulation framework is consisted of 3 stages which are:

Stage 1 Input Stage

In this stage we constructed the IFE, EFE & CPM Matrix which act as an input to device a
comprehensive strategy.

Stage 2 Input Stage

In this stage we match all the inputs data to construct the following matrix:

1. SWOT Matrix
2. SPACE (Strategic Position & Action Evaluation ) Matrix
3. BCG Matrix
Strategic management MCB Bank

4. IE (Internal External ) Matrix

5. Grand Strategy Matrix

Stage 3 Decision Making Stage

In this stage we construct the following matrix:

1. QSPM (Quantitative Strategic Planning Matrix)

We will start the strategic analysis and choice by constructing the following matrix:

1- SWOT MATRIX

SWOT analysis, method, or model is a way to analyze competitive position of your company.
SWOT analysis both internal and external aspects of doing your business. The SWOT
framework is a tool for auditing an organization and its environment.

SWOT matrix can be constructed by identifying the key strengths, weaknesses, opportunities
& threats and then relate them together. The SWOT matrix for MCB Bank can be constructed
as:

1- SWOT Analysis Matrix

External factors

Opportunities
 Micro financing
 Islamic banking
 Personal loans
 Car leasing
 Reduced transaction
charges
Threats
 Direct competitors
 Financial recession
 Foreign banks
 Downfall of economy
 High interest rate

Strengths
 Strong lending position
 Largest online
branches
 Largest atm network
 Solid financial postion
 Fastest growth rate
 Motivated work force
 High profit margin
SO ST
 MCB can start new  Largest online
business business of branches can help to
micro financing beat the direct
position due to strong competitors.
lending position  MCB have a strong
 MCB has a largest financial position so
branches system it MCB can survive in
can also start car downfall of economy.
leasing in small
cities.
Strategic management MCB Bank

Weaknesses WO WT

 Non performing loans  MCB has poor

 MCB have an
 Increase in lending cost customer care and
opportunity to start
 Urban areas focus only strong competitor
 No branch micro financing
potion can be harmful
attractiveness which can beat its
for business.
 No customer care weakness of urban
area focus only.
 .MCB can cover its
weakness of
nonperforming loans
by issuing personal
loans

2- SPACE Matrix (Strategic Position & Action Evaluation Matrix)

The SPACE Matrix for MCB Bank Limited is constructed by using the market data of the
company like financial statement that the company presents to its shareholders. The SPACE
Matrix is consisted of 4 quadrants which are representing different set of strategies like:

 Aggressive Quadrant :

It includes strategies like integration, intensive and diversification.

 Conservative Quadrant :

It includes strategies like intensive &diversification.

 Defensive Quadrant :

It includes Defensive strategies like retrenchment, divestiture & liquidation strategies.

 Competitive Quadrant:

It includes the integration and intensive strategies.

And the SPACE Matrix is used by gaining information regarding the company; the answers
for x-axis and y-axis are calculated by using the following information of the company.
Strategic management MCB Bank

 FP (Financial Position)
 CP (Competitive Position)
 SP (Stability Position) and
 IP (Industry Position)
 FP and IP ranges from +1to +7 where +7 shows best and +1 shows worst response.
 While the CP and SP ranges from −1to −7 where −7 shows worstand −1 showsbest
response.

SPACE Matrix for MCB BANK LIMITED:

The SPACE Matrix for MCB Bank is constructed on the basis of information from its
financial statement 2014-15.The ratios are used to analyze its financial position while the
others are calculated by calculating the key indicators regarding the sector and importance of
these for MCB Bank Mills. The following answers are obtained from the information:

FP (Financial Position) CP (Competitive Position)

Current ratio 1.8 Quality -4

Quick ratio 1.389 Market share -3

Return on assets 0.65 Supplier control -2

Debt ratio 0.015 Distribution system -4

Return on equity 0.35 Technology -3

Price -4

4.204

4.204/5 -20

-20/6

0.8408 -3.33

SP (Stability Position) IP (Industry Position)

Barriers of entry -5 Growth rate 5

Change in technology -4 Government regulations 6

Demand variation -3 Profit Margin 4

Strategic management MCB Bank

Inflation -6 Resource utilization 4

Market trend -4 Financial stability 6

-22/5 25/5

-4.4 5

So the equation become

X-Axis = FP+SP

=0.8408+(-3.33)

= -2.4892

Y-Axis = IP+CP

=5+(-4.4)

= 0.6

These answers for the x-axis and y-axis are plotted as follows.

FP

Conservative quadrant Aggressive Quadrant

CP 0.6 IP

-2.48

-4 -3 -2 -1 1 2 3 4

-1

-2

Defensive Quadrant -3 Competitive Quadrant

sp
Strategic management MCB Bank

Interpretation of SPACE Matrix:

The answers for x-axis and y-axis that are -2.48 and 0.6 respectively are plotted across the x,
y plane in the SPACE Matrix the resultant point of intersection lies in the 2nd quadrant that is
conservative quadrant. This means that the company should adopt the intensive and related
diversification strategies in order to gain more profit and to be successful. The company can
either go for any of 3 intensive strategies that are Market Penetration, Market Development
and Product Development or go for the related diversification strategy.

3-BCG (Boston Consulting Group) Matrix

This technique is particularly useful for multi-divisional or multi-product companies. The
divisions or products compromise the organizations “business portfolio”. The composition of
the portfolio can be critical to the growth and success of the company. The BCG matrix
considers two variables, which are:

 Market Growth Rate

 Relative Market Share
The market growth rate is shown on the vertical (y) axis while the horizontal (x) axis shows
relative market share. The share is calculated by reference to the largest competitor in the
market.

 The BCG growth/share matrix is divided into four cells or quadrants, each of which
represents a particular type of business.
 Divisions or products are represented by circles. The size of the circle reflects the
relative significance of the division/product to group sales.
 A development of the matrix is to reflect the relative profit contribution of each
division and this is shown as a pie-segment within the circle.

There are four quadrants into which firms products classified:

 Cash cow
 Star
 Question mark
 Dog

1-Question Marks:

These are products or businesses that compete in high growth markets but where the market
share is relatively low. A new product launched into a high growth market and with an
existing market leader would normally be considered as a question mark.
Strategic choices for question marks include all intensive strategies or divestment like:
 Market penetration
 Market development
Strategic management MCB Bank

 Product development
2- Stars

Successful question marks become stars. However, investment is normally still required to
maintain growth and to defend the leadership position. Stars are frequently only marginally
profitable but as they reach a more mature status in their life cycle and growth slows, returns
become more attractive. The stars provide the basis for long term growth and profitability.
Strategic options for stars include

 Integration (Forward, backward and horizontal)

 Market penetration
 Market development
 Product development
 Joint ventures
3- Cash Cows

These are characterized by high relative market share in low growth industries. As the market
matures the need for investment reduces. Cash Cows are the most profitable products in the
portfolio. Cash Cows may be used to fund the businesses in the other three quadrants. It is
desirable to maintain the strong position as long as possible.

The strategic options include.

 Product development
 Concentric diversification
If the position weakens as a result of loss of market share or market contraction then options
would be
 Retrenchment (or even divestment)
4-Dogs

These describe businesses that have low market shares in slow growth markets. They may
well have been Cash Cows. Often they enjoy misguided loyalty from management although
some Dogs can be revitalized.
Strategic options would be:
 Retrenchment (if it is believed that it could be revitalized)
 Liquidation
 Divestment (if you can find someone to buy!)
Successful products may well move from question mark though star to Cash Cow and finally
to Dog. Less successful products that never gain market position will move straight from
question mark to Dog.
 Strategic management MCB Bank

Construction of BCG Matrix for MCB Bank Limited:

As BCG is concerned with the portfolio construction but MCB has no portfolio so we will
consider only single product BCG matrix.

Following steps are involved in the construction of BCG Matrix:

 Step 1. Choose the product

 Step 2. Define the market
 Step 3. Calculate relative market share
 Step 4. Find out market growth rate
 Step 5. Draw the circles and pie on a matrix

Business Industry Market Relative Revenues Profits %age %age

Products Growth share Market Revenues Profits
rate share

MCB
Bank
18.04% 2.205% 9.86% 86836000 687900 19.09% 8.61%
Strategic management MCB Bank

BCG Matrix of MCB Bank Limited

Relative market share

High100% 50% low 0

Star Question Mark

Industry Growth rate %

Low High

MCB BANK
21%

Cash cow Dog

-21%0

4- Internal-External (IE) Matrix

The Internal-External (IE) matrix is strategic management tool that is used to
analyze working conditions and strategic position of a business. The Internal External Matrix
or short IE matrix is based on an analysis of internal and external business factors which are
combined into one suggestive model.

IE Matrix construction:

The IE matrix belongs to the group of strategic portfolio management tools. In a similar
manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix.
The concept of circle and pie is same as in BCG Matrix as this is also a portfolio matrix.

The IE matrix can be divided into 3 major regions that have different strategy implications.

 Cells I, II, and III suggest the “grow and build” strategy. This means intensive and
aggressive tactical strategies. Here strategies focus on market penetration, market
development, and product development.
 Strategic management MCB Bank

 Cells IV, V, and VI suggest the “hold and maintain” strategy. In this case tactical
strategies should focus on market penetration and product development.
 Cells VII, VIII, and IX are characterized with the “harvest or exit” strategy. If costs
for rejuvenating the business are low, then it should be attempted to revitalize the
business.

The IE matrix is based on the following two criteria:

1. Score from the EFE matrix -- this score is plotted on the y-axis
2. Score from the IFE matrix -- plotted on the x-axis

Following financial information of the companies is needed to construct the IE Matrix of

Shahnawaz Group of Industries:

Business Revenue Profits %age %age IFE Score EFE Score

Divisions Revenue Profits

MCB Bank
Limited
86836000 687900 19.09% 8.61% 2.7 2.6

IFE total weighted score

3

(Internal factor evaluation)

(Medium)
(External factor evaluation)

4 (Strong)3 (Average) 2 (Weak) 1

EFE total weighted score

1 2 3
2

Grow
4

Build and
(low)
(High)
1
Strategic management MCB Bank

and
4 5 6

MCB Bank
Hold Maintain

7 8 9

Harvest and Divest

Interpretation of IE Matrix:

The results of IE Matrix for the portfolio are different but for the concerned MCB Bank
Limited the IE Matrix suggest the “Hold and Maintain” as the score of IFE & EFE lies in i
ii and V quadrant. These set of strategies include the market penetration and market
development strategies.

The company if go for any of these strategies it can be successful for the company as these
strategies are based on the company’s financial position so these can bring a positive change
in the revenues and profits of the company. The company can make any choice of strategies
after further research and by taking into account its resources.

GSM (Grand Strategy Matrix)

A grand strategy matrix is a tool used by businesses to devise alternative strategies. The
matrix is primarily based on four essential elements: rapid market growth, slow market
growth, strong competitive position and weak competitive position.
Strategic management MCB Bank

Rapid Market Growth

Quadrant ii Quadrant i

1-Market Development 1- Market Development

2- Market Penetration 2- Market Penetration

3- Product Development 3- Product Development

4- Horizontal integration 4- Forward integration

5- Divestiture 5- Backward integration

6- Liquidation 6- Horizontal integration

7-Concentric diversification

Weak competitive position strong competitive position

Quadrant iiiQuadrant IV

1- Retrenchment 1- Concentric diversification

2-Concentric diversification 2- Horizontal diversification

3- Horizontal diversification 3- Conglomerate diversification

4- Conglomerate diversification 4- Joint ventures

5- Liquidation

Slow Market Growth

Result of GSM:

As the “MCB Bank Mill” has strong competitive position and it has rapid market growth so
company falls in quadrant I of Grand Strategy Matrix. This means the recommended
strategies for the company are following:

1- Market Development

2- Market Penetration

3- Product Development

4- Forward integration
Strategic management MCB Bank

5- Backward integration

6- Horizontal integration

7-Concentric diversification

Chapter 5

Decision making

After gathering the information need to determine the current state of organization and its
programs and activities, the next step is to make decisions based on that information. It's the
responsibility of the planning team, in consultation with other stakeholders, to establish the
organization's strategic direction and priorities; to identify goals and milestones on the road to
achieving those priorities; and to craft objectives designed to meet those goals.

In this stage we construct the following matrix:

1. QSPM (Quantitative Strategic Planning Matrix)

QSPM (Quantitative Strategic Planning Matrix)

Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management

approach for evaluating possible strategies. Quantitative Strategic Planning Matrix or a
QSPM provides an analytical method for comparing feasible alternative actions.

The Quantitative Strategic Planning Matrix or a QSPM approach attempts to objectively

select the best strategy using input from other management techniques and some easy
computations. In other words, the QSPM method uses inputs from stage 1 analyses, matches
them with results from stage 2 analysis, and then decides objectively among alternative
strategies.

QSPM (Quantitative Strategic Planning Matrix) for MCB Bank Limited

TheQSPM for MCB Bank Limitedcompares two alternatives. Based on strategies in the stage
1 (IFE, EFE) and stage 2 (BCG, SPACE, IE), we determined that the company needs to
pursue the intensive strategies aimed at development of new products and further penetration
of the market.

Intensive Strategies
 Strategic management MCB Bank

Market Market Product

Weights Penetration Development Development
EFE& IFE (0-2)

AS TAS AS TAS AS TAS

Opportunities

New acquisition 0.2

Good suitable location 0.1

Earn foreign exchange by 0.1

exporting excess sugar

Increase per yield production by 0.05

using new technology

Made sugar from beet as it is 0.05

cheaper

Threats

Direct competitors 0.1

Government Regulations 0.1

Energy crises 0.2

Political sanctions on sugar 0.05

industry

Low fertility of soil 0.05

Strengths

Strong/ well managed 0.1

distribution and sales network

Experienced Business units 0.1

 Strategic management MCB Bank

Strong quality control system 0.1

Good Plant location 0.3

Good relationships with cane 0.05

providers

Weaknesses

Un-hygienic atmosphere for 0.1

workers

Poor communication system 0.1

Poor Training System 0.05

Less focus on the use of beet in 0.1

sugar production

Total Attractiveness Score 2

Attractiveness Score (AS) ranges from 1------4 where

1 = not acceptable

2 = possibly acceptable

3 = probably acceptable

4 = most acceptable

0 = not relevant