Strategic Management Habib Bank LimitedPage | 1 Strategic Management Habib Bank Limited |L e t t e r of Transmittal Sir Shebaz Islam Faculty Member, Strategic Management Iqra University, Defence View Karachi Dear Mr. Islam: We are submitting here our term report on the mission and vision of H abib Bank Ltd. Initial pages of this report contains the brief information about company’s background and the banking product it is offering. All the information provided in the report is comprehensively discussed with a satisfactory background of valid facts and figures . If there are any questions or queries you have about the material presented in this report, we will be extremely glad to appear before you. Sincerely, Zafar Ullah Khan – 9703 Uzair Ikhlaq – 9806 Uzair Siddiqui – 9620 Muhammad Arif – 5795 Hasan – 10231 Sifwat Usmani – 10741 Page | 2 Strategic Management Habib Bank Limited |E x e c u t i v e Summary The purpose of the following report was to conduct survey in Habib Bank Limited, for our Strategic Management course, and understand the way it conducts its operation and the strategic posture of the organization. The survey was conducted through conducting interviews and questionnaires. Our key area to explore and research was “Vision and Mission” of Habib Bank Limited. HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th Anniversary. HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network and became the largest private sector bank with over 1,400 branches across the country and a customer base exceeding five million relationships. With a presence in 25 countries, subsidiaries in Hong Kong and UK, affiliates in Nepal, Nigeria, Kenya and Kyrgyzstan and representative offices in Iran and China, HBL is also the largest domestic multinational. In the following report, we have included the GAP that we found during our survey and analysis of the organization along with some recommendations for further improvements for the overall performance of Bank. Page | 3 Strategic Management Habib Bank Limited |T a b l e of Contents 1. HBL History ............................................................................................................... 5 2. Products....................................................................................................................... 6 3. Vision........................................................................................................................... 6 4. Mission ........................................................................................................................ 6 5. SWOT Analysis .......................................................................................................... 7 6. Question & Answer .................................................................................................... 8 7. Survey ........................................................................................................................ 10 8. Recomendations........................................................................................................ 11 9. Conclusion ................................................................................................................ 11 Page | 4 Strategic Management Habib Bank Limited |H B L History HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th Anniversary. HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network and became the largest private sector bank with over 1,400 branches across the country and a customer base exceeding five million relationships. With a presence in 25 countries, subsidiaries in Hong Kong and UK, affiliates in Nepal, Nigeria, Kenya and Kyrgyzstan and representative offices in Iran and China, HBL is also the largest domestic multinational. The Bank is expanding its presence in principal international markets including UK, UAE, South and Central Asia, Africa and the Far East. Key areas of operations encompass product offerings and services in Retail Banking. HBL has the largest Corporate Banking portfolio in Pakistan with an active Investment Banking arm. SME and Agriculture lending programs and banking services are offered in urban and rural centers. In UK and GCC, HBL focuses on trade finance and remittances for South Asian Diaspora in addition to basic banking facilities. With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. International operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands. On December 29, 2003 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). On February 26, 2004, management control was handed over to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees. Page | 5 Strategic Management Habib Bank Limited HBL has always been a bank and a brand for the masses, with a history that is inextricably linked with the history of Pakistan itself. As it continues to grow, both locally and abroad, it strives to embody its brand personality: honest, approachable, and inclusive. HBL is currently rated AA+ (Long term) and A1+ (Short term) by JCR-VIS. |Products Business Customers Individual Customers Corporate Banking Freedom Account Commercial Banking Credit Cards Global Treasury Deposit Accounts Investment Banking Banc assurance Islamic Banking Debit Card Cash Management Mutual Funds |Vision Enabling people to advance with confidence and success. |Mission To make our customer prosper, our staff excel and to create value for our stakeholders Page | 6 Strategic Management Habib Bank Limited |SWOT Analysis STRENGTHS WEAKNESSES Goodwill & historical background Unfavorable union activities Professional and well trained staff Unfavorable management conflicts Largest customer base Checking System is at intra-department level HBL is Pakistan's largest commercial bank Weak marketing policies Wide Branch Network Nepotism & Favorism 20% share of HBL in financial market Infected portfolio still exists as bad debts Large Balance sheet size Centralized management in particular areas Decentralized authority OPPORTUNITIES THREATS Growth in cash management Adverse & unstable government policies Expansion in cash management Political instability Faster market growth represents opportunity Advance technology to grow and diversify Competition from other banks Restoration of investor’s confidence and pick up in private sector investment flows. Large deposit base and funds flow can help to avail related market opportunities Page | 7 Strategic Management Habib Bank Limited |Question & Answer Session with Rafi Ahmed – Deputy General Manager HBL 1. How do you know you have achieved your objective as stated in your Vision Statement? Existence of the bank throughout country makes customer satisfy that they are connected with the trust worthy bank and has its brand image, whenever customers face any sort problem or query so they can provide their feedback at our call center or online they can login their complains and through blogging as well. And other than that through performance of the bank, achievements of targets and day by day increase in customer base make as believe that yes we are achieving our objective as stated in our vision statement. 2. How do you communicate the objective of your Vision Statement to your employees? HBL has its own institute at its head office by the name of management development institute where they conduct the training session for their employees. We generally invite external speakers to come and gave our employees the brief session about the importance of vision and mission statement and how to achieve those objectives that are stated in our statements. Other than that our experienced and senior employees also in lights the vision and mission importance to their teams or departments, and bank also gets feedback from their employees to understand either their employees understand the objective of vision statement or not, if not, they prefer those employees for the respective training. 3. We can understand the superior value to customer and employees, but how HBL grant superior value to their stake holders? As HBL is a public limited company so shareholders also comes under stake holder and govt. of Pakistan also has influence on it. And we are not only customer focus, we show same respect same value to our stake holders. Whenever bank increase its profitability or achieve its targets so it would ultimately benefit our stake holders. As I am associated with the bank from a very long period of time I can confidently say that our stake holders are more than satisfied with the bank. And the reason behind their satisfaction is obviously bank is providing some sort of value or importance to them. Page | 8 Strategic Management Habib Bank Limited 4. For the achievement of goals stated in the mission statement, what are the align strategies at HBL? As you can see that the very first part of our mission is about the customers “to make our customer prosper”. And obviously without customers we cannot survive. As the competition is very tough in the market so to retain our customers from time to time we develop new products for them and also facilitate them. Well talking about the second part of our mission statement “to make our staff excel” for our employees as I already discuss we conduct training sessions in which firstly we update the product knowledge among them so if any customer comes to them, they can gave the exact product information to customers. And “value for the shareholder” for this thing the best return you give them this means you are giving best value to them and it is dependent on the profitability and all the strategies are for the profitability. 5. Do feel like there is a need for change in the banks mission statement? We have a separate committee by the name of MMC (members of managing committee) which consist executive management and board of directors. And one of their responsibilities is work for mission and vision statement of the organization. HBL current mission statement was made somewhere in 2005. HBL is now going for maximum centralization, currently global transaction are centralized. 6. What was the need of revising the mission statement? The changing environment and the changes in the mind set of customers and employees highlight the need for the improvement in mission statement. And as you have noted that our current mission statement is customer, employees and stake holder oriented. This is one of the characteristics of a mission statement. 7. Does the national HBL network & internationally operating subsidiary branches share same mission or is there a difference? Nationally & internationally same mission & vision statement is followed. Because we give same value to our entire customers, employees and shareholders. No matter if the culture is different across the country. Page | 9 Strategic Management Habib Bank Limited |Survey Page | 10 Strategic Management Habib Bank Limited |Recommendation Their mission statement should reflect in what business they are in Their mission statement should reflect how they will achieve their goals Their mission statement should reflect that who their customers are Their mission statement should reflect their product offering Their mission statement should reflect where does the firm compete They are biggest bank their mission statements should include something about the society development or social responsibility More Training about mission and vision should be given More training should be given to functional staff Advance employee training IT system improvement as per current & ongoing requirement More customer facilitation through net, ATM & call center |Conclusion Drucker says asking the question, “What is our business?” is synonymous with asking the question, “What is our mission?” An enduring statement of purpose that distinguishes one organization from other similar enterprises, the mission statement is a declaration of an organization’s “reason for being.” The Importance of Mission Statements is Well Documented Rarick and Vitton found that firms with a formalized mission statement have twice the average return on shareholders’ equity than those firms without a formalized mission statement. Bart and Baetz found a positive relationship between mission statements and organizational performance. Business Week reports that firms using mission statement have a 30 percent higher return on financial measures than those without such statements. Habib Bank Limited is a big and strong organization with lot of strengths and few weaknesses as mention above in the recommendation part which they should overcome for the betterment of their promise and to achieve their goals. Page | 11