FINAL PROJECT

STRATEGIC MARKET MANAGEMENT

GROUP MEMBERS:

Tehseen Ghafoor (10616)

Taiba Ashraf (10553)

SUBMITTED TO: SIR Abdul Razzaq

 ACKNOWLEDGEMENT:
God never spoils any effort; every piece of work is rewarded according to the
nature of devotion for it. We are extremely thankful to ALLAH ALMIGHTY who, in
spite of numerous difficulties, vicissitudes and acute frustrations enabled us to
prove the present study and dissertation. We bow our head to ALLAH ALMIGHTY
for the buntings and the blessings that He has bestowed upon us. Who has given
us the courage and stamina to come up to the expectations of our revered
teacher and ever loving parents and to sum up our maneuverings for the
completion of this project.1

All the respects are for the last Prophet of God, HOLY PROPHET MUHAMMED
(Peace Be Upon Him) Who is the greatest scientist of all the ages, whose moral
and spiritual teachings enlighten our heart, mind and soul and flourished our
thoughts towards achieving higher ideas of life.

We deem it utmost pleasure to avail this opportunity to express the

heartiest gratitude and deep sense of obligation to our revered Teacher Mr.
ABDUL RAZZAQ Lecturer of IQRA University for his skilled guidance, keen interest,
constructive criticism, constant encouragement, valuable suggestions and pains
taking supervision throughout the course of our study and research work. The
work presented in this report is accomplished under his dynamic, skillful,
affectionate guidance and generous transfer of knowledge. Whenever we sought
help from him, he was the person who was always there bearing a welcoming
smile on his face and having the doors of his good offices always opened for us.
We have learnt a great deal from him.

We have the honor to express our deep sense of gratitude and profound
indebtedness to ever affectionate Mr. Abdul Razzaq for his keen interest,
encouragement, generous guidance and untiring help at all times. In fact it was
not possible to bring this work to fruitful conclusions without persuasive and
sincere efforts. He has guided us at every step that we took throughout our
career at postgraduate level. He has always thought right for our betterment and
for our success in the professional field. We cannot thank him, as we have no
words that can have an idea of the respect we have in our heart for him.
HISTORY of HBL:

Habib Bank Limited (HBL) was established on 25th August 1941; just one year after the historic
Pakistan resolution was adopted in Lahore for carving an independent homeland for the
Muslims of subcontinent. It was founded with the blessing of Quaid-e-Azam (Great Leader)
Mohammad Ali Jinnah, the architect and founder of Pakistan. HBL is proud of the fact that the
Quaid-E-Azam demonstrated his faith and confidence in HBL by opening his personal account in
our Bombay branch in the year 1946. The first prime minister of Pakistan Quaid-e-Millat Liaqat
Ali Khan, on the independence day of Pakistan (August 14, 1947) appreciated the service of the
bank in these words. “I wish every success to HBL and hope that it will continue to play an
important and useful role in the industrial and commercial life of the Muslim nation” The new
born country faced serious financial difficulties. Habib Bank joined hands with the government
of Pakistan and placed all its services at their disposal for nation building activities. Throughout
the decades, HBL has held the mantle of a dynamic leader, by adding value to the lives of its
customers. It was HBL that introduced products such as
DebitCards, ATMs, Travellers Cheques, etc., to the Pakistani market.
Today, Habib Bank is truly the bank of the people, providing its customers convenience and
satisfaction all over the world.

HBL’s Vision, Mission and Values:

Our brand:

Our brand identity is the outward expression of what we stand for as an organization. This is
summarized in our vision, mission and is supported by our values.

Vision:

Enabling people to advance with confidence and success.

Mission:

To make our customers prosper, our staff excel and create value for shareholders.

VALUES:

Our values are the fundamental principles that define our culture and are brought to life in our
attitude and behaviors. It is these values that make us unique and unmistakable. Our values are
defined below:
Excellence:

This is at the core of everything we do. The markets in which we operate are becoming
increasingly competitive, giving our customers an abundance of choice. Only through being the
very best – in terms of the service we offer, our products and premises - can we hope to be
successful and grow.

Integrity:

We are the leading bank in Pakistan and our success depends upon trust. Our customers - and
society in general – expect us to possess and steadfastly adhere to high moral principles and
professional standards.

Customer Focus:

We understand fully the needs of our customers and adapt our products and services to meet
these. We always strive to put the satisfaction of ourcustomers first.

Meritocracy:

We believe in giving opportunities and advantages to our employees on the basis of their
ability. We believe in rewarding achievement and in providing first-class career opportunities
for all.

Progressiveness:

We believe in the advancement of society through the adoption of enlightened working

practices, innovative new products and processes and a spirit of enterprise.

The Source of Culture

HBL has a strict rule and regulations and employees learn culture by managers,trainings are
conducted, books and different workshops are organized for theemployees.

Innovative culture
HBL has innovative culture. HBL promotes the new ideas and appreciate itsemployees for giving
new and innovative ideas. That helps the employees inachieving their goals and, they try to
show their best at job.

Customer-responsive culture

HBL has customer –responsive culture. The employees of the HBL are continues intheir desire
to please the customers and provide good service to their customersand satisfy the needs of
customers.

Focus on individual development

HBL focus on individual development, HBL try to create the good culture, in whichevery
employee can adjust, work properly, learn the new thing and give best.

Trust and openness

In HBL, top management have full trust on their employees. Mostly employees arehonest and
they

Employee’s Empowerment

In HBL, managers have trust on their employees and they want that their employeesalso try to
make decisions at their own job level.

SWOT ANALYSIS:

Strengths:

 HABIB Bank is well established bank enjoying long history of over 65 years ofExperience
and profitable operation.
 HBL is the largest private bank in Pakistan now and people trust is very high
 It has the largest branch network among private banks of Pakistan.
 HBL has been very effective in controlling costs as it successfully restructured itself after
privatization.
 Excellent branches appearance gives an edge to HBL over other banks. The
 Branches are well furnished even in less developed areas where other banks branches
give a poor view.

Weaknesses:
  All branches are not online
 Low rate of interests on deposits
 Unfavorable union activities and management conflicts
 Checking System is at intra-department level
 Centralized management in particular areas

Opportunities:

 Huge untapped market

 Growth of international network
 Opportunities for growth and expansion in cash management.
 Faster market growth represents opportunity to grow
 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

Threats:

 Other private commercial bank with sound profitability is also a threat to HBL e.g. UBL,
Alfalfa, MCB etc.
 From the 2 to 3 years, Pakistan is facing economic and political instability which is a big
threat.
 Foreign banks are flourishing in field of consumer financing.
 Afghan war and terrorisms has an effect on the economy of Pakistan.
 Increased regulations from state bank of Pakistan may affect its business.

HBL GROWTH AND MARKET SHARE:

According to the financial results, HBL made a profit of Rs 6.93 billion in the quarter of April to
June 2016 as compared with previous year’s profit of corresponding period which stood at Rs.
5.80 billion.With the negative growth of 9% in the first quarter and positive growth of 19.5
percent, the bank managed to make a positive growth of Rs 1.4% in the overall first half of
2016, at a time when policy rate reached below four-decade low and the banking industry is
also bearing the brunt of new taxes.

The bank witnessed a growth of 6.4% in its interest income which was presumed to go down
since the interest rate stayed at 5.75 percent in the country. It earned Rs.70.70 billion as
interest income whereas its mark-up expenses stood at Rs.29.28 billion. This totaled a net
income of Rs 41.4 billion for the bank.

The JCR-VIS Banking Sector Overview covers 26 local commercial banks and has been
developed given the current industry stratification whereby top 6 banks account for 59.8% of
banking sector deposits, including presence in various overseas markets. Besides these large
banks, the industry is composed of a few medium sized banks and several small sized banks.

Banks have been classified into 3 groups: Large banks (market share > than 6%), Medium banks
(market share ranging between 3-6%) and Small banks (market share < than 3%). For each risk
area, JCR-VIS has commented on the issues of the sector, as a whole, followed by specific
comments for strong and weak banks in each classification
MCB, ABL and Alfalah have witnessed a decline in operating profit during 1H16 vis-à-vis 1H15.
MCB, despite expansion in their asset base, was the only bank in the peer group to witness a
decline in net interest income during 1H16 as compared to the corresponding period last year.
In terms of re-investment risk, UBL is the most well positioned amongst large banks with most
sizeable PIB portfolio (well-structured maturities) having the highest average yield while MCB
and ABL had significant PIB portfolios (outstanding at end-December’2015) maturing in the
ongoing year.

PESTEL ANALYSIS:

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 trends
 Social environment
 Technological factors
 Legal environment
POLITICAL ENVIRONMENT:

Political component is that part of general environment which is related to Government affairs.
Government policies may influence the organization and it has vital impact thereon. In 1974,
banks including HBL and other important big industries/factories in the country were
nationalized as a Government policy. The charter of political parties on coming into powers may
influence about a particular industry /organization. The form of Government whether it is a
military or democratic. Other countries economic, political and military aids depend upon the
form of the government which also influence its industry, social sector institution and financial
institutions as well and rating of banks may be downgrade or otherwise. In international
markets, foreign banks may refuse acceptance of Pakistani Banks’ letters of credit (LCs) opened
for import of goods. Banks are strongly affected by the political and legal considerations. This
environment is composed of regulatory agencies and government law thatinfluence and limit
various organizations and individuals. Mostly these laws create new opportunities for business.

ECONOMIC TRENDS:

It indicates how resources are being distributed and used within the environment. How the
particular community is producing, distributing and using various goods and services. Keeping in
view economic resources possessing by the population, HBL targets the customers by
introducing various products to attract them.

HBL introduced Auto Loan/Flexi, Loan/Life Style/Visa card/debit card/value account to sell them
same. The consumers are using the bank’s products. While selling goods, the wages of the
employees, inflation, the tax paid, and the cost of material is kept in mind to determine and
what price product/service should be sold in the target market. It is very important for an
organization’s success to have thorough economic analysis of the environment to design the
products and services otherwise an organization may not be able in achieving its results/goals.
SOCIO-CULTURAL ENVIRONMENT:

A society is shaped by beliefs, norms and values. People in a society consciously and
unconsciously interact with:

 Themselves
 Others
 Organization
 Society

The social component shows the characteristics of the society in which organization exists.
There are two important features of the society are “Demographics” and “Social Values”.

HBL as its strategy, targets the consumers (low /middle /high income) by introducing the
products. For example, it targets the middle income consumer by introducing consumer
products like Flexi loan/Visa Card and Balance Transfer Facility (BTF) and house loan/car loan
products were introduced for high income consumers. Social Values are the relative degrees of
worth society places on the manner in whi8ch it exists and functions. Social values of the
society influence the organization in tailoring its products and services to theconsumers.
Keeping in view social values in Pakistan society, HBL has strategic planning in introducing the
products /procedures.

TECHNOLOGICAL FACTORS:

New approaches/procedures/technology is used in producing goods and services to compete

with the other organizations in the market.

HBL has purchased software called as “MISYS” from a Singapore firm. In 2005, it installed the
system in one branch in Karachi and in its Singapore Branch. After its successful launching, it
has now installed MISYS in about 300 branches in domestic and overseas branches. Real time
banking is now ensured in HBL. By completion of installation process, remaining branches will
also be on line banking leading to paperless banking. The customer may transfer their funds
from one account to another account within or outside country within few seconds of time.
HBL has planned to shift all the 1443 (Nov.2007) branches on MISYS by end of 2008. HBL is the
first bank in Pakistan, which has acquired this system to cater its needs. It will also help in
reducing staff strengthsignificantly due to elimination of manual work. Due to introduction of
MISYS, HBL had to change its existing accounting and procedure system to acquaint with the
new system.
LEGAL ENVIRONMENT:

The legal component is that part of general environment which contains passed legislation. It
influences the organization. Violation of laws may lead to imposition of penalty to the
organization. The banks in Pakistan have to perform their functions in line with SBP directives
(regulators), Security & Exchange Commission of Pakistan (SECP), Banking Recovery Ordinance (
2001) for recovery of loans, BASEL -I & BASEL–II with regard to Anti Money Laundering (AML) &
Terrorist Financing to meet international community obligation and to observe the United
Nations directives onfreezing of assets of a country or person.

Country laws with regard to maintenance of secrecy of information about the customers. In
1974, Nationalization Act was passed and banks and numbers of industries were nationalized
and now the same are being privatized. All the nationalized banks except NBP have been
privatized through Privatization Commission of Pakistan. Health and Safety Act aims at ensuring
health and safe workplace for the workers.

Business legislation has following main purposes:

 To protect banking companies from unfair competition.

 To protect consumers from unfair business practices adopted bybanking companies

To protect the interest of the society from unbridled business behavior.

Banks are strongly affected by the political and legal considerations. This environment is
composed of regulatory agencies and government law that influence and limit various
organizations and individuals. Mostly these laws create new opportunities for business.
HBL caters to all market segments, offering products that are as diverse as the people we
service. We remain resolute in our commitment to provide productsthat are competitive and
services that are exemplary. Whether establishing a newventure or expanding an existing
business, our team understands your bankingneeds and works closely with you to realize your
goals. HBL provides thefollowing products and services to meet its individual customer
requirements:

Role of HBL in Pakistan

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 privatesector bank with over 1,468
branches across the country and a customer baseexceeding five million relationships.With a
presence in 40 countries, subsidiaries in Hong Kong and UK, affiliates in Nepal, Nigeria, Kenya
and Kyrgyzstan and representative offices in Iran andChina, HBL is also the largest domestic
multinational.The Bank is expanding its presence in principal international markets includingUK,
UAE, South and Central Asia, Africa and the Far East. Key areas of operations encompass
product offerings and services in Retail Banking. HBL hasthe largest Corporate Banking portfolio
in Pakistan with an active InvestmentBanking arm. SME and Agriculture lending programs and
banking services areoffered in urban and rural centers. In UK and GCC, HBL focuses on trade
financeand remittances for South Asian Diaspora in addition to basic banking facilities.HBL has
always been a bank and a brand for the masses. As it continues to grow, both locally and
abroad, it strives to embody its brand personality:honest, approachable andinclusive. HBL is
currentlyrated AA+(Long term)andA1+(Short term) by JCR-VIS.

Branches:
HBL carries on its business through a wide network of branches. These branches perform their
functions under the supervision of local principal offices and headoffice in Karachi. The bank
has over 1468 branches in Pakistan in 216 cities and40 overseas branches, with ATM Facility in
more than 80 cities.
HBL Islamic Banking
HBL Islamic Banking (HBL-IB) is the nation’s second largest Islamic banking facility provider with
a deposit growth of over Rs. 100 billion in the last three years of operations. In addition, HBL-IB
has the largest foot print with over 530 outlets, nation-wide. This is a testament of the HBL’s
dedication to serve our customers with innovative products and services. Our Shariah
compliant services are also certified by the State Bank of Pakistan and are tailor made to suit
the needs of a varied clientele base

Current Accounts
A safe way to accumulate funds, HBL’s Islamic current accounts allow individuals and
businesses to deposit and withdraw their funds round the clock.

Islamic Current Accounts are non-profit bearing based on the concept of Qard. Under this
arrangement, HBL stands liable to repay the deposited amount upon demand. Funds deposited
with the bank will be utilized by the bank at its sole discretion in Shariah acceptable avenues.

Currently, HBL offers the following products:

HBL Islamic BasicBankingAccount (BBA)

HBL Islamic CurrentAccount

HBL Islamic AsaanAccount

Fair Treatment to Customers

Islamic Current Accounts have various elements of charges on services provided by the bank.
Details along with copy of Islamic Schedule of Bank Charges (I-SOBC) are available at all Islamic
Banking Branches (IBBs) and authorized Islamic Banking Windows (IBWs). All Taxes/Excise
Duty/Withholding Tax/ FED etc. levied by the government will be recovered wherever
applicable.

HBL Rural Banking

HBL is one of the few financial institutions which caters to farmers financing need and has
played a pivotal role in the development of the rural agriculture market.

With the distinction of being the largest commercial bank in Pakistan, HBL has influenced
thousands of lives in the farming communities across the country and is committed to
improving the agricultural sector’s growth. Through unique product offerings in the market,
with the help of a technically skilled sales team in the field, HBL has been able to educate and
facilitate its customers and the farming community.

At HBL, loans to farmers are mostly structured on a revolving basis. They (farmers) are only
charged on the amounts utilised, which reduces the burden on them. Furthermore, the
repayments are matched with the cropping cycle and the cash receipt of proceeds from the
crops. This enables the farmers to pay off their debt to the bank when they have the funds
available.

HBL has also joined hands with the Insurance industry for the launch of Crop Loan Insurance,
protecting the borrowers against loss of crops on arising from rain, floods, disease etc. In case
of a calamity the farmers’ crops are insured and their losses are adjusted against the insurance
coverage.

HBL Rural Banking has provided a viable platform where farmers are able to avail finances
required for their farming needs with innovative and unique offerings. With a complete range
of products for its valued customers, HBL provides cutting edge value added services.

HBL ZaraiBanking
HBL ZaraiBanking facilities are spread across the country and provide financing through more
than 800 of our branches. HBL’s presence in all agriculture belts of the country ensures easy
access to farmers in rural areas.
HBL ZaraiBanking provides loans to small-scale land owning farmers as well as large
institutionalized and alliance based finance, enhancing agricultural harvest and, in turn,
economic output of the country.

Financing Products and Features

HBL ZaraiBanking enables farmers to invest in premier quality seeds, fertilizers, pesticides,
agricultural implements and non-farm setups through its various product programs.

Crop Inputs

Crop specific finance for purchase of Agri inputs such as seed, fertilizer, pesticide and other
related inputs.

Farm Implements

Finance available for purchase of farm implements & machinery like combined harvester,
sprayers, ploughs, tube wells and other crop-related tools/implements.

Tractors/Agricultural Vehicles:

Finance available to individual farmers, self-employed tractor operators, providing the option to
select vehicles from a range of different manufacturers

Livestock:

Finance available for feed, medicines, raw material, raising charges and other related activities.

Poultry:

Finance available for all poultry related activities including poultry farm construction /
equipment, hatchery plant & machinery, poultry feed, poultry medicines, composite feed
production, poultry processing and other related activities.

Fish Farming:

Finance available for inland fish farms as well as deep-sea fishing. This includes procurement of
boat, fish locating equipment, nets & ropes, ice maker, fish farm water solution, hatchery
construction/equipment, purchase of medicines / feed and other related activities.
References:

JCR-VIS Credit Rating Company Limited