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Assessing an organisational structure and its financial impact

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Date added: 17-06-26


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A well developed and appropriately connected structure is an important need for the objectives of organization. It provides fundamental features without which an organization cannot operate. An organizational operation could include decision making to their communication across the boards. These particular functions need to be well managed and operate in order for an organization to be successful.

STRUCTURE OF HBL

At present the Bank operates through one central and 23 Regional Offices and 1439 branches, all over Pakistan. The president and Executives Committee look after the affairs of the Bank. Each Regional Head Quarter is headed by a Chief Executive and assisted by General Manager Operations and General Manager Support Services. The Regional Head Quarter controls the branches in their area. Overseas operations consist of 65 main branches, two affiliates, two representative offices and two subsidiaries. President, from Head Office at Karachi controls the officers of the Bank with the help of the senior management. Functional responsibilities of the Banks are broken into seven groups known as International Operations Group Corporate Banking and Treasury Investment Group Retail Banking and Operation Group Finance, Audit and Administration Group Assets Remedial Management Group Credit Policy Group Corporate Bank, Financial Institutions and Project Finance Group In addition to the overall controlling authority, president also manages the International Operations Group individually. While the Senior Executive Vice Presidents supervise rest of the functional groups. Each Senior Executive Vice President is individually responsible for the group which is assigned to him. At the level of provinces there are Regional Head Quarters headed by Regional Chief Executives (RCE). Each RCE is assisted by GM operations and GM Support Services. Branches are also controlled by the RCEs. Circle Offices of the past times have been removed to reduce Managerial Layers, which were working under the control of Zonal Offices. This happened as a result of policy of beginning new changes in the organizational structure.

2.1.6.2 Organizational Chart of HBL

A chart defines the line of authority in an organization and its departmentation. It is a sort of visual presentation of the organizational structure. It specifies the duties and responsibilities of the personnel of the organization. The Organizational chart of HBL is given below. Chairman President Board of Directors SEVP International Operations SEVP Corporate Banking & Treasury SEVP Retail Banking & Information Technology SEVP Finance, Audit & Administration SEVP Asset Remedial Management SEVP Credit Policy SEVP Corporate Banking, financial institute & Project Finance >4.1 SWOT ANALYSIS OF HBL HBL is considered to be a very sound bank in the financial circles. The bank where the customers can safely keep their money as long as they want. In SWOT analysis the best strategies accomplish in organization's mission by: 1. Exploiting opportunities and strengths. Neutralizing its threats and Avoiding its weaknesses. Following is a list of SWOT of HBL

4.1.1 Strengths

A skill or capability that enables HBL to conceive and implement its strategies. The officers of HBL are considered as one of the most able professionals in the banking world. I observed that HBL employees interact with their clients as if they are their personal friends and discuss about their problems as their own. HBL has got a reliable and easy to use internal computer system. Every information regarding the transactions in customers' deposits has been computerized. HBL maintained its data properly. HBL has very good security system. HBL is the larger commercial bank in Pakistan with the network of over 1439 domestic and international branches. Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest in experience. HBL focuses on consumer banking by lucrative schemes, products and services suiting best to the wants and demands of the customers. HBL has opened all its branches at commercial areas so that the customers or clients face no problems in reaching to the bank. The band is always on the look to improve its services both to the domestic as well as overseas customers. Human resources development and introduction of new technology towards modern banking. 24 hours cash access and safe payment products for high value transaction. Having potential to encounter the competitive environment in the market. Veteran and experience private management group also involved in other interests like, textile and cement industry. Customer enjoys the services at the residential localities.

4.1.2 Weaknesses

Highest number of branches effecting the proper maintenance and difficulty in providing same working environment at the each branch Poorer system of recovery of the system is a threat to bankruptcy. Lack of customer feed back. Low job satisfaction. Poor ATM's Service Inconsistency in efficiency and working atmosphere due to the largest of branches. Sense of insecurity in the employees serving at low profitable branches due to the down sizing. Females feel uneasy in an environment among the male workers. Victim of political, legal and socio-cultural pressures .Lack of professionalism in the branch employees mostly.

4.1.3 Opportunities

Huge untapped market potential in consumer banking In opportunity exist, in form of opening of ladies banking section within the branch which is entirely a new idea and it will attract customer. Opportunity for developing value added services combined with corporate banking relationships, cash management services to large and medium sized corporate clients. Growing policies of government on business and commerce sector provide HBL opportunities to take advantages of these policies to meet efficiently with the business people to solve their problems with the instant cash and financing facilities. Govt. is taking very bold steps to promote IT in Pakistan. HBL has an opportunity to improve in technology. Large international network which principally focuses on trade finance with Pakistan can be utilized to tap trade activities in other markets. In addition, services such as cross border / offshore financing for corporate customers can be enhanced. Customer feedback on different products and accounts has really improved the bank performance and encourage the atmosphere for other future policies. HBL also has an opportunity to expand its new technological advancement like; tele banking and internet banking facilities in order to serve the customer more efficiently, specially E-banking facility is also a new opportunity which is a flourishing business in foreign countries and can also be here, if HBL takes the initiatives. Further reduction in intermediation costs possible, with improving technology. Due to efficient and veteran management group, HBL can also improve Ill and expand its foreign operation successfully. Habib Bank Limited provide opportunity to utilize its skills and efficiencies in leasing business.

4.1.4 Threats

An area in the environment that increases the difficulties the organization's achieving high performance. Consolidation in the banking sector resulting in increased competition. Shortage of trained and specialized staff at lower executive and officer levels The threat of inconsistency and government policy regarding to business and economics sectors, specially political and regional situation which makes the environment uncertain. Growing global technological advancement. Strict regulation by government over credit facilities to the customers as Ill as to meet the prudential. Loss of confidence of overseas customers due to freezing of accounts. Facing more competition by foreign banks in the market. Foreign banks are flourishing in field of consumer financing. Also the increasing operation of private banks. Highly attractive and advance services by foreign banks to their customers. Political forces; The events in the last couple of years; the bomb blast of May 28th 1998 and the subsequent freezing of the FCA's, the declaration thatRiba is Un-Islamic, and a volatile political scenario that saw the overthrow of the Nawaz Sharifregime, all contributed in highlighting the important role of government in the local economy. The freezing of the FCA's destroyed the confidence of foreign depositors. Also, the declaration thatRiba is against theSharia, is likely to cause tremendous uncertainty in the banking sector. After this Pakistan's army totally holds on the government and push back the economy. Stability under the new regime is also very important for the economy as a whole. Continuous political changes have disrupted the policies and objectives as each regime brings with it its own agenda. Organizations need time to adjust to one regime and then work with it towards economic enhancement. Due the wrong policies of the government the extremism also develop in Pakistan and become the international issue in Pakistan and badly affected the Pakistan repute in the world and promote the uncertain conditions for the business in the Pakistan. Due to this the investors are not interested in the Pakistan. Economic Forces The Pakistan economy is more controlled economy, then one where market forces reign supreme. Several key institutions are stated owned. Thus a discussion of the economic forces that influence the private organization such as Habib Bank cannot ignore the substantial role played by the government in determining the state of the economy. The biggest indicator of the heavy role enjoyed by the government was evidence when foreign currency accounts (FCA's) were frozen on the orders of the ministry of finance in the wake of explosion tests on may 31st 1998. This and the recent efforts by the state bank to artificially lower the interest rates by revising the repo rates downwards and encouraging lower bids for T-Bill, highlights the overwhelming role of the government in the economy. Badla rates are a true indication of market rates at which financial intuitions are willing to lend but the government, under the dictates of the IMF wants to artificially lower the interest rates so as to provide investment liquidity within the economy. General Musharaf period of government putt back the economy of the Pakistan due to the wrong policies of the government for the economic growth in the Pakistan. Pakistan economy destroyed badly in that 10 to 11 years of the government, and investors hesitated to invest in the Pakistan, and also the load shading is another factor that effect the Pakistan economy badly. This not the end of the story after this Pakistan' economy face lot of problems like bomb attacks in Pakistan no electricity and the unstable government, due to this the investor are not invest in the Pakistan and the existing business men finish their business unit due to the loss. Social forces: A low saving culture has offset the huge population advantage this is enjoyed by Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant segment of the population is loath to accept interest for their deposits due to the negative religious implications of such an act. About 70% of Pakistan's population is based on rural areas, thus making it harder for banks to mobilize their deposits within these regions. ➢Habib group also started a school system in Karachi for the cherty purpose. ➢They give the funds to the poor person on the daily basis Technological forces: Banks in the developed world have been turning to heavy IT investments, which differentiate their products, provide response times, enhance accessibility and improve customer satisfaction. Though investing in state-of-the-art host banking solution (Fiserv, Kapiti, etc) , ATM and POS ( point of sale) networks, visa, MasterCard, and Amex switches, smart cards, telebanking and now internet banking are common IT investment in the developed world, it is now that these products and services are gaining faster acceptance in Pakistan. Habib Bank change their technology in IT sector due to the requirements of the current time, before this they have the poor technology of the IT and un less skilled person in that field but at this time they replace it with the heavy installation of the IT instruments. They hired new skill employed and trained them for the efficient and effective work. The model of the five competitive forces was developed by Michael E. Porter in his book "Competitive strategy: Techniques for Analyzing Industries and Competitors" in 1980 Porter's model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment Competing firms; Habib Bank limited is facing a strong competition from other private Pakistani banks like Metropolitan bank. Soneri bank and Askari Commercial bank. The improved performance of the nationalized commercial banks (NCBs) is also the threat for the bank Al Habib. Foreign banks are also competing with the bank for same small medium sized companies. The bank is overcoming the incentive competition due to its strong reputation as a renowned financial group in Pakistan and a long history of experience in the banking sector. VI. Potential entry of new competitors; The entry barriers in this market are high. The new banks need permission from SBP so entry of new banks is restricted. Also the paid up capital requirement is likely to be raised from Rs.500 million to Rs.1 billion. VII.Development of substitute products; The non banking financial institutions including development finance institutions (DFIs), private sector investment banks (PSIBs), leasing corporations (LCs) and Modarbas are almost in the same line of business and can be treated to the bank. Other substitutes that compete include the national saving certificates, the stock market, its supporting industry and brokerage houses. VIII.Bargaining power of suppliers; The main suppliers in the banking sectors are depositors. Although the bank is given higher return then any other bank (12% per annum) to attract the depositors but the low innovation in the product and also low investment in the marketing sector of the bank may provide difficulties in coming years. The regulatory bodies could also be the suppliers as they provide guidelines to the bank from time to time. These include the State Bank of Pakistan (SBP), The Corporate Law Authority (CLA), The Ministry of Finance and the religious board. IX. Bargaining power of customers; The main customers are small traders and exporters based in Karachi and Lahore, majority of whom deal in textile related commodities. Since the bank is targeting the short-term trade finance market, the bargaining power of customer is substantial as other banks within the same sector like Bank Al Falah and Metropolitan are fast catching up with the Bank Al Habib in providing services to the traders.
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