bank of khyber project
TRANSCRIPT
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BANK OF KHYBER
STRATEGIC MARKETING MANAGEMENT PROJECT
Firm: THE BANK OF KHYBER
Submitted
to
Mr.Imran Qureshi
Submitted
By
Asad Khan (4573-FMS/MBA/S10)
Yaqoob Shah (4572-FMS/MBA/S10)
Ahmad Qayum(4567-FMS/MBA/S10)Kaleem Akram (4545-FMS/MBA/S10)
Dated May 3 ,2010
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BANK OF KHYBER
DEDICATED
TO OUR PARENTSWHO ALWAYS
LOVED US
& all those who have a softcorner for us in their hearts
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BANK OF KHYBER
ACKNOWLEDGEMENT
All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful
and beneficent who gave us courage to undertake and complete this task. we are
very much obliged to our ever caring and loving parents whose prayers have
enabled to reach this stage.
We are grateful to almighty ALLAH who made us able to complete the work
presented in this report. It is due to HIS unending mercy that this work moved
towards success.
We are very grateful to Mr Imran Qureshi our respectable teacher for his
continuous help, support and time during the entire course of our project.
We feel great pride and pleasure on the accomplishment of this report
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BANK OF KHYBER
PREFACE
Like any other basic sphere of modern socio-industrial activities, banking, too, is a
vigorous and purposeful monetary – based media that foster and nourish the
socio-economic growth of a developing country.
Nowadays the banking sector is very important. It is the back bone for the
economy of a country. In a country like Pakistan, banks are now the focus of
government, to nourish and initiate the developmental projects at lower levels.
Banks have also ensured a high level of productivity, growth, and strategies. One
such bank with new policies and strategies pushing forth towards progress is The
Bank of Khyber, which has since its inception shown remarkable achievements
and discovered new avenues of innovative banking.
This report has been divided into four sections:
Section one deals with the introduction, back ground of study, purpose of study, .
Section two involves SWOT analysis, TOWS matrix, Ratio Analysis, BCG
matrix, Customer Analysis, Competitor Analysis, Positioning, Scorpio
Techniques and some suggested strategies. Lastly, We would like to mention that
all this has only been done by the grace of Almighty Allah and with the support of
my very kind and loving parents, who have always been remembering me in their
prayers and encouraging me to be a true Muslim as well as to achieve excellence
in academic education which is the building block of my future life. .
We are also thankful to Mr.Imran Qureshi, who has extended full cooperation and
help towards us.
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BANK OF KHYBER
TABLE OF CONTENTS
TITLE PAGE NO
Preface
Table of Contents
Executive summary
SECTION I INTRODUCTION
INTRODUCTION
Back Ground of Study
Why is the study conducted
Scope of Study
Methodology of Study
SECTION II
SWOT Analysis of the BOK
TOWS Matrix
Ratio Analysis
Boston Consultant Group Matrix
Customer Analysis
Competitor Analysis
Positioning
Scorpio Technique
Suggested Strategies
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BANK OF KHYBER
EXECUTIVE SUMMARY
The main purpose of the report is to develop the suitable marketing strategy that would
benefit the firm by comparing the strategic marketing management knowledge in theory
and put it to practice in a real work situation as well as to improve communication and
analytical skills. The report is composed of information obtained from interviews,
observations, reference books, annual report of The BOK and from other manuals
published by the organization.
The Bank of Khyber was established in 1991 after the passing of a resolution in the
Provincial Assembly of NWFP. The main purpose of establishment of the BOK was not
only to provide employment opportunities for the manpower of this province, but also to
provide financial assistance to the people of NWFP. The Head Office is situated at
24-The Mall, Peshawar Cantt. In the year 1991, it was awarded as a schedule bank and
it started its operations directly with SBP. In 1995, the BOK availed a license from SBP
to deal in foreign exchange business. The BOK has its own Board of Directors,
comprising five members; the Managing Director may also hold a position of Chairman.
The BOK has a network of 44 branches, which are located in different cities of Pakistan.
In this report of strategic marketing management various analysis are done, like SWOT
Analysis, TOWS matrix, Ratio Analysis, BCG matrix, Customer Analysis, Competitor
analysis, Positioning and Scorpio technique. And some strategies are developed in
concern with these analyses.
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The information, which is collected for the first time and exists in raw form, is
known as Primary Data. It contains the following:
a) Personal observations
b) Discussion with staff of the BOK.
Secondary Data
The information, which has undergone through statistical techniques and
exists in a refined form, is known as secondary data. It contains the following:
a) Annual Report
b) Information memorandums
c) Internet
d) Documents published by banks.
e) Banking manuals.
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CHAPTER # 2
BANKING SECTOR IN PAKISTAN
DEFINITION OF BANK
A corporation empowered to deal with cash, domestic and foreign, and to
receive the deposits of money and to loan those monies to third-parties.
In 1901, Justice Holmes wrote, in an Irish case (Re Shields Estate):
"The real business of the banker is to obtain deposits of money which he may use for
his own profit by lending it out again."
In United Dominions (1966), Lord Denning deferred to these words to define a bank:
"An establishment for the custody of money received from, or on behalf of, its
customers. Its essential duty is to pay their drafts on it: its profits arise from the use of
money left unemployed by them.
FUNCTIONS OF BANK:
According to section 7 of the BCO, 1962, the banks in Pakistan are authorized
to engage in any one or more of the following forms of business, namely:
a) The borrowing ,raising or taking up of money;
b) The lending or advancing of money either upon or without security;
c) The drawing, making, accepting, discounting, buying, selling, collecting
and dealing in bills of exchange ,promissory notes, drafts, bills of lading warrants,
debentures (musharika and mudaraba certificates);
d) The granting and issuing of letters of credit, travelers’ cheque and
circular notes;
e) The buying and selling of foreign exchange including foreign bank notes;
f) The acquiring, holding, issuing on commission, underwriting and dealing
in stock fund, share debenture stock, bonds, obligations, securities;
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BIRTH OF THE BANK OF KHYBER
The Bank of Khyber is one such bank which came into being after the passing
of a Resolution in the Provincial Assembly of NWFP in 1991. The focus point for the
establishment of this bank is to provide employment opportunities for the man powerof this province & to provide financial assistance to the people of NWFP, who are
engaged in small, medium and large scale businesses. Most of the nationalized
commercial banks have their Head Offices in provinces other than NWFP, which is
the main hindrance to availing loan in time from these banks. The banks have to take
formal approval from their H/O in order to advance loans to their customer or to make
some transactions within the branches. Therefore, it was felt that there was a great
need to have a bank which has its Head Office in the same province also, so that there
could be no time delay, communication gap or provisioning of documents to advance
loans expeditiously. Initially, the Bank of Khyber had agency arrangements with ABL
and MCB for clearing and collecting cheques from other banks, but with the grace of
Almighty Allah and the hard work of its management, it became a scheduled bank. It
started its operation in SBP and to have a clearing officer of its own for clearing
purposes and tackling of other matters with SBP. Presently, this bank has started to
work as an agent for all its branches in Peshawar and other cities where SBP
arrangements are not possible. In 1995, the BOK availed an opportunity for a Foreign
Exchange license and its corporate main branch became the first authorized dealer to
deal in foreign exchange business and trade services/finance. The BOK corporate
main branch also provided its services to its different branches which had
import/export businesses but were not authorized for such business. After the
successful completion of the foreign exchange business, the licenses were also availed
for The BOK Ashraf Road Branch, Peshawar, The BOK Sadder Road Branch
Peshawar & the BOK Khyber Bazaar Branch, Peshawar. Now, other than its branches
in the NWFP, the Bank of Khyber has its network of branches in Islamabad, Lahore,
Quetta and Karachi & Muzaffarabad also.
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CHAPTER # 3
ORGANIZATIONAL STRUCTURE
THE BOK’S ORGANIZATIONAL CHART
The graphical representation of an organizational structure is known as an
organizational chart. The organizational chart is a formal document which shows the
chain of command and titles which have been given to the managers and other
members of the organization.
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Chart Organizational Chart of the Bank of Khyber
Organization
Board of Directors
Managing Committee
Long Term Projects
Resident Directors AUDIT
Managing Director
Personnel &
Establishment DivisionBanking Operation
Division
Branch Operations
Department
Accounts & Treasury De artment
International Banking
Department
Credit Divisions
Assets Management
Department
Investment
Computers
MFD
P,T&E Deptt.
Public Relation
Department
Branches 29 Marketing Department
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CHAPTER # 4
SWOT ANALYSIS:-
In every organization efficient managers analyze the workings of their
organization Analysis.
It is a combination of four words that is
S stands for Strengths.
W stands for Weaknesses.
O stands for Opportunities.
T stands for Threats.
SWOT ANALYSIS OF THE BANK OF KHYBER:-
STRENGTHS
1 Bank of Provincial Govt
As the Bank of Khyber is the bank of the NWFP government the people repose
more confidence in the BOK as compared to other banks and deposit more money in it
also.
The BOK also has many government accounts due to which its reputation and
image becomes stronger & more positive. Examples of such accounts are Traffic
Challan accounts, TV License accounts and NADRA’s accounts.
2 Launching of New Product2
With the ordinary deposits accounts the BOK has launched a SDA (Special
Deposit Account) on which it provides mark-up / profit on a daily basis. Most of the
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people prefer to open such an account.
3 Micro Finance Unit (MFU)
The BOK has a department known as the Micro Finance Department which is
operating in every branch of the BOK. This department provides micro lending
facilities to small businesses like shops, small projects or in-home projects of ladies,
like boutiques, beauty parlors, embroidery & stitching centers. Through this
department the BOK earns even more revenue every year.
4 Finance provided by the Government
Whenever the BOK faces problems of liquidity, the government of NWFP
helps them which is a plus point for the Bank of Khyber.
WEAKNESSES
1)-Number of branches
The number of branches of the BOK is very limited as compared to other
banks. Although it is the NWFP government’s bank its branches in Peshawar only
nine which are still less when compared to other banks branches. In Karachi, which is
one of the most populous cities of the Pakistan, there are only two branches.
2)-Behavior of the staff
Most of the employees consider themselves to be govt employees and do not
take interest in their work which does affect the performance of the bank (in the long
run). Beside this, the behavior of the staff is some times very rude to their customers
and naturally the customers want to wind up their accounts in the BOK as a result.
3)-Branches in other countries
In foreign countries the BOK has no branch and this creates problems for
importers and exporters.
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4)-Load of work
The work burden carried by some employees is very high due to shortage of
branches & that creates errors and mistakes. As is known in the banking line, one little
mistake can create a very big problem.
5)-Influence of Provincial Govt
As it is a provincial government bank so at all level there is some interference
by and at times undue influence of the provincial government in the decision process
of the Bank.
6)-Heavy load of Bad Debts
As it is a provincial government bank so the concerned loan officers sanction
the loans to the government’s people who in turn do not make the repayment of these
loans. That ultimately goes to the Bad Debts Account & becomes a burden on the
Bank.
7) -Weak exposure to media:
Marketing skills of the bank are good but they have little presence at
different media.
OPPORTUNITIES:-
1)-Opening Of New Branches
They have the opportunity to open new branches in the country as well as in
foreign countries. They should open new branches at least at the district level. Besides
this they have the opportunity to take an NOC from SBP and open new branches in
Afghanistan.
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2)-Hire skilled & professional educated personnel
The BOK has the opportunity to hire skilled, professional, and educated
persons who are specialized in the course of banking and accountancy like CAs(Chartered Accountant).
3)-Investment in public and industrial sectors
They have the opportunity to invest their liquid cash in public & industrial
sectors especially in commercial plazas which is a most profitable activity for the
BOK. They have the opportunity to invest in the IT sector also especially in software
programming. They can also invest in the mineral resource sector of the NWFP
4)-Reduction in Commission & Charges
The BOK can attract all the business and non-business community by
providing low bank charges commission on DD, TT, and MT. Thus the BOK can gain
maximum market share.
5) Collection of utility bills:
Being a provincial govt bank they have the opportunity to make agreement
with private as well as govt organizations to collect utility bills for them and through
this activity the bank can earn profit without any investment .
THREATS
1)-Recovery of loans:
As it is the bank of the provincial government so most of the politicians take
loans from the bank. The recovery becomes impossible from such politicians due to
which the bank faces problems of bad debts and the bank incurs major loss.
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2)-Foreign banks
The number of foreign banks is increasing day by day in Pakistan. They also
provide good quality services at the same cost as the BOK provides to their clients.
Thus this too is a potential threat for the BOK.
3)-Interference of Government
As the political situation is always unstable, that is why the government does
not give proper attention to the performance of the BOK. Beside this, the NWFP
government is directly involved in the affairs of the bank which may affect the
position of the bank.
4)- Global economic recession
From the last few years worldwide economy is moving down, which reduces
the business activities and investors are uncertain about their investment return.
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TOWS MATRIX FOR THE BANK OF KHYBER
Internal
elements
External elements
Organizational
Strengths
Organizational
Weaknesses
Strategic options
Environmental
Opportunities(and risks)
S-O
(THE BANK OFKHYBER)
W-O
Environmentalthreats
S-T W-T
STRATEGIES:
1 The BOK lies in SO(Strength Opportunity) region, as they have sufficient
funds provided by provincial government of NWFP ,which is their one of the
biggest strength ,They can use these funds to open new branches in
Afghanistan which is mostly a Pukhtoon representative area, which is one of
the reliable opportunity for their business expansion outside the country.
2 Most of the area of NWFP is rich in mineral resources which are mostly
unexplored, so the BOK has also an opportunity to invest in these mineral
resources of the province, which might be a better source of revenue for both
the provincial government and bank itself.
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RATIO ANALYSIS OF THE BANK OF KHYBER
We have discussed the following marketing ratios of the BOK.
1) Operating profit
Total Assets
(2008) (2009)
708813000 648549000
31338989000 38811000000
=2.26% 1.67%
Interpretation
The BOK has suffered loss in 2009 as compared to 2008, in which 2.26% of their
total assets were generating operating profit, while in 2009it is declined to 1.67%.
2) Operating Profit
Sales Revenue
708813000 648549000
2958865000 3390014000
=23.95% 19.13%
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Interpretation: In 2008, 23.95% of the sales revenue were converting into
operating profit, While in 2009 it has declined to19.13% ,So Bank has suffered the
loss in 2009 as compare to 2008.
3) Assets Employed
Average daily sales
31339000000 38811000000
8106479.452 9287709.589
= 3865.91 4178.74
4) Production cost of sales
Average daily sales
1897816000 2390388000
8106479.452 9287709.589
= 234.11 257.37
Interpretation: In 2008 Bank was more efficient because its production cost was
less as compare to 2009.
5) Distribution and marketing cost
Average daily sales
654869000 719453000
8106479.452 9287709.589
=80.7 77.46
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Interpretation: Bank was more efficient in 2009 because its Dist & Mktg cost
was low as compare to 2008.
6) Earnings per share ratio:
(loss)/profit for the year
Total number of shares
137348000 (637183000)
500400148 500400148
= 0.27/- 1.27/-
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7) Advertising & Selling expenses
Total sales
15646000 13717000
2958865000 3390014000
=0.52% 0.40%
InterpretationIn 2008,0.52% of the total sales of the BOK was used in advertising and selling
expenses, While in 2009 bank is being more efficient because its sales has
been increased and advertising and Selling expenses is reduced to 0.40%.
8) Current AssetsAverage Daily sales
28832410000 35518519000
8106479.452 9287709.589
=3556.71 3824.24
Interpretation
Bank is earning benefit in 2009beacuse in 2009 more average daily sales isgenerating as compare to 2008.
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BOSTON CONSULTING GROUP
Agricultural credit:
Year 2007
(000)
2008(000)
The Bank of Khyber 21567 30464
Muslim Commercial Bank 41422 52432
United Bank Limited 31384 42278
Total 125176
Growth Rate BOK = 30464-21567/21567*100
= 41.25%
market share of BOK= 30464/125176*100
= 24.3%
Leader market share MCB= 41.89%
Relative Market Share= 24.3%/41.89%
= 0.58 times
Deposits:-
Year 2007
(000)
2008
(000)
The Bank of Khyber 21411 24732
Muslim Commercial Bank 4361760 4705540
United Bank Limited 3289637 3699548
Total 8429820
Growth Rate BOK = 15.5%
market share of BOK=0.29%
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Leader market share MCB= 55.82%
Relative Market Share= 0.005 times
Micro Finance:-
Year 2007
(000)
2008
(000)
The Bank of Khyber 31465 32575
Muslim Commercial Bank 324422 396862
United Bank Limited 313718 324565
Total 754002
Growth Rate BOK = 3.53%
market share of BOK=4.32%
Leader market share MCB= 52.6%
Relative Market Share= 0.082 times
Advances:-
Year 2007
(000)
2008
(000)
The Bank of Khyber 10068 12644
Muslim Commercial Bank 2815614 3025141
United Bank Limited 2724703 3216234
Total 6254019
Growth Rate BOK = 25.59%
market share of BOK=0.2%
Leader market share UBL= 51.4%%
Relative Market Share= 0.003 times
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Relative Market Share= 0.003 times
Industry Growth Rate:-Sum of 2007 = 14047171Sum of 2008= 15563015
Growth Rate=15563015-14047171/14047171*100
= 10.79%
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Customer Analysis:
We have selected the following four products or services of The Bank of Khyber fordoing their consumer analysis,
1. Islamic Banking
2. Deposits3. Microfinance
4. Agriculture Credit
After having a detailed study of our products in the perceptive of our customers we came
up with the following results,
Types of product:
Islamic banking is specialty good/services for the BOK because it differentiates it from
other conventional banks. It needs a bit low involvement because trading rules andregulations through Islamic banking are fixed by Islamic law, which is adopted by all
banks dealing in Islamic Banking.
Deposits, Microfinance and agriculture credit are categorized as shopping goods/services
and it needs high involvement.
Product Life Cycle:
Islamic banking services are currently going through the growth stage.
Deposits are in the stage of decline because due to the current economic condition
peoples don’t have enough money to deposits in the banks and they also have the fear of bank ruptcy.
Microfinance is currently in the boom stage because in such economic downfall peoples
mostly prefer to Entrepreneurship.Agriculture credit in Pakistan is always in boom stage because it is an agricultural
country and this sector is s
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BUYING BEHAVIOUR
High involvements Low involvements
Significant
Differences
No
Significance
Differences
ComplexDeposits
Microfinance
Agriculture
credit
Variety
Seeking
ResonanceReducing
HabitualIslamic
Banking
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BUYING DECISSIONS: Customers use the following methods while availing the
products /services of the BOK.
1. Introspective method
2. Retrospective method
Islamic Banking: Customers follows the retrospective method for availing the
Islamic banking services of the BOK.
Deposits & Agri credit: For availing the deposits and agri credit services of the
BOK. Customers use retrospective method i.e. they use their past experience and
information they have collected from others.
Microfinance: To avail the microfinance services, customers follow both the
introspective and retrospective methods. They also make decisions on the bases
of their own information without asking anyone and also from their past
experiences or from someone others.
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COMPETITOR ANALYSIS
Competitive stance
Competitive stance provide us with the information through which we analyze
our customers that they are growing or not.
All the competitors of The BOK are growing(developing) in terms of
infrastructure, baking services, distribution networks.
Promotion/ Public Relation
Competitors of the BOK are promoting their banks products and services
through huge marketing efforts and using huge financial resources.
Strategic focus
The BOK is directly competing with other banks.
Technology skills
The competitors of the BOK are much more advance in the field of technology
as compare to the BOK. Because The BOK is a new bank and its still in the
developing stage.
New product innovation
The competitors of the BOK are much more efficient in terms of Innovation in
products and services. They are offering various new schemes.
Strategic forms/competitive
Competition: The BOK are competing with other Banks in terms of all theproducts, services, and several schemes that they are offering.
Competitor Responses
Selective Response: The competitors of the BOK are much more developed
than the BOK, so they do not give that much response to any move of the BOK.
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they choose their competitors selective or the competitors that are of their level.
They are showing a very selective response.
Undifferentiated Strategy: All the banks including the BOK are using the
undifferentiated strategy. They take the whole market as a one segments andapply the same strategies for all the segment.\
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POSITIONING: Positioning means that how your customers are viewing
the products/services of your company. It creates the image of your
company in the customers mind.
Types of positioning
Triple benefit positioning
The products/services that the BOK is providing offers triple benefit positioning
to its customers. When a customer opens an account in the bank, he can also get
the benefits of ATM, debit card facility and online banking.
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SCORPIO TECHNIQUE
This technique is used to justify the strategies that we have selected while
doing various analyses like BCG Matrix, TOWS Matrix, GE Multifactor
Matrix.
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SCORPIO TECHNIQUE:
Industry or Market
Industry or technology thinking
Example:- ATM, free cheque books
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CUSTOMER:-
1. General public, govt officials, entrepreneur
2. Advances, deposits, microfinance, agri credit
3. ATM, Credit Cards, Free Cheque books.
4. 24 hours online banking services, increase number of branches.
5. Security issues, less no of branches
6. Regional bank, reliability
7. Branches, websites, telephone
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SEGMENTATION AND TARGETING
1. Undifferentiated
2. To increase customers by targeting all the level of social classes.
3. All the segments
4. Durable
5. No priority
6. All
7. By delivering new offerings
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POSITIONING AND BRANDING
1. Commodity marketing
2. Medium quality
3. Best quality at higher price by following market trend for future
4. Provide finance for govt projects
5. Risk of default is minimum
6. Customer trust increases
7. Increase business activities.
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RETENTION STRATEGY
1. holding current customers to attract new customers
2. Quick Respond to complaint
3. No, it can also increase the customers
4. Yes
5. Good
6. To get satisfaction of your customers
7. Offering New schemes
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BANK OF KHYBER
ORGANIZATION: PROCESSES AND CULTURE
1. Both
2. Providing better services
3. Strictly followed
4. Yes
5. Yes
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BANK OF KHYBER
OFFERINGS
1. Superior values and services with attractive schemes
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BANK OF KHYBER
SUGGESTED STRATEGIES: After doing all the detailed analysis in the scorpio
technique, we come up with the following strategies that the BOK should follow.
1. Market Development: They should develop their infrastructure, and
should keep their main focus on increasing the number of branches all
over the country. They should also focus on other big cities of Pakistan
like Karachi and Lahore. They also can take the NOC from the state
bank of Pakistan to open branches in Afghanistan which could be a
valuable source of revenue for them.
2. Unrelated Diversification: Most of the areas of NWFP is rich in
mineral resources which are mostly unexplored, so the BOK has also an
opportunity to invest in these mineral resources of the province, which
might be a better source of revenue for both the provincial government
and bank itself.