Dependable Management Information System

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02 Nov 2017

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In SWOT analysis the best strategies accomplish an organization’s mission by:

Exploiting an organizations opportunities and strength.

Neutralizing it threats.

Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strength neutralize threats and avoid weaknesses.

STRENGTH:

Government organization:

BOP impressive strength is that it works as a Punjab government organization. BOP & its Projects are reared by government funds and machinery. Government regularly injects funds and capital in it, so that it can grow and flourish well. All the securities and deposits of Punjab government are with BOP.

Credit ranking:

Entity rating by PACRA:

Long term AA-

Short term A1+

Long term rating AA- means very high credit quality & low probability of credit risk. They indicate very strong aptitude for timely payments of financial commitments.

Short term rating A1+ means that obligations are supported by the highest aptitude for timely repayments.

Qualified professionals:

The Bank officers of BOP are considered as one of the most talented professionals in the banking world. They interact with their clients in a way as if they are their personal friends and discuss about their problems as their own.

Loyal customers:

As a result of the empathetic and personalized services of the officers, the client’s perception for BOP is very high. They have trust and feeling that they are secure while dealing with BOP.

Best located branches:

BOP has opened all its branches at commercial areas so that the customers or clients face no problems in approaching the bank.

Dependable Management Information System:

BOP has got a consistent and easy to use internal computer system. Any information regarding the changes in customer’s deposits has been computerized. Data are appropriately maintained.

Safekeeping:

Customers are provided with high confidentiality of accounts and good security system. So they feel comfortable to deal with BOP.

WEAKNESSES:

Political Influences:

There is a massive political influence of Punjab Government on BOP. So often it acts as the puppet of Government as a result bank usually faces a drastic change in policies and procedures which disturb its smooth functioning.

Lack of Internal power:

Lack of proper internal controls is one of the foremost weaknesses of BOP. Its internal control Status is marginal that is distressing for the survival of bank. At present BOP scandal of bad loans is also due to this weakness.

Stumpy Marketing:

BOP has introduced a lot of products and services for its customers, even more than other commercial banks, but any advertisement on electronic media has not been seen which means there is a serious lack of advertising by the bank.

High work Load:

Employees at the branch level are over loaded with work that decreases the level of their efficiency. So the work should be disseminated according to their post and capabilities to get optimal level of effectiveness.

Difficulty in managing large number of branches:

As Bank of Punjab have a larger network of extensive branches within the Punjab province. This cause difficulty in managing large number of branches, further it increases the cost.

OPPORTUNITIES:

Well Designed Products:

In order to satisfy dynamic consumer needs, BOP has made considerable inroads in its entire service spectrum. A lot of products have been introduced especially in Retail Banking (Agriculture Side) and people are now even more loyal to the bank and because of its feasible transactions. Most favorable pricing and branding strategies of the bank are helping to make customer feel secure and convenient.

Scope of Expansion:

Currently BOP has 284 branches, mostly in the Punjab. It can enlarge its operations by opening more branches in the Pakistan. BOP still has a broader scope of expansion within & outside the country. BOP has no overseas branch so it’s the high time to start its operations in abroad.

Magnificence in Agricultural market:

There is huge scope of magnifying in the agricultural market for BOP. Its agricultural products are well designed and it has huge number of loyal agricultural clients. By giving more attention to agricultural products BOP can wide the span of its operation.

Advancement in Information technology:

All the opportunities of the 21st century are to be availed by the immense use of information technology as Information technology is the future of this dynamic world. Therefore BOP should stress on IT, especially on E-Banking. Bank can plan a universal account like other foreign banks, to enhance online facilities.

THREATS:

Change of Government:

BOP is a bank of Punjab government and has unlimited control of government. That’s why change of government is a big threat to BOP. Alteration of Government & Political instability also affects the management stability of BOP. By this BOP management can also change.

Slump in Banking Sector:

Despite the difficult conditions & recession that confronted the banking sector in particular and the country in general, BOP has been still profitable. But, the facts can’t be denied and there might be an adverse impact of such situation.

Strong Competitors:

BOP is confronting a strong competition by its competitors which has high reputation & assets as compared to BOP. Business of all these Banks is rising at very high pace.

Bad Loans:

Bad loans are the most prevailing threats to BOP. These were occurred due to short of internal control & dishonesty of some employees. By this not only the name of BOP blemished but it has also destroyed the reliance and loyalty of customers on BOP.

RATIO ANALYSIS

Short term Solvency Ratio

Current Ratio = Current Assets /Current Liabilities

2010:

= 211591919000/113128490000

= 1.871 times

2011:

= 315566949000 / 159994154000

= 1.972times

2012:

= 263513279000 / 133299137000

= 1.977 times

Quick Ratio / Acid test Ratio= Current assets (Closing Inventory) / Current Liabilities

As banking industry doesn’t hold any inventory because they are not dealing in trading industry so the quick ratio remains same for both the years.

Long term Solvency Ratio

Long Term Solvency Ratio: Total Assets / Total Liabilities

2010:

= 229,190,273,000 / 225,521,803,000

= 1.0163

2011:

= 280,997,531,000 / 270,224,941,000

= 1.03986

2012:

= 332,111,054,000 /319,739,551,000

= 10386 times

Debt Coverage Ratio/Debt Equity Ratio

Debt / Equity * 100

2010:

225,521,803,000 / 63,668,470,000 * 100

= 6148 %

2011:

270,224,941,000 / 10,772,590,000 * 100

= 2508 %

2012:

= 319,739,551,000 / 12,371,503,000 * 100

= 2584 %

Interpretation

Short term Solvency Ratio

Current Ratio

The current ratio for the year 31 Dec, 2012 is 1.972 times and 1.977 times in year 31 Dec, 2011.Both years have almost same ratio. The ratios indicate that the current assets of the bank are almost two times greater than its current liabilities and it is a positive sign for the bank. The current assets comprises of Cash and Balances with other banks and different advances to customers or financial institutions. The current liabilities show bills payable (becoming double from previous year),borrowing, and other liabilities .However, there is also a negative point that both year shows same ratios (no growth and positivity in year 31 Dec 2012) however current assets increased by Rs 51,113,523,000 (18.19 %)but current liabilities also increased by Rs 49,514,610,000 (18.32%) These all information shows that bank current assets and liabilities are grown by same rate but Current ratio in 2010 is 1.871 which shows that bank has increased its current assets in 2011 to meet its financial liabilities. The bank should consider new opportunities to increase it, Current assets or apply more strategies like cost effectiveness to decrease current liabilities.

Quick Ratio / Acid test Ratio

Again the same situation is for long term solvency ratio for the year ended at 30 December 2011 shows a ratio of 1.03986 times and year 2012 shows a ratio of 1.0386 times(both years have almost same ratio).This indicates that like the banks current assets ,the fixed assets also remain same for both years. The fixed assets in2011 shows a figure of Rs Rs.17484.252 m and in 2012 it shows a figure of Rs 16544.105 m.However there is a big increase in total assets in 2012 (Rs 51113.523 m) but the total liabilities in this year increase by almost same proportion/rate. The ratio decrease by same minor values however it is insignificant. In 2010, this ratio is 1.0163 times, which indicates that there is progress in 2011 but no growth in 2012.The bank should seek new opportunities or strengthen its capabilities to get strong position and to grow with a same rate in all years.

3) Debt / Equity ratio

The most important area for the banking sector. The figures are 2584% (2012), 2508 (2011) and 6148% (2010).When we talk about the year 2011-2012 ,again the situation remains same but a minor increase in this ratio. It indicates that the bank liabilities are 25.84% times (2012)25.08 times greater than its capital equity. The basic reason for that is the accumulated loss, The figure is Rs 127424m (2012) and Rs 140678 m (2011)there is a point that accumulated loss decreased by 9.42% in 2012 but the ration increase instead of decreasing. The bank has taken more loans to fulfill its liabilities but couldn’t increase its capital in the same proportion. In 2010, this ratio is 61.48 times greater than its capital/equity. This ratio decreased to 2508% in 2011 but again raised to 2584% in 2012. The bank has the capability to indicate new opportunities that increase its share holder’s financing plus decrease in its liabilities. The bank should carry out new opportunities like joint venture which can benefit the bank in long term.

Conclusion

In my view the bank is coming towards progress as compare to the year 31 December 2010.Year 2011 shows a great value that figures remain almost same or slightly increasing in 2012.The bank should make new strategies or review its strategies to meet their liabilities and enhance their assets to show up as a star in the market.



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