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BANK OF KHYBER

STRATEGIC MARKETING MANAGEMENT PROJECT

Firm: THE BANK OF KHYBER

Submittedto

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

BANK OF KHYBER

DEDICATED

TO OUR PARENTS

WHO ALWAYS

LOVED US

& all those who have a soft corner for us in their hearts

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

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.

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

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Positioning

Scorpio Technique

Suggested Strategies

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.

BANK OF KHYBER

CHAPTER # 1

INTRODUCTION

STUDY BACKGROUND

Today, banks are the most important financial institutions which play a vital

role throughout the world’s economic system. Because most of the sectors like

Industries, Commerce and Agriculture need financial assistance, it is the banks

which carefully entertain them.

A resolution was passed in the Provincial Assembly of NWFP, in the year

1991 for the establishment of a provincial bank. It proved successful and the

result was the emergence of a new bank in the banking sector, i.e. The Bank

of Khyber Pakistan. In the year 1994 it became a scheduled bank. The Head

Office is situated at 24-The Mall, Peshawar Cantt. NWFP-Pakistan. This bank

has been playing an important role for the development of different sectors in

Pakistan and especially in NWFP. It has a network of 41 branches, which are

located in different locations of our country. Despite difficult economic

conditions, like lack of suitable lending opportunities, volatility of interest rate

and equity prices, the bank manages to show good results for every year.

.

SCOPE OF STUDY

This report may help students in future to understand banking practices in

our country. It would also attempt to evaluate the overall performance of The BOK

through a thorough & detailed analysis of its daily working.

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METHODOLOGY OF STUDY

For the purpose of writing this report, the following methods of collecting

information have been used:

Primary Data

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;

BANK OF KHYBER

f) The acquiring, holding, issuing on commission, underwriting and dealing

in stock fund, share debenture stock, bonds, obligations, securities;

g)The receiving of all kinds of bonds, scripts or valuables on deposit or for

safe custody or otherwise, the providing of safe deposit vaults, the collecting and

transmitting of money and securities.

h) Acting as agents for any government or local authority or any other person

or persons;

i) Acting as “Mudaraba company” under the provisions of the Mudaraba

Companies Ordinance 1980;

j) Contracting for public and private loans and negotiating and issuing the

same;

k) The effecting ,insuring, guaranteeing, underwriting, participating in

managing and carrying out of any issue, public and private, government, municipal,

or other loans or of shares, stock, debentures or debenture stock of any company,

corporation or association and the lending of money for the purpose of any such

issue;

l) Carrying on and transacting every kind of guarantee and indemnity

business;

m) Purchase or acquisition in the normal course of its banking business of

any property, including commodities, patents, designs, trade-marks, and copy rights,

with or without buy-back arrangements by the seller, or for sale in the form of hire-

purchase or on deferred payment basis with markup or for leasing or licensing or for

rent-sharing or for any other mode of financing;

n) Managing, selling and realizing any property which may come into the

possession of the company in satisfaction or part satisfaction of any of its claims.

BANK OF KHYBER

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 power of 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.

BANK OF KHYBER

Organization

Board of Directors

Managing Committee

Long Term Projects Resident Directors AUDIT

Managing Director

Personnel & Establishment Division

Banking Operation Division

Branch Operations Department

Accounts & Treasury Department

International Banking Department

Credit Divisions

Assets Management Department

Investment

Computers

MFD

P,T&E Deptt.

Public Relation Department

Branches 29 Marketing Department

Chart Organizational Chart of the Bank of Khyber

BANK OF KHYBER

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

BANK OF KHYBER

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.

BANK OF KHYBER

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.

BANK OF KHYBER

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.

BANK OF KHYBER

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 OF KHYBER)

W-O

Environmental threats

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.

RATIO ANALYSIS OF THE BANK OF KHYBER

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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%

BANK OF KHYBER

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 388110000008106479.452 9287709.589

= 3865.91 4178.74

4) Production cost of sales Average daily sales

1897816000 23903880008106479.452 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 7194530008106479.452 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 yearTotal number of shares

137348000 (637183000)500400148 500400148

= 0.27/- 1.27/-

BANK OF KHYBER

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 Assets Average Daily sales

28832410000 355185190008106479.452 9287709.589

=3556.71 3824.24

InterpretationBank is earning benefit in 2009beacuse in 2009 more average daily sales is generating as compare to 2008.

BANK OF KHYBER

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)




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)




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)




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

BANK OF KHYBER

Relative Market Share= 0.003 times

Industry Growth Rate:-Sum of 2007 = 14047171Sum of 2008= 15563015Growth 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 for doing their consumer analysis,

1. Islamic Banking2. Deposits3. Microfinance4. 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 and regulations 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

BANK OF KHYBER

BUYING BEHAVIOUR

High involvements Low involvements

Significant Differences

No Significance Differences

ComplexDeposits

MicrofinanceAgriculture

credit

Variety Seeking

Resonance Reducing

Habitual Islamic

Banking

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BUYING DECISSIONS: Customers use the following methods while availing the products /services of the BOK.

1. Introspective method2. 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.

BANK OF KHYBER

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 the

products, services, and several schemes that they are offering.

Competitor Responses

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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. 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 and

apply 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

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Industry or technology thinking

Example:- ATM, free cheque books

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

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6. Regional bank, reliability

7. Branches, websites, telephone

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

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6. All

7. By delivering new offerings

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

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6. Customer trust increases

7. Increase business activities.

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

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6. To get satisfaction of your customers

7. Offering New schemes

ORGANIZATION: PROCESSES AND CULTURE

1. Both

2. Providing better services

3. Strictly followed

4. Yes

5. Yes

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OFFERINGS

1. Superior values and services with attractive schemes

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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.

BANK OF KHYBER