Strategic planning and implementation in Soneri Bank

Introduction

Soneri Bank was incorporated on September 28, 1991 the first Branch of Soneri Bank Limited formally opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on May 09, 1992. The bank now operates with 145 branches spread all over Pakistan including the Northern Areas of the country where no other private bank has ventured so far. Expansion of branches is based on a policy of maintaining a balance between the urban and rural areas with a view to offering services even in the remote areas of Pakistan. Pleasant and sophisticated atmosphere has been provided in the branches which are all fully air-conditioned and computerized.

The essence Soneri Bank business philosophy is to cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of our credit portfolio is related to export financing and credit decisions are taken within 48 hours

Mission Statement:

To develop Soneri Bank Ltd into an aggressive and dynamics financial institution having the capabilities to provide personalized service to customer with cutting edge technology and a wide range of products and during the process to ensure maximum return on assets with the ultimate goal of serving the Economy and society.

Slogan:

“We have more time for you”

Progress to Date:

Soneri Bank Ltd was incorporated in 1991 as a public ltd company with paid up capital of Rs: 300 M. Over the last 16 years it has achieved a sustained growth with a network of 90 branches across country. The equity stand at PKR 7.6bn and total asset stand at PKR 88bn at the first quarter of year 2009.

Top level management and their Names

Boards of Directors:

Chairman Legal Advisor

Mr. Alauddin Feerasta Manan Associates, Advocates

Chief Executive Officer

Mr. Safarali K. Lakhani

Directors Registered Office

Mr. Nooruddin Feerasta Rupali House

Mr. Inam Elahi Upper Mall Scheme

Mr. S. Ali Zafar Anand Road, Lahore – 54000

Mr. Abdul Hayee Registrar and Share

Mr. Shahid Anwar (NIT Nominee) Transfer Agent

Mr. Manzoor Ahmad (NIT Nominee) THK Associates (Private) Ltd.

Company Secretary Ground Floor

Mr. Abdul Hayee State Life Building No. 3

Audit Committee Dr. Ziauddin Ahmed Road,

Mr. Nooruddin Feerasta (Chairman) Karachi – 75530

Mr. S. Ali Zafar (Member) UAN: +9221-111-000-322

Mr. Shahid Anwar (Member) Fax: +9221-5655595

Mr. Abdul Hayee (Member & Secretary)

Auditors: KPMG Taseer Hadi & Co.Chartered Accountants

PLANNING

Definition

Planning defines organization goals and objectives establishing overall strategies for achieving those goals. Developing a comprehensive set of plan to integrate & coordinate organization work.

Type of plan

Soneri bank use both formal and informal type of planning

Informal

In informal planning, their planning is not written down, short term focus and specific to an organization unit

Formal

In formal planning their planning is not written down, specific long term focus & involves shared goals for an organization.

Goal/objectives:

Financial strength and profitability by making profitable advances

Customer satisfaction by providing higher quality of service at an affordable cost.

Growth by expanding branch network deposit base

Short term objective

Profitability

Long term objective

Profitability

MISSION

To develop and deliver the most innovative products, manage customers experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.

STRATGY

Strategy of Soneri Bank are giving loans and accepting deposit.

PLAN

Plan of Soneri Bank are short term advance and deposit.

PROGRAMME

Program of Soneri Bank are up to one year or more then one year advance, fixed account, current account, etc

POLICIES

Policies of Soneri Bank are profitability by making profitability advance and customer satisfaction by providing best services at on affordable cost.

RULES

Their rules are depending upon by upper level of management according situation.

BUDGET

Soneri Bank allocates its budget for the following area

1. Diversify products & services

Anticipating customer needs, Soneri is increasing its focus on new products and services through leveraging its extensive branch network. The Bank is introducing various types of financing structures tailored to the capital investment requirements of its corporate clients as well as small & medium sized enterprises.

2. Focus on consumer banking

Making use of its computerized network of branches, the Bank plans to enhance its market share and profitability via focusing on consumer banking products and services as well as integrating e-banking into its delivery channels.

3. Increase employee productivity though training & new techniques

The Bank seeks to increase employee productivity through a combination of training and

implementation of modern human resource techniques. Frequent in-house and external training programs are expected to help the Bank in maintaining and developing an efficient work force.

4. Improve credit assessment, loan monitoring & debt recovery

The management intends to improve asset quality by implementing strategies for identification, measurement and mitigation of risk, which will result in reducing the quantum of non-performing loans.

ORGANIZING

Manage work in organization but while is an organization?

An organization is a deliberate arrangement of people to accomplish some specific purpose.

Your banks, Universities is an organization, college, Govt. department all organization because they have three common characteristic.

First

Each organization has a distinct purpose this purpose is typically expressed in term of goal or set of goals that the organization hopes to accomplish.

Second

Each organization composed of people. One person working alone is not an organization and it takes people to perform the work that’s necessary for the organization to achieve its goals.

Third

All organization develops some deliberate structure so that their member can do their work.

Purpose of organization

Work to be done into specific jobs and department in Soneri Bank

Co-ordinate diverse organization task in Soneri Bank.

Establishes former line of authority in Soneri Bank.

Allocates and deploys organization resources in Soneri Bank.

Organizational Deign:

It means developing or changing an organization structure. A process that involves six elements: Work Specialization, departmentalization, Span of Control, Chain Of Command, Centralization and Decentralization, and Formulization.

Work Specialization:

The degree to which tasks in an organization are divided into separate jobs, also known as division of labor.

Work Specialization in Soneri Bank:

At Soneri Bank high work specialization exists. The whole is divided into number of repetitive task. There is division of labor according to the task specification. They perceive that work specialization is an unending tool to do work efficiently and effectively. Secondly they assume that work specialization is helpful in maintaining effective internal control, because if there is fraudulent move by any person regarding particular task, manager can counter that person on the spot. Work specialization is also helpful to maintain organization mechanism.

For Example:

In case of credit issuance if one person is responsible for checking Security Documents of pledged property and he recommend incorrect document manger of credit issuance can spot him out.

Departmentalization:

The basis by which jobs are grouped together is called departmentalization. It means the extent to which we need to divide jobs into different department.

Departmentalization at Soneri Bank:

Departments at Soneri Bank are minimal. Only few departments exist which are listed below

IT department

Credit Department

International Banking Department

Domestic Banking Department

Accounts and Audit Department

IT department facilitate all other department regarding IT services and fixing out problems of IT.

Credit department is one which provide loan to businessmen, general public and for agriculture development as well. This department provides a full range of Corporate and retail banking services with special emphasis to provide qualitative and competitive services to small and medium entrepreneurs. The department scrutinizes the whole process of issuing loan and in case of borrower default this very department is responsible to take legal action against defaulter party. A complete range of products for trade finance, is one of core banking activities of Soneri Bank

International banking department deals in import, export, foreign exchange and issue Letter of Credit.

Domestic Banking department serves in cash, government bonds and securities, deposits, and provide locker facility .A wide range of attractive saving scheme to suit all segments of investors, consumer finance scheme, and Islamic banking products catering to the needs of variety of customers.

Accounts and Audit department maintain the books of all discussed department.

Marketing activities:

There is no separate department for marketing activities rather these are presided by Executive Vice President (EVP).

HR Activities:

All affairs relating to HR are controlled by Inam Qazi. There is no separate department of Human Resource Management.

Financing Activities

Financing activities are handled at Central office Karachi.

Span of Control:

The number of employees a manager can manage efficiently and effectively.

Span of control is important to a large degree because it determine the number of levels/layers and managers in an organization. All things being equal the wider the span of control is more efficient the organization is.

Span of Control at Soneri Bank:

The span of control at Soneri Bank is usually kept short. Bank has vertical and tall span of control. According to bank correspondent sometime span of control is also dependent upon workload in the bank. More work load may lead to wide span of control.

Chain of Command:

It means the line of authority extending from upper organizational level to the lowest level which clarifies who reports to whom.

Chain of Command at Soneri Bank:

Chain of command at Soneri Bank is tall or vertical. Flow of information from top to bottom or from bottom to top is slow because information is supposed to pass from each channel. There is no direct interaction between top level managers and front line managers neither through E-mail nor through telephone regarding the exchange of information.

For Example if a branch manger wants to communicate information to BODs then 1st he will interact with Controller of Branches (COB), then COB will contact with Divisional General Manager of concerned division, then divisional GM will report to Central office and central office will send information to the Head Office or BODs.

In the same way if BODs want to contact branch manager the whole above discussed process will be followed in reverse order.

Centralization and Decentralization:

Centralization means the degree to which decision making authority lies in the hands of upper level of organization’s individuals or managers. It also means decision making with no/low input from lower employees.

Decentralization means to what extent the decisions making authority is delegated to lower level employee.

Centralization and decentralization at soneri bank:

The decision making authority is delegated to employee up to some extent. They can make their decision by using that delegated authority

For example

If a credit manager of branch has authority to sanction loan up to Rs 4 million when borrower demand is more than Rs 4 million than credit manager of that branch contact COB (controller of branch) who has authority to sanction loan above Rs 4 million, if COB recommend then credit manager will issue loan and so forth.

Formalization:

Formalization means to what extent organization jobs are standardized and the extent to which behaviors of employees are guided by the rules and procedures.

Formalization at Soneri Bank:

Formalization at Soneri Bank is high. All the rules and procedures are clearly defined covering work processes which employees are supposed to follow, And employees have less discretion over what is to be done when it is to be done and how it is to be done. Employees are expected to handle the same input in exactly the same way resulting and uniform output.

Types of Organization Design:

There are two types of organization design

Mechanistic design:

Mechanistic is a machine like structure, it is rigid and human involvement is minimums.

Organic design:

Organic structure is highly flexible, humanistic activity is maximum.

Elements of Organizational design

Mechanistic Structure

Organic Structure

Work Specialization

High

Low

Departmentalization

High

Low

Span of control

Short

Wide

Chain of command

Long

Short

Centralization

High

Low

Formulization

High

Low

LEADING

Leadership

The process of influencing a group of people toward achievement of preselected goals is called leadership.

Leader

The person who makes this purpose is who can influence other / groups of people and who has managerial authority is called leader.

The Soneri Bank has formal way of leadership style

Traits of leader

The leader of Soneri Bank has the following Traits & Skills in themselves.

Decision making

Risk taking & Risk bearing

Stress taking & Stress bearing

Communication Power

Honesty

Strong vision

Inter personal skill

Step forward

Discipline

Believe of on equality

Type of Leader

Democratic leader

The leaders, Soneri Bank have, are the types of “Democratic”. Because the major portion of bank is ‘De-centralized’ that’s why the each leader have the complete power of decision making, but the are working “Collaboratively” in whole organization with each other. All leaders of bank are involved in decision making, delighting their authority to their higher qualified employees, encouraged the participation of their employees in work and gives them opportunities coaching in well manner.

Task Structure

Every leader is giving the formal/ formalizes job or task to his employees, for getting the best result. That’s why the task structure also strong in the Soneri Bank.

CONTROLING

Controlling is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting and significant deviation.

Importance of control:

Control is very much important because it is the final link in the management function. It is the only way manager know whether organizational goals are being met or not and the reason why?

In Soneri Bank the importance of control can not be neglected because it’s a services base organization and deals with finance. Every employee in this organization has direct and indirect interaction with financial activities and finance playing the key role in the progress of the bank.

Types of Control:

Following are two main types of control.

Feed forward control:

In feed forward control problem is identified and resolved before accruing.

Concurrent control:

In contemporaneous control problem is identified and resolved while that is accruing.

Division in Soneri Bank for Controlling:

Following are two divisions in Soneri Bank for controlling purpose.

Credit Monitoring Division:

Credit monitoring division monitor all the activities related to following areas

Credit card

Debit card

Auto loans

Homes Loans

RTC

Money Gram

Audit and Inspection Division; this division in Soneri Bank conduct the internal audit at the inspections of all the activities in the Soneri Bank to insure the accuracy of work and the performance of the bank.

Control at Supervisor and Managerial Level:

At lower level in the Bank supervisor and manager ensure the proper handling of the activities and they assign the targets to their subordinates to achieves in a given time and at those bases, they asses the performance of the employee.

PROCESS OF CONTROL

Measuring actual performance

There are two ways to measuring performance in the Soneri Bank.

Qualitative

Quantities

In measurement of performance employees of the organization are being measure qualitatively 40% and quantities 60%.

Comparing actual performance with standards

The comparing performance of the degree of variation between actual and standards performance

Standards

In Soneri Bank following standards are set to compare actual performance.

General standards

Compliance with law

Reasonable assurance and safeguards

Integrity, competence, and positive attitude

SPECIFIC STANDARDS:

TEAM LEADER

In the Soneri Bank mostly every executive is working together with employer under him/her, and every manager is also working together with employer under him/her and they all are working collaboratively with each other in all the department of whole organization.

TRANSFORMATIONAL_TRANSACTIONAL LEADER

The leader of Soneri Bank is giving guide line and direction of established goals of these followers by clarifying the rate and task requirements for the best possible unit.

That’s why these leaders of bank are “TRANSACTIONAL LEADERS” but not “TRANSFORMATIONAL” leader.

GOALS & OBJECTIVES

Goals and objectives are factors through which the company’s devotion and commitment to the job can be seen. If the goals are realistic and achievable, than surely that organization is doing its job.

Soneri Bank also has certain goals and objectives which it is trying to achieve, through its various strategies and operations. The goals and objectives are mentioned below:

To create a sound base, and through efficient systems achieve modern banking through out Pakistan.

By the end of every accounting year there is an increase in deposits. As the deposit rate of during 2008 was approximately 72 Million and the same has been increased in 2009 by 97 Million.

To create unit banking network in all the branches of Soneri Bank, the end of the year. This means that all the operations of the bank, i.e. deposits to advances, imports, exports, L/C Opening, foreign currency and many more aspects under one roof, so that the customer can be facilitate in one visit.

Islamic Banking is one of the goals of Soneri Bank though it has been initiated in the last fiscal year and it is very acceptable for general public. However, there is a lot of work to do for successful implementation of the Islamic Banking Plan. In this regard the Bank is opening specific Islamic Banking Branch under the supervision of its Islamic Banking Division.

STRATEGIES

Soneri Bank has formulated certain sets of strategies to enable it to achieve its goals and objectives. These strategies are mentioned below:

1. In order to achieve its goals of creating a sound base and presence of efficient modern banking system, Soneri Bank has started operation of Automated Teller Machines (ATM) in all the major areas like Karachi, Lahore, Islamabad and other cities of Pakistan.

2. Soneri Bank is committed to building long-lasting relationships through an assertion to service excellence and providing innovative products to meet the changing needs of our valued customers. Although still in its infancy, compared to the exalted banking standards, Soneri Bank inspired by the vision of its Board and Management, has built up a strong customer base. The Bank provides a full range of banking services to corporate clients, while applying leading technologies. Today the Bank is well-positioned to provide appropriate banking services to customers.

3. The main focus is building relationships and being known by the way they do business. Management recognizes that a banking relationship requires compatibility, communication, and cooperation and that each customer deserves nothing less than full attention and available resources to meet their financial objectives.

4. Core value and corporate culture is based on the belief that superior personalized service is the most important product. Bank is in the process of getting to know customers by name and understand their business and personal financial needs. This one-on-one, personalized service quality has served as Soneri Bank unique signature since inception and continues to separate it from other financial institutions.

5. The Soneri Bank team comprises of some of the most highly skilled and professional financial experts in banking industry. Managers, lenders and trust advisors offer the unique perspective of knowing and understanding in the local economy. The Management focuses its attention on making informed and feasible economic decisions, bringing better returns and more profitability for investors and customers.

6. To acquire the reputation and status of bank which operates on international standard, Soneri Bank was to get the credit rating of Pakistan Credit Rating Agency, which gave it the AA- and A1+ in the long term and short term respectively.

SWOT Analysis of Soneri bank

Strengths

Strengths are the core competencies of any organization & as far as SONERI is concerned the core competencies of this organization are:

Target Achievement

Policies & Procedures

Controlling Standards

Priorities

Rewards & Benefits

Job Security for the Employees

Favorable, friendly & Healthy Working Environment

Documentation System is so much accurate

Accounting & Banking System is Accurate & Reliable One

Weaknesses

Weaknesses are the lacking points which every organization must avoid in order to make its operational effectiveness.

Hectic Working Environment

Work load

Lack of Self Marketing Department

Low Training & Coaching

Low incentives like bonuses overtime pay etc.

Human Resource Department is not so much effective

Appraisal is not done frequently

Low salary packages as compared to other banks

Opportunities

In fact, when we study all our weaknesses critically & deeply than we come to know that we can convert our weaknesses into strengths. So basically these are our opportunities. The opportunities for SONERI bank are:

On the job training & coaching sessions can be conducted.

Work sharing activities should be started so that a person who is working continuously for 9 hours can get relax.

Marketing department should be started in order to promote the name of SONERI.

Appraisal should be conducted frequently so that employees get motivated & do their work as a loyal employee.

Attractive salary packages should be awarded.

Threats

Though Soneri bank has a strong footing and maintain a good number of loyal customer, still bank has threats in various sectors. The threats are prevailing such as:

The conventional banks those having high growth rate and high market share are always being a threat.

There is an average not low turnover rate, mainly because of low incentives as compared to the other banks.