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July 11, 2013

An assignment On Management System of Bank Alfalah Ltd



Company Background

1. History:
Bank Al Falah Limited was incorporated in June 21st, 1997 as a public limited company under the   companies Ordinance 1984. The bank commenced its operations from November 1, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance 1962.

After a few years, the bank introduced its new identity of H.C.E.B after the privatization in 1997.The management of the bank has implemented strategies and policies so the bank would become a major player in the market.


By building partnership with the Abu Dhabi Group the position of the bank became stronger which allowed the bank to invest more in revolutionary technology to increase its range of products and services. This facilitates their commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers.

2. Bangladesh Chapter:
On the 16th of May, 2005 Bank Al Falah Ltd. Formally took over the Bangladesh operations of Shamil Bank Of Bahrain for US $17.88 million and renamed it to Bank Al-Falah. This was the first branch of the bank outside Pakistan. Currently there are five branches of the bank in the country, three being in Dhaka and others being in Chittagong and Sylhet.

3. Corporate Slogan:
Bank Al-falah Ltd. Promotes “The Caring Bank” as their corporate slogan. This slogan implies that this bank ensures high quality customer service to create long lasting customer relationship.

4. Mission:
To develop & deliver the most innovative products, manage customer experience, deliver quality services that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.

5. Vision:
To be the premier organizations operating locally and internationally that provides the complete range of financial Services to all segments under one roof.

6. Company Profile:

Headquarters:             168, Gulshan Commercial Area-2, Dhaka-1256.
Managing Director:     F A Masrur
Products:                      Loans, Credit Cards, Savings, Consumer Banking etc.
No of Branches:           05
Location:                       Gulshan.Motijheel, Dhanmondi (Dhaka) Agrabad (Chittagong),
                                         Mirabazar (Sylhet).
Paid Up Capital:           BDT 2000 Million
Authorized capital:      BDT 3500 Million
Revenue:                        BDT 15.783 Million [2009]
Net Income:                   BDT 3.130 Million
Website:                         www.bankalfalah.com


7. Competitive Advantages:

  • Becoming increasingly competitive.
  • Bank’s customer base is expanding and strong customer loyalty.
  • Excellent in Islamic Banking System.
  • Getting idea from customer to develop services.


Company Management System

Management means the administration and the governing body that is concerning the whole organization. All the decision and strategies are been proposed and evaluated the management of the organization. At Bank Alfalah, the management is pretty strong and there is lot centralization in the whole network of the bank. The management at Bank Alfalah has been divided into 3 major parts i.e. Board of Directors, the Top management, and the group of middle managers, supervisors and the employees.

1. The Board of Directors:
The upper most part of the management is the Board of Directors or the Executives. The Board of Directors is responsible for the first phase of the management process, i.e. planning. So, all the decisions and the strategies are being proposed and implemented under the instructions and the supervision of the board of directors or the executives. Also the policies and the overall objectives of the Bank are being proposed at this level of the organization.

2. The Top Management:
The top management involves the branch managers and the chief managers of the bank including the operations managers as well. The major responsibilities include the strategy formulating for the bank and supervising the whole staff at the branch. They define and interpret the objectives and vision and then formulate policies for their completion.

3. The middle management, supervisors and the employees:
Departmental heads constitute this level of management at Bank Alfalah. They are directly responsible for planning and controlling the activities of officers. Finally, the employee’s activities are monitored and controlled according to the desired objectives.

 

 



Management Functions

 



1. Planning:

1.1 Definition:
It is the establishment of overall strategies for achieving organization’s goals and objectives and developing a comprehensive set of plan to integrate & coordinate organization work. Bank al Falah also plan for its operation.

1.2. Type of plan:
Bank al Falah use both formal and informal type of planning. In informal planning, their planning is not written down, short term focus and specific to an organization unit. In formal planning their planning is not written down, specific long term focus & involves shared goals for an organization.                      

1.3. 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. Bank Al Falah 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 throughout Bangladesh.
  • By the end of every accounting year there is an increase in deposits. As the deposit rate during 2006 was approx 72 million and the same has been increased in 2009 by 97 million.
  • To create unit banking network in all the branches of Bank Al Falah, 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 Bank Al Falah though it has been initiated in the last fiscal year and it is very acceptable for general public. In this regard the Bank is opening specific Islamic Banking Branch under the supervision of its Islamic Banking Division.



1.4. Process of planning:

(a) 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.

(b) Strategies: Strategies of Bank al Falah are giving loans and accepting deposit.

(c) Plan: Plan of bank al Falah is short term advance and deposit.

(d) Program: Program of Bank al Falah are up to one year or more then one year advance, fixed account, current account, etc.

(e) Policies: Policies of Bank al Falah are profitability by making profitability advance and customer satisfaction by providing best services at on affordable cost.

(f) Rules: Their rules are depending upon by upper level of management according situation.

(g) Budget: Bank al Falah always met its budget.

1.5. SWOT Analysis:

 

1.5.1 Strengths:

Strengths are the core competencies of any organization & as far as BAFL 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.


1.5.2 Weaknesses:

Weaknesses are the lacking points which every organization must avoid in order to make its operational effectiveness. The weaknesses of BAFL are:

§  Hectic Working Environment.
§  Work load.
§  Lack of Self Marketing Department.
§  Low Training & Coaching.
§  Human Resource Department is not so much effective.
§  Appraisal is not done frequently.
§  Low salary packages as compared to other banks.



1.5.3 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 BAFL 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 BAL.
§  Appraisal should be conducted frequently so that employees get motivated & do their work as a loyal employee.
§  Attractive salary packages should be awarded.


1.5.4 Threats:

Though Bank Al Falah has a strong footing and maintain a good number of loyal customer, still bank has threats in various sectors. When we see the possible threats for BAFL, 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.
§  Large business parties have fewer attractions in being a client of BAFL-IBD, mainly because of excessive amount of documentation.


1.6. Porters Five Forces Model


For further analysis of Bank Al Falah environment, Porters Five Forces Analysis is also applied on the bank. This analysis takes in to consideration the following factors:

1.6.1 Availability of Substitutes:

Substitution of one product with another one increases the rivalry within an industry. Although perfect substitute of banks are not available in the market Bangladesh but people still have choices of saving or investing their money. They can either save their money at homes or put their money in the banks which give protection to their assets. Aside from saving one can invest money in stock market in form of shares / bonds or in real estate. These kinds of substitutes increase the rivalry in the banking sector.


1.6.2 Rivalry among existing firms:

There is tough competition among various banks. As variety of public and private banks are already existing in the market, offering products on competitive prices. If we look at Islamic Banking products then, Islamic Bank Bangladesh Ltd., Al Arafah Islami Bank, Prime Bank and many others are offering wide range of products in this sector in Bangladesh. The tough competition among these banks gives rise to the challenges which the competitor banks have to face. The competition among various banks increases the switching of the customers form one bank’s product to the other bank. 

1.6.3 Threat of new entrants:

The banking sector of Bangladesh has always chances of growth and competition so many new banks enter and leave the market. Mostly foreign banks step in the developing countries like Bangladesh for expanding their branches, not only this mergers between foreign and local banks take place at large scale but Bangladesh present economic condition and government instability has arose the feelings of awe and terror among most of the foreign banks to enter in the market.  In future due to uncertainty and security problems in Bangladesh investors will not be willing to invest here. Due to overall financial problems in the whole world new banks will not be entering in to the banking industry.

1.6.4 Bargaining Power of Buyers:

Bargaining power of buyer is low where the products substitutes are not available and customers are large in number. In case of banks, there are lots of other banks and banking intermediaries, having wide range of products in Bangladesh. So power of buyer in banking sector is high. The bank cannot force any customer to buy the desired product because this directly affects its reputation, but can convince its customers by giving them special discount or rewards. If we look at Bank Al Falah, we will find that the competitors are also offering products due to which customer feel in power by saying that they can go to some other bank in case of dissatisfaction.

 

1.6.5 Bargaining power of Suppliers:

As in banking sector, suppliers do not exist so there is no bargaining power of supplier.

1.7. Decision Making:
1.7.1 Top Level Managers:
Important and overall decisions of the bank are made by top level managers.
1.7.2 Regional Managers:
Make decisions at regional level.
1.7.3 Branch Managers:
Make decisions at branch level.

 


2. Organizing:

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.

2.1. Organization structure:
 Organizing structure of BAFL is composed of both mechanistic and organic to create business performance and to build competitive advantage. Major portion of BAFL organization is decentralized because managers of all levels have the power of decision.

2.1.1. Finance Department:
 Finance is responsible in terms of money in all departments or monetary policies. It is concern with more in flow of the cash that outflow of the cash in terms of BAFL. They use structured finance unit.

2.1.2. Marketing Department:
Marketing department performs different functions in term of BAFL including sales, need identification, positioning, targeting and promoting.

2.1.3. I.T Department:
This department deals with ATM network service, online banking and phone banking.

2.1.4. HRM:
HRM means to put the right people, for the right job, at the right place .HRM deals with the fair job description in BAFL. It uses road-map of HRM which helps BAFL to process human resource.

2.2. Purpose of organization:
  • Work to be done into specific jobs and department in Bank Al Falah
  • Co-ordinate diverse organization task in Bank Al Falah.
  • Establishes former line of authority in Bank al Falah.
  • Allocates and deploys organization resources in Bank Al Falah.

2.3. BAFL management chart:
 Management performs different type of functions in BAFL.

2.3.1. Chief Executive Officer:
o   Controls the whole management affairs in BAFL.





2.3.2. Executive in charge:
o   Establishing the environment of strategic planning and aware of to hold the global market.
o   Manages the HRM and assign work to individual for betterment.
o   Divide the credit in different place ways and allocation to safer place.
o   Controls the administration activities and carries on the establishment process for the betterment of BAFL.
o   Investigates the business development reports that our business gets profit or loss.
o   Analysis the audit and inspection division for efficient work.
o   His work is to divide the cards in best manner, just like debit cards, credit cards, ATM cards and Hilal cards in BAFL.
o   He did his work for internal and treasury division in BAFL.
o   Divided IT.
o   Supports the corporate and home finance.
o   Monitors the credit division.
o   Investigates the local affairs.



























3. Leading:

The leader is needed by the every field & organization , as well as the BAFL has its leader in the form of High qualified & skilled managers, which are working hardly to put the peak level as well as achieving the organization’s pre-selected goals.



The Bank Al Falah has formal way of leadership style (Formal vs. Informal).

The leaders of Bank Al Falah are Democratic. Because the major portion of bank is ‘De-centralized’ that’s why the each leader is able to use the complete power of decision making, but they are working “Collaboratively” in whole organization with each other. Al 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 (Type of leader).

The behaviors of leaders of BAFL are lies in the “Team Management”, because all the managers are doing their work collaborative with each other and also with their team of workers, they have as well (Managerial Grid).

The leader of Bank Al Falah has the following Traits & Skills in themselves (Traits of leader):
o   Decision making
o   Risk taking & Risk bearing
o   Stress taking & Stress bearing
o   Communication Power
o   Honesty
o   Strong vision
o   Inter personal skill
o   Step forward
o   Discipline
o   Believe of on equality







3.2. By contingency leadership theories:

All the leaders of BAFL are cooperative with their followers and no one possess uncooperative attitude (LPC Theory).
(Situational

As above the all leaders of BAFL are very cooperative to each other as well as with Their followers, that ‘s why they are also providing the right “Path/Direction”, after friendly, to their followers on through they and their followers could achieve their targets and goals (Goal-Path Model).

3.3. Leadership behaviors:
They provide proper schedules, direction, and guidance etc. to their followers, from through the employees can do the specific work which has been given to them, to achieving their and organizational objectives as well (Directive).
The leaders also give the proper attention on their employees and also help them in case of any trouble in achieving the targets and tasks (Supportive).

3.4. Motivation:
The leaders of BAFL use motivation to encourage their employees to achieve the best result.

3.4.1. Early Theories of motivation:
The leaders of BAFL are very well familiar with all the basic or extra needs, like physiological, safety, social, esteem and self actualization needs. That’s why they are handling their employees that they are providing the basic needs to their employees and provide them higher level rewards if the employee performs better.
The BAFL has the both type of employees ‘x’ and ‘y’ in it. So, manager motivates the employees according to their behavior. Some  of the employees of the type ‘x’ in the bank feel like hygiene from their job, That’s why managers face some difficulty to motivate them.

3.4.2. Contemporary Theories of motivation:
These theories and approaches are representing the current explanations of the employee’s motivation. These theories are; Three- needs theory, Goal-Setting Theory, Reinforcement Theory, and Equity Theory.

According to these theories, the manager of BAFL motivate their employees in the sense that their employees do the work for achievements and they behave in the best way with everyone, so to make a friendly atmosphere in the whole organization, for making a good relationship with everyone.




4. Controlling:


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

4.2. 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 Bank Al-Falah 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.

4.3. Types of Control:
Bank Al-Falah follows two types of control. One is Feed forward control in which problem is identified and resolved before accruing and another is Concurrent control in which problem is identified and resolved while that is accruing.

4.4. Division in Bank Al-Falah for Controlling:
Following are two divisions in Bank Al-Falah for controlling purpose.
Credit Monitoring Division; credit monitoring division monitor all the activities related to following areas:

o   Credit card
o   Hilal Card ( debit card)
o   Auto loans
o   Homes Loans
o   RTC
o   Money Gram

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

4.5. Control Criteria

4.5.1 Data Integrity:
  • Are the controls in place to ensure the integrity of the data?
  • Are records up-to-date and accurate?



4.5.2 Documentation:
  • Are all systems, functions, processes, procedures, programs, and activities clearly documented?
  • Is the documentation readily available for examination?
  • Are operating procedures adequate?

4.5.3 Recording:
  • Are the records shows that controls are in use?

4.5.4 Supervision:
  • Are appropriate procedures in place for assigning, reviewing, and approving work?
  • Do the employees adhere to procedures for assigning, reviewing, and approving work?

4.5.5 Authorization:
  • Are appropriate controls in place to ensure transactions and other significant activities are authorized and executed only by authorized personnel?
  • Do employees adhere to the requirements of authorization only by authorized personnel?

4.5.6 Separation of duties:
  • Are key duties and responsibilities such as authorizing, processing, recording, and reviewing separated among individuals?

4.5.7 Security:
  • Are appropriate procedures in place which limits access to resources and records to authorized personnel?
  • Do employees adhere to security procedures?



4.6. Process of control:
4.6.1 Measurement of performance:
There are two ways to measure the performance in Bank Al-Falah: Qualitative and Quantities. In measurement of performance employees of the organization are being measure qualitatively 40% and quantities 60%.

4.6.2 Comparing actual performance with standards:
Comparing the performance of the degree of variation between actual and standards performance. In Bank Al Falah following standards are set to compare actual performance.


(a) General standards:
  • Compliance with law
  • Reasonable assurance and safeguards
  • Integrity, competence, and positive attitude


(b) Specific Standards:

Team Leader
In the Bank al Falah 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 Bank Al Falah 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 Leader” but not “Transformational leader.”

4.6.3 Managerial Action:
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.
















Recommendation



Here some suggestions are given which will enable the bank to compete with other banks more effectively & efficiently.

o   Bank Alfalah Limited should properly advertise and Communicate to public about the services provided by it, so that more customers will be attracted.
o   The bank’s management should give more incentives and pay scale of officers should be revised & improved.
o   System and operations should be more defined and organized.
o   IT draw backs should be improved.
o   Administration drawbacks should be improved by the strict control of general issues.
o   Audit should be held internally. Rather there should be an Audit Department in the branch to make audit on daily basis. This can become as helpful as different banks are having this department of their own.
o   Lockers, ATM, all these facilities should be provided to attract more customers.
o   Expenditures must be control, which are very high.



















Conclusion

Bank Al Falah has a strong historical background of overcoming the challenging situation. It has strengths against weaknesses to cope with the opportunities and threats because of changing environment. It also has a strong managerial style and cares its employees.
Overall working environment in Bank Alfalah is comfortable. Management of branch cares a lot of its employees and considers them as the Asset of bank. Behavior of senior executive of bank is very polite and they are caring about the individual’s career and their growth. However management is very demanding about the targets but good reward at the achievement of assigned targets is awarded.
Employees at Bank Alfalah are quite efficient. Therefore, they work more than their working hours and it is all according to their will. It also shows their loyalty, commitment to organization. Employees are given the benefits like bonus, gratuity funds, loans, increments, and medical.
So far it is concerned; all the employees at branch are quite cooperative. They help employees to understand the activities of a bank to possible extent. Their good attitude gives employees more confidence to learn more and to ask if they have any query in their mind. However, by following suggestions discussed above, BAFL will become a strong competitor in Bangladesh.

Bibliography



  1. Principles of Management, by Robin peters & Mary Coutler
  2. Bank Alfalah, Gulshan branch, Dhaka.
  3. www.bankalfalah.com
  4. Md. Ashraful Islam, Accounts Officer, Bank Alfalah, Dhanmondi branch, Dhaka.

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