Impact of Globalization on Ford Motor Company

Impact of Globalization on Ford Motor Company The motor vehicle industry offers a unique perspective on globalization because of its massive employment, huge corporations and iconic product, it seem to reflect the countries identity. GM and FORD for the united states, FIAT and Ferrari for the Italy, Toyota and Honda for Japan. Globalization has impacted almost all the companies. Some of who managed to survive the various incidences of history like the world war and the great depression have set industry standards for the companies to follow. I am going to demonstrate the effect of globalization by taking Three instances from the Ford motor company. The following essay will try to give an insight of how political, economical, social and technological factors affected Fords strategies under the changing business environment that helped it stand out from the other rival car manufacturers in the world. Ford created some of the finest works of automobile engineering and came out with various eco-friendly innovations making it the only motor company to secure its place in the list of 100 most ethical companies of the world. About the company: Henry Ford had experienced a grand success especially with the early models like the T Model . he went on explained his business overseas and by the early 1910s, with production facilities in France, Denmark and England ,Germany and Austria. After the First World War started, Ford produced half of the cars being sold in the US. During the war, Ford produced many of its cars to serve the army. 1938: The German consul at Cleveland awards Henry Ford the Grand Cross of the German Eagle, the highest medal Nazi Germany could bestow on a foreigner By 1941, Ford became the worlds largest assembly plant owner and Ford produced from standard military vehicles, to B-24 Liberator bombers and tanks during the World War II After the WWII, was the period when Ford company developed and evolved very fast. Ford came out with latest technologies and development for their cars. During the Cold War they were the most important carmakers in the world. It was during period that the Ford Motor Company looked for other possible investments and continued to expand overseas. In 1979 they acquired a one fourth Mazda, the Japanese carmaker in 1987. Ford added Aston Martin and in 1989 Ford acquired Jaguar under its umbrella brand. Ford Motor Company onits 100th birthday in 2003 and showcased a series of special edition of cars, such as the all new Ford Mustang. Ford faced financial crisis when it reported losses of over $12 billion for the 2006 fiscal year .It led to the selling of some of the brands from the Ford group: Aston Martin, Jaguar and Land Rover. After the third Restructuring process The Way Forward, Ford started to Divest its subsidiary business in order to focus on the core FORD brand. It sold its Jaguar and Land Rover brand to Tata Automobile of India in 2008. Major events that shaped FORD in the changing global environment: 1914: Ford introduced $5 workday minimum wage double the existing rate. Background: In 1914 ford innovated the 5 dollar workday. 5 dollar was just twice the wages being paid at that time. The interesting thing about this was it was far more than the balance between demand and supply. The number of worker willing to work exceeded the required. The ford company came to be associated with good wages in 1914. This policy of high wages and mass production gave rise to a new term Fordism . Factors affecting decision: (P)olitical: Henry Ford was a strict anti-union, and believed in authoritative way of government system. (E)conomical: In the 1913 the availability of labors must have increased as the national economy and Detroit hinterland suffered a significant downturn. This is evident from the following table 1 which shows the number of people receiving the special unemployment relief in the country including Detroit increased about two third between the period of July 1912 June 1913 Fords high wage policy is in by the efficient wage theory. There are various theories for these changes like the Dual labour market theory. Although the same efficient wage theory also says the in a competitive market some people must be stuck in bad, low paid jobs or unemployed (Gintis, 1998). The alternative to the Fords offer of 5 dollar wage was unemployment or very low paid job hence can be the reason why workers showed up. (S)ocial: In 1913 Fords worker turnover rate increased to 380 percentage. High turnover rate during the twentieth century was a common problem faced by many manufacturers. The reason for dissatisfaction of labours according to ford management repost Too long hours Low wages Bad housing conditions Undesirable shop conditions . Fords method of 5 dollar wage made workers motivated, punctual. This although should have been a costly affair turned out to be profitable step for the business. The higher the wage rate offered by firms, the more effort will be supplied by the employees, with other things being the same (T)echnological: Dramatic evolution in production technology by Fords assembly line technique. The high efficiently of this system raised the importance of High worker turn over, high worker effort, and high worker quality. By 1910 two third of the fords workforce were either workmen or mechanics who were over rated as highly skilled or skilled this was because ford was not a manufacturing company rather assembling company. This problem was suppressed by 1996: Ford certifies all plants in 26 countries to ISO 9000 quality and ISO 14001 environmental standards Background: World War II gave birth to the idea of quality assurance. The first formal quality control programs in the world was instituted by the United States Defense department , in order to deal problems related to manufacturing of defense equipment as quality was the main consideration. Industry standards then became popular and reached the other parts of the world. They formed the basis for a set of quality assurance standards which was adopted by the North Atlantic Treaty Organization (NATO) members . Those standards were called the Allied Quality Assurance Publication (AQAP) (http://www.referenceforbusiness.com/encyclopedia/Int-Jun/ISO-9000.html). Finally at the close of World War II, the International Organization for Standardization (ISO) was created in 1947, with headquarters in Geneva, Switzerland. ISO 9000 ISO 14001: In December 1996, Ford became the largest automotive organization in the world to receive ISO 9001 quality certification, for quality management and quality assurance. On Sept. 9, 1999, Ford Motor Co. became the first U.S. automotive company to require all of its production and nonproduction suppliers to become certified to ISO 14001 international standards for environmental considerations. Factors affecting decision: (P)olitical: Governments may have actively promoted ISO 14001 if their economies relied on exporting to countries with high levels of ISO 14001 adoption rates .United States formed the Registrar Accreditation Board (RAB) to standardize procedure for certification. The US Congress adopted the National Technology Transfer and Advancement Act requiring federal agencies to adopt International Standards where they exist, instead of creating their own. Intergovernmental networks played limited role in diffusion of ISO as it was nongovernmental regime. Adversarial legalism approach was practiced in the U.S . In this system, the parties to a controversy develop and present their arguments, gather and submit evidence, call and question witnesses, and, within the confines of certain rules, control the process. The fact finder, usually a judge or jury, remains neutral and passive throughout the proceeding. This was slow and cumbersome. Relations between environmental groups, government regulators and industry were characterized by varying levels of hostility and high levels of mistrust. (E)conomic: International standards were important trends in business practice. During the Early 20th century, quality was viewed as an additional cost of production for the business. But, the quest for quality became their major consideration, as companies realized that high quality leads to more efficient and less expensive production processes. Both ISO 9000 and ISO 14001 helped companies to increase their market share. Encouragement by World Trade Organization for creation of supranational standards helped cut down barriers on trade and investment. As a consequence of which Foreign Direct Investment from international Market started pouring in. Changes were also happening at domestic levels which led to Rise in intercompany (trade within value the value chains of the company) trade Because of presence of dual trade linkage there might be a Possibility of California effect which means that if country A absorbs a significant proportion of country Bs exports, then country B can be expected to mimic or respond to the policies of country A (S)ociological: Employee morale improved as they felt part of the process. Managers and employees accepted responsibility for quality. This created better co-operation and communication among workers to do a better job and increased companies efficiency. This in turn led to improved customer satisfaction and trust. It helped reduce the need for customer audits (This can result in major savings). However, many citizen and activist groups were wary of EMS standards and viewed them as private regimes that were outside public scrutiny and claimed that adopting ISO 14001 will become a de facto condition of doing business: firms that outsource their operations sometimes require that their suppliers adopt ISO 14001. (T)echnological: Development of pollution-prevention techniques and company-specific EMSs to reduce waste production as well as disposal costs .Presence of new form of Information and technology and greater interaction among people of different countries led to the diffusion. Ford was perceived as good corporate citizens producing higher quality products. Hence, they gained goodwill that helped retain old customers while attract new ones. (L)egal: There was NO legal implication were there on the companies to adopt such standard but since EMS had become a gold standard for CSR conscious firms therefore most of the MNCs adopted them. (E)nvironmental: In the 1980s, environmental regulations on hazardous waste disposal at both the local and national levels became more stringent. This forced companies to change their method for hazardous waste disposal from placement in landfills to treatment and recycling. 2008: Ford sells Jaguar and Land Rover to Tata Motors: Background: After facing a loss of North American market share to Asian rivals like Toyota, Ford CEO Bill Ford declared to cut 25,000 to 30,000 jobs and idle 14 facilities by 2012 thus declaring the resurgence of Ford Motor company.. Bill Ford had instituted a Revitalization Plan in 2002, after the automaker lost $5 billion a year earlier. But the plan failed to meet the goals set for 2005. Later in 2006 the new CEO Allan R. Mulally announced the Third restructuring plan known as The Way Forward. The targeted areas of improvement were marketing and sales, Technology development and Human resource. Factors affecting decision: (P)olitical: Allan R. Mulally succeeded Bill Ford as the new president CEO of Ford Motor Company on September 5, 2006. on September 5, 2006. One of Mulallys first decisions at Ford was to bring back the Taurus nameplate. (E)conomical: Ford reported a loss of 1.2 Billion Dollar with a decrease in the market share from 23.7% to 15.5% since the year 2000.It faced tough competition from Asian manufacturer such as Toyota which had manufacturing capacity of over 1.5 million vehicles in North America alone. High prices of oil posed a threat that global economy might slip into recession and would create high uncertainty for the business as customers were switching over from sport utility vehicles to smaller, more fuel efficient cars. Because of high increase in labour and material costs, United States parts manufacturing company like Delphi declared bankruptcy in 2005. Ford did not want to sell its jaguar and land rover brand to similar automaker company which had wide range of product in order to avoid competitive pressures on fords other auto lines. (S)ocial: Stringent relationship between united auto workers and American car maker as the domestic car manufacturers bore the burden of heavy pension and health care costs. This was the scenario for both for current and retired workers, as stipulated in contracts with the UAW. This was not the case with Japanese manufacturers. UAW member at fords allowed non union workers to perform certain tasks and did not pay them even for overtime some of which fell on weekends and furthermore 6000 salaried jobs were cut in September, 2006 and additional 30,000 jobs scheduled for 2012. Customer purchases are driven by perceived value derived from brand reputation and an individuals personality and living standards, lack of differentiation between Ford, Lincoln and mercury brands resulted in cannibalization of sales. (T)echnological: U.S governments new rule in august, 2005 brought a change in the existing fuel efficiency standards. Though ford lacked innovation in mid sized and small cars it projected that by 2015 one half of the vehicles on road would have a six speed automatic transmission, which would result in increased mileage. (E)nvironmental: Pressure from environmentalist on car and truck manufacturers to clean up emissions by adopting to fuels like bio diesel, electric motors, compressed natural gas and solar energy. How globalization  impacted FORD: We see from the examples globalization effected fords strategies from the time it was setup till date. They were able to maintain their competitive advantage over the other companies either by innovating new technologies likes the assembly lines, approaching to new International standards or by focusing on the core Ford brand. By adapting such processes, FORD motor company contributed toward Corporate social responsibility and created remote social value in the eyes of the customers. Although there is some probability of window dressing and a quest for better profits. These can be understood by strategic behavior theories like market imperfections (Stephen Hymer (market imperfections, 1960s) and role of oligopolies (Market Imperfections, 1960s). Which explain that MNCs expand abroad ,exploit specific advantages over their rivals and remove conflicts with their rivals. (IBE, Lecture 8, slide 33) The Ford company explored new horizons of business across cross border market either by value crating or value capturing activities (lecture 6 slide 31). Expanding overseas specially towards emerging economies may not only increase corporate profits and shareholders returns but also provide employment to host countries and develop these economies at the base of the pyramid all of which have noble CSR dimensions. Ford quickly merged and acquired some of the big brand under its umbrella and came out come with some best of the cars leaving a long lasting impression on the consumers. Despite of debate, Globalization has led to a greener and safer environment where MNCs are under continuous process of giving their consumer even better products and creating flagship cars.

Future of Cultural Diversity

This paper is intended to voice my hopes on the future of cultural diversity and explain how we could use the knowledge of each other’s culture to build humanity and to bring about social reform for all people. It will also give examples of diversity challenges and opportunities. The world as we know it has 6. 76 billion people, with Asia accounting for over 60% of the world’s population. These numbers certainly mean that the world that we live in has a diverse group of people and these people make up thousands of ethic groups, with each in the group different. Our differences require us to value different learning styles and to understand and identify each other’s work and social and lifestyles. Cultural differences in groups of people determine what language they speak, how they dress, their traditions, their concept of values and morals and how they interact with each other and the environment as well as how they are treated. Culture influences how people manage their daily lives. According to the Universal Declaration on Cultural Diversity, UNESCO (2001), culture is defined as, â€Å"the set of distinctive spiritual, material, intellectual and emotional features of society or a social group. It encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs. † Our culture influences our choices and lifestyles for many years and for some, for life because some people maintain their attachment to their beliefs and a particular way of living throughout their lives. I have discovered when a society is not allowed to socialize beyond their immediate contexts, they lack socially, politically and their choices in life do not include wide ranges of options. I believe that is it important to experience the cultures of others because those experiences tend to broaden an individual’s life, allows them to become more balanced, well rounded individuals and expands their range of choices in life. I remember particularly when I lived in the Adams Morgan neighborhood about five years ago was when I truly gained an appreciation for the culture the Asians and Latinos. I enjoyed their foods, styles of dress, form of entertainment and learned to understand their belief and their value systems. I also came to understand their blight with having to struggle with poverty and a language barrier and a lack of understanding of American culture. I remember particularly while serving as President of my condo association, one Latino family knocked on my door to report that their light bulb in the kitchen needed to be replaced. I had to gently tell them that now that they owned their unit, it was their responsibility to change their florescent light bulb in their kitchen and went on to tell them they could purchase one at the local home depot. Yet for other, they saw homeownership as a vehicle to gain financial and social acceptance in the states. During my research to write this paper, I have discovered that it is critically important to be culturally sensitive to other’s beliefs, especially in the work environment. Showing cultural sensitivity to others shows that we care about people and are concerned about human expansion. People have a human right to have their own cultural experiences and interests because that is what is essential to their human survival. Freedom of religion and/or religious expression is a fundamental human right under the U. S. Constitution. It is the right of an individual to worship publicly or privately in practice and observance of whatever religion they choose. By understanding why a person believes in a particular faith provides us with insight into that faith and helps us to understand whey people do certain religious rituals At Honda, one of the nation’s leading automakers, their top recruiters make it a point to hire a diverse staff. All of their employees are encouraged to learn Japanese so that they can communicate effectively with their suppliers and clients. Having a diverse workforce has its advantages, as it allows more creativity and sensitivity to solving problems more effectively. According to a business publication â€Å"Cultural Diversity and your future†, when companies hire people from different cultural groups in the community, their public image improves. When a company broadens their scope of hiring, it increases competition because an employer will get the best candidates from many different ethic groups. Employees benefit as well because they are now put in a position to communicate the benefits of a product to their clients of the same ethic background. My daughter who is an Attorney, was recently hired to work in a law firm in Greenbelt, Maryland, not only because of her competence, but because the firm did not have any African American Attorneys. Shortly after, the firm also hired an Asian female who would be able to serve their Asian clients. Since hiring the two mentioned above, business had increased for the firm. In conclusion, we live in a world of different cultures, race, ethnicity and religious beliefs. Embracing cultural awareness does not imply that we adopt a person’s moral beliefs, but rather allows us to find out what people believe in, why they believe and use that knowledge to find out what makes sense to the people we serve or encounter daily. My belief is that we should not avoid cultural interaction but openly embrace it as it can reveal better ways of challenging harmful cultural practices and belief as well as strengthen positive ones and sharing those beneficial cultural practices throughout the world.

Philosophy Questions Essay

Question One A causal claim, by definition, is a statement about the causes of things. Regular (non-causal) claims are considered to be any declarative statement. While the regular claim can simply be made about anything as long as it is a declaration, causal statements require a certain sense of cause and effect. Causal claims examine the complex processes in which people, forces, events, and other things interact to cause certain phenomena. Causal claims rarely are proven due to the different things that may happen to cause things. Feedback: I agree with the answer because causal claims are definitively hard to prove. It depends on how you look at the event in question. Impartiality is a virtue when exploring causal claims and is often hard to keep when personally involved in the matter. Question Two A real life example of common thread reasoning in advertising is Listerine. Listerine is a mouthwash that claims to kill more germs than any other leading mouthwash. In actuality, mouthwash does not actually kill germs and the rate of germs killed does not meet FDA standards for antiseptics. The common thread would be that all mouthwashes claim to kill germs and they really do not. Most of them also claim they are antiseptics when they do not meet current FDA standards. Feedback: Listerine is a mouthwash which makes false claims as does many mouthwash companies. The common theme among these companies is their determination to market a product with falsehoods. If all of these companies make false claim, then what are they to be called?

Political Instability And Electric Shortage Finance Essay - Free Essay Example

Sample details Pages: 28 Words: 8369 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The project is about the factors causing SME Loans to decline as percentage of JS Banks total advance. JS Bank is a subsidiary of JS group. The project devises the complete research on why decrease advances for the JS bank. Don’t waste time! Our writers will create an original "Political Instability And Electric Shortage Finance Essay" essay for you Create order JS bank is the emerging bank which is providing high quality of services with the primary objective of customer satisfaction. This project is on different type of research respect to small and medium enterprises and analysis of JS bank financial statements and compare with two competitors. The performance of the bank from all the perspective including marketing finance and management have been evaluated and necessary recommendations have been presented in order to achieve the ultimate goals and objectives of the JS bank and conclude that government should improve their performance against Small and Medium Enterprises. SME plays an important role to stable the economy they also perform good in their line.JS bank decrease their advances against SME loan because of recession, political instability, and electric shortage INTRODUCTION COMPANY HISTORY JS Group  is a  financial services  group in  Pakistan. JS Group controls and operates financial services companies in Pakistan. Financial services of JS Group include  asset management,  commercial banking, company research, insurance,  investment banking,  Islamic banking,  micro finance, and  stock brokerage. JS Group also has investments throughout Pakistans economy, in the  industrial sector, technology and media sectors, commercial real estate, energy and  natural resources. JS Group has its headquarter in  Karachi  [1] Jahangir Siddiqui Co. Ltd. (JSCL) came into being in 1991.Mr. Jahangir Siddiqui emerged as the successor to the financial business and equity. This company, having a joint venture partner named as Bear Steams, was considered as one of the first companies related to securities having a Wall Street pedigree. On 10th August 1991, the company was listed in Islamabad, L ahore and Karachi stock exchange. The company has achieved a lot so far like being the financial adviser to the Hub Power Co. Ltd(for its equity offerings).This company has grown and diversified within the financial services to become an insurance, banking, asset management and brokerage business. In Pakistan JS operates financial services companies. Microfinance, Islamic banking, company research, investment banking, insurance, asset management and brokerage are included in its financial services. Throughout Pakistans economy like in technology, industrial and media sectors, natural resources commercial and real estates, JS group has its investments. While the headquarter is present in Karachi.  [2] Company Overview The company exhibits a complete framework of good governance it shows splendid practices regarding corporate governance. Management has a complete hold over the check and control of risks but still accepts the challenge of the growth of its business and to maintain and improve its standards.JS group has almost 160 branches which are operating in 85 countries. JS has introduced JS bank limited with different standards of banking and also the group is working with different sectors. The bank however operates in commercial banking. The five business units of JS bank are 1. Investment banking 2. Corporate banking 3. Wealth management 4. Retail banking 5. Treasury  [3] JS bank Background: JSBL is a subsidiary (64%) of Jahangir Siddiqui Co. Limited (JSCL). Mr. Jahangir Siddiqui, JS groups founder, chairs the banks seven-member BOD (excluding the CEO). Mr. Kalim Ur Rahman the new CEO has banking experience of over four decades. The bank has a well-defined organizational structure whereby the banks operations are grouped under eleven departmental heads.  [4] Addition of new branches and expanding network to 147 online branches. Focusing growth on rural and semi urban markets. JS bank are increasing their network in 79 cities which is resulting in there increase in their branches. Js bank is also increasing growth in trade related business. Side by side they have extensive growth in home remittance business which is very beneficiary for the JS to sustain a growth in this highly competitive industry. JS bank is now increasing their business by keeping pace with the technology by offering new services. JS bank emerged as the fully scheduled bank on 30th Dec, 2006 .For the government securities it has primary dealer license from The State Bank of Pakistan. The bank offers an innovative and complete range of products and services as well. The units given below are used to categorize the banks activities. Investment banking Treasury Retail Corporate and commercial banking  [5] Retail banking Retail Banking at JS Bank offers a variety of products and services for both depositors and borrowers at competitive rates. Please call or visit our Retail banking team to discuss your financial needs. You may take a snapshot of the Products Services in the menu on the left hand side of the screen. To get further details, please click on to the specific Product or Service. Please note that Zakat, w/tax, or any other tax/ conditions are applicable as per Regulations.  Ã‚  [6] Wealth management for the individual needs wealth-building solutions are offered. Personalized and independent products and services are used. Investors diff er in their nature. Some like to get a complete hold of their investments while some want the help of an advisor who is trustworthy enough to help in strategic investments. Our Wealth Management Services are for individuals looking to create, preserve and grow their wealth with the right investment solutions customized by a team of professionals. So, no matter where you are on your pathway to success, how experienced an investor you are, or how involved in your investment decisions you want to be, we have a service to suit your needs. As part of our Wealth Management Services, our product lines are divided into the following: Ban assurance Mutual Funds  [7] Corporate banking gives away the proper credit facilities and financial solutions to the individuals and the businesses. Services and products are provided accordingly keeping the needs under consideration. Bank believes to provide highest quality services to its customers. A team of client-customer relationship helps to keep a watch over the objectives. The bond with the customers is very strong and every challenge is accepted. Every corporate customer is assigned with a relationship team. Through this team the corporate customer can access the areas of JS group. Through this dedicated relationship team, customers can also access all areas of the JS Group, enabling them to benefit from a comprehensive package of banking/investment solutions. Areas of expertise include Treasury, Asset Management, Corporate Finance, Brokerage Services as well as Islamic Banking for shariah-compliant banking services. If theres a way to satisfy our customers, well find it. If theres not, well do our best to invent one  [8] Vision To provide quality and innovative range of banking services and products to our customers by a highly motivated team of professionals whilst maintaining high ethical and regulatory standards thereby, generating sustainable returns to our shareholders.  [9] Mission To be a preferred partner of our customers by providing complete financial solutions exceeding service expectations, though a single relationship via conventional and non conventional, conveniently accessible distribution channels  [10] Business activities JSCL makes investments in the growing companies of Pakistan. Its investments cover sectors like Islamic banking, asset management, insurance and security brokerage. Jahangir Siddiqui Co. Ltd. (JSCL) was incorporated under the Companies Ordinance, 1984 on May 04, 1991 as a public unquoted company. JSCL is primarily an investment company in financial services and also makes long term investments in growing companies in Pakistan. In financial services, its investments cover all sectors including commercial banking, Islamic banking, asset management, securities brokerage and insurance. JSCL also benefits from strategic long term investments including technology and media sector companies, transport and communications companies and other industrial sector companies. Other activities of the company are trading of securities, consultancy services, underwriting etc  [11] Products and Services In the investment banking sunshade, our range of activities include corporate debt origination and syndication, underwriting, coordinating as bankers to the issue, and facilitating trusteeship and agency services. Corporate Finance Advisory The Investment Banking Group provides a comprehensive range of Corporate Finance Advisory services in the Debt Capital Markets, including Mergers and Acquisitions and Project Finance Advisory. We provide independent capital markets recommendations and financial valuation and due diligence advice, or as an integral part of managing a comprehensive Advisory and Arrangement transaction. Arrangement and Placement of Securities The Investment Banking Groups distribution team is one of the markets leading corporate debt arrangers through a variety of structured and vanilla Term Finance Certificates as well as Shariah-compliant product offerings. Our solutions-oriented approach, excellent pricing, and unmatched distribution capabilities continue to mak e us one of the leading TFC arrangers in the local market, both by volume and value.Trust and Security Services A dedicated team manages and monitors various aspects of trust and security services, including acting in the capacity of a trustee or/and an agent to various corporate debt offerings and playing an active role in structuring and maintaining special purpose accounts. Underwriting We have substantial underwriting appetite for handling large capital market issues, both at Private Placement (Pre-IPO) and Initial Public Offer (IPO) stages. Till date, we have underwritten majority of the issues brought to the local markets of Pakistan. Bankers to the issue We act as Bankers to the Issue for IPO transactions, in both equity as well as debt capital markets. Despite a limited, albeit a rapidly growing, network of branches, this is a substantial business for JS Bank through a pro-active initiative in actively marketing Public Offers.  [12] Literature review Vaughan Yeager (2007) has discussed that in the Do federal home loan bank membership and advances increase bank risk taking in past few years, FHL Bank has supported the commercial banks to remove the gap between core deposit growth and loan growth in order to increase the premiums sufficiently. From 1992 to 2005 if we check the balance sheet data and the quarterly income we conclude the effect between the increased rank on the bank risk and loan bank membership. The member banks evidently exhibit risked liquidity profiles and leverages and the risk increases by dependence on advances. Member banks have no significant difference in overall risk. The high charter values of the commercial banks have been under risk around early 1990s. Charter values can quickly deteriorate in an extremely competitive environment of banking. Higher charter values in commercial banks keep a check on risk taking. Supervisors should always stay careful, while in an environment of low charter values. Onl y a careful monitoring by federal supervisors can prevent certain moral hazards, associated with funding of FHL Bank. With the increase in the bank risk and decline of the capital ratios the excess to the advantage is definitely curtailed. The FDIC should impose a fine capital charge on banks that have a larger quantity of the collateralized obligations.  [13] Limi (2003) has discussed banking sector reform in Pakistan economic scale and scope considering financial depth to be the most important factor for the stable economic growth, banking sector adds more to it at the early stage, so it should be liberalized. In the developing economies there are different public and financial institutions which also play an important role in economy. The paper focuses on the promotion of the banking sector, reconstruction through expansion of the individual bank level. In Pakistan both economies are present in banking industry, but for larger banks like MCB scale economy is reducing. One of our major burdens for banking industry in Pakistan is non performing loans. Although state owned banks are private banks differ in their technologies and objectives. By expanding their MOR gage and the services the total cost could be reduced of the private sectors. These banks are efficient of all. While the state owned banks (NCB) have the lower efficiency. There is a need to encourage the financial institutions of medium sizes. Larger banks should focus to gain the cost saving advent by diversification of business. Foreign banks and domestic banks should focus on expanding their operational sizes. Besides the negative profits foreign banks should clear the high average cost as having a branch is of more advantage in Pakistan in their whole global strategy because both the sectors i.e. state owned and private have different technologies, so they have different benefits. State owned banks on the average are out performed by private banks. So the technical efficiencies of these ban ks should be improved through sufficient measures.  [14] Basher discussed that in impact of small industries in Pakistan the importance of small industries could not be denied. It not only is beneficial for the growth of GDP of a country or for providing a number of job opportunities but also to prevent the migration of people from rural to urban regions. In the past these small industries were completely ignored. Even banks and other financing institutes helped the large-scale enterprises. So the small industries did development on their own. Though they had old machinery and unskilled workers but they tried to manage with these resources. Government really needs to pay attention towards them as they could improve the GDP of the country by producing export quality products, by producing raw materials for the large industries, utilizing their wastes even and by providing employment opportunities.  [15] Ahemed discussed that in efficiency analysis of commercial banks in Pak istan Commercial banks have an important role in developing countries like Pakistan. Their performance could be found by its efficiency measurement. Data envelopment is used for this purpose with two approaches that is CRS and VRS. Inputs and outputs of these banks could be found by intermediate approach. To bit model is also helpful. The efficiency could be defined as producing the output with the minimum input. These banks should consider in increasing their assets with decrease in their liabilities to get their higher efficiency. Moreover commercial banks which are state owned should not be privatized. Inputs of the banks are the number of its employs and operating fixed assets while outputs are investments and lending to the financial institutions.  [16] Angadi (2012) discussed that in banks advances to priority sector In Pakistan as their few financial assets the monitory policies designed for developed countries will have a very little success in Pakistan. Monitory polici es should be made for increasing efficiency; however the policies already followed are weak enough and insufficient in reaching goals. The main burden for maintain the price, stability by increasing export rates and saving is because of policies of exchange rate so a strong monitory policy has to be followed in Pakistan.  [17] Iimi (1990) discussed that in efficiency in the Pakistani banking industry the most inefficient sector is the banking industry in Pakistan. The government although has taken steps for reconstructing. The main target is the improvement of efficiency. Employs are the basic assets related to the productivity in banks, but all are suffering from over branching. So because of over staffing, banking industry is in a loss. Technical efficiency should be well trained. Recruitment should be done on the basis of experience. Pakistani banks as compared to the average level of the international efficiency will be working inefficiently thus the government has to conti nue the reconstructing.  [18] Gul, irshad zaman (2009) discussed that in factor affecting bank profitability in Pakistan this study is all about investigation of certain characteristics of bank and their input together with the effect of macroeconomic indicators on bank profitability. Banks with more capital and macro factors like economic growth and total assets have more safety and advantage which takes them to higher profitability. According to 1st hypothesis profitability is associated with microeconomic factors. While hypothesis number two says external factors have more impact on profitability both hypothesis are expected.  [19] Rashid discussed that in economic causes of political crises in Pakistan Bonaparte tried to appear as one of the patriarchal benefactor of all most all the classes. But he could not give one class besides taking from other classes. He wanted to turn labor of France to an obligation to himself. Same in Pakistan in last 3 decades conflicts amo ng certain powerful classes and contradictions could be seen. In Bhuttos rule conflicts in landowning and that of businessman industrialist class became critical. It could be seen in the present time as well. This was also found in the state of bonapratist in which state machinery also should conflicts by getting against other classes and trying to get the hold.  [20] Tuccillo, Flick ranville (2005) discussed that in the impact of advances on federal home loan bank portfolio lending Impact of the FHL bank system on the lending activities of the member institutions have been investigated in this paper. More use of advances by a member shows a high level of housing and development loans in that members portfolio, as compared to the corresponding institutions portfolio. By looking on the assets holding of the different examination patterns could be examined. The reason of these investment patterns could be determine by regression analysis. The advances could relate positively to construction, land development, agriculture and also small business loans. FHL banking system advances have provided a very strong post of the activity of its members that are obviously beneficial not only to the communities in which these institutions are doing this business.  [21] Akhtar (2006) discussed in analysis of Pakistani commercial banks the efficiency of banks in Pakistan is comparatively lower than the scores of banks present in regions like India. This paper through DEA tries to focus on assessment of efficiency in commercial banks across whole Pakistan. The comparative environment in banking industry, increasing interest rates and higher administrative rates make local banks to be efficient than the ones from abroad. In this study some managerial implications have been like improvements of efficiency level by utilization of labor and capital is an effective manner. Proper use of technology is required. Methods to maximize returns and to minimize the risks have to be used. Restructuring and branch closures should be used. A global prospective has to be adopted by local banks. The difference in the local and foreign banks could be studied by productivity growth analysis.  [22] Vaughan, Yeager stojanovic (1990) discussed that in article is the federal home loan bank system good for bank to fill the gap between core deposit growth and loan growth commercial banks have always relied on FHL banks advances. This however can undermine the market discipline. In this study the effect of the home loan bank (HLB) could be assessed on the bank risk. Similarly relationship present between the risk and advances among the number banks was also examined. The member banks do not exhibit a significant change in the overall risk and also have sensitivity of lower interest rate. There is a need for supervisors to remain careful in a high charter value environment, while in the opposite only a careful watch by a supervisor can prevent the moral hazards rela ted to funding of home loan bank.  [23] Choe (2006), has discussed that the political economy of SME financing and Japan regional bank problem in the face of analysis regional banking sector are the main focused area. Regional banking sector has the major problem of nonperforming loans against SME sector. Political intervening against sme sector was the major issue. Government helped sme sector to getting loan from banks. Government policies to get loan was easy thats why poor sme sector get loan and in result of nonperforming loans rise. According to his research government should help sme sector but without the regional banks that is not favor in banking sector. If government involve sme sector to get loan from bank with easy financing without any guarantee banks non performing loan will increase. If the same situation in any bank so should be open their branches to other region.  [24] Fidrmuc Hainz (2008) has discussed default rates in the loan market for small and med ium enterprises sme sector are playing import role to increase default rates he took the data in the year of 2000 to 2005 because in that time period there is no high interest rate and growth of loan was moderate. He said during that time only few percent of the sme sector default on their loans. But the level of default in other countries was lower than the Slovakia he said in that type of situation only macroeconomic policies would be apply. According to his research business of natural person are much better than the legal entities.  [25] Berger Udll (2006) in his research discussed that complete conceptual framework for sme finance they said in their article lending are the linkage between governments planning and sme credit policy. They said government policies helped in large sme sector verses small foreign, local and state, private. And one of the major parts of research was how lend the money to sme sector and that helped in credit availability with the help of differe nt technologies. And on other part which proves what is the effect on profit by using these types of government policies.  [26] Hassan (2012), discussed that on SME lending long term commitment toward the development industry said that in any country development and decrees unemployment SME plays vital role. Due to increase in sme sector unemployed people getting benefit of it and sme sector promote only by the better policies of lending and taxation department also play a role in that. Conclude that article in that way only sme sector improve country local problems and unemployment.  [27] Afrin,(2012) discussed in their paper standard charted bank is the reputable bank and working in Bangladesh also she said if we blame our banks they dont play a better role. In Bangladesh we see that there is high growth in GDP increase in trade they gave opportunity to unemployed person and in Bangladesh they improve their living standard. In Bangladesh there is most profitable business in banking sector SME getting loan from bank she said failure of state that doesnt mean banks are the responsible for such type of failure.  [28] Aftab khan (1999), author of this article discussed that potential role of SME sector in Pakistan and increasing trade they discussed very challenging problem in Pakistan that the sme sector are private and they dont know how to improve their polices and to get better profit in return. SME sector they think that there is same policy in all over the world and the policies remain same in long term. Small and medium enterprises play an important role in Pakistan by last 3 decade but they have the problem company director or any on higher management they are not educated and they dont know which factor change by time to time. They said sme sector they are doing better for economy of Pakistan but they should have better plan. They discussed SME sector support should be in group form they would get better benefit of it.  [29] Tango, Nyarko, Anuwa-Amarb (2005) in that article they discussed that financial challenges facing urban SME financial sector liberalization in Ghana they discussed financial sector liberalization impact on sme and sme sector they improve in the lending and improvement in collateral against loan.sme loan improve in Ghana and thats way improvement in macro and micro economic factor. In other hand government improve in investment fund.  [30] Thorsten, Asil, Maria (2008) they discussed in that article banking and small and medium enterprises around the world they compare large sector verses SME and their financing. They found that almost all sme sector funded by banks and they doing well in their business and large sector also get service from bank the difference they found was banks have different planning for SME and large sector for funding. But there is not large difference for funding on SME and large enterprises. Large firms getting finance and services with their requirements but the important point they discuss difference only in a way of developed countries and developing countries. Ishrat (2005), she discussed in conference for SME financing their issues and strategies to resolve these problems she discussed how sme getting benefit with loans and stronger the economic condition of Pakistan she said state bank play an important role for lending in sme sector banks. She said government policies and state bank both take care of SME to promote in country. Government help in to providing land electricity and the better line for trade and more focus on industrial projects both provincial and federal government helps to promote the idea of small business. She said SMEDA is doing good in the market but in some way they improve their performance they help in to train people in small business organize seminars etc . She said SME bank which was doing well but SME bank not performs alone in their task government should support in that. And she said for banks they should establish their banks in every city even small cities of the country. There are some leasing companies working in Pakistan they should improve their services and promote their program. In last she said there wider network in Pakistan for training institute they should improve their services she said unemployment and poverty is major problem in over economy and that problem terminate only in improving of SME sector. Khawaja (2003), in his article he discussed unleashing the potential of the sme sector with a focus on productivity improvements off all he give an overview of sme sector of Pakistan there problem growth and discussed why sme sector involve in potential growth of employment economy stabilize and poverty reduction. He explain sme sector and larger sector and there growth rate in 1970 to 1990 he said growth rate was improving but not fulfill the country need. Sme plays an important role in to stabilize the economy of Pakistan. He said high growth rate in larger s cale but not in sme. He prove that sme sector not fulfill the requirement of the country thats way Pakistan lies in that box where unemployment and trade balance in negative. In other hand he explain how government policies effective in promoting SME. He said government should improve their strategies against sme.  [31] FINANCIAL ANALYSIS OF JS BANK Bank have experienced a growth in its total assets mainly due to government securities but the finances have not shown such a good performances which bank needs to focus at. Capital gains F. GROWTH 2011 2010 2009 1. Total Assets 12.42% 19.48% -80.92% 2. Gross Finances -16.65% 9.58% -86.31% 3. Impaired Lending 64% 122% -0.64% 4. Investments 62.19% 59.84% -85.72% 5. Customer Deposits 28.98% 23.28% -85.24% 6. Equity 4.13% 3.54% -43.59% 32 The total assets of the JS bank have shown a significant increase during the year 2011 but this increase in the total assets is critical due to the fact that there is a decrease in the loans and advances given to the customers but there is a massive increase in the government securities which means due to the poor economic conditions prevailing in the country the demand for the credit have been shrunken down. Performance of JS Bank: The performances of JS bank in terms of ROA and ROE have shown an improvement. The bank have incurred heavy losses in the last two years of 09 and 2010 which affected the bank equity base negatively but the situation improved in 2011. The revenue of the bank from its core business of loans have been decreased due to the low credit demand and higher investments in the government treasury bills while the investment portfolio is also deteriorating which reflects poor asset quality of the bank. The bank has not invested wisely in the stocks as the gain on sale of investment has been decreased over the years. Currently, the bank is not having any liquidity issue because it has enough resources to cover its liquidity in the form of securities and cash and bank balance but at the same time the bank is losing out as the demand deposits is expense free but the bank the bank is not having enough of them. The bank is also losing out the opportunity of having profits on these idle resources . Going forward the bank can increase its demand deposits as the network of branches are increasing. During the year 2011 the bank has increased its financial performance due to the increase in the volume of the business and massive government borrowing from the commercial banks. But at the same time the bank have been affected badly by the bearish stock market of Pakistan during this period. The bank intends to increase its revenues by diversifying its cliental by focusing on dealership business, remittances and by reaching out the unreached sectors and markets as the increasing branch network would be helpful in this.  [33] Risk: JS bank risk management is very active in adopting all the practices of risk associated with banking activities which resulted into effective risk management framework which contributes mobilization and provision of banking capital. Bank risk policies are well familiar with widespread guidelines covering the credit evaluation and monitoring. Bank risk management activities are present at every level through a proper structure of policies approved by Board of Directors. Risk management committee comprises of two divisions BRMC and Audit Committee. These committees have authority to examine have check and balance on overall risk portfolio of the bank. Bank risk management is structures in this way that they not only follow the prudential regulations but also they have a compliance with the strategic goal. Asset liability committee and integrated risk management committee are operating within the established structure of banks in order to maintain and monitor the bank activities cover the weak areas and maintain the risk which is associated with every level of activity in the bank. This committee operates on a regular basis to review the market development and financial risk allied with the bank. The KIBOR plus a spread is used by the bank for the different type of load to the corporate and commercial clients while the consumer finance enables the bank to charge a relatively a higher ratio. Operational risk: The management of the bank is maintaining an adequate system of internal controls. The management has developed the control evaluation charts these policies are approved by the senior management and forwarded to the board of directors. The bank internal audit department reviews the activities and exchange them with board of directors. In 2010 JS Bank utilized Temenos T24 as its core software. Meanwhile the bank acquired the risk module but it was implemented in 2011 which further give strength to overall the risk management and internal control system of the bank to prevent any operational failure. This software also helps in the online expansion of branches of bank making it more efficient. Credit risk: The finances are around 28.68% decreased from 43.43% form 2009. The advance portfolio constitute of the textile being the highest followed by the chemical and pharmaceutical. The energy crisis has badly affected the textile sector which causes the generation of NPL from this sector. The NPLs is being devastating for the bank as the NPL as a percentage of total finances are 34% which is very alarming situation for the bank. This means beside the extensive credit and risk management framework, credit policies of the bank are failing so the credit risk of the bank is increasing. Market Risk: Market risk originates from the fluctuations in the price of securities which is a function of volatility in interest rates. Value of investments in government securities may decline or rise over given period of time because of economy changes or other events that constitute major portion of market. JS bank have very efficient trend in their investment there investment was increasing till 2011in both equity as well as in government securities. If risk is high, market conditions are not suitable and gain on sale on investment of that security is low so it can be minimized by proper Asset Allocation and diversifying which will be good for bank in every prospectus. Asset Liability Management: The investment in the government securities benefited the asset liability of the bank. A large chunk of the asset comes from the trade financing which is usually short term. The bank asset liability committee continuously monitors the position of the asset liability structure of the bank. Investment in government securities with massive amount has benefited banks Asset/Liability management because of efficient market external conditions. Funding: The main source of funding is the customer deposits which constitutes time, saving and demand deposits with almost the same percentage. The bank is also having sufficiently good amount of equity due to the issuance of the share capital. Main source of funds in JS bank was customer deposits which was 28.98% in 2011 as compared to 23.27% in 2010. It depicts the relationship maintained by bank with its customers. Bank real strength for source of funding and maintain liquidity reserve and short term lending and borrowing are done by customer deposits. This increase can be raised more by providing efficient high tech services. Increase in number of branched will help them in attracting new deposits for funding and capital needs. Capital: The banks equity to total asset has been decreased in the recent years mainly due to the provisions of the NPLs. The capital adequacy ratio has maintained and it increased due to maintenance of the tier 2 capital of the bank. Going forward the CAR is going to provide the cushion for the risk of the bank in the future. 34 RATIO ANALYSIS 2011 2010 2009 A. PERFORMANCE 1. ROE 5.29% -7.00% -10.58% 2. ROA 0.72% -1.03% -1.81% 3. Pre-Provisions Operating Profit / Avg. Equity 3.57% -8.49% -8.67% 4. Pre-Provisions Operating Profit / Avg. Assets 0.51% -1.34% -0.64% 5. Personnel Expenses-to-Total Net Revenue 91.18% 134.43% 163.89% 6. Cost-to-Total Net Revenue 91.65% 135.67% 164.02% 7. Other Operating Income / Total Net Revenue 22.31% 23.95% 31.93% 8. Taxes / Pre-Tax Profit 22.45% -34.55% -58.94% 9. Net Non-Earning Assets / Assets net of Non-Interest Liabilities 18.13% 14.97% 11.58% B. CAPITAL ADEQUACY 1. Equity / Total Assets 13.64% 14.78% 17.09% 2. Adjusted Equity (including revaluation impact) / Total Assets 13.72% 14.82% 17.19% 3. Revaluation Surplus/ (Deficit) / Adjusted Equity 0.60% 0.29% 0.57% 4. Capital Adequacy Ratio as per SBP 23.75 17.64% 23.99% C. LIQUIDITY 1. Liquid Assets / Deposits and Borrowings 64.69% 53.20% 50.75% 2. Finances / Deposits and Borrowings 34.56% 48.09% 52.96% 3. Finances / Deposits 37.61% 58.20% 65.48% 4. Demand Deposits / Total Deposits 31.85% 35.97% 30.47% 5. Export Refinance / Advances 30.02% 40.63% 37.02% 6. Finances (net of Export Refinance) / Deposits 28.80% 38.72% 45.84% 7. Government Securities / Total Assets 38.79% 27.53% 19.98% 8. Finances / Total Assets 28.68% 38.83% 42.43% 9. Lending to financial Institutions/Borrowing from Fis (net ERF) 366.8054 901.44% 3.78656 D. LOAN LOSS COVERAGE 1. IMPAIIRED Lending / Gross Finances 24.42% 12.44% 6.14% 2. Loan Loss Provisions / Impaired Lending -16.31% -27.72% -55.72% 3. Net Impaired Lending / Equity 42.98% 23.62% 6.75% 4. Net Impaired Lending / Adjusted Equity 42.72% 23.55% 6.71% E. INTERMEDIATION EFFICIENCY 1. NIMR (Net Interest / Mark-up Revenue) / Avg. Assets 4.12% 2.89% 0.69% 2. Assets Yield [Interest Earned/ Average(Earning Assets-Equity Investments)] 13.22% 15.71% 9.88% 3. Cost of Funds [Interest Expensed / Average (Deposits + Borrowings)] 7.16% 10.34% 1.97% 4. Spread 6.06% 5.37% 7.90% F. GROWTH 1. Total Assets 12.84% 19.73% -81.45% 2. Gross Finances -16.65% 9.58% -86.31% 3. Impaired Lending 64% 122% -0.64% 4. Investments 62.19% 59.84% -85.72% 5. Customer Deposits 28.98% 23.28% -85.24% 6. Equity 4.13% 3.54% -43.59% G. OTHERS 1. No. of Branches 147 126 101 2. Staff Strength 1473 1,255 1,200 35 Graphs ROE 36 By measuring how much earning a company can generate from assets, ROE offers a measure of generating efficiency. This ratio helps investors to determine whether a company is able to generate profits from investing their equity or not. In JS bank we can see form the graph that Return on equity was negative in 2009 and 2010 as they were getting no return by investing their equity in their business. But in 2011 the return was getting positive as they were able to handle their transactions and it was a result of devising their policies and regulations. ROE offers a useful signal of financial success since it might indicate whether the company is growing profits without pouring new equity capital into the business. ROA 37 ROA is a ratio which is a indicator of how a profitable company is relative to its total assets. This ratio gives the company idea as to how efficient management is at using its assets to generate earnings. In JS bank ROA trend is similar to ROE it was also negative in 2009 and 2010 but it heavily grows in 2011 which was a very good situation for the bank as they tried to get maximum return out of their assets. Thus highest value of assets shows that business is more profitable. This ratio should be only used to compare firms operating in the same industry. Total Net Revenue 38 Total revenue is income that a company receives from its normal business activities usually in the bank case these are the interest rate incomes, fees, commissions and charges. Total net revenue of JS bank consistently increased in the following years as we can see form the trend that in 2009 net revenue of JS bank was around 90 billion it increased to 130 in 2010 and it further increased to 160 in 2011. As JS bank was new in the industry and have a very high competition they still have the potential for growth as they showed up in the recent years. Liquidity/Deposits 39 JS bank was able to maintain their liquidity in terms of their deposits. This graph is showing that JS bank has no any liquidity issue right now and in 2011 they have excess liquidity which is good for the JS bank. Loan Loss Coverage 40 JS bank was able to cover their loan loses throughout form 2009 to 2011. Loan losses which occurred from default credit payments of the borrowers or the contingent liabilities of the banks. JS were having enough cushions to support up their losses. External, internal environment analysis SWOT ANALYSIS Strengths: Group Banking Service level Innovative services Client Retention Transaction Quality Employee Satisfaction Products Range Growing Branch Network Visa Debit Card Weaknesses: Branches ATM Services IT Sector Lending Portfolio Transaction Quality House Financing NPLs Lower deposit rates Non-financial risks Centralized procedures making process slow Opportunities: Islamic Banking Product Development Consumer Finance Growing Consumer Liability Advertisement Growing awareness House financing sector Foreign institutional support Growing asset base Growing Investments Secure Investments Growing Banking operations Growing customer loyalty Worldwide trend Threats: Basel III Poor Economic Condition Non-Performing Loan Government Policies Bank Failure Lack of Islamic Courts Lack of professionals Risk Management No transparency for customers Micro financial crisis High interest rate from SBP Long term investments INTERNAL FACTOR ANALYSIS STRENGHTS Weights Rating Score Group Banking 0.15 4 0.6 Services Level 0.1 2 0.2 Innovative Services 0.15 4 0.6 Client Retention 0.05 3 0.15 Transaction Quality 0.05 4 0.2 WEAKNESSES Branches 0.15 2 0.3 ATM Services 0.05 2 0.1 IT Sector 0.15 3 0.45 Lending Portfolio 0.10 4 0.4 Culture 0.05 3 0.15 Total 1 3.15 EXTERNAL FACTOR ANALYSIS OPPORTUNITIES Weights Rating Score Islamic Banking 0.2 3 0.6 Product Development 0.1 3 0.3 Consumer Finance 0.05 4 0.2 Growing Consumer Loyalty 0.15 3 0.45 Advertisement 0.10 2 0.2 THREATS Basel III 0.05 4 0.2 Poor Economic Condition 0.15 3 0.45 Non-Performing Loan 0.05 2 0.1 Government Policies 0.1 2 0.2 Bank Failure 0.05 3 0.15 Total 1 2.85 INTERNAL FACTOR ANALYSIS The biggest strength of JS bank is the group backing of the JS group to the Bank. The bank services level is satisfactory according to the customer survey conducted. While it has good client retention and the transaction quality is good while the bank is seriously need to give attention to its lending portfolio due to the occurrence of the NPLs although the NPLs have decreased and advances of the bank are decreasing but still they are eroding the profits of the bank. The bank ATM service is satisfactory and it still needs to increase the number of branches and number of ATM to gain competitive share. EXTERNAL FACTOR ANALYSIS The bank has a very big opportunity for capturing the Islamic Bank niche because the trend of Islamic banking and finance is an emerging and growing trend in Pakistan. The bank is not heavily advertising but it could have media advertising because the JS group owns a complete Media group which could help in the promotions. The JS bank should focus on product development more as it does not have diversified products in retail banking as compared to the competitors. Basel 3 is going to implemented on the banking industry in Pakistan hence JS have to meet its standards. The NPLs is indeed a threat because in Pakistan the rate of NPLs is very high. Country is passing through poor economic conditions these days hence it is affecting negatively the banking business. Competitors analysis JS bank Competitors analysis with two other banks Bank Al Habib and KASB bank in this comparison ratio analysis of both banks and get a result what is position of js bank in the market. ROE ROE of JS bank is lower as compare to its competitors ROE for the bank was 5.29% in 2011 showing an increasing trend from -10.58% in 2009. Bank Al HABIB also showed positive trend with 24.33% ROE in 2011 from 23.25% in 2009. KASB bank showed fluctuation trend declining to -85.59% in 2010 from -160.58% of 2009 and last year gained back the progressive trend to -0.10%.in Js bank has decline however it is better according to competitors major reason behind ROE is declining banking spread  [41] ROA ROA of JS bank is lower as compare to its competitors ROA for the bank was 0.72% in 2011 showing an increasing trend from -1.81% in 2009. Bank AL HABIB showed negative trend with 1.14% in 2011 from 1.00% in 2009. KASB bank showed fluctuation trend progressing to -4.69% in 2010 from -5.69% of 2009 and last gain back the progressive trend to -0.02%.JS bank has increase its asset however this is majorely due to increase in investment in government securities  [42] Liquidity Liquid asset/ deposit and borrowings Liquid asset/deposit and borrowings of JS bank is lower as compare to its competitors Liquid asset/deposit and borrowings for the bank was 64.69% in 2011 showing an increasing trend from 50.75% in 2009. Bank AL HABIB showed positive trend with 70.74% in 2011 from 57.19% in 2009. KASB bank Showed fluctuation trend progressing in 73.66% in 2010 from 71.53% of 2009 and last gain back the progressive trend to 85.55% as seen from the last ratio increase in liquid asset that is government securities i.e resulted in improve liquidity position.  [43] Finance deposit and borrowings Finance deposit and borrowings of JS bank is lower to its competitors finance deposit and borrowings for the bank were 34.56% in 2011 showing a decreasing trend from 52.96% in 2009. Bank AL HABIB shows negative trend with 36.33% in 2011from 51.09% 2009. KASB bank showed fluctuation trend progressing in 60.65% in 2010 from 51.56% and last gain back with 60.86% Finance Deposit Finance and deposit of JS bank is lower to its competitors finance deposit bank were 37.61% in 2011 showing a decreasing trend from 65.48% in 2009. Bank Al HABIB shows negative trend with 39.84% in 2011from 61.44% in 2009. KASB bank showed fluctuation trend progressing trend in trend progressing in 68.69% in 2010 from 58.29% and last gain back with 72.23% in 2011. Demand Deposit/ Total deposit Demand Deposit/ Total deposit of js bank is higher as compare to its competitors Demand Deposit/ Total deposit for the bank was 31.85% in 2011 showing a decreasing trend from 30.47 % in 2009. Bank Al HABIB also showed negative trend with 38.08% in 2011 from 43.84% in 2009. KASB showed fluctuating trend declining to 18.80% in 2010 from 18% of 2009 and last year it gained back the progressive trend to 18.85%. Export refinance/ Advances Export refinance/ Advances of JS bank is higher as compare to its competitors export refinance/ advances for the bank was 30.02% in 2011 showing a decreasing trend from 37.02% in 2009. Bank Al HABIB also showed negative trend with 17.03% in 2011 from 31.42 % in 2009. KASB showed fluctuating trend declining to 13.09% in 2010. From 14.91% of 2009 and last year it gained back the progressive trend to13.92%. Finance (net export of refinance) /Deposit Finance (net export of refinance) /Deposit of JS bank is lower as compare to its competitors for the bank was 28.08% in 2011 showing an increasing trend from 45.84% in 2009. Bank Al HABIB also showed negative trend with 33.51% in 2011 from 43.79% in 2009. KASB showed fluctuating trend declining to 59.70% in 2010. From 49.60% of 2009 and last year it gained back the progressive trend to 49.60%.finance of JS bank has increase however this increase as measured as proportion of deposit otherwise investment has increased by a greater pace. Government securities/ Total Asset Government securities/ Total Asset of JS bank is higher as compare to its competitors roe for the bank was 38.79% in 2011 showing a increasing trend from 19.98 % in 2009. Bank Al HABIB showed positive trend with 52.88% in 2011 from 39.50% in 2009. KASB showed fluctuating trend declining to 10.74% in 2010. From 17.83% of 2009 and last year it gained back the progressive trend to 12.38%.this ratio justify over explanation that js bank as shifted its business to non core activities that are investment. Finances/ total Asset Finances/ total Assets of JS bank is lower as compare to its competitors for the bank was 28.68% in 2011 showing decreasing trend from 42.43 % in 2009. Bank Al HABIB also showed negative trend with 33.29% in 2011 from 46.55% in 2009. KASB showed fluctuating trend declining to 56.33% in 2010. From 47.64% of 2009 and last year it loss back the regressive trend to 53.54%. Lending to financial institution/ borrowing Lending to financial institution/ borrowing of JS bank is higher as compare to its competitors roe for the bank was 366% in 2011 showing an increasing trend from 378 % in 2009. Bank Al HABIB also showed positive trend with 19.9% in 2011 from 14.98% in 2009. KASB showed fluctuating trend declining to 2.02% in 2010. From 61.26% of 2009 and last year it gained back the progressive trend to 61.26%. Growth Total Asset Total Asset of JS bank is lower as compare to its competitors total asset for the bank was 12.84% in 2011 showing decreasing trend from 8.24 % in 2009. Bank Al HABIB also showed negative trend with 15.17% 2011 from 40.88% in 2009. KASB showed fluctuating trend declining to -59.36% in 2010. From 27.76% of 2009 and last year it loses back the regressive trend to -99.9%. Gross financing Gross financing of js bank is lower as compare to its competitors for the bank was -16.65% in 2011 showing a decreasing trend from -86.53 % in 2009. Bank Al HABIB also showed negative trend with -15.45% in 2011 from 14.06% in 2009.KASB showed fluctuating trend declining to 3.49% in 2010. From -4.93% of 2009 and last year it loses back the regressive trend to -99.90%. Impaired lending Impaired lending of JS bank is higher as compare to its competitors for the bank was 64% in 2011 showing an increasing trend from -0.64 % in 2009. Bank Al HABIB showed negative trend with 8% in 2011 from 91% in 2009. KASB bank showed fluctuating trend declining to 5.41% in 2010. From 8.22% of 2009 and last year it loses back the regressive trend to -99.89%. Investment Investment of js bank is higher as compare to its competitors roe for the bank was 62.19% in 2011 showing an increasing trend from -85.72 % in 2009. Bank Al HABIB also showed positive trend with 52.19% in 2011 from 29% in 2009.KASB bank showed fluctuating trend declining to 5.14% in 2010. From 1.3% of 2009 and last year it gained back the progressive trend to 11.9%. Equity Equity of JS bank is lower as compare to its competitors roe for the bank was 4.13% in 2011 showing an increasing trend from -43.59 % in 2009. Bank Al HABIB showed negative trend with 10.45% ROE in 2011 from 23.27% in 2009.KASB bank showed fluctuating trend declining to -59.33% in 2010. From -46.2% of 2009 and last year it gained back the progressive trend to -1.32%. Spread Spread of JS bank is higher as compare to its competitors for the bank was 6.06% in 2011 showing an increasing trend from 7.90% in 2009. Bank Al HABIB also showed negative trend with 5.16% in 2011 from 3.18% in 2009.KASB bank showed fluctuating trend declining to 4.08% in 2010. From 3.94% of 2009 and last year it gained back the progressive trend to 5.9%.spread is decreasing because of increase in competition and survival of small banks Net impaired lendings equity Net impaired lending of JS bank is lower as compare to its competitors roe for the bank was 42.98% in 2011 showing an increasing trend from 6.75 % in 2009. Bank Al HABIB also showed positive trend with -11.34% in 2011 from -2.06% in 2009.KASB bank showed fluctuating trend declining to 23.1% in 2010. From 12.89% of 2009 and last year it gained back the progressive trend to 29.9%. Nonperforming loans are increasing due to asset quality of JS bank. Js bank should focus on improvement of asset quality via imposing 6cs (collateral, cash, characters, credit worthiness) of lendings. STRUCTURE OF THE ORGANIZATION Board of Directors Chairman Mr. Jahangir Siddiqui Mr. Mazharul Haq Siddiqui Mr. Maqbool A. Soomro Mr. Ashraf Nawabi Mr. Rafique R. Bhimjee Mr. Shahab Anwar Khawaja Mr. Basir Shamsie President Chief Executive Officer Mr. Kalim-ur-Rahman Audit Committee Chairman Mr. Jahangir Siddiqui Member Mr. Maqbool A. Soomro Member Mr. Rafique R. Bhimjee Company Secretary Mr. Muhammad Yousuf Amanullah Auditors M. Yousuf Adil Saleem Co. Chartered Accountants (Member firm of Deloitte Touche Tohmatsu) Legal Advisors Bawaney Partners Liaquat Merchant Associates Share Registrar Technology Trade (Pvt.) Limited 241-C, Block-2, P.E.C.H.S., Karachi Registered Office JS Bank Limited Shaheen Commercial Complex Dr. Ziauddin Ahmed Road P.O. Box 4847 Karachi-74200, Pakistan  [44] Research Question and Statement of Problem Area of Interest: SME BANKING The basic research design is for small and medium sector why these are not getting loan from banks Area of Research: SME FINANCING (SME LOANS) Research question: The research question is stated as: What are the factors causing SME Loans to decline as percentage of JS Banks total advances? Answer to this question will connect studying the strategies of competitors. This question will be answered by satisfying the following questions: Competitor Analysis Situation Analysis SME financing Current economic Situation of Pakistan Future prospects Strategy for SME using by the government of Pakistan Literature Review Tabulating and analyzing results Methodology Sample technique Sample frame required Size of sample needed Geographic area to which suited Relative cost Easy to explain to support workers Simple random sampling Accurate and easily access able Better with over a few hundred Concentrated if face to face content required otherwise does not matter High if large sample size or sampling frame not computerized Relatively difficult to explain 45 Simple random sampling involve you selecting the sample at random from sampling frame using either random number tables or a computer to do this Number each of the cases in your sampling frame with a unique number. The first case is numbered 0, second 1 and so on.. Select cases using random number until your actual size is reached Sample random sampling is the best used when you have an accurate and easily accessible sampling frame that list the entire population, preferably stored on computer. While you can often obtain these for employees within organization members of society are often not available for type of organization if your population cover large geographical area random selection means that selected cases are likely to disperse throughout the area.  [46] As quote above which use in methodology purpose the techniques select simple random sampling is accurate and easily approachable. Questionnaire filled in face to face and sample size was very large. Thats way questionnaire filled from thirty different type small and medium businesses. Questionnaires filled in sequence first second third and so on with using random numbering. Sample size: 30 Research type I have conducted qualitative research simple random sampling method as my thesis title suggests. It has the objective of what are the factors causing SME Loans to decline as percentage of JS Banks total advances. Data type It is primary data which gets to fill questionnaire from different small and medium firm and conducted some interview and analysis of financial statements year 2009 to 2011. I explored it for my purpose and the data I m using graphs to get my answer. Sources of data Data for financial statements has been taken from website of JS bank from 2009 to 2011. By taking an interview and fill questionnaire. Time frame Activity Start time End Time Research Proposal 27-07-12 24-08-12 Literature Review 24-08-12 15-09-12 Competitor Analysis 20-09-12 28-09-12 Questionnaire 04-10-12 14-10-12 Analysis of data collected 14-10-12 23-10-12 Fi