“CONVENTIONAL BANKING
& PRECTICES”
“Muhammad Umar”
18221554-007
Presented To:
“Mr.Usman Saeed”
• The character of a business, whether it is a sole trader,
What Is The
Character Of A
Business?
partnership or limited company, not surprisingly, is
shaped by the personal character of the individual(s) who
run the business.
• The sole trader apart, the other business structures are
heavily influenced by the ability of the individuals to
interact with each other and identify and agree common
goals and objectives.
• Once this is achieved, the real test is their capability to
work as a team to proceed in the chosen direction,
respond constructively when things go wrong, and
ultimately meet desired targets.
2
Capacity
The areas to consider here are:
• The capacity of the management.
• The capacity of the business.
• The capacity of the industry and how the business compares
with the industry norms.
• The overall effects of the economy on the business.
3
Premises
•
Does the business own or lease its premises? If the
premises are owned, is there borrowing?
•
If there is borrowing outstanding, is the business
generating sufficient profit to make capital reductions
and meet interest payments?
•
If the premises are leased, what are the terms of the
lease?
•
What is the rent and when are the rent reviews
scheduled? Is there sufficient space for the business
to expand? Are there special conditions in the lease?
•
Are these conditions acceptable to the bank?
•
Seasonality
Seasonality plays an important role in
business. Oftentimes, it is the cause of
otherwise unexplained increases and
decreases in sales. Those who lack an
understanding of an industry’s natural
cycle might misdiagnose a decline in sales,
especially if it lasts longer than two
months.
5
•
Management
Management is a process of planning,
decision making, organizing, leading,
motivation and controlling the human
resources, financial, physical, and
information resources of an organization to
reach its goals efficiently and effectively.
6
Succession
planning
•
Succession planning ensures that a business can continue
successfully after the loss (whether planned or
unexpected) of any individual manager or member of
staff, so it is vital to identify and plan for key positions in
the future.
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When considering the quality and ability of the human
resources available, the following checklist will help:
Staff
•
•
•
•
•
•
Recognition/reward schemes.
•
Training issues.
Staff morale/turnover.
Commitment.
Under-/over-staffed.
Labour relations.
Dependency on specialist skills - easily
recruited/replaced
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•
Product &
Services
A product is a tangible item that is put on the market
for acquisition, attention, or consumption, while a
service is an intangible item, which arises from the
output of one or more individuals. Although it seems
like the main distinction between the two concepts is
founded on their tangibility, that is not always the
case. In most cases services are intangible, but
products are not always tangible.
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•
•
Market
•
•
•
•
A market is a place where buyers and sellers can meet
to facilitate the exchange or transaction of goods and
services.
Markets can be physical like a retail outlet, or virtual
like an e-retailer. Other examples include the black
market, auction markets, and financial markets.
Markets establish the prices of goods and services that
are determined by supply and demand.
Does the business rely on one supplier or obtain raw
materials from a range of suppliers?
Who are the customers and what is the potential for
expansion?
Where is the business placed in the supply chain?
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•
•
Plant And
Equipment
•
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Property, plant, and equipment are also called fixed assets,
meaning they are physical assets that a company cannot
easily liquidate.
PP&E are long-term assets vital to business operations and the
long-term financial health of a company.
Purchases of PP&E are a signal that management has faith in
the long-term outlook and profitability of its company.
Is the machinery owned, leased or under hire purchase
contract?
How old is the machinery?
Will it need to be replaced?
Does it work at full capacity?
Is there any machinery that is obsolete?
Is the machinery critical?
Alternative means of manufacture.
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•
Technology
Business technology refers to applications of
science, data, engineering, and information
for business purposes, such as the
achievement of economic and organizational
goals. The main element of technology is the
idea of change, and how it can
affect business and society.
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Competition
•
Competition in business is the contest or rivalry
among the companies selling similar products and/or
targeting the same target audience to get more sales,
increase revenue, and gain more market share as
compared to others.
•
•
Who are the competitors of the business?
•
In many industries there is no longer room for
everybody; one business’s increase in customers
represents another business’s loss
What size is the business in relation to its competitors?
Can the business allow a reduction in its sales prices to
maintain its customer base or attract new customers
and at the same time continue to be profitable?
13
•
•
Before creating business plans or when evaluating
existing ones it is important to 'scan' the external
environment. This takes the form of a SLEPT analysis,
i.e. an investigation of the Social, Legal, Economic,
Political, and Technological influences on a business
Economic changes are closely related to social ones.
The economy goes through a series of fluctuations
associated with general booms and slumps in
economic activity. In a boom nearly all businesses
benefit and in a slump most lose out. Other economic
changes that affect business include changes in the
interest rate, wage rates, and the rate of inflation (i.e.
general level of increase in prices). Businesses will be
more encouraged to expand and take risks when
economic conditions are right, e.g. low interest rates
and rising demand.
Economic
Conditions
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• Social issues includes such things as demographics, in
the local market, nationally and perhaps even
internationally.
Social
Issues
•
Is unemployment an issue in the market the business
serves?
•
Is management aware of financial pressures affecting
customers and suppliers?
•
Does management know how their record on social
awareness is regarded by customers and potential
customers?
• Do they have a clear idea of the socio-economic groups
they serve?
• Do they support local initiatives and are they aware of
local attitudes?
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What is
financial
System?
•
•
•
A financial system is the set of global, regional, or
firm-specific institutions and practices used to
facilitate the exchange of funds.
Financial systems can be organized using market
principles, central planning, or a hybrid of both.
Institutions within a financial system include
everything from banks to stock exchanges and
government treasuries.
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Components
of the
Financial
System.
A financial system has five components:
1. Money
2. Banks and Development Financial Institutions
3. Financial Instruments
4. Financial Markets
5. The Central Bank
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What Sort of
impact dose
money have on
Local Trade?
•
Currency exchange rates can impact merchandise
trade, economic growth, capital flows, inflation and
interest rates.
•
Examples of large currency moves impacting financial
markets include the Asian Financial Crisis and the
unwinding of the Japanese yen carry trade.
•
Investors can benefit from a weak greenback by
investing in overseas equities.
•
Investors should hedge their foreign currency risk via
instruments such as futures, forwards and options.
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Difference
Between CPI
& WPI?
•
•
Wholesale Price Index is a measure of the
average change in the price of goods at
a
wholesale
level
or
in
the
wholesale market.
Consumer Price Index is another price
index that calculates price changes of goods
and services that a consumer has to pay for
consuming a basket of goods
19
•
Foreign trade is indispensable for the full
economic development of a country and
includes
framing
commercial
policies
conducting trade negotiations, and making
bilateral,
regional
and
international
arrangements for promotion of trade. Foreign
trade also includes all the merchandise coming
from foreign countries into Pakistan through
lawful channels under private and government
accounts via sea, air, land routes and by parcel
post, released by Customs either directly or in
the form of bonds. Goods imported and
deposited into bonds are not taken into account
Does Money Impact on
Foreign Trade? If Yes
The How?
20
What do you
Know About
the Concept of
Balance Of
Trade?
•
Balance of trade (BOT) is the difference between the value
of a country's exports and the value of a country's imports
for a given period. Balance of trade is the largest component
of a country's balance of payments (BOP). Sometimes the
balance of trade between a country's goods and the balance
of trade between its services are distinguished as two
separate figures.
•
The balance of trade is also referred to as the trade balance,
the international trade balance, commercial balance, or the
net exports.
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•
•
Use the balance of trade to compare
a country's economy to
its trading partners.
A trade surplus is harmful only
when the government uses
protectionism. A trade deficit can be
beneficial to countries that import
heavily and simultaneously invest in
economic development.
How The Balnce of
Trade effect our
economy?
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•
Financial markets refer broadly to any
marketplace where the trading of securities
occurs.
•
There are many kinds of financial markets,
including (but not limited to) money, stock, and
bond markets.
•
These markets may include assets or securities
that are either listed on regulated exchanges.
•
Financial markets trade in all types of securities
and are critical to the smooth operation of a
capitalist society.
•
When financial markets fail, economic
disruption
including
recession
and
unemployment can result.
Discuss Financial
Markets in your own
words? And Explain
their key Features.
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•
•
The money market is the trade in short-term
debt. It is a constant flow of cash between
governments, corporations, banks, and
financial institutions, borrowing and
lending for a term as short as overnight and
no longer than a year.
The capital market encompasses the trade
in both stocks and bonds. These are longterm assets bought by financial institutions,
professional brokers, and individual
investors.
Difference Between
Capital & Money
Market?
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“Thanks you”
For Your Kind
Intention
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