Alliance Bank: A Leading Financial Institution in Kazakhstan

1. Introduction
Alliance Bank is one of the leading banks in Kazakhstan, and it is the tenth largest bank in terms of assets in Kazakhstan. Headquartered of the bank are located in Almaty. Bank is developing as a universal financial institution in all lines of business, with a primary focus on retail banking and lending to SMEs.JSC Alliance Bank, has been operating for over 15 years. Recently bank has been shadowed by number of scandals, which had a negative effect on its reputation.

In February, 2009 the government appointed a new management team after its key shareholder, SAFC, rejected to support the bank in long-term. During the financial crisis Alliance Bank was the first bank to default. By 2010 its debts were restructured and government had to inject 24 billion KZT on its deposit account in order to save the bank. Since the restructuring, state-owned National Wellbeing fund Samruk-Kazyna is holding 67% of the bank’s shares. In 2012 Alliance was judged to be stable with a Standard and Poor’s rating of “B-”.

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Today Alliance’s long-term credit rating by Standard and Poor’s is stated at “D”, together with short-term rating. In 2011 bank considered talks with European Bank for Reconstruction and Development regarding the potential sale of its shares. In February 2014 bank has suffered from technical default. Later in February, the bank’s reputation suffered even more after SMS-attack on three banks about their default. Alliance Bank’s mission is to be a reliable partner for each customer and meet the best banking practice.

The basis for this statement is bank’s philosophy of meeting the needs of society as quality financial services.

Main principles of bank’s corporate culture include classical principles of fairness, trust and apolitical relation. These principles work as the basis for existence of commercial bank as a social institution, which aims to combine and unite interests of different groups of people - shareholders, employees, customers and partners. The vision of the bank is “Look at things in a new way!” The Bank’s primary business is related to commercial banking activities, granting of loans and guarantees, accepting deposits, exchanging foreign currencies, dealing with securities, transferring cash payments, as well as providing other banking services in the Republic of Kazakhstan. The main goal of the bank’s activity is to earn income through the provision of banking services, for legal and physical entities, residents and non-residents of Kazakhstan, establishment of direct contact with international institutions for the development of External Relations, improvement and strengthening of business cooperation with foreign organizations.

2. External analysis

PESTLE analysis
PESTLE analysis or PEST stands for auditing the Alliance Bank’s current environment and assessing its potential changes by looking at the organization from different angles in order to be better placed than its competitors and make plans for future events in terms of responding to the rapid changes in the macro-environment. It contains the factors such as political-legal, economic, socio-cultural, and technological. Considering and understanding all these factors that influence the business, the information about the risks associated with the situation in the market will be clarified. Moreover, using the PESTLE analysis, it is possible to maximize opportunities and minimize threats for the Alliance Bank. Political-legal forces provide information about the political situation in the country and current legislations that regulate the industry. Businesses can be affected by many aspects of government policy. In particular, all businesses must comply with the law. They must also consider the impact of any forthcoming legislation on their operations. This may require taking action before the legislation comes into effect.

Today a political factor, which would affect Kazakhstani banks, and in particular Alliance Bank, is the Ukrainian political instabilities. Russia and Ukraine have bad political relations, and it leads to trade barriers as well. As Kazakhstan is a member of Custom Union, of course, any instability in Russia could influence Kazakhstani market as well. As an example, recent devaluation of Russian Ruble will bring very negative effects in both Kazakhstan and Belarus Republic. This instability might lead to declining on the foreign investments to Alliance Bank that they were recently asking from London creditors. Also on the 26th of December 2012 the President of the Republic of Kazakhstan signed the Law "About Modification and Additions in Some Acts of the Republic of Kazakhstan concerning the Taxation". One of the amendments to the law says that from the January 1st, 2014 the conscientious taxpayers may postpone paying the accrued tax liability for not more than 3 years without having any collateral or fund for restricted cash. It will help the Alliance Bank to save the amount of money in the current period in order to invest it if needed in some other activities. Economic forces focus on the prevalent economic factors. Evaluating one of them which is the average monthly wage in Kazakhstan, the Agency of the Republic of Kazakhstan’s Statistics provides the following data: in March 2010 the average monthly wage is equal to 72 000 KZT, in March 2011 the amount is 87 000 KZT, in February 2012 it is presented as 92 000 KZT, and in February 2013 it has increased to 98 736 KZT. Such a picture of the wage growth is very positive and beneficial for the Alliance bank because the bigger amount of clients is willing deposit their money to bank accounts.

Another not less important economic factor to consider is the inflation rates. According to the Agency of the Republic of Kazakhstan’s Statistics, in 2011 the inflation rate in Kazakhstan was 7.4%, in 2012 it was 6%, and in 2013 it decreased to 4.6%. Due to recent devaluation of Kazakh Tenge, the forecast of inflation in 2014 is going to increase. The increase of inflation rates will lead to increase in interest rates, which will decrease the number of clients of the bank. Another important economic factor is GDP per capita in Kazakhstan. Kazakhstan government is putting a huge afford to improve the lifestyle and living conditions of its people. The government set two crucial strategies; Strategy2030 and Strategy2050. According to these strategies, Kazakhstan must be listed among the developed countries of the world. One of the requirements of these strategies is raising GDP per capita. According to Dosayev, the GDP per capita will reach to $14,600 and it is expected to reach to $24,000 in 2018. Accordingly, the products of the bank will become more popular among the population. Social forces are the next. In this case they may be presented as demographic trends.

Population of Kazakhstan for the 1st of March 2013 has increased by 1.4%, according to the report of the Agency of the Republic of Kazakhstan’s Statistics. Nowadays it is more than 17 million people who are living in the territory of Kazakhstan. Actually, the new migration policy for oralmans (people whose historical place to live was Kazakhstan), and people who arrive to the cities from urban areas is a good advantage for the bank. The President of the Agency of the Republic of Kazakhstan’s Statistics Alikhan Smailov noted that the average life expectancy in 2014 will be at the age of 70. According to the data for 2012 it was less and the actual number of years was 69 per person. Technology is another very important role in bank’s internal control mechanisms as well as services offered by them. Through the use of technology new products and services are introduced. It includes technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. Some of the technological changes which brought radical changes in banking industry in Kazakhstan, and especial in Alliance Bank are described below: Automated Teller Machine (ATM)

The latest developments in terms of technology in computer and telecommunication have encouraged the bank to change the concept of branch banking to anywhere banking. The use of ATM and Internet banking has allowed anytime, anywhere banking facilities.

IT Services & Mobile Banking

Today banks of Kazakhstan are also using SMS and Internet as a major tool of promotion and giving great utility to its customers. For example, SMS functions through simple text messages sent from your mobile phone.

Technology advancement has changed the face of traditional banking systems, it is even offering 24/7 banking even faster and secured service.
Alliance bank definitely should look after all technological changes in banking industry both within Kazakhstan and on International level, because
it really matters, and differentiate service of the bank.

Porter’s Five Forces

The Kazakhstan banking system has experienced many difficulties in recent years, as well as huge growth. Last year was marked by the successful completion of the restructuring of debts of the three largest banks in the Republic of Kazakhstan: BTA Bank, Temirbank and Alliance Bank, which defaulted in 2009. Nevertheless, Kazakhstan's banks currently operate in a very challenging external and internal environment which of course could reflect their financial stability, way of development in future years and their ability to find new appropriate business models. Kazakhstan's banking system suffered due to a liquidity crisis less than its peers (e.g. Ukraine, Kyrgyzstan). Measures of the Government of the Republic of Kazakhstan to maintain stability of the banking system and the infusion of funds into the capital's largest banks, had its effect - not one bank in Kazakhstan has not been declared bankrupt, the investors could easily withdraw their funds, there were no signs of the banking panic among the population. So, the main current advantage of Kazakhstan's banking system is the stability which is a very serious and necessary feature at the Commonwealth of Independent States.

Threat of New Entrants:

Banking industry deals with other people's money and financial information new banks find it difficult to start up. Due to the nature of the industry, people are more willing to place their trust in big name, well known, major banks who they consider to be trustworthy. The banking industry has undergone a consolidation in which major banks seek to serve all of customers’ financial needs under their roof. This consolidation furthers the role of trust as a barrier to entry for new banks looking to compete with major banks, as consumer are more likely to allow one bank to hold all their accounts and service their financial needs. Ultimately the barriers to entry are relatively low for the banking industry. While it is nearly impossible for new banks to enter the industry offering the trust and full range of services as a major bank, it is fairly easy to open up a smaller bank operating on the regional level. Large financial resources are needed in order to open own bank and enter on the financial market. Authorized capital must be 5 billion Tenge, except other expenses (advertising campaigns, open own office, purchasing equipment and software etc.)

Power of Suppliers:
Capital is the primary resource on any bank and there are four major suppliers (various other suppliers like fees contribute to a lesser degree) of capital in the industry. Customer deposits
Mortgages and loans
Mortgage-baked securities
Loans from other financial institutions
By utilizing these four major suppliers, Alliance bank can be sure that they have the necessary resources required to service their customers' borrowing needs while maintaining enough capital to meet withdrawal expectations. The power of the suppliers is largely based on the market, their power is often considered to fluctuate between medium to high. Suppliers for Bank are depositors and shareholders. Alliance Bank is interested in attracting outstanding depositors and principal shareholder. The main purposes are: correct invest invested funds;

to ensure payments under the deposits and the shares;
to make up owner's operating expenses;
to get a certain profit

Power of Buyers:
The individual doesn't pose much of a threat to the banking industry, but one major factor affecting the power of buyers is relatively high switching costs. If a person has one bank that services their banking needs, mortgage, savings, checking, etc, it can be a huge hassle for that person to switch to another bank. Alliance Bank has 2 million customers who have a bargaining power and can switch to any other bank due to bank’s current situation.

Availability of Substitutes:

Some of the banking industry's largest threats of substitution are not from rival banks but from non-financial competitors. The industry does not suffer any real threat of substitutes as far as deposits or withdrawals, however insurances, mutual funds, and fixed income securities are some of the many banking services that are also offered by non-banking companies. As Alliance bank primarily offers commercial banking services, it does not suffer any threat of substitutes.

Competitive Rivalry:

The banking industry is considered highly competitive. The financial services industry has been around for hundreds of years, and just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, higher rates, investment services, and greater conveniences than their rivals. There are two giant banks in Kazakhstan, Kazkommertsbank and Halyk Bank, which hold 18% and 19% of total asset of Kazakhstani market, whereas Alliance bank holds only 4%. Therefore, the above mentioned banks are the competitive rivalry of the Alliance bank’s services.

3. Internal analysis

SWOT analysis
The key factor in the bank’s strategic planning is SWOT-analysis. SWOT-analysis methodology suggests: first, to identify the internal strengths and weaknesses of the company as well as the external opportunities and threats, and secondly, to establish connections between them. The SWOT-analysis of Alliance Bank is described below.

Strengths
Weaknesses
Support of Samruk-Kazyna
Years of experience
Extensive branch network
Extensive acquiring network (ATMs, cash-in ATMs, POS-terminals) Innovative technologies
Professional bank management
Brand name recognition (recent rumors about bank default)
Low-speed service with a large flow of clients
Low-level promotion of banking products
Shrinking loan portfolio
Opportunities
Threats
The tenth largest bank in terms of assets in Kazakhstan
Development of technology (Online banking, fingerprints)
Geographic expansion
Long-term partnerships with major companies
Cover new demands of current customers
Expand the customer base
Publicly traded on KASE
Customer dissatisfaction with new banking products
Increased competition
Unstable economy of the country (possibility of a financial crisis, devaluation of the local currency, inflation) Changing legal and tax provisions
The possibility of clients default
Change in oil prices
Increased regulation of capital requirements

Strengths of Alliance bank are the characteristics of the business that give it an advantage over the competitors. These characteristics may include personnel, finance, and manufacturing capabilities and so on. Weaknesses are the attributes resources that work against a successful outcome. Strengths and weaknesses are internal attributes and the company can use its strengths to liquidate the weaknesses. For instance, Alliance Bank JSC has an extensive branch network including 19 branches and 106 cash offices in 51 cities and rural settlements of the Republic of Kazakhstan. They can use their extensive branch and acquiring network to increase the level of promotion of banking products in cities and rural areas. Another example is to use the innovative technology to deal with low-speed service when there is a large flow of clients. The bank could automatize its operations. Opportunities are the external factors the business can capitalize on or use to its advantage. Alliance bank has an opportunity to expand geographically to new markets. For instance, Kazkommertsbank has branches in different countries of Central Asian region, which allows them to expand their customer base and increase their profits. Threats are the external factors that could jeopardize the business.

External factors may include macro-economic factors, technological changes, legislation and socio-cultural changes as well as changes in the market place or in competitive position. For example, due to the recent devaluation of KZT in February, 2014 Alliance Bank customers withdrew 55 billion KZT in two weeks from the moment of the announcement of the devaluation. As explained to the bankers, since the beginning of the National Bank’s announcement of the devaluation in the period from 11 to 17 February, investors withdrew 25 billion KZT from their accounts. And after the SMS-attack, in the period from 18 to 21 February, another 30 billion were withdrawn from the bank. This amounted to one third of the deposit base. Conducted SWOT analysis helps to analyze how our Company proceeds and what kind of opportunities and strengths we have, additionally, it helps to identify what threats and weaknesses we have.

One of the basic strength of our company is experience that we have in banking industry. Alliance Bank is supported by SamrukKazyna fund, which is trust-worthy fund. Another strength is extensive branch network, which allows bank to operate in 51 cities and rural areas of Kazakhstan. Due to recent financial problems, bank is trying its best to deal with these kinds of strengths in order to overcome financial distress and possibility of new technological default. Recapitalization of bank by the government resulted in injection of 24 billion KZT. SamrukKazyna owns today 67% of shares of the bank, and bank is looking for opportunities of finding capital investors in order to buy shares of the bank.

VRIO analysis

The VRIO Analysis is an analytical technique which for each type of resource considers the following questions (evaluation dimension) for an organization as well as for its competitors. In practice, the VRIO analysis is also used in combination with other analytical techniques to help organizational management evaluate business resources in a more detailed view. For financial resources, there are many detailed financial indicators that evaluate the financial condition or performance of the business from different perspectives. Likewise, humanresources, property or information are other detailed indicators of their performance, efficiency or quality. The advantage of a VRIO analysis is its simplicity and clarity.

Value Chain

Product Development
Alliance Bank has two primary product offerings: personal banking and commercial banking. Commercial banking is the largest of these, comprising more than half of the bank’s portfolio. Commercial blends are segmented by business size and feature a combination of accounts, credit cards, lines of credit, merchant services and cash/investment management services. Personal banking blends are segmented by customer age and include services such as checking and savings accounts and credit cards. Product Support Suppliers

Alliance Bank leverages and backs up its products with hedging instruments in order to maintain a stable financial base. This involves in-house development of a diversified portfolio, market analysis of deposit versus lending activities as well as the purchase of risk-hedging tools to back its lending products. However they have to increase the efficiency of their product development. Marketing

Alliance Bank has differentiated itself within the crowded field of commercial banking through its marketing and brand-building efforts, steadfastly emphasizing customer service andalso reframing theirs as a retail organization. Alliance Bank has established a brand strongly. Over the past years, Alliance Bank has invested heavily in rebuilding a brand image which was negatively affected during the financial crisis on 2009. Alliance promotes itself as an “innovative, customer friendly retailer of financial products and services” whose aim is “to connect with the public on an individual level”. They have pursued this strategy through more traditional (TV, radio, brochures, newspapers and billboard) campaigns. Sales and Service

Service is a critical differentiator for a community bank because most financial products are homogeneous. It therefore makes sense that Alliance has made unsurpassed service a key strategy company-wide. Much like Alliance’s efforts at creating a community atmosphere, this strategy could be easily replicated by other banks. Here Allianceis afforded at least a competitive parity.

Information Technology and Human Resources

Human Resource Development and Information Technology are two underlying segments of Alliance’s value chain that support all their other lines of business. For its part, IT’s strategic relevance is limited by the simple fact that most banking platforms are acquired from third-parties due to their huge development and support costs. These platforms tend to constrain service because they are geared more towards security and stability—for obvious reasons—than flexibility. IT is therefore generally a threat to Alliance’s quest to provide innovative banking solutions. HR, on the other hand, is a strategic asset that Alliance continually employs to support their unique service culture. HR has successfully managed the organization’s culture via a variety of methods: ongoing employee development/training programs, astute hiring practices, etc.

4. Recommendation (Corporate Strategy)

Before making the recommendation concerning the Corporate Strategy, the profound analysis of the Company overview was made. Because of devaluation in Kazakhstan, the company is on the stage of technical default. Meantime, the financial sector in Kazakhstan is very vulnerable and some of the banks’ situation is becoming even worse. Alliance Bank is looking for new opportunities to get out of this situation. According to Madina Abdina, the head of Almaty branch of Alliance Bank, the bank is looking for investors to do restructure. This activity will save the bank from the bankruptcy. According to Banking Report of the Republic of Kazakhstan, Alliance Bank holds only 4% of total asset of Kazakhstani market. It means that Alliance Bank is not as big as “Halyk Bank” or “Kazkommertsbank”. Nevertheless, the company managers and employees doing their best to save their bank. One of the most optimal recommendations during this period would be to restructure the bank. When the bank returns the previous position, then it could look at other opportunities, which we will offer. We will recommend the bank to apply growth strategies. First is, through concentration strategy.

The company can launch new services within the business or expand its business through expanding its geographic locations. We will talk about this issue later in this part. The first recommendation is that Alliance Bank should sign a Strategic Alliance with market’s giants; “Kazkommertsbank” or “Halyk Bank”. According to Banking Report of the Republic of Kazakhstan, “Kazkommertsbank” and “Halyk Bank” hold 18% and 19% respectively. This would be a good chance for Alliance bank to expand its business and to have new customers, but they should offer a good proposal to those banks. Another recommendation is offering new service as a product development. According to Forbes, Insurance is one of the most profitable businesses. Of course, there are many insurance companies in Kazakhstan, but according to the World Bank, life insurance still has not developed in Kazakhstan. Therefore, Alliance Bank can open an insurance company under the financial sector. The next recommendation relates to concentration strategy. The purpose of a concentration strategy is to provide a singular focus to the product line, and the market in which the company chooses to compete.

The concentration strategy may be approached through market development or product development. In the case of Alliance bank, we recommend to concentrate on market development through geographic expansion. In today’s rapidly globalizing economy, a well-planned and properly managed geographic expansion can help a business reduce costs, gain access to new markets and fuel the company’s future growth. In his article “The Effects of Geographic Expansion on Bank Efficiency”, Berger and DeYoung note that geographic expansion may allow scale or scope efficiencies that reduce costs or enhance revenues. Linking branches, ATMs, and back-office facilities over a larger geographic area may yield network economies. A more geographically broad institution may also be better able to serve business customers that have many locations, and may have a broader menu of potential new investment opportunities outside its home market. As we can see, there are numerous advantages of geographic expansion.

In case of Alliance bank, it can open its branches in neighboring Central Asian countries, like Tajikistan and Kyrgyzstan. Known to all, those countries are the least developed countries in the region and Alliance bank is able to introduce many new things to these markets. The products and services that are not highly accepted in Kazakhstan due to a big number of good banks in this region can have a greater success in Tajikistan and Kyrgyzstan. The main reason is that the banking system is not highly developed in those countries and there is a lack of good banks there. The example of a Kazakhstani bank that expanded geographically is Kazkommertsbank. It already has its successfully operating branches in Kyrgyzstan, Tajikistan and the Russian Federation. Alliance bank has the same potential to succeed by geographic expansion. In the long term, Alliance Bank can expand to other regions of the world, access new markets and grow in the future.

5. Recommendation (Business Strategy)

Due to rapid development of technology, Alliance bank can use an opportunity of creating a more developed SMS-banking system. SMS-banking is type of mobile banking, which allows customers to operate selected banking services over their mobile phones using SMS-messaging. Alliance Bank already had implemented internet banking. Still, it is not widely used among its customers due to inconvenience of usage. Bank has to promote its online banking system and SMS-banking very actively so that customers get to know the services of bank. By developing the SMS-banking, Alliance Bank will have a chance to compete with its rivals, differentiate its services from other banks, which do not have internet-banking and SMS-banking yet. SMS-banking is well developed in international banks, as well as in Kazakhstan. One of the banks that use this system is Kazkommertsbank. Thus, Alliance Bank can differentiate its services by using one more feature to its customers. SMS-banking is very trustful, safe application that allows doing following operations:

Balance enquiry
Statement request
Fund transfer to account number
Fund transfer to mobile number
Current exchange rates information; deposit interest rates

Bank could spread new offerings, i.e. do mobile marketing through the SMS-banking, which allows decreasing the amount of funds spent for marketing. Bank could also use one of the latest tools against cyber-fraud – One-time password. OTPs are requested each time customer wants to perform transactions. Once password is used, it expires. Most of SMS-banking solutions are add-on products, which work on bank’s existing platform. Today, however, some companies develop independent applications that allow using SMS-banking. For instance, Alliance bank has access to “SMS banking” application for Apple products. The problem with this application is that it is only available for Apple products and also it is not easy to use. Ratings of users remain very low. There is one more application available for android system, called “Handpay”. This application, however, is also not easy to use, requires high speed of internet. Payment is only withdrawn for SMS-requiries sent to the bank. However, customers do not find it useful. Therefore, we suggest developing a new platform for the bank. Firstly, it will increase the safety of operations for customers. Secondly, it will allow bank to charge customers with monthly fee (200 KZT for example), which is additional source of income.

Thirdly, it will allow bank to spread information about new products without spending money for advertisement (through pull messages). Another business strategy recommendation for Alliance Bank is to introduce a new service - pension accounts. This is very convenient service for Alliance Bank subscribes because their long term clients will stay with their bank even during pension period. This service gives an opportunity for pensioners to get their pensions and make other transactions with the same account. Alliance Bank should think about new activities which differentiate them from their competitors. One of such activities is launching pension cards for free. Another activity which our team recommends to Alliance Bank is that the bank should offer pensioners to buy or order Internet transactions with lowest possible rate. Pension accounts will give Alliance Bank and additional opportunity to expand its network. 6. Recommendation (Functional strategy)

The functional strategy of the bank should be based on both recommendations on corporate and business strategies that our team offered. Different departments in the bank, such as Human Resource, R&D, Marketing and Accounting/Finance realize functional strategy. The main aim of functional strategy is to assure that corporate and business strategies implemented by the bank are successful. Alliance Bank should implement following activities for each of the above-mentioned departments:

Corporate Strategy
Business Strategy
Strategy/ Department
Strategic alliance
Insurance Company
Geographic expansion
SMS Banking
Pension account
Marketing
Think of appropriate way to deliver this message to customers Calculate efficiency of these alliance
Use Push marketing
Think of appropriate way to enter insurance market
Use Pull marketing
Contact local advertising agency to plan their marketing campaign for entering new market Use Pull marketing
Think of appropriate way to deliver this message to customers Use Push marketing
Think of appropriate way to deliver this message to existing clients Use Push
marketing
H&R

Select new manager for executive position
Hire new personnel for new company
Select and send their specialist to the new market
Hire new local people for different positions
Train the local personnel
Hire appropriate IT specialist
Teach marketing team the usage of the technology
Assign a team from existing staff
R&D
Make research before the implementation of alliance
Monitoring the efficiency of alliance
Technological leader
Research about current market on insurance industry
Technological follower

Research on the situation of the banking industry in Tajikistan & Kyrgyzstan Technological leader
Research sms-banking application and find the most appropriate and easy to use Technological follower
Technological follower
Accounting/Finance
Create pro-forma statement
Find the most appropriate investors
Find the ways to minimize the costs of opening the new business Calculate the future profits of the company
Consider the opportunity of debt financing versus equity financing Find the ways to minimize the costs of opening the new business Calculate the future profits of the company
Create pro-forma statement
Create pro-forma statement

7. Implementation
According to our recommendations, Alliance Bank should introduce; 1) Strategic alliance with Kazkomertsbank and Halyk Bank, 2) Introducing insurance company, 3) Geographic expansion under corporate strategy. Additionally, there were some more recommendations under the business strategy such as: SMS banking and pension account. Accordingly these new activities and businesses will change organizational structure of Alliance Bank and may introduce new management strategy. For signing Strategic Alliance, the bank itself will be responsible for all documentations. As for introducing insurance company, the company will have another division with responsible management. This would be the example of divisional type of organizational structure. In case of opening Alliance Bank’s branches in Tajikistan or Kyrgyzstan, the company should have a new managerial position with all functional areas in both countries.

Here, Alliance Bank showing the geographic type of organizational structure. General Manager of both country branches will rapport to CEO of company in Kazakhstan. As about introducing SMS banking, the Engineering Manager and R&D Manager will be responsible for launching this service. When this service starts operating, a new manager should coordinate this service. In case of pension account, a new manager under the CEO of Alliance Bank will be assigned. In last two activities Alliance Bank will have the combination of functional and matrix types of organizational structure. It shows that implementing our recommendations will change the organizational structure of Alliance Bank significantly. 8. Conclusion

The current situation of Alliance Bank makes the managers to think about new strategic plans in order to survive further. The company’s external and internal analyses show that company can introduce new activities and businesses which would be profitable for Alliance Bank. Our recommendations are based on analyses of SWOT, VRIO, Value Chain and PESTLE. Alliance Bank should introduce corporate strategies as Strategic Alliance with Kazkommertsbank and Halyk Bank, establishing a new Insurance Company and expanding geographically. Implementation of Strategic Alliance would take 3-5 months; establishing an insurance company would take 3-4 years; and geographic expansion would take much longer – 4-5 years. Alliance bank should introduce business strategies as SMS-banking and pension accounts. Development of the SMS-banking would take 1 year and the development of pension accounts would take 3-4 years. To successfully implement the corporate and business strategies, Alliance bank should involve all the departments of its company. Therefore, Alliance bank should have a good functional strategy. This would include involvement of Marketing, Human Resource, Research and Development, and Finance and Accounting departments. Overall, by summing up all those strategies we developed recommendations for Alliance bank which includes usage of corporate and business strategies in different situations as this would help a company to recover from the technical default and improve its current financial situation.

9. References
Berger, A. N. & DeYong, R. (n.d.). The Effects of Geographic Expansion on Bank Efficiency. Journal of Financial Services Research. Retrieved from http://www.federalreserve.gov/pubs/feds/2001/200103/200103pap.pdf Biery , M. E. (2013). The Most Profitable Businesses to Start. Forbes. Retrieved from http://www.forbes.com/sites/sageworks/2013/04/28/the-most-profitable-businesses-to-start/ Clardy, A. (2013). Strengths vs. Strong Position: Rethinking the Nature of SWOT Analysis. Modern Management Science & Engineering, 1(1). Kazakhstan commercial banking report. (2012). Business Monitor International. Kazakhstan Overview. The World Bank, (2014). Retrieved from http://www.worldbank.org/en/country/kazakhstan/overview Tatum, M. (2014). What Is a Concentration Strategy? Retrieved from http://www.wisegeek.com/what-is-a-concentration-strategy.htm Toktabayev, K. (2013). Internet Banking. Business Review. Retrieved from http://profit.kz/articles/2019/Internet-banking-2013-ili-Odin-v-banke-dnem-shest-let-spustya/ Vidyanova, A. (2014). Alliance Bank Faced Technical Default.Capital Finance. Retrieved from http://kapital.kz/finance/26763/v-alyans-banke-proizoshel-tehnicheskij-defolt.html Yertayev, Z. (2013). Position of Kazakhstani banking system today – Review. Forbes journal. Retrieved from http://forbes.kz/life/opinion/v_kakoy_zone_nahoditsya_bankovskaya_sistema_kazahstana