The Impact of Bahrain's Political Environment on the Banking Industry

Running head: Analysing Market Environment 0
ANALYSING MARKET
ENVIRONMENT
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]

Analysing Market Environment 1
Introduction- An Overview
Analysing the market environment of any organization involves a great deal of task
which are conducted so as to evaluate the overall scenario, such as the internal and the
external environment. The rise in the global competition have compelled the managers of the
worldwide companies to evaluate every circumstance and the market relevant factors so as to
cope with the changes that would be necessary to meet the regulatory standards, face the
rising competition, meet the customers demand, improve the market position, bottom line as
well as profitability.
This report involves auditing of internal micro and macro environment of Ahli United
Bank, in Bahrain along with their impact on the overall business of the company. This will be
done using diverse market analysing tools such as Porter’s Five Forces and PESTLE analysis.
In addition to this, a SWOT analysis will also be conducted by means of using the findings
from the audits.
1.0 Audit of Internal, Micro and Macro Environment of Ahli United
Bank
According to the point of view of the scholars Sheehan et al (2018), analysing the
internal, micro and macro environment of an organization is usually done for the purpose of
evaluation of the risks, challenges and threats that are faced by the management. Mose (2016)
on the other hand, contends that such analysis helps ins assessing the capability of
organizations to meet such challenges and mitigate the risks that may ascend thereof. Porter’s
5 Farces analysis will help in evaluating and understanding the forces that shape competition
within the Bahrain banking industry, particularly Ahli United Bank.
1.1 Porter’s 5 Forces Analysis
1.1.1 Suppliers Bargaining Power- Low
Suppliers of banks are the depositors, who have excess money with them as savings
as well as prefer regular fixed income and safety (Haddad, 2005). In this case, Banks are the
best place for them to deposit their surplus money. Therefore, in the banking industry, the
suppliers have low bargaining power.
1.1.2 Buyer’s Bargaining Power- High
Buyer’s have always been regarded as the kings, because banks and also other
institutions needs to provide products and services in accordance with the needs and

Analysing Market Environment 2
preference of their clients. Also, there are large number of alternative options available in
terms of banks with low switching cost from one bank to another. Therefore, power of
buyer’s is high.
1.1.3 Competitive Rivalry- High
The competitive rivalry among the Bahrain banks are high for the reason that there are
a rising number of financial institutions that have established their business and attracted the
banking clients by means of providing loans at cheaper rate and deposits at a higher rate
(Nordea, 2018). The competition among the banks are becoming fierce so as to maintain their
bottom line as well as serve the best to its customers. There are a number of insurance
companies as well as mutual fund institutions that have been established during the past few
years, which in turn have led to a decline in the sales of such products.
1.1.4 Threats of New Entrants- High
There are less statutory requirements with regard to establishment of a new venture in
Bahrain. The legal regulations are required to be followed merely by submitting certain
documents and nominal start up cost (Nordea, 2018). There are a number of public sectors,
private sector as well as foreign banks which together with the non-banking finance
corporations compete in similar business. Therefore, the power of new business competitors
are high.
1.1.5 Threats from Substitutes- Moderate
The substitute products in the banking industry include mutual funds, government
bonds, debentures, stock market and many others. A wide range of options in accordance
with the needs of the consumers give sufficient room for substitute product development.
However, there are numerous people who still prefer banking channels for their deposits and
savings. Therefore, threats from substitute is moderate.
The macro environment can be analysed using the PESTLE analysis, which will
involve a complete assessment of the political, economic, social, technological, legal and
environmental analysis of Ahli United Bank in Bahrain.
1.2 PESTLE Analysis
1.2.1 Political
The political environment of Bahrain has remained one of the most debated topics
among researchers (Nordea, 2018). It has been reported that constitutions monarchy is still
headed by King and there are a number of reports with regard to violation of human rights