Comprehensive Analysis of Ahli United Bank's Market Environment

This report provides a comprehensive analysis of the market environment of Ahli United Bank (AUB) in Bahrain. It begins with an introduction that highlights the importance of market analysis for businesses in a competitive global landscape. The report then delves into an audit of the internal, micro, and macro environments of AUB, utilizing Porter's Five Forces to assess the competitive dynamics within the Bahrain banking industry. The PESTLE analysis is employed to evaluate the political, economic, social, technological, legal, and environmental factors impacting AUB. The impact of internal capabilities, industry dynamics (such as interest rate fluctuations), and macro factors (like inflation and economic policies) on AUB's performance are then discussed. The report concludes by emphasizing the need for AUB to enhance its forecasting and evaluation methods to improve its market position and profitability, recognizing the dynamic nature of the macro environment and the importance of adapting to customer needs and market standards. References to key academic sources support the analysis.

Running head: Analysing Market Environment 0
Analysing Market Environment
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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

Analysing Market Environment 3
and restriction on press and media. The official political parties are said to be illegal, but the
government very well authorises political societies as well as associations. The political
environment has a significant impact on the banking industry with regard to
1.2.2 Economic
There are steps being taken by the government for systematic diversification of the
revenue streams of Bahrain so as to make the economy oil-independent. Focus is being made
in the banking industry therefore, more regulations in this sector are eased. The overall GDP
of the nation has increased tremendously (Nordea, 2018). The financial sector has played a
significant role with over 100 banks in the region with a total banking asset amounting to
US$ 1887 billion by the year end 2016.
Bahrain is determined to position itself as one of the key regional players in banking
and financial services. The nation is at the lead of banking innovation as well as regulation in
the Middle East as a result of its membership at the Basel Committee of Banking Supervision
(BCBS).
1.2.3 Social
The nation is government by Islamic Law and it is the regional financial hub for
Islamic banking as well. There are high literacy levels in the nation along with growing
workforce population. This increases the employment opportunities as well. There are
openings in the banking sectors at regular intervals for the concerned job position.
1.2.4 Technological
The population here believes in advanced technology with mobile banking facilities,
high speed internet in addition to ease of doing business. Al Alhi United Bank as well as
other banks have very well incorporate advanced mobile banking technology to serve its
people better.
1.2.5 Legal
The laws in this country are very stringent with regard to doing business, whether it is
a small firm or an industrialized one. Following these laws eases the terms of doing business.
Bahrain follows a mixed legal system that is highly influenced by the Egyptian Civil, the
British common law, Penal and Commercial Codes, the custom law and the Islamic law
(sharia). The banking regulation and its compliance are easier to follow (Alhi United Bank,
2018). However, complying with these laws altogether, becomes tough for any company.

Analysing Market Environment 4
1.2.6 Environmental
Environmental factors such as pollution, oil spills, weather conditions are common in
this nation. Conducting business in this region becomes tougher due to changes in the
summer due to rise in temperature which forces the maximum number of people to move out.
However, this have less impact on banking sector, but waste management in financial sector
must be considered.
2.0 Impact of Internal, Micro and Macro
Factors
2.1 Impact of Internal Capabilities
The Alhi United Bank, with its combined resources of staff, advanced technologies as
well as solid capital has been able to attain its objectives, growth and regional expansion. The
bank has also been able to maintain solid capital adequacy and liquidity ratios. In addition to
this, it has also maintained the highest international standards of corporate governance and
abided by the required regulatory compliance.
The bank offers comprehensive commercial as well as investment banking services
and in addition to these, in the field of heavy equipment leasing and home finance, it also
offers few specialized services. It had been able to report a record profits year after year. It
has its access over 30 stock exchanges and deals in over 200 currencies as well. Thus, being a
universal commercial bank, it has been able to serve the needs of its corporate as well as
retail customers.
2.2 Impact of Industry Dynamics
The industry dynamics such as changes in the credit rate, interest rate as exchange
rates have a huge impact on the business of bank. The trends and fluctuations in these rates
imply that the bank must tighten its provisions with regard to the business products and its
service offerings to the customers.
The impact of interest rate and credit rate have a great influence on the organization
as well as on the corporate clients because maximum amount of funds is deposited by the
corporate clients (Alhi United Bank, 2018). In addition to this capital regulations also have
considerable impact on the organisation as well as on corporate clients.

Analysing Market Environment 5
Financial frictions imply that bank leverage choices become inefficient, thereby imposing a
cap on bank leverage. Any scope of withdrawal of the huge amount by these corporate clients
on account of availability of similar facilities at other banks, will have a substantial impact on
the business of Alhi United Bank.
2.3 Impact of Macro Factors
2.3.1 Inflation Rate
The macro factors such as inflation rate have substantial impact on the bank. Higher
inflation rate tends to affect the value of currency. This in turn has a ripple effect on the
banks. It also causes instability in currencies and erodes the confidence of the corporate
clients as well, particularly those from foreign countries.
2.3.2 Economic Policies
Unfavourable economic policies, due to stringent laws and regulations in Bahrain,
affect the business of the banking institutions as well. Alhi United bank is no more an
exception to it. In addition to this, the stringent laws and regulations can make the bank
curtail its business and lose corporate clients as well who are the major business of banks.
3.0 Conclusion
The above evaluation indicates that the banking industry in Bahrain faces tough
competition and Al Alhi United Bank needs to improve its forecasting and evaluation
methods so as to improve its market position as well as its bottom line. The general
environment within the economy influences the working, performance, decision making as
well as the strategy of the business corporations. Though the micro environment is vigorous,
however, the macro environment is dynamic in nature and this is why it calls for more
attention of the management. The ability to serve the customers and the capability to meet the
market standards needs to be verified by the bank at regular intervals.

Analysing Market Environment 6
References
Alhi United Bank (2018). About us. Retrieved from https://www.ahliunited.com/
Haddad, A. (2005). A new way to pay: creating competitive advantage through the EMV
smart card standard. Gower Publishing, Ltd..
Mose, A. (2016). Analysis of macro and micro environment on the marketing strategy
formulation and the influence to the competitive advantage. Academy of Strategic
Management Journal, 15.
Nordea (2018). Landeprofil Bahrain. Retrieved from
https://www.nordeatrade.com/dk/explore-new-market/bahrain/economical-context
Sheehan, M., Grant, K., & Garavan, T. (2018). Strategic talent management: A macro and
micro analysis of current issues in hospitality and tourism. Worldwide Hospitality and
Tourism Themes, 10(1), 28-41.