MGT-321: Al Rajhi Bank in International Business Report Analysis

This report provides an analysis of Al Rajhi Banking & Investment Corporation within the context of international business, specifically focusing on its operations within Saudi Arabia and the broader Gulf Cooperation Council (GCC). The report begins with an introduction to the company and the GCC, highlighting the economic cooperation among member countries. It then conducts a SWOT analysis of Al Rajhi Bank, detailing its strengths (such as a wide range of services and extensive branch network), weaknesses (including accusations of illegal activity funding), opportunities (like strong net profit growth), and threats (such as increased competition). The report further explores factors affecting Al Rajhi Bank, including government policies, economic growth, and cultural considerations. The conclusion emphasizes the bank's performance in the global market despite challenges. The report is based on the MGT-321 course and includes references to relevant academic literature.

Running head: INTRODUCTION TO INTERNATIONAL BUSINESS 1
Introduction to International Business
Name
Institution
Author’s Note

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Al Rajhi Banking & Investment Corporation
Introduction
In the year 1981 realized the formation of the Gulf Cooperation Council when their office
opened doors for operation in Saudi Arabia. The main agenda for the formation was to help
members in Arab countries to be able to grow in terms of their economic standards, which in
return would realize better living standards for the citizens (Salahuddin & Gow, 2014). The main
economic activity carried out by these countries is the mining and exportation of oil to other
countries of the world that are not members. Being that these countries have the same export, the
formation of the Gulf Cooperation Council was to give these countries the opportunity to fight
poverty and to have a common exchange value in the global market (Al-Mawali, 2015). For
Saudi Arabia, in particular, this cooperation led to economic growth due to the springing up of
many companies and industries. It is an undeniable fact that this cooperation brought many
benefits to the economy of the member countries despite the lack of a common currency (Kaya
& Tsai, 2016). One of the companies that will be discussed here is Al Rajhi Banking &
Investment Corporation.
SWOT analysis
Strengths
This is one of the most successful investment companies in Saudi Arabia. There are many
strengthening factors that have put this company in its position and maintained it there
(ElMassah, 2015). To start with, this company provides a variety of services to its customers and
with a lot of ease. Ranging from retail to corporate banking services, treasury, and investment
solutions are provided by this bank. This makes Al Rajhi bank one of the efficient banks that can

INTRODUCTION TO INTERNATIONAL BUSINESSS 3
be able to provide a lot of solutions to people's financial problems. It is able to triumph over the
competitors because of the many services such as credit facilities, personal, home, car finances,
credit cards, and a lot more range of investment products to its customers. This company has also
beaten its rivals by providing its customers with a network of branches and ATMs all over the
country and other parts of the world that makes work easier for clients to get their problems
solved. This bank got popularity when it won the Asian banker of the year award in retail and
corporate banking. On the last point of the strengths, this bank is attracting customers by its
cheap cost of funds such as free deposits (Edgar et al. 2016). This makes Al Rajhi bank one of
the most favorite for many people to bank and invest with.
Weaknesses
Some of the weaknesses of this bank that may have deterred further rise of this bank are
as follows; firstly, there are some accusations that this bank is involving in funding illegal
activities. When this kind of information got into the ears of the pubic, some of the clients, both
private and corporates, lost their trust in the bank because of this reputation. This resulted in
some withdrawing for other providers of the same services. There is a very drastic credit growth
that puts much difficulty on this bank capital count, which is resulting in this bank, tightening
some of its services and hence losing attraction to clients.
Opportunities
Some of the opportunities that this bank is relying on are; its strong net profit growth
even when the county's economy declines brought about by high oil prices, which increase
lending and depositing of money (Nusair, 2016). On the other strength, due to their lending

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culture to private companies in Saudi Arabia, this company realizes much growth in the profit.
This bank has also gone international, which gives a lot of revenue.
Threats
Despite the success of this company, it lives in fear of threats such as increased
competition from other Islamic states. This denies this bank the monopoly and puts it in a state of
stiff competition. The other threatening factor to this company is the damage of the reputation
made by the allegations of the US senator that the bank is funding illegal activities that can lower
their rates. To conclude, there has been increased competition in the lending environment of
Saudi Arabia. This will lead to a reduction in lending and, at the same time, reduces profits.
Factors affecting Al Rajhi bank
Many factors have affected a lot of companies in Saudi Arabia with Al Rajhi bank
included. Some of the effects are resulting from politics and policies made by the government.
Government policies such as a cut in the energy subsidies have made many people spending
much on energy weakening the economy and hence interfering with customers' demand for loans
and credits (Caselli & Tesei, 2016). Economically, it is clear that the Saudi Arabian economy has
grown so much. The growth is so good and is boosting the profits that bankers make due to loans
given to private companies to be able to start up. In contrary to this, there are quite a lot of
banking companies that are cropping up in the Saudi Arabian market that provides loans and
credits at much cheaper rates. These companies are creating threats of extinction to Al Rajhi
bank since their clients are getting other new attractions in terms of flexibilities and rates. Most
of the companies in Saudi Arabia are owned by Arabs and people from other Islamic states. This
is making some of the operations of these companies to appear like they are cultural (Sillah, &

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Harrathi, 2015). This keeps off other people from different regions from partnering with these
companies. In the case of Al Rajhi bank, Christians and people from other cultures sees the bank
as a cultural thing and, therefore, not meant for them.
Conclusion
Gulf cooperation council brought a lot of developments within the Middle East and
helped in the eradication of poverty that was in this region. Several companies that are products
of this cooperation have extended their branches in many countries and are now doing well in the
global markets. This is despite several challenges that are posted on them by both external and
internal factors. Al Rajhi bank is moving well within the world economy despite competitors
within and outside Saudi Arabia, as portrayed in the analysis.

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References
Al-Mawali, N. (2015). Intra-Gulf Cooperation Council: Saudi Arabia Effect. Journal of
Economic Integration, 532-552.
Caselli, F., & Tesei, A. (2016). Resource windfalls, political regimes, and political
stability. Review of Economics and Statistics, 98(3), 573-590.
Edgar, D., Azhar, A., & Duncan, P. (2016). The impact of the audition policy on recruitment and
retention: A case study of the banking sector in Saudi Arabia. Journal of Business, 1(5),
01-14.
ElMassah, S. (2015). Islamic economy option: SWOT case study analysis. Advances in
Management & Applied Economics, 5(3), 63-84.
Kaya, A., & Tsai, I. T. (2016). Inclusive Economic Institutions in the Gulf Cooperation Council
States: Current Status and Theoretical Implications. Review of Middle East Economics
and Finance, 12(2), 139-173.
Nusair, S. A. (2016). The effects of oil price shocks on the economies of the Gulf Co-operation
Council countries: Nonlinear analysis. Energy Policy, 91, 256-267.
Salahuddin, M., & Gow, J. (2014). Economic growth, energy consumption, and CO2 emissions
in Gulf Cooperation Council countries. Energy, 73, 44-58.
Sillah, B. M., & Harrathi, N. (2015). Bank efficiency analysis: Islamic banks versus conventional
banks in the Gulf Cooperation Council Countries 2006-2012. International Journal of
Financial Research, 6(4), 143-150.