Jan 25, 2020 in Analysis
Mashreq Bank Global Strategy

Executive Summary

The Mashreq Bank is known to be the biggest private commercial bank in the United Arab Emirates. The UAE is acknowledged to be an excellent location for conducting business due to its solid economical and political setting, vigorous commerce history, and unsurpassed communication and transportation infrastructure. The Mashreq Bank appears to be the third best bank in the region, leading the industry through its constant innovations and advancements. Canada is a perfect location for the bank’s development as Muslim and UAE populace is incessantly increasing and developing in the country. Canada’s banking industry is a vital constituent of the country’s economy. Banks are allowed to offer a full range of fiscal services, while numerous constraints to the entry of foreign players have been eliminated. Generally speaking, the analysis of the Canadian bank industry demonstrates that it is highly important to create and sustain customer satisfaction within both local and immigrated populaces. Thus, conduct of their marketing operations through the specific ‘7 Ps’ marketing mix framework facilitates in creating customer satisfaction. In accordance with the Canadian government regulations, foreign banks willing to operate in the retail banking sector are supposed to enter the market either as a subsidiary or as a branch. It is recommended for the Mashreq Bank to enter the Canadian retail banking sphere in a form of a subsidiary as it provides numerous advantages and possibilities for development. The current paper will provide a global strategy analysis for the Mashreq Bank on the basis of its entry into the Canadian market.

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The Mashreq Bank is known to be the biggest private commercial bank in the United Arab Emirates. The bank was launched in 1967 by the Al-Ghurair Group. It provides a wide variety of banking and fiscal attendances to retail and corporate customers. The bank executes its operation functions via four divisions, incorporating SME Banking, Corporate, Personal, and Financial Institutions departments. The head office of the company is headquartered in Dubai and it is utilized to operate a network of 45 local and 20 international branches, incorporating the U.S., Hong Kong, India, the UK, etc. The bank is also known to have three representative offices in Pakistan, Nepal, and Bangladesh. The Bank’s strategic vision is to regard clients as a nucleolus of all company’s initiatives, while providing them with the most beneficial and rewarding banking connections, thus becoming the best bank for their clients. The company’s values incorporate commitment to being strongly customer-oriented, pellucid, honest, technically-advanced, vigorous, and individually accountable. The Mashreq Bank is well-recognized in the Middle East area for its innovations and high dedication to utilizing advanced technology in pronouncing and providing client-driven solutions.

Bank-Specific and UAE Location Advantages

The UAE is acknowledged to be an excellent location to conduct business due to its solid economical and political setting, vigorous commerce history, and unsurpassed communication and transportation infrastructure. The facts demonstrate that the UAE is prosperously developing and increasing, while depicting a sustainable maturity, which actually provides an elevated investment impulse into the state as such and the Middle East region as a whole. The facts demonstrate that starting from 2008 the authorities of the UAE region have implemented numerous measures in order to facilitate the majority of weak banking system links. This is the main reason why banks have been recapitalized, which has allowed strengthening the overall banking system fund adequacy ratio up to the level of 21 percent. Thus, weaker fiscal institutions, incorporating banks, have been united with more vigorous institutions. Despite the fact that banks reveal a higher level of nonperforming loans on the contrary to the pre-crisis period, they have become more risk-averse in regards with their lending.

This has allowed the country to progress in the readjustment of the GRE debt, incorporating the Dubai World and Dubai International Capital, which are known to be the foundation of Dubai Holding. In addition, the UAE has won the right to organize and entertain the World Expo in Dubai in 2020 for the first time. Moreover, the UAE also upgraded its status from Frontier to Emerging Market status in accordance with the MSCI index in 2014, which allows yielding elevated equity investment currents. The Mashreq Bank appears to be among the five best banks in the industry, leading its development. It has been awarded as the best regional retail bank in the UAE, becoming the third best bank in the region. Although the bank is an accredited lending bank, it is also known to have a well-established Islamic Banking franchise, allowing the bank to execute amenable banking services. This also provides the bank with an opportunity to perform a great variety of alternative financing, investment, and hedging solutions for the company’s customers pertinent in the Middle East and on a global scale. As the banking industry in the UAE is highly competitive, it stimulates the Mashreq Bank to dedicate efforts and costs to innovation (including online and mobile banking), making the company unique and intensifying its customer concentration. The company has always been leading the UAE banking industry, being the first to establish automated teller machines (ATMs), travelers’ cheques, debit and credit cards, consumer loans, Point-of-Sale (POS) terminals, mortgages, etc. Nowadays, the bank continues innovating with pioneering efforts and has announced to establish of ‘Mashreq Pay-port’, which can be characterized as the first completely EMV Chip & PIN amenable mobile POS resolution in the region. This solution has been enabled through the bank’s partnership with MasterCard and SWIFT. Furthermore, the bank demonstrates a highly strong position in equity management as the company has one of the longest and most successful investment track reports in the Middle Eastern assets and fixed-income discretionary credentials and capitals. Finally, the Mashreq Bank has obtained a high number of international awards, specifically for their innovations and quality management. The facts reveal that the bank has more ISO certifications than any other bank in the region. All of these advantages make the Mashreq Bank the leading financial institution in the UAE, turning it into the world class company in every facet of its business.

Our Process

Canada as a Host Country for the Mashreq Bank

Canada’s banking industry is a vital constituent of the country’s economy. Banks are allowed to offer a full range of fiscal services, while numerous constraints to the entry of foreign players have been eliminated. Canada currently has 72 banks with the total assets surpassing the figure of $2.4 trillion. The facts demonstrate that “Big Five” Canadian local banks dominate in the sphere, including “the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of Montreal, and Toronto-Dominion Bank”. These banks combined with the National Bank of Canada account for approximately 90 percent of all Canadian banking business equities. The Canadian banking industry demonstrates several dominating tendencies. Firstly, the level of competition is high. Alterations in the federal law and legislations have provoked a heightened competition within the banking industry in Canada. Banks have begun proposing products beyond their conventional scope services, while several non-bank players have turned into active figures in the banking sphere. In addition, foreign players have been permitted to operate in the country, allowing leading international banks to have presence in the country. Secondly, the sphere is characterized by the changing nature of retail banking. Generally speaking, immigration is an essential stimulator of the Canadian population increase, provoking a drastic alteration in the populace demographics. Despite the fact that Indians and the Chinese dominate the immigrant populace, the quantity of Muslims is elevating as well. This has provoked the Canadian authorities to consider and approve the possibility of Islamic banks to enter the market. Finally, the increased competition within the Canadian banking industry has provoked an elevated commoditization of services and products, making banks concentrate on advanced strategies in targeting their customers.

Multinational Framework of Operations

The Mashreq Bank can develop a conceptual framework of the marketing approach by drawing together major themes from the retail banking, which focus on the marketing mix and international strategies. Generally speaking, the analysis of the Canadian bank industry demonstrates that it is highly important to create customer satisfaction within both local and immigrated populace. Thus, the conduct of their marketing operations through the specific ‘7 Ps’ marketing mix framework facilitates in creating customer satisfaction. This mix incorporates products, price, place, promotion, participants, physical presence, and process. Firstly, the Canadian experience demonstrates that individual relationships with the retail bank surpass the services offered, which means that the bank capable of managing the customer experience has a better position in evolving relationships. Thus, significance of product differentiation is minimal. Thus, the Mashreq Bank will have to position itself as a full-service bank by providing a full diapason of retail banking products. Moreover, it is highly important for the bank to build relationships with new Muslim and UAE immigrants by suggesting innovative products, for instance, specific account, which would allow immigrants coming to Canada to open a Canadian bank account from a foreign country and transfer capital before their arrival. The bank can also target their specific market niche by recognizing the credit history of the Muslim and UAE immigrants from their home country. These actions can allow the bank’s customers to access money upon arrival, easing their transition to the Canadian society.

Secondly, Canadian customers are unwilling to acquit an unfair price due to the fiscal situation impacts. Thus, the concentration of pricing strategy can lead to a competitive advantage. This market mix can allow the bank to promote its money transfer business by providing their customers with the possibility to hold a chequing account in order to transfer money back to the UAE without any charge. This strategy can be regarded as a vital as numerous immigrants demonstrate a tendency to be more concentrated on transferring money back home. Offering of free money transfers can assist the bank in creating solid customer satisfaction during the initial phase of immigrants' adaptation to Canada. In addition, emulative investments and mortgages pricings can assist in sustaining customer satisfaction during the second phase. This can seriously evolve customer loyalty, making customer switching less probable to appear and providing the bank with the possibility to concentrate on other variables to sustain satisfaction.

Thirdly, Canadian customers are interested in banks, through which they can easily conduct their banking activities. Thus, the Mashreq Bank’s operation innovations and full EMV Chip & PIN amenable mobile POS resolution provide it with a solid competitive advantage. The bank should also propose its products via a wide variety of channels. Therefore, it is recommended to establish several branches in Canadian cities, which are characterized by solid Muslim and UAE communities. Due to the fact that these categories of the population are forecasted to elevate, the branch strategy appears as vital and highly sustainable. Fourthly, promotion appears as a significant constituent of a Canadian retail bank’s marketing mix since despite the fact that customers might obtain products from an unknown vendor, they constantly search for a reliable bank. Value-supplemented promotions, being a legal method of marketing in Canada, appear to be beneficial methods of obtaining customer satisfaction. The Mashreq Bank can use media and internet promotions, hiring some well-known Muslim or UAE celebrity to advertise company’s trustworthiness. It can also sponsor different high-brow Muslim cultural events due to the fact that immigrants might be allured to such shows, being financially capable. Connection of the event experience to the bank brand can result not merely in favorable popularity and elevated brand recognition, but also increased brand image.

Fifthly, Canadian customers are greatly interested in having intercourse and connections with their bank. Thus, strong relationships between customers and bank personnel can serious benefit the bank as they are complicated for competitors to copy. Sixthly, physical evidence at a bank branch seriously influences customer satisfaction as it appears to be one of tangible constituents accessible to measure a bank's offerings. Finally, process systems utilized to deliver service should be predicated on efficient communication evolving and shared cognition. It is highly important to execute open dialogues with customers, resolve received complaints, and keep customers informed of alterations in product and service offerings. Thus, the bank should be capable of leveraging its cultural insights and knowledge in order to successfully appeal to the Muslim and UAE immigrant market in Canada. The establishment subsidiary, which enables full-service bank operations and autonomy sustaining autonomy, appears as a major area of the bank’s strategic decision-making in Canada.

Entry Mode

In accordance with the Canadian governmental regulations, foreign banks willing to operate in the retail banking sector are supposed to enter the market either as a subsidiary or as a branch. It is recommended to enter the Canadian retail banking sphere in a form of a subsidiary. The Canadian regulations demonstrate that subsidiaries are capable of offering a full diapason of retail banking services, which will allow the Mashreq Bank to operate as an ultimate solution for banking requirements of new Muslim and UAE immigrants. In addition, foreign bank subsidiaries are also admissible for insurance equipped by the Canada Deposit Insurance Corporation, which insures the costs of Canadians if their financial institution bankrupts. This fact seriously enhances the recognized dependency of the bank, elevating its capability of attracting the market share. The subsidiary entry mode will also provide the Mashreq Bank with a higher control over strategic decision-making, allowing rapid reactions to alterations in the external market. Moreover, the organic growth strategy provides the possibility to have autonomy in decisions regarding the marketing mix, allowing the bank to diverge its offerings from the competition. Thus, the organic entry mode can help the Mashreq Bank in exploiting the long-range potential of its investments in Canada.

Our Benefits

Functional Issues

The Mashreq Bank is supposed to be capable of entering Canada by targeting home-country customers and leveraging its home-country success. Application of the subsidiary and organic entry mode strategy asks the bank to establish a felicitous matrix and attendance in the host country of the target market and not to analyze that the targeted segment has a genuine future development and can increase potential in the new country. Moreover, the bank will have to display commitment and engagement to the target market via different agents, which are mainly controlled by managers. It means that managers will have to select the personnel capable of efficiently communicating with customers in order to meet requirements of the target market. Due to the fact that it is important to develop customer relationships at early stages of immigration, the bank should recognize new strategies regarding the applicants’ credit history and alterations in the overall bank pricing principals and regulations. Finally, the bank’s managers will have to create a reliable and dependable image and insinuate a culture concentrated and oriented on the customer via incessant employee trainings.

Conclusion

The current paper vividly demonstrates that the Mashreq Bank has a solid and sustainable perspective of development in Canada. The bank is highly innovative, incessantly applying advanced technologies in order to support and satisfy its UAE customers. It is recommended to apply the subsidiary and organic entry mode strategy in Canada as this will provide the bank with a possibility to implement a full diapason of retail banking services. It is also highly recommended to create customer satisfaction within both local and immigrated populace. Thus, the conduct of all marketing operations through the specific ‘7 Ps’ marketing mix framework can seriously facilitate the Mashreq Bank in creating customer satisfaction.

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