Saudi Investment Bank’s Environmental Analysis

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Table of Contents

Introduction
Marketing goal and objectives
External Environmental Analysis
Analysis of Industry’s Competitiveness Using Porter’s Five Forces
Internal Environmental Analysis
Marketing Plan
Works Cited

Introduction

Saudi Investment Bank is a financial institution in the Kingdom of Saudi Arabia with its headquarters in Riyadh. According to Kotler and Keller, Saudi Investment Bank has an asset base estimated to be USD 21.5 billion, making it the eighth largest bank in the country (45). The firm has experienced phenomenon growth over the past few years. The financial sector in the Kingdom of Saudi Arabia has experienced massive changes due to the entry of a number of new financial institutions into this market.

The dominant players in this industry such as Samba Financial Group, Al-Ahli Bank, Al Rajhi Bank, and Riyad Bank are forced to come up with new market strategies to help them manage the increasing market rivalry in this firm. This only means that Saudi Investment Bank has to develop effective strategies that will make it remain relevant in this industry.

The management of Saudi Investment Bank has to understand the current market forces in order to come up with strategies that will enable it to achieve its strategic goals. This firm will need to identify a market that can offer it growth opportunities in an industry that is seemingly becoming flooded. For a long time, most of the financial institutions in this country have always focused on targeting men because of the belief that they are the major decision makers and owners of wealth in the country.

However, a research by Saxena showed that women in this country are increasingly becoming independent (70). This means that they can make independent financial decisions, making them an attractive market segment for any financial institution. In this paper, the researcher seeks to develop a plan that can be used by this firm to target this market segment with superior products that meet their needs. The plan focuses on redesigning one of the existing products at the firm to suit a segment of the market more appropriately.

Marketing goal and objectives

It is important to stipulate the objectives in order to bring a clear understanding of what this paper seeks to achieve. The following is the primary goal for this paper.

To develop a plan for Saudi Investment Bank that would enable it to redesign its female banking products to meet its female clients’ needs in a better way.
To achieve the above stated goal, the following are some of the specific objectives that will have to be considered.
To conduct a comprehensive analysis of the external environment that may affect the ability of the firm to achieve the goals.
To conduct an internal analysis of the firm to determine its ability to achieve the set goals.
To come up with an appropriate plan based on the internal and external forces that would help this firm achieve the set goals.

External Environmental Analysis

When planning to develop a marketing plan, Cant says that the first task is to analyze the external environmental forces (61). The external environmental analysis helps in determining the competitive forces and how they may affect the ability of a firm to achieve its set objectives. The analysis also makes it possible to look at other environmental forces such as the economy, political environment, the legal structure of the business environment, emerging technologies and how they may affect the ability of the firm to achieve the desired goals. Saudi Investment Bank has achieved success in the market because of its ability to monitor and manage some of these environmental forces. The external environment will be analyzed using PESTEL Analysis and Porter’s Five Forces.

Political environment

This is one of the most important external environmental forces that may affect the operations of a firm. The political environment may have serious impacts on the plans of a firm. It is a fact that political instability may lead to serious insecurity within a given country. Achieving success in a lawless country may not be possible. Saudi Investment Bank has flourished because of the political stability that has been experienced in Saudi Arabia. The country has enjoyed a long political stability and peace that has benefited the business community. The political leadership has also made an effort to avoid direct interferences with the business community. This means that the political environment in the country will not affect this firm as it launches a new marketing strategy that will be targeting the female clients.

Economic environment

The economic environment is another major force that can affect a firm’s ability to achieve the set goals in this country. The economy of Saudi Arabia has remained relatively stable over the years. The country remains the leading economy in the region, with a very strong purchasing power. The impressive economy in the country means that the financial power of the target market is also relatively high. With this financial power, these individuals have the capacity to operate healthy bank accounts, making them an attractive segment of the market. Other than the 2008 economic recession that affected the country and the world at large, the economic environment has remained very supportive. This firm now operates in other cities outside Riyadh. This means that its cliental base can easily grow if it develops an effective plan that focuses on female clients.

Social environment

The social environmental forces may also have a strong influence on the ability of Saudi Investment Bank to achieve success in the market. According to Saxena, socio-cultural beliefs have a major impact on the consumer behavior (87). It is in this area that this firm will need a special plan to help it achieve success. A research by Hutt and Speh shows that the Saudi society is still largely patriarchal (55). Major financial decisions in families are still made by men, while women are expected to follow the instructions issued by their male counterparts. This means that it will be difficult to have a considerable number of female clients if the marketing plan does not sound pleasant to men.

With this knowledge, the marketing team developing the plan will have to come up with strategies that would attract female clients, but in a way that pleases men. For instance, Islamic culture prohibits any body contact between women and men who are not their spouses. However, such body contacts cannot be avoided in banking halls where men and women have to queue. By introducing a female branch that is specifically meant for women, this firm will be helping both the Islamic men and women stick to the Islamic teachings. The program will be easily acceptable among the target group if it is coined in such a religious tone.

Technological environment

The emerging technologies have been as instrumental in the success of some firms as they have been in the downfall of others. Technology can help a firm to meet the objectives if it is handled properly. However, sometimes it may be very destructive. Technology has transformed the operational strategies used at this firm. The firm currently uses the emerging technologies to enhance speed, efficiency, and quality of its service delivery to its client. Technology has also transformed its marketing strategies as it seeks to reach out to a new market audience. Saudi Investment Bank currently uses social media platforms such as Facebook, Twitter, and YouTube to reach out to its targeted clients.

Technology has also enhanced interaction between the firm and its strategic partners. Through the emerging technologies, Saudi Investment Bank has been able to introduce a number of new products into the market such as internet and mobile banking in order to help it enhance its competitiveness and increase its sources of revenue. The increasing internet connectivity of remote parts of the country has helped this firm in expanding its market share. This same technology that has helped it expand will be very necessary when implementing this new plan. Social media will particularly be instrumental in reaching out to the target audience.

Ecological environment

One of the three pillars of sustainability of any firm is the ecology. According to Kotler and Keller, firms have always ignored the need to protect the environment even though they rely on it in various respects (73). Ecological issues may have impacts on the macro environment of a firm. The society is becoming very sensitive of the responsibilities that firms are taking to help in protecting the environment. They are concerned because they know pollutants may have a negative impact on the environmental sustainability in the near future.

Pressure has been mounting on firms to engage in activities that may help in protecting the environment. This means that firms such as Saudi Investment Bank will need to have strategies which are conscious of the environment. The aim of this strategy will be to convince the entire Saudi community that Saudi Investment Bank is very keen on protecting the environment for the betterment of the current and future generations. This will give it a positive image needed to achieve the set objectives.

Legal environment

Finally, it is also very important to look at the legal environment and determine how it may affect the ability of Saudi Investment Bank to achieve the goal set above. The legal environment is a macro factor that may affect the operations of Saudi Investment Bank in a number of ways. As Hutt and Speh say, a firm cannot operate successfully in a lawless country (41). It needs laws that will guide its relationship with other stakeholders, and will protect it from unfair business practices that may be a threat to its existence.

The legal environment in Saudi Arabia has enabled Saudi Investment Bank to operate without any form of interference. This has facilitated its growth over the past years. This legal environment may not be a major barrier in achieving the set goals. The firm has been operating successfully in this country for a number of years, and has full knowledge of the legal structure regulating the banking sector. The firm will only need to continue observing these laws when implementing the new plan.

Analysis of Industry’s Competitiveness Using Porter’s Five Forces

External environmental analysis may not be complete without evaluating the environment using the Porters Five Forces. This tool will help to determine some of the threats that Saudi Investment Bank has to deal with in order to achieve the set goals in the market. The Five Forces model is shown in the figure below.

Figure 1: Porters Five Forces Model. Source (Kotler and Keller 76)

Competitive rivalry threat

The major threat in the current market of ladies banking in the Kingdom of Saudi Arabia is the competitive rivalry among the top players. According to Kazmi, Saudi Investment Bank is ranked position 8 among the top financial institutions in the Saudi Arabia (56). This means that there are other seven top brands that are considered superior to Saudi Investment Bank in the market. Firms such as Samba Financial Group and Al Ahli Bank have established female banking system that they have developed over the years. The competition has become very stiff, and this means that this firm has to reassess its strategies from time to time in order to ensure that they are relevant enough to manage the competitive forces.

Threat of new entrants

The threat of new entrants is very real in the current market where Saudi Investment Bank operates. The Kingdom of Saudi Arabia has embraced an open market policy. This means that new firms have the freedom to enter or leave this market without any restrictions. The current competition can become even stiffer if new firms with similar strategies are introduced into the system. Saudi Investment Bank will need to have effective strategies that can be used to manage the threats of these new entrants in order to protect its market share.

Threat of substitutes

The threat of substitutes may also be another negative environmental factor that may affect the progress of the firm in the market when implementing the new marketing plan. As Kotler notes, if a product has perfect substitutes that can meet the same needs but in a superior way, then swaying customers from the substitutes can be a very challenging process (78). Saudi Investment Bank’s planned products have a number of substitutes that can be used in its place. Some female clients no longer find it normal using banking halls that are used by men. These clients may not find the products of this firm relevant to them. To deal with the problem of the substitutes, this firm will need to introduce new lines of superior products that will compete directly with the substitutes. This will enable it to protect its market share.

Bargaining power of suppliers

According to Hutt and Speh, the bargaining power of the suppliers may also be a major threat to the success of a firm in the market (44). This is specifically so if a firm heavily relies on the materials to deliver services to its clients. In the case of Saudi Investment Bank, the only supplier that may have major impacts on its operations is the central bank. The central bank only exercises its powers when there is a negative impact in the economy.

Bargaining power of buyers

Finally, it is also important to look at the bargaining power of the buyers in the market. In this strategy, the bargaining power of the buyers may be of little significance. The aim will primarily be to attract as many female clients to this bank as possible. Their ability to negotiate on issues such as the interest rates they get on their savings or the interests they are charged on the loans extended to them can be negotiated once they become clients of this firm.

Internal Environmental Analysis

After analyzing the external business environment and how it may affect the new marketing plans for this firm, it will be necessary to analyse the internal forces and how they can enable or hinder this firm from achieving the goal. In order to conduct a situation analysis of this firm, a SWOT analysis will be necessary at this stage.

Strengths

Saudi Investment Bank has been able to remain competitive in the banking industry because of a number of reasons that may be considered its strengths. The experience in the banking industry is one of the major strengths of this firm in the country. This firm started its operations in this industry at a time when competition was relatively low. It witnessed the massive changes which brought with it a new strong wave of competition into this industry. This wealth of experience has enabled this firm to predict new market forces and how to deal with them in a way that will assure it success. Another major strength that has enabled Saudi Investment Bank to overcome market challenges is its team of dedicated and highly experienced leaders.

Saudi Investment Bank has been known for its unique capacity to retain its highly skilled employees. This is majorly because of the strategies put in place by the leaders of this firm. At Saudi Investment Bank, every employee has his own special skills, making him unique among the rest, and the management is keen on treating them that way. The management has also remained open to change within the environment. The unique ability to retain the most talented employees has also helped the firm to achieve success in this competitive industry. The decision to open new branches in various places around the world has also been very beneficial to this firm. The numerous branches will be very instrumental as this firm implement a policy of attracting more clients.

Weaknesses

It is also important to note that this firm has a number of weaknesses that may limit its ability to achieve the expected goals in the market. One of the major weaknesses of this financial institution is its limited financial asset compared to that of its major market rivals. Saudi Investment Bank is estimated to have an asset base of USD 21.5 billion. However, the market leaders, Al Ahli Bank and Al Rajhi Bank have asset bases in excess of USD 92 billion and USD 76.8 billion respectively. This means that Saudi Investment Bank may be financially constrained when it comes to implementing ambitious plans as compared to these industry leaders.

Opportunities

The market presents a number of opportunities that this firm should take advantage of in order to enhance its competitiveness and ability to achieve the set goals. According to Kazmi, emerging technologies may be seen as either threats or opportunities, depending on the approach that a firm takes to deal with them (112). The emerging technologies may bring an opportunity to introduce new products such as internet-related banking. The new communication tools can also enable Saudi Investment Bank to interact easily with its clients in a virtual environment. This makes it easy to monitor and respond to the changing market trends as may be appropriate.

The increasingly globalised international market offers Saudi Investment Bank an increase in the market. Saudi Investment Bank is yet to make an emphatic presence in the regional markets. These markets could be the magical key to its prosperity if the management can find a way of exploiting the opportunity. The rising population of the middle and upper class members of the society in Saudi Arabia shows that more people will be looking for baking services in the country. Among those will be women, especially those who are in gainful employments or those who are running their own businesses.

Threats

The external environment presents some threats that Saudi Investment Bank should find a way of managing to avoid their negative consequences. The threat of new entrants into the Saudi market is expected to go high as many financial institutions get attracted to the country. Any new firm that has the capacity to withstand such a competitive environment can easily join this market, and this can make the market to be very competitive. This means that Saudi Investment Bank may need to find how it can make an additional effort in this market in order to compete with them favourably. According to Cant, one of the major threats that financial institutions face in the market is the issue of cyber crime (88).

Cyber crime is a global problem that is affecting numerous firms around the world. Some of these criminals always target specific clients, especially if they have the capacity to access their banking details. If these criminals succeed in defrauding clients of this bank, then the client may lose their trust in the bank. In fact, Kotler says that in most of the cases clients would blame their banks for having failed to put in place stronger security measures (87). Saudi Investment Bank will need to find effective ways of dealing with such threats.

Marketing Plan

The critical analysis of the external and internal environment has revealed the bank’s true position in the market, and its ability to redesign the product that is given focus. Based on the interview that the researcher had with the marketing manager of Saudi Investment Bank, the firm already has the ladies section of the bank that exclusively serves female clients. However, the firm has been struggling to find a way of redesigning this product to meet the needs of its clients in a better way. In this plan, the aim will be to redesign and reposition this product in a way that would meet the specific needs of the clients in the market.

Redesigning the product

The interview with the marketing manager revealed that the ladies section of the bank is just meant to serve the conservative female clients who are not comfortable getting into the banking halls used by men. In this strategy, the researcher proposes a completely new approach for this company. Saudi Investment Bank will develop a new financial product for this target market. The product may be called Female First, but it will still use the brand of the company. Female First can be considered a sub-brand of the main brand name of the firm.

This product will have its own unique interests earned on savings, interests charged on loans, and operating costs. All the costs related to management of this account and borrowing money for the holders of this account will be lower than what is charged in the normal banking system. The interest rates earned from the savings for the holders of this account should be higher than what is offered in other accounts. The aim is to make this product unique and very attractive to the target clients.

The external environmental analysis revealed that women in Saudi Arabia have had limited financial autonomy. This is slowly changing as more women find their way to the corporate world. They need banking products that will enable them to maximize on their financial wealth. For those who are only interested in savings, this product will offer them the most attractive rates in the market to help them benefit more by using this account than when using any other accounts.

The analysis of the external environment also revealed that women have become enterprising in this country. Such business-oriented ladies will be offered loans at the cheapest cost in the market if they choose to use this unique product. The aim of redesigning this product is to attract as many female clients as possible, including those who find no problem sharing banking halls with men. This product will have a meaning for them.

Action plan

Redesigning the product to make it attractive to the clients will not be a simple task. It will involve a detailed understanding of how to balance earnings from the savings and interests on extended loans to come up with a plan that will give clients maximum benefits while still enabling this firm to make attractive profits. It is important to note that the attractive packages attached to this account should not hurt its ability to earn the firm impressive and sustainable profits. A team of experts from our department, especially financial experts, will develop the most appropriate interest rates to be charged on loans and those that will be earned through savings. The experts from this department will ensure that the package offered in this new account is more attractive than what is offered in other accounts. This may reduce the profit margin per individual account, but the mass sale of these products will cover the margin.

Projected sales and financial data

It may not be easy to predict with precision the kind of impact that this new product and marketing plan will have in the market. However, it is expected that the new marketing strategy will increase the size of clients of this firm by 31% within the next one year. The financial data, especially the profitability of the expected increase in number of customers at this firm can only be determined by the end of the trading period because the saving and borrowing trend of the new clients cannot be practically predicted.

Marketing programs mix recommendations

To achieve the set goals, the marketing team of this firm will need to put into consideration a number of marketing mix recommendations that will ensure that the product becomes popular among the female clients. This new product is expected to attract a huge number of female clients because it is uniquely designed to meet their needs. However, a number of actions will have to be taken in an appropriate manner to achieve the intended goal. The product, as an element of marketing mix, has been clearly defined in this plan. The place element is also of critical importance in this plan. The management of this firm will need to ensure that this product is readily available at all the branches of this firm for ease of accessibility.

The firm will also need to ensure that the product is available in the online platform for all its online clients. The third element of marketing mix that is also of great importance is the price. As discussed above, the price that will be offered to the clients will be more attractive than what is offered in other accounts in the market. This is expected to be one of the main factors that will make more female clients to be attracted to this product. The final element of marketing mix which is also very important in this plan is promotion. After developing this impressive product, clients must be informed about its existence. The marketing manager should consider the following promotional mix recommendations.

The firm should rely on both social and mass media in its promotional campaigns to reach out to a larger audience.
The management of this firm should position the product as specifically meant to serve the unique needs of female clients.
Promotional campaigns should emphasize on the superiority of the product. It should emphasize on the benefits that clients get while using this product.
The firm should redesign its promotional campaign strategies in the market. This will make it to be seen as a unique brand in the market.

Works Cited

Cant, Charles. Marketing Management. Cape Town: Juta, 2006. Print.

Hutt, Michael, and Thomas Speh. Business Marketing Management: B2b. Australia: South-Western, Cengage Learning, 2013. Print.

Kazmi, Samuel. Marketing Management: Text and Cases. New Delhi: Excel Books, 2007. Print.

Kotler, Philip, and Kevin Keller. Marketing Management. Upper Saddle River: Prentice Hall, 2012. Print.

Kotler, Philip. Marketing Management: Analysis Planning Implementation and Control. New Delhi: Prentice Hall of India, 2007. Print.

Saxena, Rajan. Marketing Management. New Delhi: Tata McGraw-Hill, 2009. Print.

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