Introduction
In the course of this work, the new marketing policy of Mashreq bank was studied and analyzed. The assessment was given to the mentioned policy, as well as the strategy was classified according to the list of five competitive strategies. The internal and external environments were assessed, the key principles and values of the bank examined. The recommendations given to Mashreq were evaluated.
The Key Elements of Mashreq Bank’s Market Positioning
Mashreq bank used to perform an aggressive market policy intended to gain a greater market share, which led to considerable debts. After the global crisis, they decided to change the strategy for secure lending. At the case time frame, the market positioning of Mashreq Bank consisted of the following key elements. First, the leaders of the bank identified the changes that occurred in bank sector after the global economic crisis and developed a strategy to respond to these changes. Next, the bank changed the way of its interaction with customers, selecting interactive approach and offering end-to-end services. Then, the bank divided its market into the secure and insecure (non-performing loans) parts and established the former as a priority (Pasha par. 1-6).
The Success of The Chosen Strategy
To my opinion, the new market positioning strategy of Mashreq bank was reasonable, developed on a strong basis, quite successful in the present, and will bring more benefits in future. Due to its relative neglect for the insecure part of the market (one of the primary points of the new strategy), the bank will be less exposed to revenue losses. Tightening the lending conditions and establishing a higher provision for insecure and doubtful debts has already brought profit to Mashreq bank. Despite the fact that the new requirements gave the bank a hard time initially, they soon were justified by the strengthening of the bank’s position. In future, the new market positioning strategy will enable the bank to keep its larger share of the market.
A Competitive Strategy
According to Thompson and others, there are five strategies that can be used to build a competitive advantage. As I am convinced, mentioning the niche marketing strategy based on differentiation is the best way to describe what Mashreq bank is doing to pursue a competitive advantage. According to this type of competitive strategies, a business offers its niche market members (in our case, it’s the secure market share) products and services that are tailored to their requirements and expectations (Thompson et al. 54-55). By narrowing its priority market share and becoming more customer-oriented, Mashreq bank intends to gain an advantage in the competition with the other banks of the UAE.
An Assessment of the Bank’s Strategic Management
To my opinion, Mashreq bank did an excellent job on strategic management since it successfully fulfilled all the five tasks of strategic management. First, the directors of the bank developed a strategic vision of what the organization was planning to achieve. They performed a thorough and sober analysis of the situation in the bank sector of the UAE and identified the direction, in which the bank was going to move in such conditions. Second, the directors set clear objectives and specific outcomes that they wanted to achieve after the job was done. Third, they worked out a marketing strategy (described above) to get these outcomes. Fourth, they actually translated this strategy into reality, setting tough requirements and dividing their market in two shares. Fifth, the directors are ready to make corrections in their policy, considering the specific future conditions (“5 Tasks of Strategic Management” par. 1-6).
External Environment
On the one hand, the external environment of Mashreq bank seems unfavorable in the case time period. The banking industry of the country had to recover after the global crisis, which heavily influenced all the strategies and practices of the banks. The banks had to face serious financial losses. The central bank placed strict regulations related to the bank’s exposure to various segments and personal finance limitations. However, on the other hand, these harsh conditions triggered the emergence of a new trend, i.e. less aggressive marketing policy and a turn to secure banking. Due to this trend, Mashreq bank was enabled to develop a more successful competitive strategy and find new markets. Additionally, the limitations imposed by the central bank encouraged Mashreq to look for new financial instruments and markets.
Internal Environment
The conditions of the internal environment were clearly favorable for Mashreq bank in the case time period. The fact that the organization has been in this industry for more than 40 years allows to claim that Mashreq has a considerable experience in banking affairs, including dealing with crises. The bank also has an efficient organizational structure, as well as it is effectively managed. Since the proposals connected with the new marketing policy, the development of the services, and portfolio management go through a long way (discussion by the respective department heads, then discussion in the management committees, and the approval of the CEO), it ensures that only reasonable, effective decisions will be approved and implemented. Therefore, the internal environment of Mashreq bank is favorable for the future development.
The Principles Influencing the Implementation of the Chosen Strategy
The key of principles, on which the implementation of the chosen marketing strategy is strongly based, are embodied in the rules of Sharia’h. According to the company, all the services are fulfilled in compliance to Sharia’h. In the organizational structure of Mashreq, one of the chains is devoted to this issue: Sharia’h Governance & Compliance department. The department supervises all sales and relationship staff. The employees of Mashreq, who are responsible for the implementation of marketing policy, are trained on the principles of Islamic law regarding financial operations and banking. Sharia’h Supervisory Board is in charge for checking the strategic decisions, identifying whether they contradict Islamic law, and issuing Fatwas. Islamic principles underlie the execution of the selected strategy (“Sharia’h Governance & Compliance” par. 1-2).
Confronting Issues
During the case time frame, certain issues were causing the anxiety of the bank’s managers. First of all, it was the negative impact of the global financial crisis on the whole banking sector. This global issue entailed a local problem: Mashreq had to face a sharp decrease in profit, along with loan defaults and scarcity of credit. The other serious problem that caused concern of the managers of Mashreq was the need to fulfill a transition from one policy to another. Previously, Mashreq had been open to various markets, industries, and income levels. Then, it had to change the approach and make the market more narrow. The managers should naturally expect a variety of problems coming from that process.
The Values of the Bank
According to the company’s claims, it honors the following values. First, being customer-focused and fulfill the expectations of the clients is of high importance for the bank. This value is strongly embedded in the bank’s strategic policy. Second, Mashreq strives to maintain transparency and be clear and concise in all its interactions, promoting mutual trust and respect. Third, the bank strives to be progressive and always considers the way to improve the service. Fourth, Mashreq challenges the common practices and takes risks. Finally, the bank maintains individual responsibility while working with each customer. The mentioned values are perfectly consistent with the bank’s policy and the way it makes business since these values promote customer-oriented, individualized service, which is one of the key principles of Mashreq’s policy (“Values” par. 1-7).
Evaluating the Recommendations
Considering the recommendations given to Mashreq bank, it is necessary to mention that the first two recommendations, i.e. to limit the exposure to the unsecured market and to divide the market in the secure and unsecure parts, are excessive, for the directors of the bank have already approved these decisions and started the implementation of them in the bank’s policy. The recommendation to focus on corporate clients and the SMEs is valuable. These segments are open to investment, and since the market of the bank is intended to be narrow, these segments will perfectly fit this narrow share. Monitoring a new customer’s credit history is also a good idea, especially considering the newly launched UAE credit bureau (Kassem par. 1). To ensure the future growth and maintain successful financial performance, I would recommend Mashreq bank to remain customer-oriented and be committed to innovation.
Conclusion
In this work, I analyzed the market positioning of Mashreq bank. I studied the competitive strategy of the bank, its business principles and values, gave an assessment to the external and internal environment, and evaluated the recommendations.
Works Cited
5 Tasks of Strategic Management 2011. Web.
Kassem, Mahmoud. “UAE Credit Bureau Should Curtail the Debt Tide.” The National, 2015. Web.
Pasha, Shaheen. “Dubai’s Mashreq Bank retail NPLs peaked in 2010.” 2011. Web.
Sharia’h Governance & Compliance. n.d. Web.
Thompson, Arthur, Margaret Peteraf, John Gamble, and A. J. Strickland. Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. 18th ed. Columbus, Ohio: McGraw-Hill Education, 2011. Print.
Values. n.d. Web.