Institutions Investment Bank Connections Essay

Question:

Discuss About The Institutions Investment Bank Connections?

Answer:

Introduction

The report focuses on the marketing strategy and plan considering the business organisation ABUDHABI financial group as the case study in this report. The report will demonstrate how my role as a marketing manager will help the company to operate in the United Arab Emirates region and ensure production and proper delivery of products and services locally. The marketing objectives will be understood by understanding the strengths, weaknesses, opportunities and threats of the company, furthermore contribute towards the achievement of business goals and objectives (Abuelkhair et al. 2012). The PESTEL analysis will provide detailed environmental analysis about the company and the corporate social responsibilities will be illustrated here as well (adfg.ae 2017).

The external environment includes the macro environmental factors that has created an impact on the banking and financial industry of UAE (Armstrong et al. 2015).

The political conflicts can also result in deteriorating the organisational functioning by harming the ownership of oil and land reserves (Bord and Santos 2012). Because of UAE’s good trade relations with many countries all over the world, it has become easy for Abu Dhabi financial group to sustain in the market place. The acquisition of 48.36 percent stake in Dubai based financial services sector was also successful (Ferrell and Hartline 2012).


Economic

The economy of the country is one of the major factors that has affected the business functioning. It has a high GDP per capita, though the rate of unemployment is considerably low in spite of the high level of Foreign direct investments. The monetary and fiscal components in business could also result in higher rate of inflation and depreciation and the increasing rate of interest might further contribute to the increase in inflation rate (Flammer 2015).

Social

Globalization is increasing and this has resulted in making an impact on the culture of the organization. Religion has also affected the societal matters, because of which, the Abu Dhabi financial group has delivered products and services according to the changing needs and preferences of the customers (Golubov, Petmezas and Travlos 2012).

Technological

In UAE, the young adults are tech savvy, which has helped in leveraging the technology and purchase new technological equipments and machineries for improvement of services and quality of products delivered. With the implementation of technology, Abu Dhabi Financial Group has been able to communicate with the consumers easily and even assessed their negative feedbacks to make necessary improvements (Griffin, Shu and Topaloglu 2012).

Legal

The legal requirements were managed to ensure management of financial markets properly and ensure that the various rules and regulations that are imposed can bring positive impacts on the organisation. There are not many legal factors that are associated with the business functioning, because of which, the laws that are implemented have allowed the organization to maintain a good and stable condition within the business environment (Kamarulzaman and Madun 2013).

Environmental

The environmental policies and procedures are implemented to minimize the effects of environment and promote environment friendly prospects for maintaining a clean and healthy environment. Sustainability measures were undertaken to maintain ecological balance in nature.

Impact weights

Factors

Ratings

Political

-2

Economic

4

Social

-1

Technological

-2

Legal

3

Environmental

4

Total

6

Final index was derived by dividing the total ratings with 24, i.e., 6/24.

The calculated result is 0.25, which is greater than 0.45 and thus it is understood that w the company which operates within the macro environment is favorable.

Overview of the organisation

The mission and vision of the organisation is to promote innovation, value and agility.

Abu Dhabi Financial Group is an established Emirati investment company that has its headquarters in Abu Dhabi. It was founded in 2011 and the CEO is Jassim Alseddiqi (Mihart 2012).

It is the leading global investment group that provides lots of investment opportunities to the investors including various corporations, financial institutions, government and individuals. The financial investment sector has been revolutionized, which has delivered an interest rate of 27 percent to the stakeholders.

Financial performance

The company has also experienced enhancement in value creation across the real estate and financial services and the assets have been worth US$5bn. The company has a good financial condition and it has huge numbers of assets that are worth quite high in value as well (Morgan, Katsikeas and Vorhies 2012).

Marketing performance

With the expansion of new assets, sustained value creation and delivery, ADFG remained consistent and generated exceptional returns. The marketing performance is enhanced through devising of strategies and screening the opportunities and scopes to verify the actions undertaken.

Marketing goal and objective

The marketing goal or objective of Abu Dhabi Financial Group was to launch funds on the global market of Abu Dhabi to manage the equities with a proper risk or reward profile. The marketing goal and objectives also included developing an effective investment strategy and enable constructivism to deliver returns more than 120 percent (Mullins, Walker and Boyd 2012).

Corporate social responsibility pyramid

The company has focused on contributing to the community by providing better scopes of employment and furthermore aligned the CSR goals and objectives with the core business activities. The CSR activities are associated with the stakeholders in business, which has further contributed to the sustainable activities and this allowed the company to emphasize on social issues related to the children, environment and local communities in UAE (Ng et al. 2012).

Economic

To improve the welfare of business and generate good level of profit, financial innovation is evitable and the company has been acting according to the economic factors. Because of the changing needs and interests regarding finance, the investment banks need to be economically viable to managing risks and utilize the resources properly. Managing communication with the stakeholders could also enable the company to fulfill its economic responsibilities and comply with these kinds of factors.

Legal

There are legal responsibilities too for maintaining safety of the financial system and thus the company has complied with the support provided by the legal bodies to ensure proper management of foreign account tax related matters (adfg.ae 2017). The organisation has complied to the factor for managing safety of the financial system.

Ethical

The ethical issues arising within the investment bank sector could be manipulation of credit ratings, lack of selling of products, inappropriate trading and over leverage capacity. The ethical norms and rules are implemented according to the demands and preferences of the business stakeholders to maintain honesty and sincerity and obtain stakeholders’ trust. Fairness and transparency must be enabled to meet the expectations of stakeholders and support the development of good culture and ethical business practices. Thus, it is true that ADFG has complied to the factor and fulfilled the ethical responsibilities properly (Ormrod, Henneberg and O’Shaughnessy 2013).

Philanthropic

Customers, being the most important business stakeholders expect good quality products and management of information while the staffs of ADFG want good working conditions and a positive culture to promote growth and development. Based on the principles within the investment bank sector, responsible investment should be done for ensuring that the financial products and services were bought. It could be understood that ADFG had complied with the philanthropic or discretionary responsibilities properly (Nobanee 2014).

Main target for the specific products

The main targets for the investment product are to set up investment accounts with the niche investment banks and ensure proper management of stock, bonds and other investment related activities. The bank could also market the investment solutions to the existing customers of the company with huge numbers of benefits. The major services provided by investment banks are trading and promotion of securities along with management of individuals and companies based on the investments made (Saeidi et al. 2015).

Competitive analysis

The major competitors are SHUAA Capital, Goldman Sachs, Emirates Investmnet bank, whose performances are high with the higher prices of services. The high performance and low price products and services are offered by ADFG itself and there is Emirates Capital Limited, UAE. The companies that fall under the high price but low performance are YUSR Islamic Investment Bank, Nomura International, etc. whereas the low price and low performance banks are Abu Dhabi Investment House, Merrrill Lynch Bank, etc (Stowell 2017).

Critical success factors and SWOT analysis

ADFG is known for its widespread expertise in various sectors such as real estate, capital markets and debt financing that has managed the financial services and created scopes to enhance the flow of cash in business (Stowell 2017).

Strengths

  • Abu Dhabi Financial Group has a strong lending network and manages huge amounts of investments in UAE by capitalizing on the market across the financials sectors in UAE.
  • The company has involved in brand promotion strategies, which has strengthened its brand image and name and with its strong network of distribution.
  • It is also one of the most liquid banks in UAE with good capital adequacy ratio and diversified streams of revenue (Abuelkhair et al. 2012).
  • The performance of the company in the areas of treasury management and divisions of investment is also good along with its extensive research and development activities to.

Weaknesses

  • The low perception of corporate social responsibility is another weakness whereas variable revenues are generated because of the market fluctuations at a rapid rate.
  • The reduction in prices of oil and strict liquidity conditions have also created weaknesses for the company to sustain in the market place.
  • The rate of attrition is quite high which is another weakness of the company too (Ferrell and Hartline 2012).

Weaknesses turned to strengths

To overcome the threats, the weaknesses should be turned into strengths and enable ADFG to grow in a mature market by increasing the market share. The company can keep the prices of products and services higher and sometimes lower to enter new markets and create a positive mindset among the people, though not compromising on the quality. The company could provide additional benefits to customers based on the investments made and even provide them with a handsome amount of return according to the funds that they had deposited (Bord and Santos 2012).

Opportunities

  • The major scopes and opportunities include expansion in the developing economies and development of custom ESG and impact investment for making the investment banking functions successful.
  • The high demand for investment banking has also created enough opportunities for the organisation to deliver the best quality services for the fulfillment of customers’ needs and requirements.
  • The international expansion would create new synergies for ADFG and expand the customer base, which could further lead to better financial stability and reduced chances of risks (Flammer 2015).

Threats

  • There are various tax reforms in UAE that have affected the business functioning of Abu Dhabi Financial Group whereas the competition by other investment banks have posed major threats to the company.
  • There are other threats of non-financial risks too, which have deteriorated the effectiveness of business functioning for ADFG in United Arab Emirates.
  • There was credit market crisis, which increased the cost of borrowing and decreased the flow of cash to the shareholders or investors in business (Golubov, Petmezas and Travlos 2012).

Converting threats to opportunities

By developing trust and loyalty, the negative effects caused due to the property taxes would be reduced and right prices should be set for the products and services to ensure customer satisfaction. Abiding by the laws, rules and regulations could also help in keeping costs under control whereas offering discounts on loans would also be beneficial for experiencing good flow of cash. Management of electronic payments could increase the cash flow and maintain good relationships with the suppliers too.

Value proposition

The investment bank must also focus on the development of new assets, keep tight margins for attracting more customers, and enhance the profit level. The value proposition of the organisation lies in the fact of maintaining growth strategy to keep the shareholders satisfied and maintain good financial condition too. The value proposition could be induced by planning for acquisition in the Arabian Gulf region and develop its portfolio to foster the investment banking activities and accomplish the goal of obtaining authorized capital of more than $100 million.

Marketing issues

The issues faced by ADFG were lack of ability to change, facing difficulties in improving the global structural reform and inefficient application of trading commissions. The return on investments is not up to the mark always, as expected before making investments. The liquidity ratio often creates issues for the investment banking sectors too. Promotions and advertisements were not done properly, which further deteriorated the brand name and image (Kamarulzaman and Madun 2013).

Brand perceived by the target market

ADFG has focused on the value and growth across the financial sectors. After the establishment, the expansion of Abu Dhabi Financial group has helped to deliver the best quality services to its customers. There are multiple assets, which are being managed for 3.5bn, and this has enabled the company to create strong records of accomplishment and pioneer approaches to make investments successfully (Mihart 2012).

Differentiation

The differentiation strategy is implemented to differentiate the products and services of the organization from any other company in the market. This would also help the customers to understand the differences between the products of two different companies and compare those before purchasing those. The advancement of technology and other sustainable approaches have made the company set its products and services apart from other company products, furthermore allowed to attract more customers and generated more profit in business.

Positioning

The positioning is done by selling the stakes of ADFG in line with the Dubai Group’s restructuring agreement and this has made the company one of the proud partners in SHUAA Capital. The positive brand image, portfolio of compelling yet best quality services, loyal base of customers and good management team have further made the company well positioned for becoming successful in the future as well (Ng et al. 2012).

Conclusion

The marketing strategy and plan was developed for Abu Dhabi Financial Group by making an assessment of the various external and internal factors by using the PESTLE and SWOT analysis respectively. Due to the good trade relations in UAE, Abu Dhabi financial group has sustained in the market place with ease. To manage proper CSR activities, the company had prevented societal issues, focused more on sustainable approaches, and provided benefits to children. Moreover, ADFG’s marketing strategy and plan had brought several benefits for both the company and its customers.

Recommendation

  • It is recommended to manage the assets properly for generating more profit and allow the company to gain competitive advantage in business
  • Because most of the people in UAE are tech savvy, it is recommended to leverage technology and enhance the quality of services
  • It is recommended for the investment bank to separate and focus more on the core competencies
  • The organisation must also undertake various environment friendly approaches to create positive impact on the environment as well as benefit the society largely.

References

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Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Bord, V. and Santos, J.A., 2012. The rise of the originate-to-distribute model and the role of banks in financial intermediation.

Ferrell, O.C. and Hartline, M., 2012. Marketing strategy, text and cases. Nelson Education.

Flammer, C., 2015. Does corporate social responsibility lead to superior financial performance? A regression discontinuity approach. Management Science, 61(11), pp.2549-2568.

Golubov, A., Petmezas, D. and Travlos, N.G., 2012. When it pays to pay your investment banker: New evidence on the role of financial advisors in M&As. The Journal of Finance, 67(1), pp.271-311.

Griffin, J.M., Shu, T. and Topaloglu, S., 2012. Examining the dark side of financial markets: Do institutions trade on information from investment bank connections?. The Review of Financial Studies, 25(7), pp.2155-2188.

Kamarulzaman, Y. and Madun, A., 2013. Marketing Islamic banking products: Malaysian perspective. Business Strategy Series, 14(2/3), pp.60-66.

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Mihart, C., 2012. Impact of integrated marketing communication on consumer behaviour: effects on consumer decision–making process. International Journal of Marketing Studies, 4(2), p.121.

Morgan, N.A., Katsikeas, C.S. and Vorhies, D.W., 2012. Export marketing strategy implementation, export marketing capabilities, and export venture performance. Journal of the Academy of Marketing Science, 40(2), pp.271-289.

Mullins, J., Walker, O.C. and Boyd Jr, H.W., 2012. Marketing management: A strategic decision-making approach. McGraw-Hill Higher Education.

Naser, K., Nuseibeh, R. and Rashed, W., 2013. Managers' perception of dividend policy: Evidence from companies listed on Abu Dhabi Securities Exchange. Issues in Business Management and Economics, 1(1), pp.001-012.

Ng, I., Parry, G., Smith, L., Maull, R. and Briscoe, G., 2012. Transitioning from a goods-dominant to a service-dominant logic: Visualising the value proposition of Rolls-Royce. Journal of Service Management, 23(3), pp.416-439.

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Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), pp.341-350.

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adfg.ae. (2017). Home. [online] Available at: [Accessed 3 Dec. 2017].

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