In producing the paper I am thankful to a number of people who contributed in its making. Special thanks to the RAK Bank management for providing detailed company information and also the respondents who filled the questionnaires play a major role in the successful completion of this paper. Also special thanks to my course instructor for providing instructions and guidelines on how to complete the project.
ABSTRACT
The paper starts by providing a introduction, background or literature review and objectives of the study, after which it moves on to providing details on the methodology of the research design, data gathering instrument and statistical tools used in the study for analysis.
Chapter III presents the results and discussion of detailed Analysis of RAK Bank using SPSS after which Chapter IV draws important conclusions based on the statistical analysis conducted with the help of graph and frequencies.
In the end Chapter V presents recommendations followed by references and the questionnaire used for data collection presented in appendices.
Table of Contents
Table of Figures
Chapter 1
INTRODUCTION
The research found insights about the RAK Bank by collecting data on mission, vision and profile of RAK Bank. After providing data on RAK Bank the research provided a brief comparison of RAK Bank with its industry competitor NBAD (National Bank of Abudhabi).
The paper also discussed the profile of the industry, along with the profiles of RAK Bank and NBAD. Mission statement has a very important role in strategic management and helps a firm to communicate its strategic direction (Harrison & St.John, 2010, p.74). The mission and vision statements of a firm is vital in communicating ideals of a bank, in our case the mission statement of RAK bank has helped to gain a sense of direction and purpose of the bank.
After equipping the reader with the sense of direction of the bank the paper then provided details about the five most important components of any organization which are Management, Operations and Production, Finance and Accounting, Management Information System and Human Resources of RAK Bank.
Background of the Study
A recent study revealed that the banking in UAE is flourishing at fast pace making its presence known in the banking world (Grant, Golawala, & McKechnie, 2007). Further the study revealed that the government of UAE is shifting its dependence from oil reserves to new business sectors such as tourism, business hub and finance. The UAE is on the path of becoming the global business hub where banking plays an important role. Fast, efficient and reliable banking ensures the maximum business opportunities for individuals and organizations.
Another study revealed the risked faced by banks in UAE and highlights the three most important risks faced by the banks in UAE (Al-Tamimi & Al-Mazrooei, 2007, p. 394-409). The three risks are exchange risk, credit risk and managing risk.
After a detailed literature review it is been deduced that no research is conducted on RAK bank before. Therefore this research is a preliminary research and the research found information specifically on RAK Bank profile, mission and vision. The research will focused on exploring the profile of RAK Bank and then comparing it with the industry competitor i.e. NBAD.
Objective of the Study
This paper assessed the functional areas of RAK Bank. It intended to determine the gaps in the strategies and activities of the organization and come up with strategic recommendations. Specifically, it sought to:
Determine the company profile
Determine the industry profile
Determine the vision and mission
Determine the status of the functional areas in terms of:
Management
Operations and Production
Finance and Accounting
Management Information System
Human Resources
4. Draw conclusions out of the findings
5. Offer recommendations based from the findings and conclusions
Chapter II
METHODOLOGY
Research Design
This study used the descriptive research method. Descriptive research design focuses on studying individual variables separately rather than the relationship between them (Gravetter & Forzano, 2012, p.365). This research provided details on functions and operations of RAK Bank by exploring insights on each variable separately.
The purpose of the study is to provide insights on the functional areas of RAK Bank by analyzing the profile, vision and mission of RAK Bank, therefore the information collected in this research falls in the category of preliminary research which could be used for further study or decision making. The goal of the research is to obtain information on the description of each variable by obtaining information on RAK Bank.
The descriptive design research used in this research is based on survey research and the data was collected using a questionnaire attached in the appendices. We have used closed ended questionnaire to achieve maximum validity in the results.
Respondents of the Study
The respondents of the study were the department heads of the concerned functional areas of RAK Bank and selected employees. The questionnaire was also given to the management and employees in RAK Bank and results presented in chapter III, status of the functional areas of RAK Bank.
Data Gathering Instrument
The instrument used in this paper is a Survey questionnaire on the Functional Areas of the organization. It was patterned after David's questionnaire (textbook). The researcher conducted brief interviews for other relevant information.
The data is collected with the help of closed ended questions in which a list of selection is provided starting i.e. Strongly Disagree, Disagree, Neutral, Agree and Strongly Disagree (Babbie, The Basics of Social Research, 2011, p.270). Closed ended questions provide uniformity in responses and are easier to administer then open ended question. The responses in this paper are already coded on a scale of 1 to 5 as explained above which has certainly reduced the chances of error in analyzing the collected data and increased the validity of the results.
Procedures of Gathering Data
The data collection was focused on the company profile, mission and vision and the different functional areas. The means of collecting data were the survey questionnaire, interview, and observation. The questionnaires were distributed on ____________________ and were retrieved on ____________________. The interview and observation were simultaneously conducted on _____________________.
Statistical Tools used in the Study
The data for this research study were analyzed by means of frequencies and percentages. Frequency distributions are constructed by listing all the attributes of each variable (Babbie & Rubin, Essential Research Methods for Social Work, 2009, p.290). Hence descriptive univariate analysis was conducted with the help of percentages in graphs and frequency distributions.
Chapter III
RESULTS AND DISCUSSIONS
Findings
Company profile
History
RAK Bank was founded in 1976 and its also one of the oldest banks in UAE. The first ATM machine was installed by the bank in 1990 and in 2005 the bank was listed on the Abu Dhabi Securities Exchange (ADX).
Performance
RAK Bank is the trading name used to present the national bank of Ras Al-Khaimah, which is registered as a public joint stock company (RAK Bank, n.d.). The bank has its headquarters in Ras Al-Khaimah, in the UAE and the government of Ras Al-Khaimah has 52.75% stake in the bank.
The banks credit losses in 2012 were also 30% lower than the figures of 2011 due to a conservative strategy followed by RAK Bank in loan underwriting and provisioning. The bank also reported an increase of 13.3% in deposits in 2012. Bank also made a major achievement by repaying the AED 684 million in debt to the Ministry of Finance.
Leadership
The board of the bank consists of several members of the ruling family of Ras Al-Khaimah, the board also includes business men from UAE and Kuwait. The details of the leadership of RAK Bank are listed below:
H.E. Shaikh Omar Bin Saqr Al-Qasimi (Chairman), Nationality: UAE
H.E. Shaikh Salim bin Sultan Al-Qasim (Member), Nationality: UAE
Mr. Hamad Abdulaziz Al Sagar (Member), Nationality: Kuwait
Mr. Abdul Aziz Abdulla Al Zaabi (Member), Nationality: UAE
Mr. Yousuf Obaid Essa Al Nuaimi (Member), Nationality: UAE
Mr. Ahmed Essa Al Naeem (Member), Nationality: UAE
Mr. Salem Ali Abdulla Saeed Al Sharhan Al Nuaimi (Member), Nationality: UAE
Mr. Graham Honeybill (Chief Executive Officer)
Products
Banking Accounts
Fast Saver
RAK Save
RALvantage
Savings Account
Current Accont
Evantage
RAKBANK Value Collection
Deposits
Fixed Deposits
Call Deposits
Commercial Banking
Online Banking
Mobile Banking
Islamic Banking products in 2012
RAK Bank AMAL
Accounts
Cards
Finance
Deposits
Wealth Management
Savings and Retirement
Family Takaful Plan
RAK Bank Direct
Cards
Debit Card
Titanium Credit Card
Titanium Business Credit Card
Master Card
RAKBANK nmc MasterCard
Visa Credit Card
RAKBANK Geant La Carte Credit Card
Prepaid Cards
RAKBANK Value Collection
Wealth Management
Al Momiaz - Premium Bank Account
RAKinvest - Investment Services
RAKselect - Premium Banking
Treasury (Financial Services)
Insurance
Loan and Overdrafts
Mortgage Home Loans
Personal Loans
RAKauto Loans
RAKfarm Loans
RAKfinance Loan
Overdrafts & Salary Advance
SME Business Finance
Services
Over 50 ATMs around UAE
RAK Bank Deals
RAK Bank Value Collection
RAKBANK Extra Value Collection
RAKBANK Superior Value Collection
RAKBANK Ultimate Value Collection
RAKBANK Executive Value Collection
RAKBANK Premium Value Collection
Status within the industry
According to the data collected RAK Bank is one of the leading retail and small business bank in the UAE. The banks profits have increased by a staggering 16.6% in 2012 as compared to the profits in 2011, the net profit announced in 2012 is AED 1,402.8 million.
The following table-1 represents the credit rating of the bank as rated by famous credit rating agencies which are Moody's, Fitch and Capital Intelligence.
Table - RAK Bank Credit Rating
Rating Agency
Deposits
Financial Strength
Outlook
Support
Moody's
Baa1/P-2
D+
Stable
-
Fitch
BBB+/F2
C
Stable
2
Capital Intelligence
A-/A2
BBB+
Stable
2
1.1 Industry Profile
The UAE market consists of 51 banks out of which 28 banks are foreign banks and 23 are domestic banks (Suttle, 2009). The following figure-1 shows the market shares of the 27 domestic banks in 2009 as present by the credit rating agency Moody's.
Pie Chart 1.png
Figure - Market Share by Total Assets at Year 2009 (UAE Banking Market as assessed by Moody's)
According to the pie chart the top four banks are ENBD, NBAD, ADCB and FGB with respect to the market share by total assets also the pie chart clearly shows the RAK Banks position with respect to the market
The following figure-2 shows competitor information by graphically presenting the bank asset composition percentage with respect to the average composition across the UAE banking market.
Bar Graph.png
Figure - Bank Asset Composition percentage of total assets in year 2009 (Moody's)
According to the information presented by figure-2 the total assets of the 27 banks operating in UAE were AED 1.666 trillion in 2009, 68.7% of these assets were invested in net loans, 16% of the assets are in liquid form and 9% of the 27 banks in UAE were held in the form of investments on average.
The data collected also revealed that there are long term growth prospects for the banks in the developing market of UAE and showed that 65% of the totals assets of the 27 banks in figure-2 were financed through deposits, which is clearly a long term growth prospect for banks in the developing economy of UAE.
Vision and Mission
RAK Bank
The vision and mission of the RAK Bank are to become the industry leader in providing retail and corporate banking services by continuously increasing its network of branches and adopting new promotional techniques and continuously developing according to the needs of the market. The Vision of the bank is to target business and personal finance segments to take greater shares of the banking market in UAE.
The bank is following a conservative strategy for loan underwriting and provisioning following the measures taken against the shock from the global melt down of the financial world.
NBAD
AS compared to RAK Bank, National Bank of Abu Dhabi (NBAD) clearly states its mission and vision as follows:
Mission: "To provide our customers with exceptional service by creating products and delivering service of enduring value to help our customers grow" (NBAD, n.d.).
Vision: "To be recognized as the World's Best Arab Bank".
As compared to the conservative mission statement followed by RAK Bank, NBAD has a more customer oriented approach in their vision and mission statement. RAK Bank has lesser market share of the UAE banking market as shown in figure-2 because of its strict policy for loan underwriting and provisioning.
Status of the Functional Areas
The closed ended questionnaires were used and were given to 15 respondents on key positions in RAK Bank. The data collected was analyzed using SPSS, the results are shown as following:
3.1 Management Audit Check List
In response to the question the firm uses strategic management the responses are shown by following figure-3.
Figure - Management Audit Check list
Most of the respondents strongly agreed as shown by graph about 60% of the respondents agreed that the management is using strategic management concepts in RAK Bank.
Frequencies
The following table-2 constructs the frequency distribution of the responses for the question whether RAK Bank uses strategic management concepts or not.
Table - Frequencies Strategic Management
The firm uses strategic management concepts
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Neutral
4
26.7
26.7
26.7
Agree
2
13.3
13.3
40.0
Strongly Agree
9
60.0
60.0
100.0
Total
15
100.0
100.0
In the following figure-4 the graph shows constructed frequency distribution for the strategic management use as perceived by the respondents in RAK Bank. It also shows the mean and standard deviation.
Figure - Frequency Distribution Strategic Management
3.2 Marketing Audit
The following graph presented by figure-5 shows that the most of the respondent about 60% agreed with the fact that RAK Bank is well aware of modern techniques of marketing.
Figure - Marketing Techniques
The following table-3 and the histogram in figure-6 construct the frequency distributions for the same.
Table - Frequencies Marketing Audit
The firm is well aware of modern techniques of marketing
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Agree
6
40.0
40.0
40.0
Strongly Agree
9
60.0
60.0
100.0
Total
15
100.0
100.0
The above histogram with normal curve clearly shows the mean of the distribution is in between Agree and Strongly Agree when asked on the awareness of marketing techniques.
3.3 Finance and Accounting
The following graph in figure-6 represents the responses of the Finance and Accounting Audit as show most of the respondents disagree and the graph concludes that according to respondents the debt situation of RAK Bank is not excellent.
Figure - Finance And Accounting Audit Responses
Table - Frequencies Finance and Accounting Audit
The firm is well aware of modern techniques of marketing
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Agree
6
40.0
40.0
40.0
Strongly Agree
9
60.0
60.0
100.0
Total
15
100.0
100.0
The table-4 above presents the frequencies of the Finance and Accounting audit and also the frequency distribution is constructed in the following figure-7.
Figure - Frequency Distribution Finance and Accounting Audit
3.4 Management Information System
The following figure 8 shows that the management information system is very user friendly and effective and the frequencies are shown by following table-5.
Figure - MIS Audit
Table - Frequencies MIS Audit
The information system is user friendly
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Strongly Agree
15
100.0
100.0
100.0
3.5 Human Resources
The graph in the following figure-9 shows that most of the respondents agree that RAK Bank Human Resources follows effective recruitment and selection procedures.
Figure - HR Audit Responses Graph
The following Table-6 and figure-10 construct the frequencies of the responses on HR Audit of the RAK Bank.
Table - Frequencies HR Audit
The HR follows effective recruitment and selection procedures
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Neutral
3
20.0
20.0
20.0
Agree
6
40.0
40.0
60.0
Disagree
6
40.0
40.0
100.0
Total
15
100.0
100.0
Figure - Frequency distribution HR Audit
3.6 Production Audit
The graph in following figure 11 shows that most of the respondents believed that RAK Bank has enough employees for production purposes.
Figure - Graph Production Audit
The following table-7 and figure-12 construct frequencies for the responses to the production Audit of RAK Bank.
Table - Frequencies Production Audit
The firm has enough employees
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Agree
5
33.3
33.3
33.3
Strongly Agree
10
66.7
66.7
100.0
Total
15
100.0
100.0
Figure - Frequency Distribution Production Audit
Chapter IV
CONCLUSIONS
1.0 Company profile
After a detailed analysis of company profile it is concluded that RAK Bank has shown better net profits in 2012 as compared to 201.
The bank has adopted a conservative strategy when it comes to loan underwriting and provisioning.
The bank has introduced three new sectors in Small and Medium Enterprise Banking, enhanced online banking, and installed new ATM's.
Due to conservative strategies the bank is losing on the major market share with respect to total assets as shown by figure-1. The major portion of total assets in the banking industry of UAE comes from deposits as discussed above, adopting a conservative strategy had eventually made the market share of the RAK Bank smaller.
2.0 Vision and Mission
The vision and mission statement of RAK Bank are not well communicated as compared with the competitor NBAD, consequently the objectives and goals are not measurable. The top management of the bank is not communicating the policies throughout the organization consequently leading to losses and lesser market shares of RAK Bank.
3.0 Status of the Functional Areas
3.1 Management
The detailed graphical and frequencies distribution analysis concluded that RAK Bank is effectively using strategic management concepts. The RAK Bank management is involved in a conservative strategy to fight against the shocks of the credit crunch, which also affects the bank negatively by having to lose a major market share based on deposits.
3.2 Operations and Production
The analysis of Production Audit revealed that RAK Bank has programs and policies aligned with Human Resource Policies, and the facilities, equipment, machinery, and offices is in good condition.
3.3 Finance and Accounting
The results of the Finance Audit show that the firm is not in an excellent position when debts are concerned. The bank has paid a major chunk of debt owed to the Ministry of Finance in 2012 using a part of the total assets for loan repayments and reducing the proportion for further investments.
3.4 Management Information System
The MIS at RAK Bank is up-to-date and the management across all the branches of RAK bank effectively uses MIS and it is very user friendly.
3.5 Human Resources
Human Resources audit of RAK Bank concluded that the HR facilities at the bank are adequate, HR is cost effective and the HR personnel are well qualified.
The communication between HR and other organizational units of RAK Bank is very effective and the human resources department conducts online training sessions. Also the HR at RAK Bank follows an effective system for recruitment of personnel.
3.6 Marketing
The marketing audit concluded that the firm is well aware of marketing techniques, and is also using social media campaigns to increase customer base. The departments of RAK Bank are segmented effectively and the online banking system is reliable and cost effective.
Chapter V
RECOMMENDATIONS
Recommendations
1.0 Company profile
The company profile is very attractive as RAK Bank is the national bank of UAE with interests of influential members from UAE and Kuwait. The firm must better utilize these competitive advantages to gain competitive edge over its competitor NBAD.
2.0 Vision and Mission
The Vision and Mission statements of the bank are not measurable and are also not well communicated, which is defiantly creating room for inefficiencies in operations. The bank must communicate its vision and mission clearly to all the stake holders and must develop its strategy from conservative to more competitive strategy enabling RAK bank to compete in today's world of recession.
To come up with concrete goals the firm must clearly communicate its vision and mission statement to all the stake holders, the vision also indicates how the bank will evolve into future (Collardi, 2012, p.4). Therefore it is vital for RAK Bank to clearly state its vision and mission to attract more investors and deposits.
3.0 Functional Areas
3.1 Management
The management must evolve its strategy from conservative to more competitive strategy when it comes to loan underwriting and provisioning, such a policy is hurting the goodwill of the bank in long run and eventually reduces market share for the bank by reducing customer confidence and hurting deposits and sale of Credit Cards.
3.2 Operations and Production
The operations and production procedures of RAK bank are up to the mark as revealed by the graphical and frequencies analysis above.
3.3 Finance and Accounting
The debt situation of the bank is positive as it has just paid AED 684 million in debt to the Ministry of Finance.
3.4 Management Information System
RAK bank has an effective MIS which is centrally operated by the management across all the branches of the Bank in UAE.
