SWOT Analysis of Riyad Bank
Riyad Bank is a financial institution in GCC, specifically Saudi Arabia. It is one of the most established financial institutions in the KSA, founded in the 1950s. The government is the majority shareholder, with a stake of 51 percent. The bank is appropriately managed, and that is why it has been able to withstand several challenges in the banking industry. The bank, like any other commercial bank, is regulated by SAMA (Saudi Arabian Monetary Authority). With such a considerable investment by the government, mismanagement is unlikely. The institution is under the control of the Saudi Arabian government. Because of the punitive nature of the government, it will be difficult for someone to dare mismanage the bank. Riyad Bank has been strategic in its operations, and that is why it has been able to survive in the banking industry. This bank has been entering into merger deals as a strategy to grow its control of the banking sector in the Kingdom.
SWOT Analysis of Riyad Bank
The SWOT analysis of Riyad Bank will be done as follows:
Strength
Riyad Bank has a vast asset base. It also has a stable and robust financial position, which has kept it steady for over a half a century it has been operating. In the last quarter of 2019, Riyad Bank and NCB (National Commercial Bank), made a merger move. In the merger, the companies wanted to consolidate their assets to gain a firm footing that that will give them leading status in the banking and financial services sector. According to Marwa Rashad, the combined holdings of Riyad Bank and NCB could amount to the US $ 183 billion (Rashad, 2019). Ideally, Riyad Bank has a vast asset base, and its merger with NCB was a shot in the arm for the company.
Riyad Bank has a sharp brand/corporate image in the GCC. This bank has been operational since 1957 and has been committed to building its brand image. Today, in KSA, it is ranked fourth in terms of the asset base. With these many years in the business, the bank has been able to brand itself and improve its brand. In the Middle East and KSA, the bank’s brand is well known. According to Kumar, S., & Kandoi (2018), building a brand image takes time and consistency. Going by the many years the company has been operating, it has been possible for it to create a brand image that today shines across KSA and the Middle East.
Riyad Bank is strong in the SM. Riyad Bank is a listed financial company, with a strong performance in the stock market. This is an established financial institution that has been in the SM for many years. With a robust financial muscle complemented with a sharp brand image, the company’s shares continue to perform exemplary in Saudi Arabia’s stock market. Don't use plagiarised sources.Get your custom essay just from $11/page
Strong domestic and global presence – Riyad Bank is present in KSA, Middle East, and other cities like London. The company has many branches across the Kingdoms and a few others in other countries. The company has opened its first branch in London in the 1980s. Further, the company has several banking services that make it more attractive to many customers.
Weaknesses of Riyad Bank
Strict laws interfere with the efficient operations of the bank. The government owns a total of 51 percent of shares in the bank. With strict regulations and government interference, the bank’s efficiency can likely be interfered with at any time. Besides, the company has not developed its international banking, making it less competitive like other multinational banks.
Opportunities for Riyad Bank
The company has expansion opportunities in the GCC and other countries in Africa, Europe, and America. KSA is an OPEC country, and it can use such status to expand to other unexploited markets. The bank can diversify its financial portfolio to be more attractive to international traders, and that would help it grow.
Threats to Riyad Bank
The company faces stiff competition from banks such as Al Rajhi Bank, IDB (Islamic Development Bank), ANB (Arab National Bank), and BAJ (Bank Al-Jazira). Dependency on crude oil is likely to send a shockwave to the bank in case oil prices plummet significantly.
External and Internal Environment of KSA’s business environment
The political environment in the Kingdom is sometimes tense to the point of threatening businesses. The Kingdom is not a liberal nation, and this, to some extent, affects business operations. There have been power struggles, particularly in the royal family. A power struggle is not suitable for business, and if that is fixed, the business environment will be favorable across the country.
Externally, the prolonged war in Yemen and adversaries such as Iran pose significant threats to the well-being of KSA and its businesses, such as Riyad Bank. Regionally, the threat from Iran is enormous, and the Kingdom has to strategize on how to defuse Iran’s threats. However, the Kingdom enjoys favorable diplomatic relations with the USA and Israel.
Political, economic, cultural and legal challenges
Political challenges
The political challenges the company faces are arising from royal family power struggles. With a stable royal family, the bank will continue to run its operations optimally without fears of an unstable political environment. At present, the Saudi Royal house is permanent, and the political climate is becoming favorable for the banking sector (Striem & Guzansky, 2015). However, KSA has relatively peaceful politically, and that is why businesses have been able to thrive in the country.
Economic challenges
Dropping crude oil prices pose a massive threat to the Riyad Bank that largely relies on it. Also, the current global economy is staring at a slump following Covid-19, and the bank is likely to suffer from it. With an inevitable economic slump facing the world, especially in the Coronavirus pandemic continues to ravages America, Europe, and other parts of the world, the Riyad Bank is likely to record slow financial performance.
Cultural challenges
Riyad Bank does not face any cultural challenges. The bank has been winning awards for supporting cultural movements in the Kingdom (Riyad Bank, 2017). The company strictly observes the country’s cultural practices and helps their actual financial aid.
Legal challenges
As of now, the company does not face any legal challenges. The government owns the company, and it abides strictly with laws of the land. Therefore, it is doubtless that legally the company is in the right position. It complies with the banking or financial laws like other companies in the country.
In summation, Riyad Bank is a major commercial bank in the Kingdom of Saudi Arabia. The bank has a good brand and healthy financial muscle that continues to support its plan to grow and stay competitive. Despite its facing competition, the bank has expanded to other jurisdictions like London purposefully to serve its global customers and test its competitiveness in the worldwide market. The political environment in the KSA is getting more favorable, making the country desirable for a business.