QNB is one of the highly successful banks in Qatar with strong presence across the country. It has the largest network of branches inside the country as well as outside the country. The bank has shown considerable improvement in its performance over the period of time mainly due to the correct and proper strategic management within the organization. Over the period of time, it has enabled itself to impart upon a new breed of managers which are now considered as one of its strongest sources of competitive advantages.
The Bank has also formed strategic alliances with various governmental and non-governmental organizations to gain access to different and diverse nature of markets. Apart from that bank has also grown in reputation because of its excellent service as well as reach in the market. It is of importance to understand that the increasing presence of the bank in many different parts of the world especially in GCC Market provide it necessary penetration into the market which is fast becoming very competitive due to general increase in the economic well being of the GCC countries.
In order to maintain its strategic position, QNB needs to improve upon its service delivery channels and increase its number of branches as well as the breadth of its online banking services. All in all bank need to rely on the local sources of employees rather than relying on the foreigners to fill in important positions besides focusing more on technology to become more efficient and productive in nature besides focusing more on delivering services beyond the conventional banking products in order to further capture a largely untapped market in the region.
Analysis of Competencies Qatar National Bank is one of the most important financial institutions in Qatar with a largest network of thirty branches across the country. Founded in 1964 with 50% of government shareholding and 50% from the private investors, this bank is considered as one of the strategic assets of the company responsible for carrying on commercial banking transactions across the country. The bank has almost 40% share in the Qatri Market and is also considered as one of the largest financial groups in the region.
Due to better strategic management practices, bank has evolved over the period of time as one of the key players serving both the private as well as public sector organization and holds a strategic position in the overall economy of the country. It was the first bank in the country which offered Islamic banking services and eventually attempted to tap niche market to increase its overall penetration in the market.
It is because of its aggressive strategy that the bank has now opened its branches into London and Paris and even into Yemen, Kuwait and Oman with further expansion in other GCC market besides making its inroads into Singapore’s market and planning to tap into other markets such as Palestine etc. Apart from its presence in the traditional banking sector, bank has also diversified itself into wealth management and its wealth management subsidiary is successfully working in different markets including Dubai etc.
Bank is also involved into some other community related work and is actively participating and contributing towards the Qatri economy as well as society through an effective and efficient system of contributing and participating into such activities. Overall, bank is one of the highly rated with strong prospects to grow and venture into new markets, if continue to work on making right strategic choices over the period of time. The following section will present an analysis of competencies of the bank:
Quality of Leadership and Personnel Harrison has successfully stressed that the strategic decision making add up to the rational allocation of resources in order to fully meet the managerial expectations. In this regard, it is very important to comment that the QNB has a history of having a sour spot on its corporate career as during the tenure of Kaleem Ur Rehman, as CEO of the bank, there were increasing incidents of employee maltreatment as well as following a carrot and stick approach with more emphasis on stick.
However, over the period of time, this culture has been completely changed and the bank is considered as one of the most professional banks in terms of hiring excellently trained staff as well as offering an environment which is most conducive for unleashing creativity and innovation. It is also critical to mention here that the QNB follows a four pronged policy in terms of managing its personnel strategically and derive its strategic advantage.
The use of team based approach has helped the organization to gather a critical mass of employees and executives who have the vision and the ability to direct the bank towards new heights of success. The strategic decision making process at Bank takes place through a formalized board of directors under which different committees work in order to provide the strategic direction and decision making. It is critical to understand that the current CEO of the Bank as well as other executives are considered as one of the leading banking professionals of the region.
Since, QNB is working in service sector which largely depends upon the knowledge accumulation as one of the most critical element for the overall success of the organization therefore QNB effectively manages this process through an effective transformation of core competencies external to the firm by internalizing them through imparting a culture of training and development. The recent success of the bank has largely been attributed to the aggressive stance adopted by the new management of the firm.
Further to this, it is important to discuss that competitive advantage of the firm, in terms of quality of personnel, that the firm combines the strategic decision making with that of the strategic use of the technology. This allows strategic decision making not only as a logical and organized process but also a more penetrating and effective in nature. Strength of Network For a service oriented organization like QNB, it is very critical that it manages a large number of informal as well as formal networks so that it not only remains a competitive organization but also a more evolving and learning organization.
According to Matador et al. the formation of strategic alliances as well as the formal and informal networks provides organizations an opportunity to act quickly by exploiting local knowledge as well as managing risk in more professional manner. Considering Sharma’s (1998) Strategic Alliances Governing Model, QNB focus on the relational factors while forming strategic alliances. QNB has almost 40% market share in terms of deposits in Qatar suggesting that the breadth and penetration of its network of branches into the country.
As discussed above that QNB has more than 30 branches in the country with more expansion to come suggests that the firm is widening its formal network of branches which is already the single largest network of branches by any bank in the country. Due to the involvement of government of Qatar into this bank, QNB’s competitive advantage in terms of its strength of network becomes stronger due to a very strong and formal link with the richest body in the country. Its strategic alliance with government provides it a necessary pool of funds which is not available otherwise to any other bank in the country.
Due to this nature, it not only enjoys a better access to the informal chain of networks but also derives a unique set of strategic advantages over its competitors. Apart from this, it is also important to mention that the bank has been able to form strong strategic alliances with foreign entities to capture other markets. Licensing has been of the most preferred methods of the firm to enjoy access to the new markets as well as gaining local presence in diversified markets .
QNB has been able to form an strategic alliance with the government of Syria to form a Qatar National Bank- Syria besides obtaining shares in Commercial Bank International, a Dubai based bank. These strategic alliances suggest the level of depth and maturity of the strategic management process occurring within the bank. Reputation Under the leadership of its current management, the bank has been able to grow in its reputation not only in national markets but into international markets too.
Standard & Poor has allotted an A+ rating to the bank for its long term whereas for its short term ratings, S&P has given A- ratings to it in terms of its deposits and credit. These rating suggest the reputation and financial stability of the bank. These ratings are based on the fact that the firm has been able to tap a large chunk of the market including deposits as well as credits. Its portfolio is balanced with an appropriate mix of liabilities and assets strongly indicating the level of trust in the bank and bank’s reputation as a credible and efficient bank.
Organizational Learning It is argued that in order to gain sustainable competitive advantage, organizational learning is one of the important aspects which provides organizations an opportunity to develop unique stock assets. (Tselekidis, Peppas & Williams, 2003). The process of organizational learning also contribute towards executing an effective and efficient business process reengineering process within the organizations so that better and more efficient organizational processes shall be developed. (Ackermann, et. l. 1999). Harrison (1996) outlined that strategic decision making are made to rationally allocate the resources of the firm hence organizational learning is one such object which provides organizations a necessary environment to continuously learn from external environment and tailor its decisions according to the existing strategic situations. Huber (1991) discussed four constructs of organizational learning including knowledge acquisition, information distribution, information interpretation and organizational memory.
Based on the construct of knowledge acquisition construct QNB has adopted an aggressive stance in terms of its organizational learning as well as strategic decision making. This aggressive stance has been carved out by exploiting core competencies of the critical staff of the bank. According to Matador et al, the success of the organization largely surrounds around the ability to ability to identify and link the strengths and core competencies of the organization with the core competencies of the staff and executives of the bank.
In this regard, it is therefore critical to mention that the Human Resource Department of the bank works on the assumption of supporting the organization to achieve the organizational objectives through creating a work environment which attracts the talented employees. This so called aim of the HR department of the Bank suggests that the bank has clearly shifted its focus on find a strategic fit between its strategy and the core competencies of the staff. Human Resource department of the firm also concentrate on identifying the qualitative as well as quantitative requirements of the firm in terms their human resource needs.
Organizational Culture In terms of organizational culture, it is important to discuss that QNB, over the period of time, have transformed itself into a regional to a world class bank. As discussed by Harris (1994) that organizational culture is both an individual as well as a collective phenomenon therefore QNB too have focused on improving upon both of these important ingredients of organizational culture. QNB has focused on bringing in a culture which is diverse in nature as most of its staff is expats coming from different countries. This great mix of individuals allows it to focus on exploiting the strengths of many of its employees.
Besides, the culture of merit, openness, and delegation can be considered as the hallmark of QNB’s organizational culture. It is also critical to understand that QNB has been able to create a culture of diversity into its folds. Though this may be attributed to the lack of local human resources within the country therefore bank has to rely on the expats to work on different positions however despite this fact, QNB has been able to create an environment and a culture which is largely multi-cultural in nature and this in fact allows it to successfully enter into new markets because of its existing organizational culture.
Capabilities QNB has the largest branch network in the country besides having the largest network of ATM’s. This allows it to reach a much bigger chunk of the market based on its penetration in the market. This reach into the market as well as the local knowledge can be considered as one of the strongest capabilities of the Bank because it not only provide an opportunity to better manage the market space available to it but also focus on enjoying a sort of first mover advantage in the firm because of its position in the market.
Apart from that Bank’s strategic alliances made in different countries and with different players suggest that the bank is not only attempting to achieve more synergies but also a low cost environment. Once it is achieved, it will be able to gain two most important capabilities of having low cost in the market as well as better processes which will allow it to be more flexible in nature and would better equip to beat the competition and continue to be a leader in the market.
Further to it, the government support it enjoys also provide it the necessary access to larger chunks of deposits at very low cost and lend at higher interest rates. This capability provided QNB a strong hold over the market. Corporate Social Responsibility Recent trends suggest that the various organizational stakeholders forced organizations to make investment into corporate social responsibility. (McWilliams & Siegel,2000). Mador et al (2006) argued that organizations working in a service sector can actually enhance the sustainability of their business by adopting strong orientation as a socially responsible organization.
The current industry trends suggest that most of the organizations in services sector attempt to obtain publicity therefore they aim to support those programs which improve upon their public image. Porter and Kramer (2006) however, suggested that the organizations should attempt to use corporate social responsibility as a strategic tool rather than using it in more conservative and conventional way. The use of CSR as a strategic tool provides organizations a necessary acceptability into the market.
QNB follow CSR into four major areas of education, community, sports and environment. QNB attempt to executive its CSR policies mostly through sports and tend to contribute to the different causes including donating to the earth quack victims in India. This approach of QNB suggest that it is not just concentrate on its own region for CSR policies but also attempting to gain a reach into an untapped market for QNB. In this way, it is also striving to use CSR as a strategic management tool rather than just a tool for donating to the needy and poor.