Qatar National Bank was founded in 1964 in Qatar with its headquarters in the city of Doha. The company grew with time and currently it is operating in 31 countries across the world through the bank and other subsidiaries. The ownership of the bank is divided between the Qatar Investment Authority and the public shareholders making it a public company. The revenue of the bank in 2016 was 6.4 billion USD showing the size and success of the company (Forbes, 2019). To keep the company on the track of success, Porter’s five forces model is conducted and presented below
Competitive Rivalry
Qatar National Bank is the leading bank in the country with a leadership position in the region of the Middle East as the total asset value of the bank is 242 billion USD. The bank has loans of 171 billion USD while the customer deposits having a value of 174 billion USD. Qatar Islamic Bank is on the second spot with 42.7 billion in the assets which are showing a massive difference between the value of assets for the leading bank and Qatar Islamic Bank. In terms of assets, the Commercial Bank of Qatar comes at the third spot with an asset value of 40 billion USD. Masraf Al Rayan and Doha Bank are also in the list of prominent banking and financial institutions having the worth in billions for their assets (ADV Ratings, 2019). The comparison of the valuable assets of banks in Qatar shows that there is no big rival for Qatar National Bank as the difference is massive between the value of assets for the banks. But the presence of multiple banks still accounts for the competition in the industry. Therefore, the competitive rivalry in the banking industry is moderate.
Bargaining Power of Buyers
The buyers of banking services and products have a range of options to buy banking services. There is no bank in the country that is offering unique services but all of the banks are offering good services that are required. The presence of Qatar National Bank and the reliability in their services have made them the market leader. Otherwise, the customers are not like highly loyal to the bank but they are willing to shift in case of any better option. Therefore, the bargaining power of buyers is moderate.
Bargaining Power of Suppliers
The deposits of the customers are the supplies for the banks and the customers in the sense of suppliers hold the whole power. Different banks offer different rates of return and services to customers for the purpose of getting the deposit which increases the significance of the customers. The dependence of the banks on customers’ deposits is huge which improves their bargaining strength (Fejza et al., 2017). Therefore, the bargaining power of suppliers is high in the banking industry of Qatar.
Threat of Substitutes
Financial services such as banking have become a need for businesses and personal life. It is not possible to operate a business and manage the personal life without the banking services, many countries have turned their whole system to banks and even the routine purchase has to be done through the banking procedures. The increasing dependence of the businesses and personal life on banking is the reason for no threat of getting replaced. The innovation and digitization are getting heavier in the industry for providing efficient services but there is no replacement introduced for such services (McWaters et al, 2015). There is no substitute in the near future for such services which make the threat of substitute low in the banking industry.
Threat of New Entrants
The banking industry presents a number of hurdles for investors to start a business in the banking industry. The banking industry is a highly capital intensive industry and there is no limit for the capital requirements. This capital intensive nature of the industry is one of the major and biggest hurdles on the way of entering this industry. Secondly, there is a number of strict legislations by the government to open the bank in the industry to protect the people from fraud. These two major hurdles keep the threat of new entrants in the banking industry low
References
ADV Ratings. (2019). List of Banks in Qatar – Overview of Top Banks. Available at: https://www.advratings.com/middle-east/top-banks-in-qatar
Fejza, V., Livoreka, R., & Bajrami, H. (2017). Analyzing Consumer Behavior In Banking Sector Of Kosovo. Eurasian Journal of Business and Management, 5(4), 33-48.
Forbes. (2019). Qatar National Bank. Available at: https://www.forbes.com/companies/qatar-national-bank/#356ea47441eb
McWaters, J., Bruno, G., Lee, A., & Blake, M. (2015). The Future of Financial Services-How disruptive innovations is reshaping the way financial services are structured, provisioned and consumed. In the World Economic Forum. Junio de (Vol. 2105).