Case 21 Sharjah Islamic Bank

Sharjah Islamic Bank - 2010Case Notes Prepared by: Dr. Victor Sohmen

Case Authors: Hussein Al-Tamimi

A. Case Abstract

Sharjah Islamic Bank (or SIB) (www.sib.ae) was established in 1975 along Sharia’a principles with a view to contributing to community development, and to providing commercial banking services to companies and individuals. Originally founded as the National Bank of Sharjah in 2002, it became the first bank in the world to convert to Islamic banking. The change from traditional banking to Islamic banking was a significant turn for the bank. Not only were specialized products and services devised for customers, but all of the bank’s accounting and information systems were converted to conform to Islamic regulations. Sharjah Islamic Bank emphasizes its social and economic role in the community. It recognizes the importance of corporate social responsibility and takes a proactive and responsible approach to its economic and social role in developing society. It ensures that banking systems and services offered adhere to economic and financial development and are shaped by moral, social, and religious beliefs to meet the needs and requirements of a wide and diversified customer base. The Bank aims to provide customers with unparalleled levels of service and satisfaction. Through adopting a strategy which upholds clear policies of risk management and cost control throughout all areas of operations, the bank has diversified to offer customers a broad range of Sharia’a-compliant retail, commercial, corporate, investment, and international banking services through its extensive UAE network. Today the bank has a network of 22 branches (2.7 percent of the total number of branches of UAE banks) throughout the UAE supported by a growing number of automatic telling machines (ATMs) and electronic deposit machines (EDMs) located in convenient and popular business, shopping, and leisure destinations. The total assets of Sharjah Islamic Bank in 2009 were AED15,975 million (about US$4,300 million) constituting 1 percent of the total assets of UAE banks.

B. Vision Statement (Actual)

“Our vision at SIB is to become the premier national financial institution in the UAE upholding our pioneering role in Islamic banking group in the MENA area.”

C. Mission Statement (Actual)

“Sharjah Islamic Bank aims to provide the best services through its commitment and dedication, forged by a mission to serve people and the society in order to contribute towards its growth. Sharjah Islamic Bank’s mission has multiple dimensions aimed at communicating with all of its different audiences, including the following.”

Mission Statement (Proposed)

Copyright © 2011 Pearson Education Limited

http://www.sib.ae/

As an employer of choice (9), the mission of Sharjah Islamic Bank is to provide unparalleled (6,7,8) levels of service and satisfaction (6,7) in commercial banking to companies (1) and individuals (1) with a broad range of Sharia’a-compliant (6,7,8) retail, commercial, corporate, investment, and international banking services (2,4) through our extensive and diversified (5) UAE network (3), whilst upholding corporate social responsibility (6,7) with a proactive and responsible approach (7), and adopting a strategy (5) which upholds clear policies of risk management and cost control (9) throughout all areas of operations (4).

1. Customer2. Products or services3. Markets4. Technology5. Concern for survival, profitability, and growth6. Philosophy7. Self-concept8. Concern for public image9. Concern for employees

D. External Audit

CPM – Competitive Profile Matrix

The Competitive Profile Matrix (CPM) identifies a firm’s major competitor(s) and its particular strengths and weaknesses in relation to its strategic position. SIB’s relative strengths and weaknesses based on the case details are portrayed in the weighted scores. SIB is currently among the most prominent commercial banks in Sharjah, being the first to have adopted the Sharia’a system, with a diversified portfolio of financially-related services. As explicit data for competitors in Sharjah and in the UAE are unavailable from the case, they are represented respectively as X and Y. Their weighted scores are based on their hypothesized strengths and weaknesses comparative to SIB, and in terms of the critical success factors explicitly or implicitly reflected in the case.

It can be seen that, with a score of 3.36, SIB is ahead of the competitors in Sharjah and the UAE – represented by X and Y with a score of 2.50 and 2.26 respectively. The main strengths of SIB are its variety of services (“service lines”), management, technology, and service quality and image. The competitors are presumed to be deficient in these areas due to lack of experience and insufficient customer and stakeholder orientation. The student is encouraged to identify real competitors in Sharjah and in the UAE to make a more realistic Competitive Profile Matrix (CPM), as X and Y here are hypothetical examples.

SIB

X Y

Sharjah Competitor

UAE Competitor


Critical Success Factors

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Rati

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Rati

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dS

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Price Competition 0.12 3 0.36 2 0.24 2 0.24Global Expansion 0.08 1 0.08 1 0.08 2 0.16Management 0.08 4 0.32 3 0.24 3 0.24Technology 0.10 4 0.40 3 0.30 3 0.30Service Lines 0.12 4 0.48 3 0.36 2 0.24Customer Loyalty 0.08 3 0.24 2 0.16 2 0.16Market Share 0.08 3 0.24 2 0.16 2 0.16Advertising 0.06 2 0.12 2 0.12 2 0.12Service Quality 0.10 4 0.40 3 0.30 2 0.20Service Image 0.10 4 0.40 3 0.30 2 0.20Financial Position 0.08 4 0.32 3 0.24 3 0.24TOTAL 1.00 3.36 2.50 2.26

Opportunities

1. ASAS Real Estate is a subsidiary company of SIB with ambitious plans to expand its operations to other Emirates during the coming months

2. There is fast-paced growth in the UAE real-estate sector3. Customers of financial institutions expect to receive the good service SIB is

striving to give4. Employee retention can be improved if they are provided with a culture of

knowledge sharing, teamwork, respect, leadership, and initiative5. The community goodwill is enhanced by firms adopting corporate social

responsibility6. Stakeholders thrive on being provided the maximum value by the

organization

Threats

1. Adoption of Sharia’a can limit SIB’s capabilities in dealing with institutions and individuals who do not adopt Sharia’a

2. There is intense competition among financial institutions in Sharjah and also within the UAE

External Factor Evaluation (EFE) Matrix

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. Sharjah Islamic Bank is in a comfortable position with its competitive stance in Egypt as a respected player with a range of expertise in financial management services. With Egypt having a stable economy and a robust, consolidated stock market, SIB needs to assess its external opportunities and threats carefully and strategize by building on its distinctive competence in brokerage and investment banking. As the competition is still low in Morocco and other markets, perhaps SIB could capitalize on the opportunity presented by this promising financial services industry across the MENA region. Inevitably, SIB cannot compromise on quality and service to differentiate


itself and consolidate its market share; and it certainly needs to penetrate underexploited areas such as the Saudi and Moroccan markets.

Key External Factors Weight Rating Weighted Score

Opportunities


0.12 3 0.36

2. There is fast-paced growth in the UAE real-estate sector 0.14 4 0.56

3. Customers of financial institutions expect to receive the good service SIB is striving to give 0.10 3 0.30

4. Employee retention can be improved if they are provided a culture of knowledge sharing, teamwork, respect, leadership, and initiative

0.12 3 0.36

5. The community goodwill is enhanced by firms adopting corporate social responsibility 0.12 2 0.24

6. Stakeholders thrive on being provided the maximum value by the organization 0.14 3 0.42

Threats

1. Adoption of Sharia’a can limit SIB’s capabilities in dealing with institutions and individuals who do not adopt Sharia’a

0.12 3 0.36

2. There is intense competition among financial institutions in Sharjah and also within the UAE 0.14 3 0.42

Total 1.0 3.02

The average total weighted score is considered to be 2.5. A total weighted score of 4.0 indicates that the entity is responding in an outstanding way to existing opportunities and threats in its industry. In other words, the firm’s strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of external threats. A total score of 1.0 indicates that the firm’s strategies are not capitalizing on opportunities or avoiding external threats. The total weighted score of 3.02 suggests that SIB has recognized the opportunities and threats it faces, and needs to embark on a serious review of its potential for dominance in Sharjah and ultimately market leadership in the UAE.

Product Positioning Matrix

After markets have been segmented so that a firm can target particular customer groups, the next step is to find out what customers want and expect. Many firms have become successful by filling the gap between what producers see and customers perceive, as good service. Product positioning entails developing schematic representations that reflect how a firm’s products compare with their


competitors’ regarding dimensions most important to success in the industry. Two matrices are presented below for SIB and the competitors.

Product Positioning Matrix for Technology vs. Service Lines

As depicted in the Product Positioning Matrix below for Technology vs. Service Lines, SIB’s Service Lines are more varied than those of its close rivals, X (Sharjah) and Y (the UAE). SIB has already established itself in the Sharjah market as a respected player among the financial institutions – and a leader in Sharia’a system of financial management. Through training of its employees and striving to satisfy stakeholders and the community through corporate social responsibility, SIB has earned a high public image. Thus, SIB is in a stronger location on this Product Positioning Matrix than its competitors X and Y.

Product Positioning Matrix for Service Quality and Product Image

It can be seen from the Product Positioning Matrix below for Service Quality vs. Product Image that SIB surpasses both X and Y in Service Quality with its mandate to serve the best interests of employees, customers, and the community in general. Though SIB has a strong base in Sharjah which has a relatively stable economy, its mission is to be a leader in the UAE, of which Sharjah is a part. SIB’s product image


Service Lines (High)Service Lines (low)

Technology (High)

Technology (Low)

SIB

X (Sharjah)

Y (UAE)

also is impeccable due to its experience and high standards of performance in the intensely competitive and volatile financial services market.

E. Internal Audit

Strengths

1. SIB has diversified to offer customers a broad range of Sharia’a-compliant retail, commercial, corporate, investment, and international banking services through its extensive UAE network

2. SIB is resolved to become the “employer of choice” in the UAE by providing a culture of knowledge sharing, teamwork, respect, leadership, and initiative

3. SIB is committed to create sustainable growth for its stakeholders4. As the first Islamic bank in the world, SIB has built a strong brand5. SIB fosters a culture of knowledge and seeks to provide exceptional customer

service6. Adherence to Sharia’a gives SIB a competitive advantage over other firms

who are also offering similar kind of services

Weaknesses

1. Sharjah Islamic Bank does not have the flexibility to adopt either Sharia’a law or international banking methods

2. The distribution of the profits and bearing of the loss are calculated in accordance with the Islamic Sharia’a only, which may not be acceptable or clear to all stakeholders


Product Image (High)Product Image (low)

Service Quality (High)

Service Quality (Low)

Y (UAE)X

(Sharjah)

SIB

Financial Information for Sharjah Islamic Bank (Income Statement only)

YTD December 31, 2009

YTD December 31, 2008

Net Income before taxes 882,664 940,178

Expenses 284,445 278,889

Net operating income 598,219 661,289

Other expenses 338,084 429,710

Net profit 260,135 231,579

Annual profit growth % 12.33% -

Earnings per share (EPS) 0.11 0.10Source: Adapted from Sharjah Islamic Bank Annual Report (2009).

It is evident from the Income Statement results of SIB for the years 2008 and 2009 that there has been a healthy growth in profits of 12.33 percent, from 2008 to 2009. A steady increase in profits can be expected from continued viable operations throughout the UAE network of SIB branches.

Internal Factor Evaluation (IFE) Matrix

A summary step in conducting an internal strategic-management analysis is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among them. Itemized below are the strengths and weaknesses of SIB – from the information provided, there are many more strengths than there are weaknesses.

Key Internal Factors Weight Rating Weighted Score

Strengths

1. SIB has diversified to offer customers a broad range of Sharia’a-compliant retail, commercial, corporate, investment, and international banking services through its extensive UAE network

0.14 4 0.56


0.14 3 0.42

3. SIB is committed to create sustainable growth for its stakeholders 0.12 3 0.36

4. As the first Islamic bank in the world, SIB has built a strong brand 0.14 4 0.56

5. SIB fosters a culture of knowledge and seeks to provide exceptional customer service 0.12 3 0.36


6. Adherence to Sharia’a gives SIB a competitive advantage over other firms who are also offering similar kind of services

0.14 3 0.42

Weaknesses

1. Sharjah Islamic Bank does not have the flexibility to adopt international banking methods

0.10 3 0.30


0.10 2 0.20

Total 1.00 3.18

Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position. In light of this, SIB’s position with a score of 3.18 reflects a moderate to strong internal position. This is a reflection of SIB’s high public profile and image as the pioneer in Islamic banking, meticulously championing the Sharia’a system of operation. The SWOT Strategies analysis below will provide a more cogent picture of SIB’s strategic viability.

F. SWOT Strategies

Any organization, whether military, product-oriented, service-oriented, governmental, or even athletic, must develop and execute good strategies to win. A good offense without a good defense, or vice versa, usually leads to defeat. Developing strategies that use strengths to capitalize on opportunities could be considered an offense, whereas strategies designed to improve upon weaknesses while avoiding threats could be termed defensive. Taking into consideration the above identified External Audit of the Opportunities and Threats (OT) and the Internal Audit of Strengths and Weaknesses (SW), a SWOT Matrix can be compiled and is presented below as: SO (strengths-opportunities) Strategies; WO (weaknesses-opportunities) Strategies; ST (strengths-threats) Strategies; and, WT (weaknesses-threats) Strategies. Matching key external and internal factors is the most difficult part of developing a SWOT Matrix, requiring good judgment – and there is no one best set of matches.

Strengths Weaknesses


1. SIB has diversified to offer customers a broad range of Sharia’a-compliant retail, commercial, corporate, investment, and international banking services through its wide UAE network


3. SIB is committed to create sustainable growth for its stakeholders

4. As the first Islamic bank in the world, SIB has built a strong brand

5. SIB fosters a culture of knowledge and seeks to provide exceptional customer service

6. Adherence to Sharia’a gives SIB a competitive advantage over other firms who are also offering a similar service

1. Sharjah Islamic Bank does not have the flexibility to adopt international banking methods


Opportunities S-O Strategies W-O Strategies


2. There is fast-paced growth in the UAE real-estate sector

3. Customers of financial institutions expect to receive the good service SIB is striving

1. SIB should continue to expand through the UAE employing Sharia’a-compliant services and its Islamic banking brand image

2. SIB should intensify market penetration and product development for its fast-growing real estate sector

1. Sharjah Islamic Bank should adopt a flexible approach to offer both Sharia’a law and international banking laws to its customers and other stakeholders


to give4. Employee retention

can be improved if they are provided a culture of knowledge sharing, teamwork, respect, leadership, and initiative

5. The community goodwill is enhanced by firms adopting corporate social responsibility

6. Stakeholders thrive on being provided the maximum value by the organization

Threats S -T Strategies W-T Strategies1. Adoption of Sharia’a

can limit SIB’s capabilities in dealing with institutions and individuals who do not adopt Sharia’a


1. SIB should continue to maintain its distinctive competence as the “employer of choice”

2. SIB should combat the intense competition by building on its strengths as the leader in Islamic banking in the UAE

1. SIB could blend both Islamic banking and international banking methods to be acceptable to a broad spectrum of stakeholders

SO Strategies use a firm’s internal strengths to take advantage of external opportunities. SIB should continue to expand through the UAE employing Sharia’a-compliant services and its Islamic banking brand image, and intensify market penetration and product development for its fast-growing real estate sector.

WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. Sharjah Islamic Bank should adopt a flexible approach to offer both Islamic banking and international banking methods to its customers and other stakeholders.

ST Strategies use a firm’s strengths to avoid or reduce the impact of external threats. SIB should continue to maintain its distinctive competence as the “employer of choice”, whilst combating the intense competition by building on its strengths as the leader in Islamic banking in the UAE.

WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats. As a defensive tactic, SIB could blend both Islamic banking and international banking methods to be acceptable to a broad spectrum of stakeholders.

G. SPACE Matrix


The Strategic Position and Action Evaluation (SPACE) Matrix below indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given firm. The axes of the SPACE Matrix represent two internal dimensions: (Financial Strength [FS] and Competitive Advantage [CA]), and two external dimensions: (Environmental Stability [ES] and Industry Strength [IS]). These four factors are perhaps the most important determinants of an organization’s overall strategic position.

Financial Strength (FS)* Environmental Stability (ES)

Return on Investment 4 Risk involved in business -2

Leverage 3 Technological Changes -2

Liquidity3 Price Range of Competing

Products-2

Working Capital 4 Competitive Pressure -2

Cash Flow 4 Barriers to Entry -1(*These figures are best estimates based on SIB’s performance, market realities, and financial information available in the case)Financial Strength (FS) Average 3.6 Environmental Stability

(ES) Average-1.8


FS

CA

ES

IS+6+5+4+3+2+1

Conservative Aggressive

Competitive

Defensive

+1

+2

+3

+4

+5

+6

+7-2-3-4-5-7 -1-6

+7

-7

-6

-5

-4

-3

-2

-1

SIB

Competitive Advantage (CA) Industry Strength (IS)Market Share -2 Growth Potential 4Service Quality -2 Financial Stability 3Customer Loyalty -3 Ease of Market Entry 3Product Life Cycle -3 Resource Utilization 4Technological Know-how -2 Profit Potential 3Control over Suppliers & Distributors -3 Technological Know-how 4

Productivity, Capacity Utilization

3

Competitive Advantage (CA) Average

-2.5 Industry Strength (IS) Average

3.0

Y-axis: FS + ES = 3.6 + (-1.8) = +1.8X-axis: CA + IS = (-2.5) + (3.0) = +0.5

The directional vector of the SPACE Matrix above indicates that SIB is in Quadrant I of the SPACE Matrix. Therefore, according to the results of the SPACE Matrix, it is recommended that SIB embark on an Aggressive Strategy of bold expansion. The company should balance all extant external and internal realities impinging on it. According to the SWOT strategies, the company could avail of market penetration, market development, and product development. It would also be timely for the company to be horizontally integrated (acquiring similar competitive firms towards oligopoly or monopoly), but not forward integrated (taking ownership of distribution channels), or backward integrated (acquiring firms contributing to SIB’s service lines). The aggressive strategy yielded by the SPACE Matrix is reflective of the strong track record of SIB since its inception in 1975. It appears from the overall strategic thrust of the various analyses including the CPM, EFE, IFE, SWOT, and Product Positioning Matrix, that SIB could possibly adopt further related (e.g. financial services) or unrelated (e.g. real estate) diversification as it needs to consolidate its core competencies. Thus, SIB will certainly need to embark on a market penetration and market development strategy, together with product development to meet quality, price, and demand for various market segments in its promising venture into the rest of the UAE region.

H. Grand Strategy Matrix

All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth. SIB’s profit growth is healthy at 12.33 percent for 2008–2009, with scope for market penetration throughout the UAE. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. Firms such as SIB located in Quadrant II of the Grand Strategy Matrix are in a strong strategic position, with rapid market growth. Because Quadrant I firms are in a rapid-market-growth industry, an intensive strategy (as opposed to integrative or diversification) is usually the first option that should be considered. However, as SIB has strong distinctive competence with competitive advantage in its current markets in Qatar and the UAE, horizontal integration is not desirable. For SIB, continued concentration on current markets (market penetration and market development) and services (services development) is an appropriate strategy (see also the SPACE Matrix above). As it would be unwise for a Quadrant I firm to shift


notably from its established competitive advantage(s), SIB should consolidate and expand its market. It is recommended that SIB take calculated risks for expansion and consolidation of its market bases (see also the SPACE Matrix above).

1. Market development2. Market penetration3. Product development4. Backward integration5. Forward integration6. Horizontal integration7. Related diversification

According to its Quadrant I location in the Grand Matrix, SIB is in a moderate to strong competitive position with rapid market growth, and underscores the competitive stance reflected in the SPACE Matrix. SIB has a good portfolio of service/product lines (see Product Positioning Matrix above, with comments), and can hold its own in a competitive arena. As a Quadrant I firm, SIB can afford to take advantage of external opportunities in several areas, especially in its plans to enter the UAE markets. Thus, SIB can take moderate risks to expand into the UAE region with confidence. The high public profile, research skills, and successful ventures (with 22 branches in Sharjah) should certainly infuse sufficient confidence in SIB’s expansion plans.

I. The Quantitative Strategic Planning Matrix (QSPM)

The only analytical technique in the literature designed to determine the relative attractiveness of feasible alternative actions is the Quantitative Strategic Planning


Weak Competitive

Position

Quadrant II Quadrant I

Quadrant IVQuadrant III

StrongCompetitive

Position

Rapid Market Growth

Slow Market Growth

SIB

Matrix (QSPM), which comprises Stage 3 of the strategy-formulation analytical framework. This technique objectively indicates which alternative strategies are best. The QSPM uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies. That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1, coupled with the SWOT Matrix, SPACE Matrix, and Grand Strategy Matrix that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3). The QSPM is a strategic decision-making tool that allows strategists to evaluate alternative strategies objectively, based on previously identified external and internal Critical Success Factors. Like other strategy-formulation analytical tools, the QSPM requires good intuitive judgment.

The left column of a QSPM consists of key external and internal factors (from Stage 1), and the top row consists of feasible alternative strategies (from Stage 2). Specifically, the left column of a QSPM consists of information obtained directly from the EFE Matrix and IFE Matrix. In a column adjacent to the Critical Success Factors, the respective weights received by each factor in the EFE Matrix and the IFE Matrix are recorded. The top row of a QSPM consists of alternative strategies derived from the SWOT Matrix, SPACE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives. However, not every strategy suggested by the matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive judgment in selecting strategies to include in a QSPM.

Strategy 1 Strategy 2 Strategy 3SIB should continue to expand through the UAE employing Sharia’a-compliant services and its Islamic banking brand image

SIB should intensify market penetration and product development for its fast-growing real estate sector

SIB could blend both Islamic banking and international banking methods to be acceptable to a broad spectrum of stakeholders

Key Factors Weight AS TAS AS TAS AS TAS

Opportunities 1. ASAS Real Estate is

a subsidiary company of SIB with ambitious plans to expand its operations to other Emirates during the coming months

0.12 1 0.12 4 0.48 2 0.24


2. There is fast-paced growth in the UAE real-estate sector

0.14 1 0.14 4 0.56 1 0.14

3. Customers of financial institutions expect to receive the good service SIB is striving to give

0.10 4 0.40 2 0.20 3 0.30

4. Employee retention can be improved if they are provided a culture of knowledge sharing, teamwork, respect, leadership, and initiative

0.12 3 0.36 3 0.36 2 0.24

5. The community goodwill is enhanced by firms adopting corporate social responsibility

0.12 3 0.36 3 0.36 2 0.24

6. Stakeholders thrive on being provided the maximum value by the organization

0.14 -- -- -- -- -- --

Threats1. Adoption of Sharia’a

can limit SIB’s capabilities in dealing with institutions and individuals who do not adopt Sharia’a

0.12 3 0.36 3 0.36 4 0.48


0.14 3 0.42 2 0.28 2 0.28

TOTAL 1.0 2.16 2.60 1.92

Strengths1. SIB has diversified to

offer customers a broad range of Sharia’a-compliant retail, commercial, corporate, investment, and international banking services through its extensive UAE network

0.14 4 0.56 3 0.42 3 0.42

2. SIB is resolved to


become the “employer of choice” in the UAE by providing a culture of knowledge sharing, teamwork, respect, leadership, and initiative

0.14 -- -- -- -- -- --

3. SIB is committed to create sustainable growth for its stakeholders

0.12 -- -- -- -- -- --

4. As the first Islamic bank in the world, SIB has built a strong brand

0.14 4 0.56 4 0.56 3 0.42

5. SIB fosters a culture of knowledge and seeks to provide exceptional customer service

0.12 3 0.36 3 0.36 2 0.24

6. Adherence to Sharia’a gives SIB a competitive advantage over other firms who are also offering similar kind of services

0.14 4 0.56 2 0.28 2 0.28

Weaknesses1. Sharjah Islamic Bank

does not have the flexibility to adopt international banking methods

0.10 3 0.30 2 0.20 4 0.40


0.10 -- -- -- -- -- --

SUBTOTAL 1.00 2.34 1.82 1.76SUM TOTAL ATTRACTIVENESS SCORE

4.50 4.42 3.68

J. Recommendations


Strategy #1:- It is recommended that Sharjah Islamic Bank should continue its expansion into the MENA region, focusing on investment banking and securities brokerage.

K. Epilogue

Following a multi-pronged analysis using judgment and reasoning coupled with numerical and graphical outputs, three strategic choices were presented for Sharjah Islamic Bank:

(1) SIB should continue to expand through the UAE employing Sharia’a-compliant services and its Islamic banking brand image.

(2) SIB should intensify market penetration and product development for its fast-growing real estate sector.

(3) SIB could blend both Islamic banking and international banking methods to be acceptable to a broad spectrum of stakeholders.

According to the comprehensive and decisive Quantitative Strategic Planning Matrix (QSPM), Strategy #1, with the highest Sum Total Attractiveness Score (STAS) [4.50], has emerged as the best option among the three alternatives. This involves SIB pursuing the UAE market for its financial banking and investments portfolio. Even though Strategy #2 is a respectable second with a STAS of 4.42, it is not as comprehensive as Strategy #1 involving expansion in the UAE region. Strategy #3 would have more merit should SIB decide to go international.

The Sharjah Islamic Bank has a strategic portfolio of two subsidiary businesses:

• ASAS Real Estate is a subsidiary company of Sharjah Islamic Bank that has ambitious plans to expand its operations to other Emirates during the coming months• Sharjah Islamic Financial Services (or SIFS) is a subsidiary of Sharjah Islamic Bank. It offers its customers and investors a range of Sharia’a-compliant trading tools to allocate, select, and manage investments and wealth.

As one of Sharjah’s most respected financial institutions with a high reputation for well-researched, high-quality financial services, Sharjah Islamic Bank’s public profile is well-established in Sharjah and its neighborhood. SIB is thus a seasoned regional player with legitimate ambitions to encompass the UAE region with its strongly Islamic banking ethos, based on its excellent track record in Sharjah. The future bodes well for SIB with its two dynamic subsidiaries at this time. The aggressive expansion mode recommended through the SPACE Matrix should be considered, as the present drive and momentum of the bank needs to be maintained. Overall, Sharjah Islamic Bank appears to be a stable and mature – if conservative – financial institution with proven capabilities to deliberately pursue the recommended strategy of diffusion into the UAE region.


Case 21 Sharjah Islamic Bank

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