PEST Analysis for Bank Muscat Essay Example | Topics and Well Written Essays - 1500 words

PEST Analysis for Bank Muscat - Essay Example 1. History and growth of Bank Muscat The Bank Muscat is a commercial bank of Oman, founded on 30th April 1982. It has strong operational presence in sectors including corporate banking, investment banking, retail banking, and private banking. Currently, the Bank Muscat is the largest banking network in Oman with over 130 branches and assets worth more than US$18 billion (Bank Muscat). It has presence in overseas countries including Riyadh, Saudi Arabia, and Kuwait with a branch each and possesses a representative office in Dubai and UAE. The Bank Muscat is being continuously rated as the ‘best bank in Oman’ over the last several years and it has been awarded the Hewitt recognition as ‘the Middle East’s Best Employer 2009’ (Hewitt 2009). 2. PEST analysis of the company The PEST analysis is a potential tool to analyze the macro-economic environment of a business industry. This tool can be used to assess the market for the Bank Muscat. Political factors The political framework of Oman is in the form of an absolute monarchy where the Sultan of Oman acts as the head of government as well as head of state (Al-Azri 2012, p.1). The court system in Oman has three levels including Elementary Court (lowest level), the Court of Appeal (middle level), and the Supreme Court (highest level). Since Oman is an absolute monarchy, it has clear long term policies regarding the banking development in the country. The recent global recession has persuaded the Sultanate of Oman to focus more on sustainable banking development. Therefore, the Oman government greatly supports Bank Muscat’s efforts to strengthen its market position and to expand its banking business. The strong government assistance benefited the Bank Muscat to become the first company from Oman to be listed on the London Stock Exchange. In addition, Oman maintains better diplomatic relations with US and India; and this strength is likely to contribute to the Bank Muscat’s future growth. Economical factors Oman is a Middle East country which has been achieving significant GDP per capita growth rates for the past half a century (Gonzalez 2008, p.154). The country has significant oil and natural gas reserves and they appear to be the main source of revenues for the country. As studies indicate, the intense modernization efforts taken by Oman to improve its people’s living standards and to attain a significant position in the global marketplace are also promoting the operations of the Bank Muscat. Since Oman is one of the Middle East countries with no national debt, investors view Oman as a stable economy and they are willing to invest in the country (Doing business in Oman). This favorable economic situation greatly assists the Bank Muscat to attain the trust of investors and hence to promote their banking operations easily. As of the quarter ended on 31st March 2009, the net profits of the Bank Muscat nearly doubled to â€Å"OMR 48.42 million f rom OMR 26.54 million in 1Q08 (GCC First reaction paper 2009). Finally, competitive interest rate set by the Bank Muscat would safeguard the interests of its clients and the situation in turn may assist the bank to raise huge operating funds. In total, the country’s economic spectrum offers a prosperous future for the organisation. Social factors With the failure of a number of banks across the globe, Oman’