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The Abu Dhabi Commercial Bank


Addressing its roots of synthesis from the merger of the “Emirates Commercial Bank” and the “Federal Commercial Bank” with the “Khaleej Commercial Bank”, the Abu Dhabi commercial bank is a retail business firm based in the UAE. The bank is prominent for its improved performance due to the basis of its structure emanating from the merger of the liquidating firms (Boermeester, 2007). The firm not only prides its proprietorship in the governmental institutions like the “Abu Dhabi investment Authority” but also the non-governmental institutions and individual partners. This is to imply that the source of funding for the company solidly lies in both the public and the private sectors, while the consumers form the source of validity for its projects. The firm relies on the principle of cost leadership, in which market capitalization is a characteristic feature that proves the viability of its stay at the helm of the globally competitive world. This gives it a distinctive microeconomic structure that is unique to its competitors, while the analysis of its business structure forms the essence of this paper.

The Abu Dhabi Commercial Bank


The Abu Dhabi commercial bank is a retail firm operating in the UAE, where it prides its birth to the liquidation of the branched firms. Operating as a joint stock organization, the Abu Dhabi Commercial bank came into existence in the year 1985. This was during the time when the parent companies comprising of the “Emirates Commercial Bank” and the “Federal Commercial Bank” on one hand and the “Khaleej Commercial Bank” on the other faced liquidation. The bank relied its formation on the fact that the parent companies had to come together to share the constraints of the competitive market through contribution of shares to form one large entity for representation of the business endeavors (Abed, Hellyer, Vine, Al-Abed, Vine, & Hellyer, 2004). This gave rise to single entity, whose values and visions were to cater for the need of consumer satisfaction as a model of dealing with the competitive world. The merger of the companies provided a platform for realization the major goal of realization of the goal of monopoly of markets through cost leadership and differentiation of production since this formed the foundation of the parent companies. For instance, the “Khaleej Commercial Bank”, which was founded in the year 1975, had an established culture of consumer satisfaction through diversification of production. This ideology was passed over to the company formed after the merger, which stands out to date in the UAE as the ADCB (Boermeester, 2007).

The business endeavors in the ADCB is based upon the contribution of funds for a common merger of liquidating companies, in which the pass over of culture from the parent companies forms the force of drive for the rate of growth. The firm has a platform of growth spanning from the establishment of the time of establishment of the parent merger companies to the contribution of the capital in form of both the finances and ideologies for take off in the year 1985. From the time of establishment, the ADCB has had a tremendous move towards establishment of new sites for expansion, in which the current existing branches are 48 in number. These branches are specifically centered in the UAE, where two of them are based in the major cities in India, while one is in the United Kingdom. This shows that the current expanse of growth for the company does not inly lie on the local business prospects but also includes international business ventures (Abed, Hellyer, Vine, Al-Abed, Vine, & Hellyer, 2004). Moreover, there are plans for opening up of a total of fifty branches across the globe to incorporate countries like the United States, where online banking systems form the major pillar of formation. This implies that the current position of the firm lies in the genre of being the largest share holder in terms of funds and capitalization of market.


The ADCB is constrained to the production and sale of all financial goods and services where the force of drive emanates from diversification in the products geared towards consumer satisfaction. The major banking services offered in the bank include online banking, which utilizes the mode of online transfer for its consumers. This form of cash delivery is faster than the conventional modes that were made up of manual delivery. Moreover, mobile banking is a phenomenon that is practiced to the satisfaction of consumer needs, where the customers use the registered communication lines to carry out transactions within and without the firm. Mortgages are also consumer products evident in the firm, in which ADCB pays out loans on goods out of reach of cost on behalf of its consumers. For instance, the company advocates for the payment of loans on houses and homes for its consumers through the mortgage programs that are varied according to the consumer needs (Ciampi, 2009).

The goods and services provided within the company are of high demand and elastic, in which the consumers reach out for the cost leadership roles evident in the firm. This is from the fact that the company researches into the new market trends to come up with modes of consumer satisfaction through controlling the market prices. This aspect of cost leadership elucidates the validity of elasticity in the demand in that the higher the price the lower the demand for the goods. On the contrary, the efforts to provide the rigidity in demand by lowering prices compromises the profitability of the firm, which adversely affects performance and linearity with the visions and values.

Economic Environment

The firm has a high monopoly of the business share market due to the fact that its basis of formation depended on the merger of the parent companies. This implies that the company had an established system of capital acquisition to fund all the projects geared towards research into new modes of production and expansion. For instance, the current branches found overseas are as a result of meeting the capital needs that the liquidating companies could not raise while operating as separate entities. The essence of research into new modes of production and utilization of technological advancement has led to the monopoly of the market shareholder funds and the capitalization in market. The only threat to the company is the “Abu Dhabi National Bank”, which is a close competitor in terms of cost leadership (Group, 2010).

Profitability of the firm

The rate of annual profitability within the ADCB is stands at 6%, which is close to the estimated annual profit of 10%. This implies that the company operates at a deficit of 4% annual profits due to reduced sales of production and increased cost of production geared towards expansion. The major boosts to the increased performance in terms of profitability are due to both the capital adequacy and sourcing for low labor harbors for expansion. For instance, the current branches based in both India and the UK is as a result of low labor prospective sources that have led to the increased reduction in cost of production. On the other hand, the ration of operating profitability to the capital adequacy is on the increase, where the profits accrued from one business endeavor are reinvested into the firm for expansion of business projects. This ahs led to increased profitability since the rate of input in proportional to the rate of output (Group, 2010).

Consumer and societal perception

The consumers of ADCB perceive the products within the firm as being of higher quality in comparison with the cost. This is due to the sound definition of cost leadership within the company, in which the consumers assume that the first price set for the products on goods within the firm is the rightful price that the consumers need to account for. On the other hand the society perceives the firm as the meaningful atmosphere due to the charitable campaigns that the firm provides for he locals. In a move to achieve a sound correlation between the external environment and the business environment, the firm carries out charitable organizations for promotion of its image. This helps to create a rapport between the company and the society (Abed, Hellyer, Vine, Al-Abed, Vine, & Hellyer, 2004).


The ADCB is a firm that incorporates the ideologies of the predecessor companies, in which it practices the definition of diversification of production and cost leadership. The firm has established itself from a microeconomic enterprise based in the UAE to include moves of expansion to countries like India and the UK (Boermeester, 2007). The overall practice of diversification in production and cost leadership has led to the aid to the acquisition of the consumer satisfaction. This has also increased the demand for the products as the new goods and services act as a subsidy to the consumer needs. By consideration, the demand for the goods provided within the firm are of elastic value due to this diversification in production. For instance, the system of online banking is centered upon a low demand base due to the cost of production compared to the mobile banking. Consumer preference is the constant factor for this elasticity in the demand for goods and services within the firm.

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