Industry and Company

The selected industry is the banking and the selected company is First Abu Dhabi Bank. The company is basically selling general banking services which all other banks are also providing. The company tends to differentiate its products from the customers on the basis of certain different features. However, more or less, the customer perceives the product quite similar. This is also because the banking sector is highly competitive and it is difficult to differentiate the products due to lower margins and high expectations of the customers. As the products that the bank offers are basically services so we can say that the banking products are perishable, being one of the major quality of the service.(Speed, 2019)

Price Elasticity of Demand

The banking sector is highly competitive. The customers have a huge number of banks to choose from as the service providers and then there are numerous almost similar products offered by each bank. in such a case, the market for banking services or the market where the First Abu Dhabi Bank is operating can be said as pretty much the free competition situation if we talk in economic terms. As a result, the company is price taking and cannot decide the product for its services on its own. It needs to take care of the prices and costs of different services as other banks are offering and then price its products accordingly. As a result, the price elasticity of demand is quite high for the First Abu Dhabi Bank. It can change the pricing of its products very slightly as excessive higher costs as compared to other banks may alienate customers and they can shift their accounts to the competitor banks. So the demand can be said as elastic. This is because, as already explained, the higher price would reduce the number of customers wanting to do business with the First Abu Dhabi Bank.(Speed, 2019)

Main Competitors

There are around 36[1] banks operating in the UAE, which is quite a small country. So the competition is very stiff. Some of the major competitors of the First Abu Dhabi Bank are as follows,

  • Abu Dhabi Commercial Bank
  • First Gulf Bank
  • Dubai Islamic Bank
  • MashreqBank
  • Abu Dhabi Islamic Bank
  • Union National Bank

These banks are offering pretty much the same product as offered by the First Abu Dhabi Bank. However, each bank tends to differentiate its products through different add-ons and slightly changing the interest rate. Moreover, for corporate customers, each tends to be even more flexible in order to attract and retain them. (“Top Banks in UAE – Overview, and Guide to Top 10 Banks”, 2019)

Threats to the First Abu Dhabi Bank

First Abu Dhabi bank came into existence after the merger of two large banks, National Bank of Abu Dhabi and First Gulf Bank to form the largest bank in the UAE with total assets valued more than Dh670 billion. This merger proved to be highly successful because the newly formed bank also recorded a very strong financial performance post-merger and posted a net profit of Dh12 billion for 2018, up by 10 percent from Dh10.9 billion in 2017. So the bank is going strong. However, still, competition is the biggest threat (Maceda, 2019).

Banking products can be easily copied by the other banks and hence the customer relationship, high quality of service and continuous innovation to keep the customers interested, involved and loyal are very important (Mukami, 2017). So the major threat that the company needs to vary is the competition and needs to continually develop strategies to stay ahead of the competition.

The business of financial institutions depends a lot on the state of the economy. If the income in the country goes up, people would have fewer savings and would thus deposit less money in the banks. As a result, the business of the First Abu Dhabi Bank will go down and vice versa. In the same way, if the price of the substitute products goes down, the demand for the company’s products will also go down because the demand for substitute products will go up due to being cheaper. On the other hand, if the price of the substitute services and products goes up, the demand for the First Abu Dhabi products will also go up because the company’s products will seem cheaper as compared to the substitute products.

In the case of compliments, the situation would be exactly opposite to that of substitutes. If the prices of compliments go up, the demand for the banking services will go down and vice versa.


Speed, M. (2019). Pricing and Elasticity in Financial Institutions. Retrieved 8 November 2019, from

Top Banks in UAE – Overview, and Guide to Top 10 Banks. (2019). Retrieved 8 November 2019, from

Maceda, C. (2019). First Abu Dhabi Bank strongly denies report on merger with Abu Dhabi Islamic Bank. Retrieved 8 November 2019, from


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