E-Poster

Posted: January 5th, 2023

Student’s Name

Tutor’s Name

Course

Date

E-Poster

Element	Description
Statement of the problem	The problem is the need to partner with another company to overcome Noor’s economic tribulations and to become part of a leading player.
Significance of the problem	The problem helps to create the urge adopt effective plans when contemplating making change.
Description of the research method	The study uses the mixed research method that incorporate both qualitative and quantitative features.
Presentation of results or expected results	DIB is projected to become one of the highly competitive Islamic financial institution in the UAE and the world.
Summary	Acquisitions work well when all parties exercisediligence, good communication, appropriate leadership, and teamwork.

Abstract

The paper presents the findings of a research regarding DIB’s acquisition of Noor. It illustrates how following an agreement between the management of both financial institution, the firms followed the guidelines of appropriate change models to form a joint operation. Even though the acquisition may not satisfy all stakeholders, especially on Noor’s side, leaders from both sides think that the approach provides a better chance to achieve higher aspirations. DIB looks forward to become one of the greatest Islamic banks in the world, while Noor is proud to be part of the leading corporation. The information and entire plan on the acquisition provide valuable information to other operators that may help to make wise strategic decisions.

Change Management – The Acquisition of Noor bank

Introduction

Change is an inevitable process that an organization is likely to undergo in the course of its operations in a bid to advance its strategic position and become increasingly competitive. The way an organization manages changes matters significantly because this could determine whether the group attains the anticipated objectives or not. The report pays attention to how Noor and DIB handled change at a time when the latter acquired the operations of Noor. The findings provide valuable lessons that may help both the merged companies and others that wish to make such strategic moves. Operators in financial and non-financial sectors learn the need to adopt an effective change management plan that provides clear guidance on what ought to happen during the entire transformation process. They understand the importance of developing mechanisms for countering possible resistance that is likely to occur from workers who feel that the changes do not favor their individual interests. Businesses learn the values of setting their motives clear before making any strategic moves to be certain of the potential consequences and to avoid risks. Similarly, the study illustrates the implications of the merged operations between Noor and DIB, and other firms can also acquire helpful information from the section. The study relies on a mixed-method research design that provides the chance to interact with the organizational leaders and employees and draw vital data that help to answer the research questions.

Noor Background

Noor Bank, previously called, Noor Islamic Bank, was established by Sheikh Al Maktoum on 7 January 2008 in Dubai, UAE. The institution fully abides by the directives of Sharia law based on its location and target buyers, who are mainly local Muslims and those visiting from abroad (Noor Dubai Islamic Bank). The group provides a wide range of services, including; trading services, Islamic-based insurance, wealth management, and personal and corporate banking. The facility has stabilized its position across the country, and manages multiple stations in Al Ain, Dubai, Abu Dhabi, and Sharjah. The group has continued to improve its practices, and in 2018 the financial institution was recognized as the 11^th most promising bank in the UAE (Noor Dubai Islamic Bank). The institution developed the initial 24-hour, seven-days-a-week facility in the UAE barely four months after its first opening. It again established another station at the Dubai Airport three months later, and a year later recognized as among the top lead arrangers. The group recorded mixed performance between 2009 and 2011 because whereas it performed poorly in the first two quarters of 2010, it recorded significant outcome by the end of 2011 (Noor Dubai Islamic Bank). The facility continued improve its operations throughout 2013 when it collaborated with Emaar Properties, initiated Noor Trade, which focused on serving small and medium enterprises. Noor Bank’s performance improved in 2014 when it reportedly tripled its revenue and shed off the name ‘Islamic’ from its name to appear more inclusive (Noor Dubai Islamic Bank). It was in 2014 when the company strengthened its capacity to relate with its buyers, while paying considerable attention to fostering its collaboration with governments, businesses, investors, and individuals across all sectors (Noor Dubai Islamic Bank).

Noor Bank worked hard towards achieving its vision, mission, and values. Its chief vision is to be acknowledged as the globe’s best modern financial institution that is in compliant with Sharia regulations. Its mission is to empower employees to give outstanding consumer experiences (Noor Dubai Islamic Bank). The primary values at the bank, encompass innovativeness, integrity, collaboration, agility, and excellence (Noor Dubai Islamic Bank). The group’s leadership abides by these guidelines in pursuit of its core objectives.

Organizational Structure and Management

The Government of Dubai and the Royal Family in Dubai own the largest shares of Noor Bank. The government together with members of the Royal Family own more than 80% of the institution’s shares, and affiliates of the Abu Dhabi Royal Family own the rest of the shares in total (Dubai Islamic Bank). Sheikh Ahmed Bin Mohammad served as Noor Bank’s Chairman from 2016, and worked with a Board of Directors. The facility’s leadership continues to follow Sharia regulations even after its acquisition when His Excellency Mohammed Ibrahim Al Shaibani, who also functions as the Director-General of His Highness, the Ruler’s Court of Dubai assumed the role of Chairman (Dubai Islamic Bank). H.E Mohammed works closely with Dr. Adnan Chilwan who serves in the capacity of Group Executive Officer (Dubai Islamic Bank). These two leading officers receive help from various departments that focus on different aspects, but work towards achieving a common goal. Leaders apply top-down communication, which is a type of issuing information, instructions, and communication within a business utilizing a hierarchal framework. The approach works in such a way that information from the highest-ranking officials within the bank move down to workers using the organization’s managerial plan (Dubai Islamic Bank). 

Need for Change

Corporations apply the concepts of change for a number of reasons, such as to reduce costs, mitigate dissatisfaction at the place of work, improve managerial benefits, and boost growth and build a better position in the target market. Brisson-Banks (245) argues that adopting change provides workers with the chance to acquire new information and skills, and to discover new opportunities and apply their creativity in ways that finally benefit the firm through heightened commitment and new ideas. Soon after Noor was set for the acquisition by DIB, it adopted the Kotter’s 8-step change framework, which implies that for change to be prosperous, at least 75% of the organization’s leadership needs to pay much attention to the change (Brisson-Banks 248). The framework requires the team implementing change to consider eight key steps in implementing change.

Noor while planning for the change focused on the first two steps of Kotter’s 8-step change model; creating urgency and forming a robust coalition. Brisson-Banks (250) informs that for concrete change to take place, it is only possible if the entire organization really needs it. Team leaders and workers, therefore, need to create a sense of urgency around the requirement for transformation because this may help to ignite the first motive to get things running. Noor’s management knew that it was not all about showing stakeholders about the poor outcome or escalating competition, but rather about forming an open and convincing conversation about what it taking place in the marketplace and the level of competitiveness. The management at Noor handled the first step by identifying possible threats and forming scenarios describing what could emerge in the future. It also examined the possible chances that could be utilized before commencing an open dialogue that would get people thinking and talking. The group while focusing on the second stage, developing a strong partnership, dwelt on convincing people that change is inevitable. The group at this stage applied strong leadership and reached for support from vital people within the financial institution. Noor while handling the second phase acted in accordance with the directives of Brisson-Banks (250) who urges team players to identify real leaders in the firm, as well as involve important stakeholders. The company asked for the emotional indulgence of the key players, and promoted team building to achieve the desired change.

Noor paid particular attention to the third, fourth, and fifth aspects of Kotter’s model; developing a vision for transformation, communicating the vision, and eradicating possible hurdles. The group established a vision for change by first contemplating about needed transformation and utilizing the many options and solutions available to them. Brisson-Banks (251) inform that forming a clear vision can help each member of staff know why the company asks them to do something. Noor established a framework that outline the organization’s future, and selected a team to oversee the implementation of the aspiration. The firm while communicating the vision in the fourth stage, tried to relay the message as frequently as possible using the most powerful approaches that appeal to everyone. The firm acted in accordance with the directives of Brisson-Banks (251) who asserts that it is not necessary to convene special meetings to communicate the organizational vision when adopting change, instead it is wiser to explore each available opportunity. However, the management tried to consider people’s anxieties and concerns honestly and openly when expressing the vision. The corporation minimized obstacles by working with competent team members who know their roles and are conversant with appropriate ways for delivering change. The corporation also followed the guidelines by Brisson-Banks (252) by recognizing and appreciating people for accepting and working towards enacting change. Noor paid much more attention to the change process to achieve the desired outcome.

The firm focused keenly on steps six, seven, eight of Kotter’s model – creating short term wins, building on the change, and strengthening the transformations in the organizational culture. The team while formulating the short-term wins gave members a taste of early victory because Brisson-Banks (252) informs that nothing provides more motivation that prosperity. Thus, the group focused on what it can easily achieve while ensuring everyone that the move is for the good of the entire organization. The group’s management did not focus on goals that are difficult to achieve, and which would cause more discomfort within the entire workplace. Noor while paying attention to the seventh phase (building on the transformation) was keen not to become overexcited before attaining the real aspirations. Therefore, the group leaders focused on fulfilling all aspects before moving to the next category. They analysed each phase looking at what went wrong and what worked in accordance with plans and identified ways for making advancements. Finally, the anchored the adopted changed in the organizational culture by reminding stakeholders about the progress, and reminding everyone of the main objectives.

Methodology

Study Design

The study employs the mixed method approach, which entails using both qualitative and quantitative techniques. The mixed approach is more suitable in this case because it provides a chance to know the contradictions existing between qualitative findings and quantitative outcomes. Moreover, the research method is suitable because it gives a voice to respondents and ensure that study results are grounded on their experiences. The research design is also suitable because it familiarizes the researcher with the skills of conducting both a qualitative and quantitative study, which increases their likelihood of conducting future researches with ease. However, mixed methods have their limitations. An apparent drawback is that the technique requires much skill and resources, a situation which may require the incorporation of experts.

Research Questions

• What were the reasons for executing the Change?
• Did you meet any resistance to change? What were the mechanisms for addressing the resistance?
• What approaches did you use to implement change?
• What were the implications of the Acquisition?
• What other measures were adopted to improve the functioning of the merged groups?

Sample

The study includes the organizational leaders for both Noor Bank and Dubai Islamic. Specifically, the study incorporates the Director General and Chief Executive Officer from both DIB and Noor Bank because they are in a better position to explain why both firms choose to take the strategic move. However, the study also includes employees in particular departments who are in a better position to provide valuable information regarding the research questions. However, all the participants first fill a consent form where they confirm they will take part in the study. The primary qualifications for participants to be part of the study is that they must be an employee at either Noor or DIB, and must have the ability to communicate using English. The study applies the stratified sampling method, which categorizes potential respondents into smaller units called strata before conducting further analysis to pick those who are likely to provide the highly needed information. Whereas the sampling approach provides a fair chance for everyone to take part in the study, it also ensures that those who participate are able to provide relevant data that would answer the research questions.

Data Collection

Data collection happens using e-mail interviews because of the several advantages researchers enjoy when they use the technique. Upon completing and submitting the consent form via email, the participants receive an open-ended questionnaire where they submit their response in a way that satisfy them.  

Data Analysis

The study applies the descriptive analysis method, which entails describing and summarizing the nature or results of the collected data. The description makes it easier to understand the key concepts behind the responses, thereby providing the chance to find suitable responses to the research questions.  

Findings

Acquisition Motives

Several factors pushed DIB to acquire Noor. One of the major driving factors is DIB learned that Noor was willing to give away its assets at very reasonable price (Hassan et al. 711). DIB utilized the rare opportunity and projected a promising future for the firm by investing in Noor’s assets. The other motivating factor that pushed DIB to acquire Noor is to diversify its operations as a way of minimizing risk (Bodt et al. 763). Bodt et al. (765) describe how most companies practice diversification by taking over the activities and portfolios of other company to mitigate company and industry-specific threats. DIB’s leaders reveal that acquiring Noor presented an opportunity for decreased volatility in earnings and risks while boosting potential gains by owning Noor’s assets. DIB according to Bindal et al. (770) acquired Noor to achieve financial and operating synergies, such as the ability to set higher prices for services and goods and different functional capabilities from each institution.

The representative from Dubai Islamic Bank reported that the group clearly acknowledges the significance of upholding strong regulation and will remain dedicated to ensure that consumers, investors, and corporate affiliates enjoy the utmost confidence in the new joint operations with Noor Bank (Dubai Islamic Bank). DIB believes that the fusion of the two activities will further strengthen its position as one of the biggest and most influential Islamic financial organizations in the world, with a long-lasting track record of financial gain, a clearly established plan, and a vigorous balance sheet (Dubai Islamic Bank). The management and shareholders at DIB are confident that the new scale and size will permit the robust organization to gain new opportunities for economic advancement and prosperity across the entire region, while ensuring that the financial sector in the UAE remains at the forefront of the economy in the Islamic world (Dubai Islamic Bank). On an international level, DIB will expedite its growth plan to join the dots from East Africa, the sub-continent, and the Far East with Dubai as the place with new locations and markets emerging for one of the most prominent Islamic financial institutions in the globe.

Resistance towards Change

The organizational leaders at Noor Bank reveals through the interview that some workers at were resistant to embrace the new changes. According to the former leader of Noor Bank, some employees feared that the shift would make them to lose their jobs. Some workers at Noor feared that due to the high number of employees at DIB (9000 members of staff) may render the 1,200 to 1,400 workers at Noor jobless, thus magnifying the level of fear among them (Kudakwashe). In addition, many workers feared that their voice regarding the entire acquisition process may not be heard considering that the government played a vital role during the changeover. The interview reveals how team leaders became aware of the escalating tensions and decided to address the matter by interviewing all specific workers to find out if they will be able to fill certain positions. Furthermore, the group managed to handle the discomfort by getting the human resource teams from both sides together to come up with a suitable framework for absorbing Noor’s employees. John Iossifidis, the CEO at Noor, reminded workers at the facility to prepare for some changes as they shift to the new facility, which helped to condition employees to prepare for the changes.

An interview with Dr Adnan Chilwan, the CEO of DIB, reveals how the facility tried to address the resistance to change using various techniques. Chilwan informs that even though some departments did not have any vacancies, the bank created new positions to accommodate the additional workers. Response from the HR team at Noor revealed that only approximately 300 workers out of the 500 selected employees were absorbed at DIB to fill different positions. One employee from Noor expressed his pleasure to get the position at DIB saying that the company provides workers with better exposure and more opportunities to improve their career. However, the response from one worker who joined DIB expressed displeasure, and claimed that he is considering finding another place of work (Kudakwashe).

An interview with the organizational leader (Chilwan) also reveals that the firm experienced considerable challenge in maintaining asset quality. The CEO attributed the problem to the weakening property market with United Arab Emirates and because of a slowdown in global economy (International Finance). DIB viewed its acquisition of Noor as a suitable approach to overcome the external complications, and also thought that reducing the number of employees will provide a suitable alternative. However, the decision to lower the number of workers was met with much resistance, which compelled the firm to hold interviews to pick skilled and qualified workers to continue working for the merged entity. Thus, DIB encouraged all workers not to worry about job loss until after the interview is over, and it is clear who joins or leaves the merged entity.

Adopted Measures

Dr. Chilwan presented other important information regarding the measured DIB had adopted to ensure that operations between the two parties happen without any hurdle. The leader said that the bank hired HSBC Holdings Plc to provide valuable information concerning the most suitable way to complete the acquisition of Noor. The consultations provided helpful guidance, which resulted in an increase in DIB’s capital assets by thirty percent after completing the deal. Also, DIB sought the services of Ernst & Young (EY), which provided helpful guidelines on how to fruitfully implement the entire project. DIB knew that buyers would still be confused regarding the joint effort and chose to clarify things for them. To facilitate proper interaction between DIB and its buyers, the financial institution issued direct consumer communications in the form of direct calls, electronic direct mails (EDMs), and short message service (SMS). Relaying the messages and information was important because this helped customers to know how the merger would function, and what they need to do if they require any service. The primary objective of the approach was to keep buyers up to date with all service and system enhancements, while improving the present consumer services. The management believes that providing the relevant information will help to improve consumer satisfaction, and will make buyers happy for being attended to by the largest financial institution with a broader reach and robust brand. Consequently, the management adopted a timeline for 300 days under which it would complete all the adopted plans. However, because the management adopted some of the most effective ways to handle the entire project, it was possible to meet the required targets within 283 days, thereby achieving all the targeted plans seven days before the identified timeframe.

Critical Success Factors

The concept of critical success factors has continued to attract the attention of many operators in the field of project management. The concept develops at a time when the area of mergers and acquisition continue to make significant growth over the last twenty years, largely because of globalization (Hoang et al. 17). Consequently, researchers have spent considerable time examining components of critical success factors that add onto a prosperous acquisition. They provide valuable information concerning the factors to consider when considering entering into an M&A, which may be of significance to those who wish to enter into such partnerships. For example, Rockwell (125) recommends that when entering into an M&A deal, it is imperative to consider several factors, including identifying and outlining the primary objectives for the acquisition, outline what the acquirer is likely to get from the acquisition, examining the management’s capabilities and resources, executing the required plan within the suitable time, and addressing the challenges that could interfere with the entire process. Other factors to consider while entering into an M&A deal such as the one between DIB and Noor Bank identifying the organizational niche, and considering factors that impact on business outcome. Hoang et al. (18), on the other hand, feel that planning M&A requires the participating sides to consider several essential factors, including developing clear goals and objectives, developing a structural scope of work, practicing buyer consent and consultation, and promoting engagement from team members and leaders. Also fundamental according to Hoang et al. (2008) is that team leaders in charge of a project need to develop proper communication models, which make it easy to relay information from one person or group to the other. Hoang et al. (18) think that it would be a good idea to consider other essential components, including creating a detailed strategic plan, recruiting and working with specialists from M&A advisory organizations, and establishing outlines so that the organization know how long it would take to complete a particular obligation or task.

Discussion

The joint operations between Noor and DIB provides valuable information concerning how to improve strategic position through M&A. The lessons from the joint operations may be of significant importance to other operators in the financial and non-financial sectors. They learn that the journey of building a joint operation is filled with different measures and requirements. Businesses learn that they may have to enter into a merger or acquisition for different objectives – most commonly to attain economies of scale or scope and to present new products and services to an existing consumer (Soundarya, Lavanya and Hemalatha 69). However, the joint operations between Noor and DIB present other valuable information to companies that wish to form similar approaches. Firms learn the need to determine whether it is the most suitable time to proceed with the union or acquisition. A vital factor to consider is to be financially stable because if a firm contemplates acquiring the activities of other firms, it must be financially capable to handle the process (Soundarya, Lavanya and Hemalatha 69). The firm must be in a good position, getting revenue with robust product-market fit and encouraging and committed investors behind the company. It is apparent in this case that DIB would not be in a position to acquire Noor if it lacked financial strength to complete the deal. Another important factor that other firms learn from the acquisition of Noor by DIB is the need to rule find out whether it is the most appropriate time to proceed with the acquisition. Soundarya, Lavanya and Hemalatha (70) inform that other than building financial strength, it is imperative to develop the capacity in terms of group size and traction to make an acquisition more visible and viable, but many companies are yet to achieve this objective. Acquiring the operations of another firm can appear to be a simple task from a quick look, but it is essential to consider several major factors that would make it possible to excel in the target markets.

Corporations that seek to form ties with other groups must consider several other factors to achieve successful cooperation as it happens with Noor and DIB. The acquiring company must take all factors into consideration and ensure that the organization is the right fit for the company. Soundarya, Lavanya and Hemalatha (70) argue that if the firm is adequately prepared to acquire the operations of other firms, the next phase is to determine what type of business to acquire. DIB, for example, acquires the operations of a financial institution, which is a perfect match taking into account that it operates in the financial sector. However, a company may consider acquiring the operations of other firms that do not belong to its sector if considers diversifying its operations and expanding its portfolio (Rockwell 126). A firm that opts to acquire the operations of companies that do not operate within its sector need to consider prepare for additional expenses because it make some adjustments to function in the new sector without much complications. It would be an added advantage to acquire a firm that has almost similar views, aspirations, and values. Businesses seeking to form ties with others must know that communication is vital, inside and outside the company. Corporations that want to form ties with others must have an effective communication plan that facilitates interaction between all parties (Rockwell 126). The communication plan should give all parties equal chance to express their views and desires, and should outline proper ways for addressing sensitive matters. Finally, it is important to consider all the relevant laws that are necessary when forming a joint operation. Rockwell (127) asserts that knowing the necessary company and antitrust regulations, as well as securities laws, when moving through the deal. In addition, it is essential to be conversant with all exclusivity deals as the participating firms work on the deal and all related processes. However, failing to incorporate these essential factors may derail the attempts to form a stable and long-lasting relationship that would yield the anticipated results.

Summary

Businesses when entering into partnerships have the objective of expanding and surviving difficult times as it happened with Noor Bank and Dubai Islamic Bank. The acquisition of Noor by DIB has put the latter at a more competitive position, with the facility now functioning as the second-largest financial firm worldwide. Nevertheless, the joint operation is more likely to succeed if all stakeholders pay attention to key components such as acting with necessary diligence, proper communication, proper leadership, and collaboration. The facilities followed a suitable change model and engaged others in adopting the change. Other companies in the financial and non-financial sectors can gain valuable lessons from the acquisition that they can use to improve their practices.

Works Cited

Bodt, Eric, Cousin Jean-Gabriel and Roll Richard. “Full-stock-payment marginalization in merger and acquisition transactions.” Management Science, vol. 64, 2018, pp. 760–783.

Brisson-Banks, Claire. “Managing Change and Transitions: A Comparison of Different Models and their Commonalities.” Library Management, vol. 31, 2010,pp. 241–252.

Dubai Islamic Bank. “Dubai Islamic Bank.” Dubai Islamic Bank, 2020, https://www.dib.ae/about-us/news/2020/01/22/dib-completes-the-acquisition-of-noor-bank Accessed 30 December 2020

Hoang, Thuy et al. Critical Success Factors in Merger & Acquisition Projects: A Study from the Perspectives of Advisory Firms.

http://www.diva-portal.org/smash/get/diva2:141248/FULLTEXT01.pdf  Accessed 30 December 2020

International Finance. “DIB Becomes World’s Largest Islamic Bank with Noor Bank Acquisition.” International Finance, 3 January, 2020, https://internationalfinance.com/dib-worlds-largest-islamic-bank-noor-bank-acquisition/ Accessed 30 December 2020

Hassan, Ibne, Ghauri Prevez and Mayrhofer Ulrike “Merger and Acquisition Motives and Outcome Assessment.” Thunderbird International Business Review, vol. 60, 2018, pp. 709–718.

Kudakwashe. “DIB plans to reduce headcount following the merger with Noor Bank.” Kudakwashe, 2020,

http://www.assaif.org/index.php/NewsCom/Noor-Bank-reshuffles-board-ahead-of-merger-with-DIB Accessed 30 December 2020

Noor Bank. “About Us, Financial Icon of Dubai – Noor Bank.” Noor Bank, 2020, https://www.noorbank.com/about-us Accessed 30 December 2020

Rockwell, Wallace. “How to acquire a company.” Harvard Business Review, vol. 46, no. 5, 1968, pp. 121–132.

Soundarya, Baby, Lavanya Moghana and Hemalatha Sela. “Merger and Acquisition of Business Organization and Its Impact on Human Resources.” Journal of Business Strategy, Finance and Management, vol. 1, no. 1, 2018, pp. 69–72.