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Abu Dhabi Stock Exchange’s Business Model and Status

Business Model and Components

Abu Dhabi Stock Exchange functions under the recurring revenue business model, which is characterized by earning revenues from hosting several companies expected to pay a commission and annual subscription fee (Oxford Business Group 23). The aim of the recurring revenue model is for Abu Dhabi Stock Exchange to recruit a series of medium and large corporations to pay listing and subscription fees for hosting their stocks. The subscription model of the company has three main components, which are value proposition, value architecture, and profit equation.

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Value Proposition

Abu Dhabi Stock Exchange has more than 2,000 direct subscriptions from the local and international corporate organizations in search of a platform to host their stocks. Moreover, the company has direct clients consisting of those who purchase stocks, EFTs, and mutual funds (Oxford Business Group 29). The main services sold by Abu Dhabi Stock Exchange are data fees, hosting fees, annual subscriptions, and direct stock selling on a commission. The prices for these services range from as low as 50AED to 100,000AED (ADX). For instance, depending on the type of stock being traded, a client has to pay a 4% commission for direct buying of stocks to the company (Oxford Business Group 31). On the other hand, companies have to pay annual subscription fees of 25,000AED in addition to a one-time listing fee, depending on the size of an organization.

Value Architecture

Abu Dhabi Stock Exchange has a stable value architecture detailing the process of delivering value promotions. For instance, the value chain is streamlined and managed from a single location. This is necessary to cut costs associated with duplication of duties and tracking of business trends. Among the notable resources the company has employed to guarantee value architecture include a data center, a stock hosting platform, physical trading venues, online trading support, and a 24/7 customer care service (Oxford Business Group 18). These activities have created a strategic and focused operation management system angled on efficiency, reliability, dependability, spend, and general quality.

Profit Equation

The profit equation for Abu Dhabi Stock Exchange has been modeled to ensure annual revenue increase through product diversification and increased subscriptions. Moreover, the company is at the forefront in inventory management to track costs and manage different bundles of resource inputs for optimal outcomes (see table 1). At present, the company is one of the most successful businesses due to its low inventory cost and high revenue. The company employs substantial investment in promoting and managing different client accounts (ADX). However, the capital employed for each account is dependent on the cost of managing that account and expected returns. For instance, the cost of hosting and managing a large corporation’s account is higher than that of a medium establishment.

Business Operating Model Canvas

Table 1. Business operating model canvas.

Key Partners:
  • Large corporations
  • Medium corporations
  • Individual entities
  • Government institutions
Key Activities:
  • Stock trading hosting
  • Data provision
  • Customer care hosting
  • EFTs and mutual funds
  • Consultancy services on stock trade and process of IPO

These activities are hosted on the company online and offline stock trading platforms

Value Propositions:
  • Customized service
  • Research and innovation
  • Security and reliability
  • Exposure to wider market coverage
  • Produce and service diversification to serve different markets
  • Market based consultation for optimal return
Customer Relationships:
  • Business-to-customer model
  • Business-to-business model
  • 24/7 customer care support
  • Discounts and free negotiated advertisement
  • Discounted consultation and service fees
  • Continuous research services and availing data that is accessible by all clients
  • Customer training services on trading and forecasting
Customer Segments:
  • Private corporations
  • Public corporations
  • Government agencies
  • Individual entities
  • The customer segments are further classified not corporate and individual clients. The corporate clients are organizations while individual clients are persons interested in trading in shares
Key Resources:
  • Hosting platform
  • Trading venue
  • Customer care center
  • Consultation offices
  • Direct communication
  • Online support platforms
  • Website
  • Direct call center
Cost Structure:
  • Continuous inventory control
  • Division of cost variables
  • Proactive cost tracker
  • Monthly costing
  • Monthly cost forecasting
Revenue Streams:
  • Data fees
  • Listing fees
  • Commission from each stock bought
  • Consultation fees
  • Subscription fees

Position of Abu Dhabi Stock Exchange

Abu Dhabi Stock Exchange falls within the first quadrant, that is, fashionistas. The company is modeled around modern technological advancements. For instance, the entire trading platforms have been digitalized to accommodate the advanced technological innovations such as cloud support and an innovative intranet network. The systems controlling operations, finance, human resource, and logistics have been digitalized through a proactive process management characterized by an integral technological innovation. The company has a fully digitalized website and an active online support network for the customer care and online trading of shares. The financial board is fully digitalized and indexes self-adjusting (Osterwalder and Pigneur 35). The trading center is equipped with the latest technology from bidding, placing orders, invoicing, and actual purchase of stocks. There are active support staff personnel within the trading venue who are well equipped with different communication gadgets. By just a click of a button, a customer is able to access most of the company’s products and services from the front office without having to manually place an order. The bidding and purchasing gadgets are installed all over the stock buying and selling venues.

Despite these digital features, the company does not have an overreaching vision since the current technological support is based on a need-basis. This approach is limiting in terms of proactive technological integration. This means that the management of the company is not empowered to make decisions on the digital direction in service provision. For instance, the information technology support personnel are only allowed to keep the digital features in operation and not make any adjustments. At present, the coordination of all IT related services are managed from an external point through a contracted company. Although the contracted firm is effective in their job of technological support, the lack of vision for an all inclusive digital advancement within the company is wanting. This means that the company might not remain competitive in the digitalization endeavors since most of the vendors only think of their interests and are very expensive to sustain in the long-run. The limiting vision is also a leadership challenge since it makes the process of planning for the future activities unstructured (Spinelli and McGowan 66). For instance, the current simple vision might not support the leadership strategy of business expansion.

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The coordination between different activities in the company is equally wanting. It takes almost 20 minutes to run a feedback since it has pass through the servers of the outsourced technological support company. Moreover, the simple technological and digital features within the company’s activity modules might not be effective in sustaining prolonged engagement, especially in the sensitive stock exchange market. Unfortunately, the current technological support of Abu Dhabi Stock Exchange might be exposed to external attack since the security features and layers are simple. As a result, the company might face future challenges in coordinating activities, especially when the current proposal for expansion is adopted and integrated within the operational controls. The relatively simple process coordination is a blessing and a limitation in equal measure (Spinelli and McGowan 75). For instance, in the event of an external system hack, it would take a long time for the management to realize its source and strategies for address.

The company’s digital culture is not as effective as it should be because most the employees are not subjected to frequent relevant training. For a company of Abu Dhabi Stock Exchange magnitude, the digital culture should be modified to include frequent training modules on equipment use and support for effective service delivery. Although the company is currently operational within desirable technological network, the success might not be sustainable in the long run (Osterwalder and Pigneur 27). The leadership vision of complete digitalization might not be realized by the simple digitalization strategy in place at the moment.

Placing Abu Dhabi Stock Exchange on Operation Model Quadrant

The Abu Dhabi Stock Exchange falls within the third quadrant of the operating models, which is diversification. Since the company has a series of products and services within the financial stock exchange market, it had applied the diversification strategy to create different brands of services that appeal to several customer segments (Spinelli and McGowan 87). For instance, Abu Dhabi Stock Exchange has more than five independent business units dealing with a set of products and services. The notable units include the stock trading platform, data service business, customer care center, EFTs branch, and the mutual funds segment.

Moreover, the Abu Dhabi Stock Exchange runs a consultancy department to offer services to customers interesting in buying or selling stocks (Oxford Business Group 23). These divisions operate independently under the umbrella of the Abu Dhabi Stock Exchange brand name. Each unit has a different set customers and expertise. For instance, the data service unit is for companies trading online under a common platform. This service is offered in the form of monthly bundles and currently serves more than 1,000 active subscriber companies. On the other hand, the mutual funds unit serves mostly the individual clients looking to borrow from the company for the purpose of buying stocks. The mutual funds unit has an active and complete organizational management structure.

The customer care unit is equally operated an independent entity that supports the services of the other operations (Oxford Business Group 23). Specifically, this unit is active in market research and tracking customer feedback for general purposes. Functioning on the customer-to-customer and business-to-customer support models, the customer care center also runs the Abu Dhabi Stock Exchange charity foundation and other CSR initiatives (ADX). As a result of the magnitude of operations and general market coverage, the Abu Dhabi Stock Exchange has a stable IT capability that is centralized to reduce the cost of technology support and improve efficiency. For instance, all the units of the Abu Dhabi Stock Exchange are managed by the IT department at the headquarters. The centralization strategy is aimed at optimizing the economies of scale without interfering with each independent business unit. This model has been relatively successful in balancing the need for a cost effective IT support that can serve the Abu Dhabi Stock Exchange business web (Osterwalder and Pigneur 39). As a result, the company has been able to remain competitive and relatively efficient in business operations management, especially in relation to IT support and management of each unit.

Moving from Fashionistas to Digital Master Quadrant

The current simple and not overreaching vision should be transformed into a strong overreaching digital vision. This can be accomplished through complete overhaul of the current digital strategy to include long-term and sustainable technological practices. Moreover, the company should incorporate a strong and dynamic governance system that is managed through a top-bottom approach to track every event and successes of each digitalization strategy (Spinelli and McGowan 89). Moreover, there is a need to incorporate a series of digital initiatives such as introduction of a research and development sub-department within the IT department. The proposed sub-department can perform the duty of proposing and implementing digitalization initiatives that have a 360-degree feedback tracker. This will ensure that each initiative is supported by a clear and measurable goal that has the effect of improving the general business value. In addition, the current simple digital culture should be replaced by a systematic and proactive alternative that has strong features such as periodic effectiveness trackers, frequent training modules, and constant system testing for strength and effectiveness.

Works Cited

ADX.“Company Disclosures. Abu Dhabi Securities Exchange.”ADXNews. 2018, Web.

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Osterwalder, Alexander, and Yves Pigneur. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. John Wiley & Sons, 2013.

Oxford Business Group. The Report: Abu Dhabi 2015. Oxford Business Group, 2016.

Spinelli, Stephen, and Heather McGowan. Developing Sustainable Business Models (Chapter 11 from Disrupt Together). FT Press, 2014.

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