Strategic Management from an Islamic Perspective: Text and Cases

Chapter 13

Case 4: Bank Rakyata

The Strategic Challenge

Tuan Hajji Ismail was considering a discussion he had earlier in the day with his friend, Dr. Hussin. Dr. Hussin was working on a project to advise the Malaysian Ministry of Entrepeneur and Cooperative Development about the long-term strategy of Bank Rakyat. The two options were to continue business as usual by taking advantage of Bank Rakyat’s unique role among Malaysia’s cooperatives or to change its legal status in order to list on the stock market and use the money generated to venture overseas. Dr. Hussin gave Tuan Hajji some documents for him to look at before meeting up with some senior officials from the Ministry the following week. Tuan Hajji started reading.

The Cooperative Movement

The cooperative movement is a worldwide movement that started in the late eighteenth century. The fundamental idea was mutual help, and cooperatives have historically been a force to promote democracy and social justice. In fact, research suggests that cooperatives allow economic growth while better protecting the interests of communities. Recently, Claudia Sanchez Bajo and Bruno Roelants (2011) published a book entitled Capital and the Debt Trap. They start by analyzing the causes of the financial and economic crisis from 2007 to 2012. They note that the crisis is attributed to three traps: consumption, liquidity, and debt. Overall, cooperatives last longer and respond to customers’ needs better, as there are fewer financial reasons ...