Analysis Of Barclay’s Strategy

The banking industry is considered to be highly competitive and risky industry all around the globe. However, Barclays bank has been a major player in banking industry for longer period of time. In accordance with FTSE 100 index, Barclays bank is ranked among strongest firms at 16th position. As, performance of Barclays bank is improving day by day and it is maintaining its strong position in market, so, it is important to analyse their strategic management practices.Due to this reason, the current report is written on strategic analysis of Barclays bank (Frank and Sienkiewicz, 2015).

Barclays group PLC is the international financial provider which is performing its operation in Africa, Middle East, Asia, Australia, America andEurope, which is engaged in wealth management, investment banking, corporate banking, credit cards, and retail banking. It constituted Wealth management, Investment Banking, Corporate Banking, Retail Banking, each of which owns a large number of business units. The center of the group is comprised of Barclays’ important support. After 300 years of historical presence, the group performs its operations with the help of its subsidiary Barclays Bank PLC, in more than 50 countries and owns 147,500 employees and merger along with Absa group present in South Africa.

The group operates banking model for serving the clients and consumers and also for the optimization of risk-adjustedreturns for shareholders. Therefore, it protects, invests, lends and moves money for over 38 million clients and consumers internationally. It is the third largest bank of world respective to assets and largest provider of financial services within the world with major tier one ratio of around 11 percent. In the United Kingdom, it is the third largest bank which is dependent over capitalization of the market, with its headquarter at 1 Churchill Place in England, London. They moved there in the year 2005 from the street of Lombard in London (Kumi et al, 2013).

2. Analysis of Barclay’s strategy using the 5 P’s framework

2.1. Plan

Plans are considered to be highly important for success of any organization. With respect to plan, strategy is linked with the ways or approaches used by managers or leaders for establishing direction for organisations (Hitt et al, 2012). According to Hill and Jones (2013), this element of strategy helps in setting organisations on predetermined courses of action. In Barclays, plans have been advanced for becoming a top five global bank with a strategic refresh of its internet business. The organization has focused on lesser costs but the strategic plan of Barclays is to bring improvement in its cross-channel collaboration, high satisfaction of customers and increased sales volume. In the bank, there is an optimized decision making and risk is mitigated for IT investment with new model of ROI and a better informed commercial view of the market.

Barclays Bank is suffering from dynamic and exciting challenges in the 21st century, so it focuses on strategic thinking and using corporate techniques for becoming strategically competitive. The management sets directions before implementing any kind of strategy. The bank gains sustainable or sustained competitive advantage through developing a technique which cannot be duplicated by other organizations. The corporate technique involves the actions, decisions, and commitments needed for the organization to acquire strategic competitiveness and for earning more than average returns.

In February last year, the management of bank set out an ambition for Barclays to become “Go to” bank. Barclays has got a lot of success in this plan. There are a number of big businesses owned by Barclays and they are showing high performance and delivering outstanding results. Barclays has been facing major shifts in external economic environment since February 2013, so a bold and clear plan is set by the management. The organisation did a strategic announcement in May, 2014 to focus on strengths of bank and ensuring the delivery of consistent returns and development. The management of Barclays has also made a plan to identify some areas of business that are not proved to be strategically important for the business. The management has decided to exit them with the passage of time in order to ensure long term success of business (Eden and Ackermann, 2013).

2.2. Pattern

Strategy as a pattern is another way of viewing strategy. The focus of this view is on the degree to which actions being consistently followed by the organization (Eden and Ackermann, 2013). In Barclays Bank, the management focuses highly on resource based view. According to this approach, the management consistently gives value to its employees. In Barclays Bank, employees are considered to be highly valuable and are viewed as asset of the firm. This helps the management in ensuring better performance of banks, as it enhances the motivation level of employees and as a result of this their contribution level towards the bank is also increased.

Image result for resource based view of firm

The main focus of bank is helping individuals to achieve their ambitions in proper way. The people are evaluated and rewarded by the management, not just on the basis of commercial outcomes but on their day to day performance and approaches of providing value to the firm. For example, according to the Code of Conduct of Barclays, values and behaviors that have an impact on governing the way to work across the business globally are properly outlined. It includes a reference point that covers all elements of working relationships among colleagues, particularly with other workers, customers and government. The aim of strategic pattern of Barclays Bank is defining the way used by business for thinking, working and acting in order to ensure provision of assistance to people for achieving their ambitions.For example,in the Barclays Bank, all employees have to completely follow a proper pattern that includes norms, standards and values. This depicts that the management of Barclays Bank ensures ethical practices within the firm. This is one of the most significant parts of strategy of the bank. Nowadays, it is highly important for organisations to ensure that proper code of conduct is being followed.

The pattern followed by Barclay is aligned with Code of Professional Conduct through which ethical and professional attitudes of bankers are set out. This code is subscribed by Barclays and the banks shows commitment to embed its broad principles into the business. Moreover, the bank has consistently focused on four core businesses; Personal and Corporate, Barclaycard, Africa and the Investment Bank. The Barclays Bank consistently focus on providing value to its stakeholders (Rogers, 2016).

2.3. Position

Strategy as position is referred as place of an organization in the industry in relation to its competitors. In order to be successful, it is important for a company to position itself in market better than its competitors. The strategic position of a company is linked with its effect on strategy by considering external environment, resources and capabilities and expectations of stakeholders (James and McGuire, 2016). In order to understand the strategic position of an organization, the expectations and objectives within cultural and political framework of the firm are used. Strategic positioning of an organization is the positioning of a firm in the future, while considering the changing environment and systematic understanding of that positioning. The management of Barclays bank considers positioning in order to ensure the continuity of the firm. The strategy is used for determining the contents and core activities of organization. Barclays bank is positioned as a local bank with having regional and foreign expertise and it is aimed at building the top financial services group in particular countries of Africa and some specific customers’ segments (Gianiodis et al, 2014). The strategy of bank has a focus on gaining opportunities for development and taking into accounting those matters through which long-term sustainability can be achieved. For example, Barclays has positioned itself as a bank that focuses primarily on benefits of its stakeholders. The organization is responsive to requirements of key stakeholders in order to achieve objectives and retaining flexibility in execution of strategy, through considering economic aspects and future opportunities. While developing any kind of strategy, the management of banks ensures necessary involvement of all key stakeholders. The development of any strategy is done by considering its impact on key stakeholders. This assists the bank in enhancing its brand image.

Image result for strategy of barclays bank

As a focused international bank, an interlinked set of products and services are offered across retail banking, corporate and investment banking. The services by Barclays bank are offered to individuals, businesses, companies and governments. Barclays bank is positioned to satisfy customers’ needs by providing them value proposition, range of items and thereby delivering a smoother stream of income and sustainable returns. However, the bank is not involved in offering all products and services to all individuals. The competitive advantage of Barclays is gained by the bank through the scale and diversity of business, quality and relationship with customers. For example, the Africa Banking and Personal & Corporate Banking (PCB) businesses are linked regionally, relying on delivery of targeted solutions to people and businesses (Hurley et al, 2014).

2.4. Ploy

A strategic ploy is a particular move made for outwitting or tricking competitors. Ploy usually includes the use of creativity for enhancing success (Garnett et al, 2015).Barclays has been operating in banking industry for about 300 years and is involved in some famous innovations that are being used these days, like credit card and ATMs. Now Barclays has a strong focus on design as a significant element in technological advancement of contemporary community. Their aim was becoming to more cutting corner, a highly technologically advanced bank with quick delivery of services to customers all around the globe. The management of Barclays bank has noticed that world is changing and being capable of focusing on the brand and for incorporating the brand, design is considered to be very effective and powerful way of reaching customers.

Design related of discovering the world, determining the existence of opportunities. Barclay has strongly focused on the use of internet, social media and advanced features of web design. These opportunities are used by Barclays for improving their design in order to get competitive advantage. In 2012, Barclays became the first sponsor of Tech Hub Manchester that is a community hub for entrepreneurs involved in technology (Rashwan, 2015).

2.5. Perspective

According to this element, strategy is considered as a way used by an organization for viewing the world. It may involve a culture that involves high level of risk that might sieze opportunities. Barclays bank formulates strategies in accordance with legislations and considers various proposals before deciding and implementing final strategy. In order to ensure success in perspective as an element of strategy, Barclays bank ensures high level of flexibility and identifying ways of overcoming cultural barriers.

For example, the organization adopts new techniques on the basis of different environmental situations. An altered competitive environment looks for new techniques that call for reformed capability of the organization. The organisation responds in accordance with the altering environment. The management also takes reforms through changing offering of products, takeovers, mergers, divesting, diversifying while others fall back towards technology for ensuring the effectiveness of activities.

According to Sarpongand Tandoh(2015), in order to implement the strategy for innovation and creativity, Barclays decided to work with Tech Hub to gain opportunities of sourcing innovation software that would not necessarily be got from current suppliers. In order to do so, Barclays had to work with various startups for beginning commercial linkages at a very initial stage.

It was a new challenge for Barclays to work closely with young companies that is utilized to deal with IT suppliers. The management of bank spends a lot of time in building relationship with partners for getting success. In order to ensure success in this, the management of Barclays Bank also provides trainings to different employees in order to make them capable of understanding culture of other people with whom they have to work. Moreover, this strategy is also used by the bank for improving skills and capabilities of employees.Employees are encouraged to embrace the enthusiasm and passion for bringing innovation. Barclays has implemented asset management software for fixing legacy issues and another advanced technology for ensuring effective HR functionality.

3. Critical evaluation of your company’s strategy

Financial strength along with international resources and extensive local has located Barclays as the first provider of financial services in the market for previous many years. Along with it, year over year performance of Barclay has developed more confidence in management and leadership of Barclay among Barclays Bank along with banking industry and shareholders(Setia et al, 2013). This approach is making the lives easier for consumers. Barclays has made customers enough able to do such things that should really be done, whether it initiating a business or buying a house. It plays an important role in lives of customers and makes it easier for them in all approaches of lives where the centre is money. It is related to the easiness of action, ease of mind and ease of transaction. The objective is to go towards the bank and in the selected segments and markets. Barclays bank of UK does not only wish to become a good bank but it wants to be the bank that should be actively chosen by customers (Rashwan, 2015).

Cost leadership strategy has been adopted by Barclays bank. The Head of departmet of marketing has noted that in the market, it is significant to locate the product in an appropriate way. There is a need to think about the messages which are bombarded by audience every day. For standing out, products are required to have accurate positive in the mind of the audience. BBK has acquired the strategy of differentiation by giving banking services up to midnight for the branches that are present a Airports and Malls. The leadership strategy has been acquired through offering withdrawals from ATM for consumers and by offering low-interest rate at 11.99% in the market (Eden and Ackermann, 2013).

3.1. Cost Leadership Strategy

The BBK location in the quadrant of cost leadership is acquired not through scale economies in promotion, development, and research, but also with the help of experience, knowledge and learningg in process of operation. According to Ofori-Dankwaand Julian (2013),while pursuing the decrements in cost in different departments, the research identified that every department takes budgeting at the start of every year which is then transferred to the Head of Financial Control for doing the analysis. HFC then do some of the amendments for adoption through function. The process observes transport, the internet, stationary costs, telephone costs, and staff costs, whereby the certain amount is allocated to every centre to be spent in a month.

Campaigns are being run through different functions on price savings whereby staffs own initiatives of cost savings. Few cost saving initiatives which have been established involve the introduction of BBK van in which staff is picked up at a particular time for the ones who do late working. This has decreased the expenses of a taxi. The initiative is when staff is reminded before the printing of electronic record. At the end of quarter nomination, the staff is provided with awards (Setia et al, 2013).

Cost leadership is acquired with the help of branch network in the industry and also with the help of experience and knowledge in core procedures.The organization has given responses to threats in the environment in different manners. It has developed a new banking system which provides online banking. Because of the enhancement of fraud in credit cards, the bank has now developed a pin card and chip in merchant development for transactions of a credit card. The organization has also developed value increasing items in the market; for instance, loan and hallo money on phone items, and a 24 centre for contact. The organization has also provided a standardized bottom up approach in the management of risk with the help of control assessment and detailed risk (Kathuniand Mugenda, 2012.

The research identified that there are different factors that affect strategic management practices of Barclays. If an organization wishes to get some position in the market, it should develop new techniques for addressing the challenges that it suffers from the in the industry. Some of the challenges which are faced by it involveBarclays bank’ regulations, risk management, fraud, information technology, competition, and globalization. The bank should look for the improving techniques over technology as rapid alterations are being made in technology. Competitors should work hard for becoming the leaders of the market as they challenge the prominence of BBK, particularly on organizational clients. Therefore, the management team needs to continue the diversification of the productprepositioning to maintain the position in industry. Barclays bank has adopted a number of those approaches through which it can become a leader in market. However, there are some elements that limit its scope. The management has to strongly emphasize on those factors that are controllable. The present situation of Barclays bank is above average but full potential has not been fully exploited.

As, Barclays bank has been working in banking industry for many years, so, it has developed trust globally. However, due to high level of competition in global market, the bank should enhance its product differentiation and after sale services for boosting customer loyalty. The bank should also focus on increasing its importance in areas of low income for increasing its market share. Finally, the bank should invest on motivation of employees for guaranteeing their loyalty and commitment to the bank. Employees are considered to be highly important for the success of any strategy, so the management of Barclays bank should adopt those HR practices through which their motivation level can be enhanced, so that success of strategy can be ensured.

 

 

 

 

 

 

 

References

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage

Frank, B. and Sienkiewicz, M., 2015. An eagle eye: Africa in the 20th Century as viewed through the archives of Barclays Bank. African Research & Documentation, (125), pp.29-44

Garnett, P., Mollan, S. and Bentley, R.A., 2015. Complexity in history: modelling the organisational demography of the British banking sector. Business History57(1), pp.182-202.

Gianiodis, P.T., Ettlie, J.E. and Urbina, J.J., 2014. Open service innovation in the global banking industry: inside-out versus outside-in strategies. The Academy of Management Perspectives28(1), pp.76-91

Hill, C.W. and Jones, G.R., 2013. Strategic management theory. South-Western/Cengage Learning

Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases: competitiveness and globalization. Cengage Learning

Hurley, R.F., Gong, X. and Waqar, A., 2014.A framework for understanding and restoring trust in universal banks. The Routledge Companion to Financial Services Marketing, p.456.

James, B.E. and McGuire, J.B., 2016. Transactional-institutional fit: Corporate governance of R&D investment in different institutional contexts. Journal of Business Research69(9), pp.3478-3486.

Kathuni, L.K. and Mugenda, N.G., 2012. Direct Sales Strategy Applied by Commercial Banks in Kenya. International Journal of Business, Humanities and Technology2(7), pp.132-138.

Kumi, P.K., Asamoah, M.O. and Winful, E., 2013. Evaluation of the Performance of Banks in Ghana Using Financial Ratios: A Case Study of Barclays Bank Ghana Limited (BBGL), Ghana Commercial Bank (GCB) and Agricultural Development Bank (ADB). European Journal of Business and Management5(28), pp.126-138

Ofori-Dankwa, J. and Julian, S.D., 2013. Dynamism, capital structure, and performance in a sub-Saharan economy: Extending the institutional difference hypothesis. Organization Science24(5), pp.1422-1438

Rashwan, M.H., 2015. Measuring Egyptian Banks Efficiency Using Co-Plot. Rashwan, M.(2014). Measuring Egyptian Banks Efficiency using Co-Plot. Journal of Modern Business Studies2, p.28.

Rogers, D., 2016. The big four British banks: Organisation, strategy and the future. Springer.

Sarpong, M.L. and Tandoh, I., 2015. The Role of Strategy in a Competitive Business Environment: A Case Study of Ecobank Ghana Limited. European Journal of Business and Management7(11), pp.71-83

Setia, P., Venkatesh, V. and Joglekar, S., 2013.Leveraging Digital Technologies: How Information Quality Leads to Localized Capabilities and Customer Service Performance. Mis Quarterly37(2), pp.565-590.

 

 

 


Get in Touch With us

Get in touch with our dedicated team to discuss about your requirements in detail. We are here to help you our best in any way. If you are unsure about what you exactly need, please complete the short enquiry form below and we will get back to you with quote as soon as possible.