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Barclays group PLC is a big global financial services provider operating in Europe, the Americas, Australia, Asia, the Middle East and Africa. It is engaged in retail banking, credit cards, corporate banking, investment banking, and wealth management. It made up of two clusters such as; Global Retail Banking, Corporate and Investment Banking, Wealth Management, each of which has a number of business units. And the group centre, which comprises all Barclays essential support. The group operates through its subsidiary Barclays Bank PLC, with its 300 years of historical existence, the group operates in over 50 countries and employs 147,500 people and has a merger with Absa group in South Africa.
The group business model emphasizes on its practice of integrated global banking strategy being the best model to serve its customers and clients as well as optimising risk adjusted returns for its shareholders. Thus, the group moves, lends, invest and protects money for more than 38 million customers and clients worldwide. It is the third largest bank in the world in terms of assets and the one of the largest financial services provider in the world with a core tier one ratio of 11 per cent. It is the third largest bank in the United Kingdom based on market capitalization.
The bank’s headquarter is at One Churchill Place in Canary Wharf, in London, England United Kingdom, having moved there in May 2005 from Lombard Street in the City of London.
Staying close and offering the best solutions to customers and clients while managing their risks.
Build a bank that is diversified and balanced by geography and business line, by customers and by funding sources.
Operate profitability throughout the crisis, offering security as well as stability to the financial system as a whole.
Ensures to retain financial discipline required to deliver returns.
Progressively maintaining a solid capital base
Improving returns and delivery selective income growth
Demonstrating its credentials as a global citizen.
To achieve these objectives, the plan entails analysis of the market environments of the bank and identified strategies designed to bring success. Then follow by the implantation and control mechanisms aimed at ensuring that the desired results are achieved. www.barclays.com
2. Analysis of the Market Environment
2.1 External Analysis
This analysis focus on the macro-environment, the market and the competitors of bank, to identify its opportunities and threats. According to Porter (1985), PESTLC analysis ensures that the performance of the company is aligned positively with the powerful forces of change that are affecting business macro-environment. Hence, it groups environmental influences such as political, economic, social, technological, legal and cultural forces impact on the bank.
The United Kingdom (UK) population which currently stands at approximately 70million, with a slide increase in immigration, independency and dependency ratios. A shift in population always affects economic growth, thus affect the bank.
Increased in UK employment rate of 70.6 per cent, about 25.3million households, and a consistent downward strength of divorce and dissolution (of about 121,700 to 113,900), influences the bank’s performance. This increase brings about economic competitiveness and high circulation of money, thus fuelling the economic growth of the country.
UK is a multicultural society which entails co-existence of different communities defined by their race, ethnicity or faith. So sociocultural environment is diverse and dynamic, which implies the bank need to stay in touch with the social and cultural shifts.
The science, engineering and technological and entrepreneurial cultures makes UK economical successful, thus, impacting a positive change on the bank’s performance. http//www.statistics.gov.uk, www.ons.gov.uk and www.oup.com/uk
184.108.40.206 Cultural and Social
220.127.116.11 Political and Legal
Obligation to banks to give political donation as part of their democracy support to the major South African parties.
The political stability in UK, Europe, United States, Asian (India) and southern part of Africa, influences the group’s growth.
The new Basel rules on bank capital which requires all banks to hold top quality core tier one capital equal to 10 per cent of their assets, adjusted for risk. (19:09/ financial times/6th June 2011).
The Project Merlin Agreement which states that UK’s biggest banks are committed to lending more money in 2011, especially to small businesses, to pay less in bonuses than they did last year and to be more transparent about their pay packages.(15:42,BBC Business News,9 February 2011).
Plan to increase bank levy to 2.5billions pounds this year-raising an extra of 800million pounds, will be a threat on Barclays bank PLC.(18:04,BBC Business News,8 February 2011).
Recovery of national recessionary period and increased in employment rate. http://www.bbc.co.uk/news/business/13758784.
Increase in UK gross domestic product by 0.5percent.
Inflation is steadily held at Consumer Prices Index (CPI) at 4.5 per cent and Retail Prices Index (RPI) at 5.2 per cent in May 2011.
UK retails sales fall to 1.4 per cent in May and interest rates have been kept at the record low of 0.5 per cent again this year, by the Bank of England’s Monetary Policy Committee.
UK unemployment fell 88,000 in the three months to April this year to 2.43 million, the biggest drop since the summer of 2000.
The value of the average home in UK, rose by 0.1% from April to May in 2011 to ?160,519, but prices were 4.2% lower than the same period a year ago – the biggest annual drop since October 2009.
The European Central Bank signaled rise in Eurozone interest rate in July 2011, from 1.25 per cent.
Inflation in the Eurozone was 2.7% in May.
The euro fell per cent to 1.44880 dollars against the US dollar in the first quarter 2011.
High inflation in China and India in 2011 while Japan is in recession.
Increase loan rates and consumer prices in Korea.
Middle East and North Africa unrest is affecting the Dubai-based Dnata, emirates aviation industry.
Import costs in developing countries rising by up to 30 per cent as a result of high oil prices and shortfalls in production due to bad weather have contributed to higher food prices.
Jersey tax information exchange agreements with 17 of the G20 countries. http://www.bbc.co.uk/news/business-13758784
New telecommunication systems, including fibre optic telecommunication and Internet to facilitate mobile banking and online banking.
The global launch of the next generation financial kiosks such as NCR SelfServ 4 which is a cashless kiosk, ideal for non-cash transactions such as appointment check-in and account services and SelfServ 8 features cash-deposit capability suitable for bill payments, equipped with touchscreen technology, the machines are loaded with NCR APTRA software applications that are PCI and EMV compliant.
New technology such as Mix-and-Match software for 3D digital signage and kiosks
SWIFT code to facilitate the international payment system in banks.
ATMs are currently in operation at all the local commercial banks.
Global increase in computer literacy and easy access to computer
More half of the global population is computer literate and has access to internet services. http://selfserviceworld.com/research and http://www.bnet.com/library
2.1.3 Competition Analysis
The group’s major competitors are HSBC bank, Bank of America, BBVA, BNP Paribas bank, Credit Suisse, Deutsche Bank, JP Morgan, Morgan Stanley, RBS, Lloyds TSB bank, Santander bank, NatWest bank, Societe Generale and UniCredit.
HSBC holdings is the first top bank in the world with the largest profit in the first quarter of 2011(4,153 billions dollars).
The bank has a strong trust and credibility in emerging markets such as China, putting it in a good position to enjoy large economies of scale in their fast growing economy.
The bank’s good online saving account offers competitive rates with no monthly fees or minimum balance requirements, opened as little as with one dollar and money is FDIC insured to the maximum permitted by law.
HSBC decision to reduce its long- term return on equity target to 12-15 percent from 15-20 percent, leaves its investors disgruntled.
Insufficient trained staffs, thus less customer driven.
Insufficient personalisation of HSBC’s brands due to its branding emphasises on its global presence.
Decreased in production and loyalty from its staffs due to redundancy programme. http://managementoday.co.uk/news, http://www.bbc.co.uk/news/business and http:/www.hsbc.com
2.2 Internal Analysis
The internal analysis focused on the bank’s performance and its internal environmental factors such as its management, staff and infrastructures, in order to identify its strengths and weaknesses.
From Barclays annual report 2011(www.barclays.co.uk), the Barclays group PLC has more solid positions on capital with 11 per cent core tier one ratio (10.8 per cent Q4 2010), and a liquidity pool of 161 billion pounds than they started last year. While group’s adjusted gross leverage is maintained at 20 times and impairment is down 39 per cent considerably, giving the group’s first quarter (Q1) 2011, a loan loss rate of 76bps (Q1 2010:112bps). See Appendix.
Adjusted profit before tax of the group, excluding own credit and gains on acquisitions and disposals this year, up to 10 per cent to 2,004 millions pounds (8 per cent in 2010). Excluding own credit, return on equity increased to 10.1 per cent (9.3 per cent Q4 2010), return on tangible equity increased to 12.1 per cent (11.4 per cent Q4 2010), and return on risk weighted assets increased to 1.5 per cent from 1.4 per cent in Q4 of 2010. (See appendix). Increased in gross new lending to UK house holds and businesses amounted to 9.9 billions pounds indicates improvement on 2010 year ended amount of 43 billions pounds gross new lending plus 7.5 billions pounds of UK loans gotten from the acquisition of Standard Life Bank at the beginning of the year 2010. The Q1 2011 dividend of 1.0 pound per share, with earnings per share of 8.5 pounds. Over 2010, the group ranked in the top quartile Total Shareholder Returns (TSR) of its global competitors, this position is progressively maintained in the Q1 2011 implies good performance indicating good management by objectives this year.
2.2.2 Management and Staff
The management is made up of thirteen highly skilled and qualified directors and has 147,500 staff and senior executives. Most of the staff are young and have the requisite capabilities, and are re-trainable for newer systems and technology.
The remuneration Committee provides governance and strategic control of remuneration, human resource activities and senior management development.
The Committee’s objective in relation to remuneration is to motivate its employees towards excellence in business and personal performance by offering incentives, attract and retain employees of ability and experience.
Staff is encouraged to part take in share option and share purchase schemes and have a substantial sum invested in Barclay’s shares.
Staff is kept informed of matters of concern to them in many ways, such as business unit news magazines, intranets, briefings and mobile phone SMS messaging. These communications facilitate the achievement of a common awareness among employees.
Staffs share their views and feedback on issues that matters to them. Periodic employee Opinion Surveys results reported to the Board, all employees and to its European Works Council, Africa Forum, its recognised union in the UK and other recognised unions worldwide. Road shows and employee forums also take place. In addition, regular and formal consultations with its recognised trade unions and work councils internationally. www.barclays.co.uk
2.2.3 Infrastructure and Delivery
The group is investing heavily in infrastructures in order to perfect its client services and better reach to its global customers and clients, explains why the group is facing high operating costs. www.barclays.co.uk
3. SWOT Analysis
The SWOT Analysis identified the opportunities, threats, strengths and weaknesses of the bank, as follows:
The world’s third largest bank in terms of assets, with a core tier one ratio of 11 per cent.
Barclays Corporate has been named Lender of the Year at the 2011 Health Investor Award for the third time.
The group has an effective data management and first bank to produce statements in colours.
Barclays Egypt Award for business continuity despite the recent country’s civil unrest.
The Awards for Excellence 2011 won by Barclays community investment programme in Katine, Uganda.
The group’s brand is unique, historically built and promoted continuously through its good citizenship such as sponsorship of Premier League football.
The group enjoys large economies of scales and spread of risks as a result of its global presence.
Barclays Capital ranked number two overall in Risk magazine’s survey of institutional investor clients.
Double win for Barclays at UK Moneyfacts Awards
Distinct technological innovations, for example, it introduced the first credit card ever used in the market in 1966 , and mobile banking..
Acquisition and incorporation of Egg’s credit card customers in to the Barclaycard portfolio.
The complex nature and complicated application of its new brands cause a lot of problems to its customers such as the lengthy digits codes to memorize when using telephone banking.
The group leadership team has very little customer-centric view, thus give the reason why they always have a lot of customer complaints especially from its UK retail banking that is poor customer services.
Poor earnings performance in the first quarter fueled criticism about executive pay packages in Barclays capital, the investment banking unit where pretax profit fell 33 per cent in the first quarter 2011.
Less attractive shares due to low earnings performance.
The bank branches are not well centralized within the high streets of UK unlike RBS and NatWest banks which are everywhere in the streets.
Online banking and telephone banking are complicated to access.
High interest rates on loans and low interest rates on savings accounts.
The bank recent launch of the high street’s first two-year flexible bond giving savers a competitive rate and the flexibility to withdraw up to 30 per cent of the balance without incurring any charges.
Telephone banking with Barclays Wealth international offers secure, personal and private services, being the fast and friendly way to deal with day-to-day banking request unlike other banks such as HSBC.
Barclays Bank has a strong competitive advantage as it is among the top three banks in many African countries, including Ghana, Nigeria, Kenya, Zambia and Mauritius, thanks to its merger with Absa Group Ltd in South Africa.
Emerging markets in Africa and Asia Pacific.
Barclays Capital strengthens prime services management by recently appointing ten managing directors.
Its strategy of full global diverse services provides the group a wide range of cross-selling opportunities.
The recent Merlin agreement that required the availability of appropriate capital and resources by the banks to support gross new lending of 190 billions pounds, should demand materialize.
The recent strike threat at Highland airports could hit Barclays Scottish Open at Castle Stuart.
Barclays group faces stress with difference in the government rules and regulations in all of its respective markets in the world.
Chairman of the Independent Commission on Banking (ICB), confirmed recently in a weekend speech, that moves to split retail and investment banking operations were being considered.
Due to its global operation nature, the group is exposed to high risks in the financial markets.
Barclays group experiences increasing competition and threats in the banking industry from other companies such as the new Japanese bank called Mizuho which is building in London to find new avenue for growth.
www.barclays.co.uk, www.fm.co.za/articles, www.dailyrecord.co.uk/news, www.bbc.co.uk/news/business, www.belfasttelegraph.co.uk/businessnews , and www.e-customer-satisfaction.com/rev .
4. Customer Analysis
The bank has branches in the UK as well as operations throughout Europe, Africa, the Middle East, Asia and the Americas.
The market stakeholders consist of the governments, other public Sector bodies, corporate entities, insurance companies, professionals, public servants, teachers, Students and national residents in the above market segments. www.barclays.com
4.2 Market Segmentation
Market segmentation is the splitting up of a market into different groups of customers with distinctly similar needs and product/service requirements. There is now widespread agreement that market segmentation form an important foundation for successful marketing strategies and activities. (Wind, 1978; Hooley and Saunders 1993).It implies market segmentation ensures that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customers.
Barclays group divides its market into different geographic units such as nations, states, regions, cities or streets. For example Barclays bank PLC Oxford road (University’s branch) in Manchester. This kind of division is called geography segmentation.
The group also uses demographic segmentation to split its market in to groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, generation, nationality, religion, and social class. This type of segmentation is easy to measure and enables the bank to identify the right product offer to meet the specific needs of customers and improve its customer perceived offerings. For example, improvements of student account offer such as no monthly fee, an interest-free overdraft facility up to 2,000 pounds from opening the account. www.barclays.com
4.3 Market Targeting
Barclays bank PLC uses the differentiated targeting approach which recognizes that there are several market segments to target, each being attractive to the marketing organization. As such, to exploit markets, a marketing strategy is developed for each segment. For example, Barclays targeted the student market segment in UK, and its rationale for acquiring students was that there was an opportunity to establish a long-term relationship with students and, to target a new customer annually.
The bank uses effective segmentation assessment criteria such as ensuring that its various market segments are measurable, substantial, accessible, differentiable and actionable, ensure a segment is useful for targeting. This effective segmentation assessment criteria help in choosing the right targeting approach to use
4.4 Market Positioning
Market positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. (A.Ries and J.Trout, 2000). The main purpose of positioning is to build the bank’s brands in the minds of the customers in order to maximize potential benefit to the bank.
Kotler (1997) argued that “Positioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customers’ minds”. Therefore, positioning is all about how customers judge a product’s attribute relative to that of its competitors, and its ability to deliver against the promises made.
The bank has applied a good positioning of its brands to target markets. For example, Barclays found that an incentive offering mobile broadband would have the most appeal to students, the bank partnered with orange to offer 25 percent discount on its mobile broadband schemes to those who signed up for a Barclays student account.
The bank also established a working group to oversee the new student proposition such as no monthly fees, an interest-free overdraft, free debit cards, mobile phone banking and a net work of local branches. This is to build its brands in the minds of its target customers by effectively and efficiently meeting their needs.
Orange and Barclaycard recently launch ‘Quick Tap’ – the UK’s first contactless mobile phone payments service, allowing consumers to make purchases on the high street using their mobile phone · Customers can make purchases ?15 and under nationwide by simply tapping their Quick Tap mobile handset against a contactless reader at over 50,000 stores. Hence, the group has good positioning strategies.
Branding is a means to distinguish the products or services of one company from those of another. (K. Moore and Reid, 2006). Therefore, a brand is a logo, name, symbol, design or image, or any combination of these, which is designed to identify the product or service.
Barclays group does branding of its products/services with respect to its target customers needs. The group has different brands such as Barclaycard and its contactless mobile payment brand , online banking, offshore banking and investment, UK premier and personal banking, business banking, Barclays corporate, international banking services, Barclays capital and Barclays wealth. www.barclays.com/product and services, www.oup.com/uk/orc
5. Marketing Strategies
The mission of the Barclays Bank is to make available products as well as services to help the customers to achieve their financial goals that would in turn lead to economic growth as well as being a good citizen.
5.2 Marketing and Financial objectives
Customer and client driven, which implies its customers and clients are at the center of its strategy and business model. As a result of this, a long-term customer relationship is established which develops sustainable business over time. Thus, the group believes that most successful banks are those that serve clients across all their needs through a wide range of distribution channels.
Effective risk management and ensuring the required financial discipline to deliver returns is maintained, and operating within its capital resources and generating returns in excess of its cost of equity.
The group also intends to gain income growth through sustainable growth in target markets and geographies.
Target return on equity of 13 per cent by 2013 and generating additional income of between 4.3 and 6.4 billion pounds in 2013 relative to 2010 while ensuring to produce top quartile total shareholder return over time. www.barclaysannualreport.com
5.2.1 Supply strategies
Barclaycard and orange newly developed “Quick Tap” contactless mobile payment service which allows consumers to make purchases on the high street using their mobile phone for the very first time. Barclaycard is providing Orange customers with ?10 cash added to their account upon activation, and 10% cash back on all Quick Tap purchases made in the first three months.
Barclays Capital, the investment banking division of Barclays Bank PLC, recently announced the launch of the Algorithmic Inflation Momentum Switching (AIMS) index, designed to generate excess returns from the US inflation market. The reason being that market participants switch from nominal bonds to TIPS when concerned about inflation.
Barclays Wealth international offers discounted international online payments to investment and mortgage advice from our specialist advisers. It provides you with immediate access to your money as well as control over your day-to-day spending wherever you are. www.barclays.com
5.2.2 Demand Strategies
Target students and matured wealthy Nationals returning home or resident locally, including doctors, lawyers, managers, entrepreneurs and retired persons.
To gain more competitive advantages in the market through product differentiation.
5.2.3 Positioning strategies
The bank is currently perceived to have a poor customer services compared to its peer group that is their service offering and quality are not very much outstanding as portraits by its branding.
So the bank’s aim is to also move to the top position for service offering and service quality through its innovative product developments and improved service quality so as to defend its strong brand image.
Ensures effective data management is improved.
5.2.4 Competitors Strategies
Improve the quality of customer services by training staff.
Continuously promote ATMs, online banking, Barclaycards and telephone banking services that will provide greater convenience to customers.
Offer unique innovative Barclays Wealth-management and Barclays Capital products/services that will attract the target markets.www.barclays.com
5.3 Marketing Mix Strategies
Barclays offers personal banking and credit card facilities through Barclaycard to customers. The products and services for personal customers include: bank accounts (from entry-level through to premier), a range of credit cards through Barclaycard, saving accounts, loans, insurance, online banking and mortgages through Woolwich.
The also offers corporate and business banking, investment banking and Wealth management -which focuses on private and intermediary clients worldwide, providing international and private banking, investment management, fiduciary services, and brokerage.
The group ensures these products and services are always available to satisfy customer needs. www.barclays.com
The group ensures the prices are affordable with respect to the target customers. For example, no monthly fees, interest –free overdraft and 25% discount on its mobile broadband schemes to those who signed up for a Barclays student account.
Also a discounted international online payment to investment. www.barclays.com
The bank positions its product and services in such a way that they will be accessible at customers convenience such as Barclays replacement debit card delivered to customer’s home in two working days, availability of Quick Tap contactless reader at over 50,000stores.
Mobile phone banking and increase in a network of local branches.
ATMs at strategic locations throughout the country.
Word-of-mouth campaign and literature in branches.
Online advertising on website and direct mail to prospective students.
Phone prospective customers or visit them at their residents or place of business to sell products and services to them
Develop an advertising campaign programs targeting the selected groups of customers.
5.3.5 Personnel and Services
Develop a performance appraisal system that will allow for feedback throughout the fiscal year which determines annual salary increments and the quarterly bonuses such as travelling allowances, reward for sales volumes in order to motivate staff.
Recruit more people that possess the required skills for the tasks available and provide each of them with a job description setting out clearly the job expectations and goals, as well as the required job-related behaviors.
Offer good training to both existing and current staff for the job required task.
Improve on customers services by training both top management staff and subordinates to be customer-centric.
www.marketingweek.co.uk/opinion/barclays , and www.barclays.com/productsand services.
6. Channel analysis
Barclays bank uses the following ways to communicate with customers through its multichannel routes such as word-of-mouth campaign, literature in branches from employees, online advertising and direct mail.
The bank also reaches customers through telephones, ATMs, contactless payment cards and visa debit cards.
The bank has about 1,900 branches in the UK as well as operations throughout Europe, Africa, the Middle East, and the US. Also plans to improve on the centralization of its branches within each target market.
Increase the number of its local branches within the high streets of UK, such as Universities areas. www.barclays.com
7. Implementation and Control
Barclays group supports a marketing oriented culture to provide market perceived offering that meets customer’s expectations by placing a strong emphasis on its market research (SWOT and PESTLC analysis) to discover the data of its market context, customer requirements, competitors activities, the most appropriate way to run their channel operations (distribution and marketing communications)
The group has ten existing skillful directors and two current directors, all assigned to manage each of the products and services business units efficiently and effectively with the help of 147,500 employees through management by objective.
The budget holders who are top management will be given incentives, so as to hit and improve both their sales forecast and profit targets.
The group headquarters management foster and encourage creativity and innovation through out the business while ensuring effective risks management and financial discipline is in control. www.barclays.com
8. Financial Forecast
· Target return on equity of 13 per cent by 2013
· Additional income of between 4.3 and 6.4 billion pounds in 2013 relative to 2010. www.barclaysannualreport.com
9. Contingency plans
Continued investment in multichannel platform such as success performance in mobile banking and online investment platform.
Effectively and efficiently focus on productivity and innovations
Ensure customer sovereignty is in place by stay close to them and effectively managing their risks.
I have taken a critical look in to the situation faced by Barclays group PLC such as its objectives, and goal (13 percent returns on equity by 2013 and income growth of) the group expected to achieved. While taken in to consideration its strengths, weaknesses, threats and opportunities sorted out by the use of SWOT and PESTLC analysis, as well as competitors analysis, and its marketing strategies on execution.
I will lay emphasis on top management and staffs to be more customer-centric when making decisions and execution on strategies as well as carrying out effective implementation and control in order to reach desired target.
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