Barclays Bank: PEST, SWOT and Five Forces Analysis

Keywords: barclays organisational structure, barclays management

Barclays bank is providing its services in India in some their selected business divisions. Barclays bank now wants to expand its services in India with other corporate units. This report is a helping tool for their expansion as it provides basic information needed for this expansion. External Environment Analysis by the help of PEST, SWOT and Porter’s five forces provides essential information for the management of Barclays bank while making and implementing business strategies with more knowledge, authority and control.

Task1:

Business Structure of Barclays Bank:

Barclays is one of the leading British based multinational banks having branches in 5 different continents across the world. Barclays bank has strong position due to its asset estimation of more than 2.3 US dollars. Banking structure of Barclays is divided into Personal and corporate banking, Investment banking, Investment management and the unit of credit cards.

The main headquarter of Barclays is located at London and the customer’s base of Barclays bank is more than 48 million in different continents including Africa, Asia, Europe, North and South America. The basic structure of Barclays is divided into two clusters:

1. Corporate and investment banking plus Wealth and investment management.

2. Retail and Business Banking

The further business units division is already explained.

Barclays bank also plays part in providing consultancy services for people in operating their small scale business. The unit of personal banking provides its services to manage the investment of small scale businesses. The security and easy access ability level for borrowing purposes makes Barclays one of the standard financial service sectors. The business unit provides consultancy for personal banking borrowing. They provide innovation to start different small level businesses and provide attractive financial services and opportunities for personal loans. Corporate banking is one of the profitable units of business unit of Barclays as it has more than 50,000 customers in five different continents. Risk management unit is also important to provide advisory for businesses which have potential to invest and get profit and also provide opportunities for investment. Wealth and Investment management unit works in more than 20 countries to provide its services. The basic functions of this unit are international and private banking services, investment management services, fiduciary services and brokerage services. Business structure of Barclays bank allows world class banking solutions for corporate customers as well as personal banking clients. Using up to date technology in term of online banking solutions and mobility services provide an edge on competitors due to the latest procedures used in these services. Barclays rely on its global relationship approach. Different relationships teams work across the world to add value to the business of corporate and personal clients.

• Impact of Market Structure

The basic purpose of Barclays is to increase its business in term of customers and profit, looking for potential customers all around the world, looking for growing economies and to expand in such economies to fulfill its vision of growth.

Barclays bank is working in India for more than three decades. Investment banking division was the initial business of Barclays banking in India. Now Barclays bank is providing its corporate and personal banking services in India. This technique of using selected divisions is because of the market structure of India which is different as compared to Europe, Africa or America. People hesitate to deposit in banks and also there was less focus on borrowing from banks. The trend is changing due to awareness and availability of latest technology. The businesses of selected divisions in India shows that market structure have impacts while working in international economy. Changes in business structure while working internationally are basic requirements due to different values, structures and perceptions of the customers living in international market.

Task2:

• Causes of Globalization

The change in the trends of international economy damaged the working of different organizations. The negative trend of economy of different European and American business environment allows organizations to look for new markets, customers and better economic regions. This is one of the biggest causes of globalization. The other cause is the advancement in technology and the availability of easy ways of doing business. People came to know about latest processes, new innovations in products and services, the differences in the quality of products and services and new ways of communicating. These cause international companies to expand their business across the borders to target the needs and wants of such customers. The concept of international free trade also caused globalization to take place due to the incentives associated with free trade. Availability of better suppliers in the international market causes organizations not to rely on domestic suppliers. Availability on quality suppliers on competitive basis is a reason of globalization. Lower wages rates in other regions as compared to domestic labors in Europe and America encouraged organizations to expand their business in Asian countries which are less costly for infrastructure and low rate employees. All of the above mentioned reasons are primary causes for globalization. Advancement in technology, use of internet, emails, mobiles, and better traveling provided the basis for globalization to take place. The advancement in online technology provides basis for improved Management Information System to collect and analyze data all around the world to make investment decisions.

• Implications of Globalization

Better business control through internet, mobiles and MIS provides comfort for organizations to handle business from anywhere in the world. This has made strategic decision making easy and fast as response from customers and management is speedy as compared to previous systems. The improvement in the living style and standard are implications of the availability of international standard products and services in those regions. People came to know about the variety and quality of products due to increased and reliable products and services as a result of international expansions. One can now see and buy products through online websites, emails and mobiles phones as these are easy and less costly way of communication now days. Now people have more choices in term of products, services and prices. One can compare product quality and prices by the help of internet and websites to buy more reliable products according to their budget. The other implications of globalizations are E-Commerce, better procedures, improved manufacturing techniques, computer simulations and low cost products and services due to availability of reliable suppliers and processes in region.

• World Trade Organization

There are different causes and implications of globalizations but still there was a need of laws and procedures for globalization and international business. WTO is an international organization to provide standard rules and regulations for global businesses. Providing guidelines for business expansions in other countries by taking inputs from host and guest countries. Providing a list of social, legal and moral responsibilities to both parties for better business is one of the tasks of World Trade Organization. Different members across the world have provided their inputs and suggestions to generate standard laws for global businesses. Every organization and country has to wok according to these laws. Providing soft barriers for investment organizations and implementing the concept of free trade for global business are the major tasks of World Trade Organization. (THE ASSOCIATION OF BUSINESS EXECUTIVES, 2011)

Task3:

External Environment Analysis of Barclays Bank

Analysis of business environment through PEST analysis, SWOT analysis, Force Field Analysis and Porter’s Five Forces provides authentic and important information to decision making unit before formulating or implementation of business strategies. The macro and micro forces can impact the strategies of management due to their dynamic nature. External environment analysis is not a onetime process; it is a continuous process to make changes in strategies according to external environment. (T R JAIN, MUKESH TREHAN, RANJU TREHAN, 2009)

PEST Analysis

Analysis of Political, Economic, Social and Technological elements which can affect the strategies and decision made by management is done under PEST analysis.

(P)olitical Analysis

India is a country where people choose their members of parliament through elections in a fix time period. The member of parliament makes policies for foreign investors and multinational companies. There is no clue of intervention of any third power in the political system. Opposition provides suggestions for policies. So, there are fewer chances of changes in the policies for foreign investors which are a good thing for Barclays bank.

(E)conomic Analysis

One of the growing economies of the world with have emphasis on research is an attractive place for foreign investors to invest. The continuous growth in the GDP for the last 10 years provides opportunities for Barclays and other foreign companies to expand in India.

(S)ocial Analysis

One of the countries having high population and high growth rate of population in future provides opportunities for Barclays bank to have more targeted customers. Increase in literacy rate and awareness about latest and up to date services in region provides opportunities for Barclays bank to invest in India.

(T)echnological Analysis

Use of internet banking, mobile banking, ATM, credit cards, e-commerce and social media provides a lot of opportunities for Barclays bank to introduce their up to date and latest services in growing economy of India. Barclays can provide their services to improve banking operations in India which is the reason why India allowed Barclays operations three decades back.

SWOT Analysis of Barclays Bank

(BARCLAYS BANK PLC.)Using strengths of Barclays bank in term of latest technology and operations to get benefits of opportunities available in India in term of large term of customers and markets can be possible by having knowledge about these internal resources and external business environment. SWOT analysis provides this information.

(S)trengths

• Global Leader in providing financial and investment services in five major continents.
• Strong brand name in corporate banking system having more than 50,000 corporate clients all over the world.
• High credibility in the growing market of Pakistan which is also based in Asia.
• Personal banking with no limit on minimum deposit provides an edge on majority of competitors.
• Focus on risk management.

(W)eaknesses

• Need of bailout in UK due to economy crises in recent past.
• Bad impact on image due to government funding issue in Zimbabwe.
• Less innovation in marketing campaigns related to Indian culture. Barclays is working in India for a long time but they fail to adopt market orientation related to Indian culture

(O)pportunities

• Past business experience of India provides an extra advantage to make an expansion decision.
• Growing banking sector of India, focus on corporate banking and increased personal funding due to reliability and credibility of Barclays bank.
• Investment opportunities in IPL and other Indian leagues due to corporate image of these leagues can provide global promotional opportunities for Barclays bank.
• India is a country with wide geographical area and second highest population. India can provide a lot of potential corporate and personal customers by making an expansion decision in other parts of India.

(T)hreats

• Increase in interest rates has decreased the funding from personal banking sector. Government banks and investment policies provides more attraction for personal investors due to bigger output of these services.
• Domestic banks with cultural related strategies is a threat for Barclays
• More international banks are moving towards Indian market due to the availability of business and customers. It can increase the scale of competition in India.

Porter’s Five Forces

• Entry Barriers

The entrance of new multinational banks like HSBC and other are expanding their businesses in India due to soft barriers of entering and availability of customers. This situation can increase the competition scale and number of saturated markets in India.

• Rivalry with Industry

Services provided by different local and international banks are of the same type. So, it is important to change interest rates and services charges to attract more customers as compared to other banks. The switching of financial services for customers to other banks is easy and not much costly so banks need to develop latest and up to date processes to facilitate customers.

• Threat of Substitutes

Innovations in the products and services provided by banks, including car financing, house financing and education financing provides opportunities for bank to focus not only on traditional banking system. The local financing institutes with less interest rate for personal borrowing are also a threat for banks in India.

• Bargaining Power of Suppliers

Reserve bank of India takes actions regarding monetary suppliers which impact the supply of money in the economy. Customers provide supplies in deposits for personal banking and majority of banks are offering same interest rates. So, there is a need of innovation in services to attract financial suppliers.

• Bargaining Power of Buyers

Providing alternative services in term of finance for car, houses, education, businesses and consultancy can bring the bargaining power of customer low as all the banks are providing same type of services with same interest rates.

(Barclays, 2008)

Task4:

Business Objectives of Expansion

Capturing the potential customers in other attractive regions in other cities

Boosting the current market orientation of Barclays bank in India

Increasing the number of divisions working in India to capture more opportunities

Investment in Global promotional opportunities in tem of Indian Premium League and other Leagues which have global impacts

Focusing on international revenue to carryout domestic and international operations. India can provide opportunities for larger scale of revenue due to its population and geographical area as compared to domestic branches in UK

Providing E-Commerce services in India due to increased level of interest showed by Indian customers for online operations

Capturing corporate customers of India as Barclays bank has strong base and experience of dealing with corporate customers. These customers can provide vast opportunities for revenue as compared to personal or investment banking. Having more than 50,000 corporate customers is good enough experience for Barclays to target corporate banking in India

India is growing economy as compared to major European countries so it can provide more opportunities for business in India. There are number of corporate sectors in India and number of Billionaires businessmen who can provide a lot of opportunities for Barclays bank through their operations

Resistance from Employees

Making any change in the business structure or operations can help to bring employees out of the comfort zone. This is the reason why some of employees resist against any type of change in structure of operations. Making an expansion decision in Indian market means there will be a lot of changes to be made to formulate and implement strategies for new geographical areas and segments. Altering the operations of employees to take their assistance in expanding operations can bring resistance from employees. Providing them incentives associated with successful expansion of Barclays bank can help to bring down any resistance from employees. Expansion can bring a lot of opportunities for managerial positions in new branches. Good human resource management can communicate these opportunities with existing employees by giving them attractive growth and career paths for potential employees to bring down the level of resistance from employees.

(T R JAIN, MUKESH TREHAN, RANJU TREHAN, 2009)

Recommendations

Focusing on promotional activities associated with global marketing can help Barclays in Indian and international market. Recent Olympics, Indian Premier League, Formula race and other global events in India can provide a lot of help for Barclays in their promotional activities if they use these events for marketing purposes.

Proving online services in domestic languages can provide a differentiation edge and USP for Barclays to target more customers.

Barclays should invest in social activities of education and green environment to build a better corporate social image in India

Focusing on innovation in term of substitute products can help to bring more revenue and customers to Barclays bank.