Barclays plc is an international-famous British-based financial services firm with 300 years of history and expertise in banking. The company provides a variety of services ranging from personal banking, corporate and business banking, investment banking and wealth management. The firm’s operations can be found across fifty countries across Europe, US, and Africa and Asia etc (www.barclays.co.uk). According to the Annual Report of the company, from the perspective of the market capitalization, Barclays in one of the largest financial services firm in UK. Besides, UK, the firm is also having strong presence in many countries around the world, and is currently one of the leading financial services providers to multinational companies and financial institutions. The firm has a total of 2916 branches around the world. The group is structured in terms of Strategic Business Units (SBUs). Each of the SBUs is given the responsibilities and duties in identifying and executing value maximizing strategies respectively. The SBUs are organized as follow: (1) personal financial services, (2) Barclays Private Clients, (3) Barclaycard, (4) Business Banking, (5) Barclays Africa, (6) Barclays Capital, and (7) Barclays Global Investors (Barclays, 2009).
The 7P marketing Mix Framework is a famous and practical tool widely used by researchers or practitioners. In the following section, all these elements of 7P will be discussed in details.
Product. There are many products provided by Barclays Plc. Among the most important products include loan, saving accounts, investment products such as unit trusts, structured products and etc (Barclays Plc, 2009). An analysis of the product portfolio indicate that the firm have a highly diversify earning revenue base. Most of the products are widely accepted and used by the public. For example, it is reasonable to say that the product such as saving account is a ‘must’ product for the people and society. Not only is that, the public apparently trusts the products provided by Barlays because banks are generally protected and partially guaranteed by the government (Gros & Alcidi, 2009).
Price. The price for Barlays products is a complicated one. For the loan products, the interest rate charged on the loan borrowers are the price. For the investment products such as unit trust, the management fees charged to the customers is the price of the particular product. In this dimension, the pricing offered by Barclays is competitive and attractive if compared to the competitors (Barclays Plc, 2009).
Promotion. Barlays is a firm excellent in promoting the firm as well as the products. The firm is constantly promoting its products as well as the corporate images and brand name around the globe. Today, the firm is a well-know corporation in the world. Besides, the company is also experience in launching promotion packages, advertisement, and various marketing campaigns in selling the firm’s products or to enhance the company reputation. Not only that, the company is also exercising corporate social responsibility to further enhance its social images around the globe (Bold, 2003).
Place/ distribution channel. For the case of Barclays, place can be referred to the various branches the bank is having, as well as the corporate website where the customers perform the monetary or investment related transactions or activities (Barclays Plc, 2008b). A review of the firm’s branches as well as the corporate website indicates that the firm is having a well and effective distribution channels.
PESTEL model is the selected tool for analyzing macro environment. It is widely used and it is a popular concept in strategic and competitive analysis. Perhaps the concept of environmental analysis was already understood since the first merchant. It is commonly agreed that the concept of PESTEL comes from PEST Analysis Model; it is a method of analyzing the macro environment by strategists, which involves all factors that influenced in the industry and organization. Basically, the PEST framework encompasses four factors as follow: Political, Economic, Social and Technological. PESTEL Framework even goes even further to consider the Environmental and Legal factors. In the section below, all the six factors will be discussed, with the analysis concentrate on Barclays Plc.
Political Analysis. Due to the recent subprime financial crises, many companies are being reprimanded for paying large bonuses to directors and involved in trading of activities related to derivatives trading (Barclays Plc, 2009). The huge bailout required from governments across the world has caused people to focus the attention on wrong doings by banks and financial services firm in the recent years. Governments across the world are implementing or prepare to investigate the probable methods to regulate the financial industry. It is expected that such a tightening of governmental policies will negatively impacting the financial services and related firms (Gros & Alcidi, 2009).
Economic Analysis. Economic factors are most influential categories in PESTLE Analysis to affect the firm. The main pressing issues are currently the sovereign debt crises within the eurozone (Barclays Plc, 2009). The stability of Euro currency is also critically essential and the fall of Euro will destabilize the financial system in many Europe countries. Besides, as many of the countries around the Europe region as well as the world are beginning to tightening the fiscal policies as a trendy measure, the future economy outlook for the world is gloomy (Gros & Alcidi, 2009). All these factors will significantly affecting Barclays, and worst, the impacts and potential damages is hard to be predicted. To a lesser extent, other economic factors negatively affecting the firm is the potential slowdown of China’s GDP growth will also drag the economic growth of the world (Verspagen, 2010).
Technological Analysis. The recent huge topic concerning technological change around the globe is the issue of global warming, the emergence of bio-technology as well as nano-technology, applications of ICT and the proliferation of Internet to the emerging countries. Technological factors are less likely to influence the firm in the short and long term.
Legal Analysis. Legal issues may arise from the political issues as mentioned above. There are high chances that governmental bodies will continually tightening the regulatory governing financial sectors as a whole. Legal factors are probable to negatively affecting the firm.
Environmental Analysis. Of the many environmental issues greatly discussed and highlighted in mass media, the threats of global warming and the melting of ice berg due to climate change across the globe is particularly affecting human species as a whole. However, such issues are less directly affecting the firm in the short or long run (Verspagen, 2010).
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The model has a lot of applications in the real world. In fact, the SWOT model is something which can come in relevant and powerful for a situation, personality or organization analysis. In the business and management context, SWOT analysis is usually applied in evaluating a company, a business plan, a product segment, or a marketing strategy. The application of SWOT analysis is applicable to various contexts because by listing down in details about the strengths and weaknesses, it will enable and guide the researcher to investigate the dimensions of various opportunities and the potential impact of threats. SWOT analysis is simply a powerful planning tool. In the following section, the SWOT analysis will concentrate on the situation of Barclays Plc in current business environment.
Economies of scale and large scale of operations able to reduce business risks. Barclays is a well-known international financial services firm operating in over 50 countries around the world. The firm is one of the Fortune’s lists of Global 500. The company has a wide customer base – exceeding 30 million. In fact, the firm is also famous for having one of the largest branch networks and cash machines in the UK. The scale of the bank is an important competitive advantage for the firm – and has enabled the bank to leverage its scale in UK for expansion to US and the rest of the world (Anon, 1997). Besides, the economies of scale enjoyed by the bank also enable the firm to reduce operation costs while deliver a variety of services to the customers. Business risks are also reduced significantly, due to the large scale, as government will often step in to protect the bank from any crisis as it is too big to fail (Anon, 2010a; Barclay Plc, 2008).
Brand. The Barclays brand name is well-established and well-known. The management has been promoting the brand effectively. For example, Barclays brand is being promoted through sponsorship of Premier League football (Barclay Plc, 2008).
Diversification of revenue contribution from a variety of financial services. The company enjoyed a variety of diversification benefits. Firstly, due to its large scale, the firm enjoys geographical diversification (Anon, 2006). Secondly, as the firm’s operations are spread across a variety of financial services, the company is benefited from profit contribution diversification. Both of these factors protect the firm from any single event risk or unforeseen business volatility in a single business segment or country (Anon, 2010a).
Strong credit card business enables various cross selling opportunities. Barclays is one of the firms with fastest growing credit card businesses across Europe to US (Anon, 2005). The growth of the credit card business enables the firm to increase its loan portfolio and enable cross selling opportunities to existing customers (Barclay Plc, 2008).
Innovative. The firm is frequently associated with innovative decision making and actions. For example, the firm is the first to bring out credit card in 1966 (Smith, 2002).
Losses from trading businesses. Unfortunately, due to the current financial crises across the world and sovereign debt pressure in Europe, the firm reported huge losses in trading business, due to revaluation of securities and derivatives. Thus, the profit contribution of the securities trading division has decreased (Barclay Plc, 2008).
Less presence in emerging market. Although the scale of the bank is huge, but the presence of the bank in emerging markets is relatively limited and little, particularly compared to other international banks such as Citibank and HSBC (Barclay Plc, 2008).
Credit market exposures. In the past, the company is exposed to US’s subprime Mortgage Backed Securities and had suffered huge losses due to the subprime crises. Recently, the bank is expected to be suffered significantly from the exposure of sovereign debt in the Europe. All these will impact the firm financial position significantly in the long run (Anon, 2010a).
Huge bonuses. Gigantic bonuses for Directors in the firm have recently attracted unfavorable attention from the mass media. Public has been debating if it is ethical for the firm to do so. As a result, the firm refused to accept assistance from the government (i.e., rejecting an opportunity), purely because taking financing from the government would end the firm’s autonomy on the matter of bonuses payments to the directors (Barclays Plc, 2009).
Credit card business could be affected by economic slowdown. The fastest growing business section of the bank may suffer due to economic slowdown in the Europe region (due to possible tightening of fiscal policies) and the world (due to possible economic slowdown) (Barclays Plc, 2009).
Expansion of retail banking business to China, India and Arab may enhance growth for the firm. The firm has expanded into China, India and Arab in 2007, and thus the firm may capitalize on the growth trend in these emerging countries (Anon, 2010a).
Relative strong position compared to other troubled banks in the 2008 financial crises as well as the possible sovereign debt crises in Europe. Many banks and financial services related firms are badly damaged or hurt by the recent meltdown of 2008 as well as the probable crises of sovereign debt crises currently (Barclay Plc, 2008). On a relative basis, Barclays is being affected lesser as compared to many other Europe and US banks. This is a good opportunities for the bank to gain market shares from insolvent or troubled banks (Verspagen, 2010).
Cross selling opportunities. As the bank is strategically position by offering one-stop financial solutions to the customers, these create a wide range of cross selling opportunities to the firm in the future (Fojt, 1995).
Weak economic outlook for UK and Europe. Up to-date, the UK economy outlook is still gloomy after a downward spiral of low GDP growth and high unemployment. The bleak outlook of the UK economy indicates that the demand for Barclay’s products and services will be lessen the near future in UK. Besides, the economic situation in Europe as a whole is still worth and experts are arguing that the US economy is not much better as well. All these means that the firm should be prepared to face the adversity in the near future (Barclay Plc, 2008).
Increase of online fraud activities is causing threats to the internet-security issues for the firm. According to researchers, since the trend of automation in the financial services sector, the fraud concerning misuse and wrong doing with internet, online banking and credit transaction has been increasing dramatically. Thus, sensitive customer data as well as critical customers’ financial transactions are in danger from frauds and hacking. Regarding this issue, Barclays is in a position urgently challenged to implement effective and comprehensive system to prevent online fraud (Fojt, 1995).
Porter suggested that there are five important forces that should be considered in the strategic and competitive analysis of a company. The five forces are bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threats of substitutes and rivalry among existing companies. All of these forces are illustrated in the figure below. Besides, these forces will also be discussed in greater details in the paragraphs beneath.
There are many suppliers for Barclays. For the loan and savings departments, the suppliers are the depositors. For the unit trust departments, the suppliers are the customers that invest in the fund being managed by Barclays. Generally speaking, bargaining power of supplier is not a highly critical factor affecting banks or financial institutions such as Barclays Plc.
The bargaining power of buyers for the banking and financial institutions are decreasing in the recent years, due to the emergence of many competitors. As the many other banks as well as financial institutions are also providing may investment products to the wide public, the bargaining power of Barlcays I weakening in the recent years, and may continue to deteriorate in the near future.
Threat of new entry for Barlcays is a complex issue. For the banking division, the threat of new entrant is not a huge issue, because the banking industry is heavily regulated by the government (Gros & Alcidi, 2009). However, for the investment products department, the threat of new entrant is unfavorable to Barclays. This is because although to set up a unit trust or investment companies need regulatory approvals, the regulation is not as tight as to set up a bank. Moreover, due to the lucrative returns from setting up investment firms, many talented people are setting up new firms to attract investors’ money around the world.
There are relatively few products able to substitute the products offered by Barclays, except those products offered by hedge fund, private equity fund or new firms categorized as the shadow banking-related companies (Barclays Plc, 2009). Nonetheless, the threats of substitute for Barlcays are low.
Banking and financial institutions are a competing in a competitive industry. This is the reason the banks are increasingly engaging in risky decision making process and actions in order to enhance the growth and profit (Bell, 1999). Besides, the banks are constantly engaging in aggressive marketing to entice customers to switch from other institutions to their own firms (Gros & Alcidi, 2009). Thus, from the perspective of rivalry among competitors, the Barclays situation is unfavorable.
Overall, this writing has discussion several aspect of marketing strategic analysis for Barclays Plc. A total of four frameworks in the marketing and strategic management subject are being used to analyze Barclay’s competitive and strategic position in the industry, namely – the marketing mix, SWOT framework, PESTLE analysis and lastly, Porter 5 forces. All of these frameworks, when being combined to analyze Barclays, can comprehensively determine the firm position, weaknesses, opportunities and competitiveness in the business landscape.
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