Group-O-MS925 (Barclays PLC) PDF

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UNIVERSITY OF STRATHCLYDE MSC BUSINESS ANALYSIS AND CONSULTING

MS925: Strategic Modelling and Management (PART-1)

BARCLAYS PLC

Group O Ashwadh Narayana Ravi Teja Sistla Vishal Sharma Yequan Lin Yeshi Lu

(202180392) (202173670) (202066685) (202072235) (202080233)

Contents EXECUTIVE SUMMARY...................................................................................................................3 1 INTRODUCTION..............................................................................................................................4 1.1 Activities......................................................................................................................................4 1.2 Structure......................................................................................................................................4 1.3 History.........................................................................................................................................5 2 Barclays Banks PLC Current Strategy and Strategic Challenges........................................................6 2.1Analysis Of the Strategy Using The 5Ps Framework....................................................................6 2.2 The Main Strategic Challenge Faced by Barclays Banks.............................................................8 3.The Development Process and Evaluation of Barclays Banks’s Guiding Policy................................9 3.1Guiding Policy to Address the Strategic Challenge......................................................................9 3.2Guiding Policy Evaluation............................................................................................................9 4. Strategic Actions..............................................................................................................................10 5. Reflection........................................................................................................................................12 REFERENCES....................................................................................................................................14

(WORD COUNT PART A +PART B – 4862)

EXECUTIVE SUMMARY

The study was hired to conduct a strategic analytical analysis of Barclays PLC in order to develop and analyse a guiding strategic strategy for the company. We reviewed the organization's current strategic strategy and guiding policies to evaluate its organizational processes and strategic challenges. Furthermore, we developed and analysed a guiding strategy for successful coping with the organization's perceived challenges. We used some technical methods to resolve those obstacles, such as the 5Ps, addressed further down. In our research, we used strategic modelling techniques to systematically explore and analyse the key problems and challenges and how the company can overcome them. Finally, we developed some reflections that demonstrate the difficulties and obstacles we encountered when applying strategic tools and conducting an empirical analysis of the company.

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1 Introduction Barclays Bank PLC is a British universal bank organized into core businesses other than investment banking, i.e. personal banking, corporate banking, wealth management & investment management, headquartered in London, England (UK). They support consumers and small businesses through their retail banking services and larger businesses and institutions through corporate and investment banking services with a net income of 9.4bn GBP, working in over 40 countries holding 83,500 employees in the group and 48,241 in the UK Barclays banking group.

1.1 Activities

Personal Banking

Savings Account

Current Account

Barclays Blue Rewards

Cash backs

Premier Banking

Premier Current Account

Premier mortgages

Premier Barclay loan

Premier Savings & Investment

Business Banking

Start-up Business business Account as per Account turnover

Community Account

Wealth Management

Wealth Planning

Investments

Borrowing

Corporate Banking

Current Trends

Global Connectivity

Industry Expertise

Borrow Personal Loan

Credit Card

Accepting card payments with Barclaycard

Webinar to support UK businesses

Operational tools Insurance

Overdraft

Home Insurance Life Insurance

Gadget Travel Mortgag Insuranc e Insurance e

1.2 Structure Barclays is divided into two divisions: Barclays UK and Barclays International, with Barclays Execution Services as a service business. Personal banking, commercial banking, and Barclaycard customer business are all part of Barclays UK. The Barclays Bank UK PLC (ring-fenced bank) offers personal banking retail solutions to customers for their day-to-day banking. Business banking serves businesses from starts ups to SMEs with specialist advice and banking service. Barclaycard consumer is a leading credit card provider which offers flexible borrowing and payment solutions for customers. Furthermore, Barclays Bank UK PLC, which is provided by Barclays Investment Solution Limited, has acquired smart investor. Whereas, Barclays International consists of corporate & investment banking & consumer, cards, and payments businesses. These services are provided by Barclays Bank PLC (non-ring-fenced bank) and its subsidiaries. They offer a high range of products and services internationally and deliver improved returns. Barclays Execution Services, a group-wide service company that offers infrastructure, operational, and functional services to companies around the Barclays group, assists them.

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Image source:- https://home.barclays/who-we-are/structure-and-leadership/ 1.3 History The bank started in 1690 as the “Goldsmith banking business” in London, and later by 1736 James Barclay became a partner and merged with several other financial service companies and named as Barclays & co. Since 1690 till 2021, the bank has evolved into a multi-product business not only in the UK but in other parts of the world too by acquisition of other banks in different part of the world. From 1900 to 1945 they extended their branch network by making acquisitions of small British banks. From 1946 to 1980, Barclays established a U.S affiliate and was famous by the time because of the first credit card they launched and for the first time a female bank manager was appointed in London's “hanover square” branch. Moreover, they introduced world’s first cash machine in Enfield. After 1980 when Barclays bank was working internationally expanded its business to include commercial credit and took over American credit corporation and renamed it. Barclays introduced 1st debit card in U.K (Home.barclays, 2019). Barclays Global Investors was founded in 1996 when Barclays purchased Wells Fargo Nikko Investment Advisors (WFNIA) and merged it with BZW Investment Management. In 1999, Barclays launched Barclays.net, an internet service that was purchased by British Telecom in 2001, in an unprecedented step given the trend at the time for free ISPs. They closed 171 branches in the UK in 2001, with many of them in rural areas. On October 31st, 2001, Barclays and CIBC agreed to combine their Caribbean operations to establish a joint venture company known as First Caribbean International Bank. In 2004, Barclays took over Barclaycard's sponsorship of the Premier League. Barclays' group headquarters relocated from Lombard Street in the City of London to One Churchill Place in Canary Wharf in May 2005. In addition, on July 27, 2005, Barclays completed a £2.6 billion acquisition of Absa Group Limited, South Africa's largest retail bank, purchasing a 54 percent stake. In 2007, Barclays was forced to borrow £1.6 billion from the Bank of England to settle their debts with another bank. There shares dropped by 9% due to rumours exposure to bad debt in U.S. (Home.barclays, 2019) After 2010, they fell into various controversies and rumours which affected their stocks & debts. Barclays sold its Global Investors unit, which included its iShares exchange-traded fund company, to BlackRock for US$13.5 billion on June 12, 2009. In October 2009, Standard Life Bank was sold to Barclays. In March 2011, the sale was completed on 1 January 2010. it was announced that Barclays had surpassed Santander UK as the UK's most complained-about bank, with the Financial Services Authority recording 276,315 new consumer complaints against the bank in the second half of 2010. Analog Analytics, a digital coupon and daily deal company like Groupon, was purchased by Barclaycard in June 2012. From 2010 to 2020, they were able to deal with the situation and collect funds through various mergers and operations. (Home.barclays, 2019) 5|Page

2 Barclays Banks PLC Current Strategy and Strategic Challenges 2.1Analysis Of the Strategy Using The 5Ps Framework In the modern world, the banking industry can be defined as highly competitive and risky. Despite the presence of a considerable threat to business stability, Barclays Bank PLC has been able to maintain the leading position in the market during the last 50 years. There is a need to add that the financial performance of the company is improving on a regular basis. The presence of constant improvements is the key aspect that helps the business maintain its strong position in the market (Singh 2017). In their turn, the improvements are ensured by a comprehensively developed strategy that consists of various strategic management practices. The focus of the report is put on strategic analytical review of Barclays Bank PLC using the 5Ps framework with the aim to identify a strategic challenge faced by the organization.

2.1.1 Plan Any business has a prominent level of dependence on plans for achieving long-term success. The main reason for it is that plans represent how business strategy is connected to the approaches and decisions of managers and leaders. The presence of a plan helps ensure that a company follows a predetermined course of action. Today, Barclays Bank PLC operates in a highly dynamic and challenging business environment due to the need to constantly maintain a higher level of competitiveness. Hence, the company is highly focused on the utilization of strategic thinking to be strategically competitive. The management of Barclays Bank PLC has the responsibility to set a direction before a particular strategy is implemented (Docherty 2018). Such approach helps the company decrease costs associated with the need to adjust the strategy. At the same time, the plan helps ensure that the competitive advantage of the organization represented by a thoughtfully developed and implemented technique cannot be easily duplicated by other industry players. For example, in 2018, the management of the bank had a plan to become the leader in online personal banking among consumers in the UK. The plan of achieving this goal included such aspects as ensuring government compliance with the viability statement and effective audit of financial statements, thus increasing wealth management effectiveness to provide consumers with better savings propositions (Sanders et al. 2020). As a result of the plan comprehensiveness, Barclays Bank PLC managed to launch a flexible monthly income bond that enables consumers to make a three-year deposit and supplement their income with monthly payments. At the same time, the plan of the company has a low level of flexibility owing to the complexity suggested by a shift from offline to online banking. Due to competition threats, insufficient flexibility of plans can affect the ability of the business to address market changes and trends.

2.1.2 Pattern The management of Barclays Bank PLC is highly focused on addressing the needs of their employees using the resource-based view (RBV). The resource-based view (RBV) represents a strategic framework utilized by companies to identify strategic resources that can help a company gain a sustainable competitive advantage. For Barclays Bank PLC, the key strategic resource is represented by its employees (Radda et al. 2015). The management is focused on providing staff with value since they represent a strategically important asset. In the banking industry, the quality of customer service is a critically important aspect that determines the level of competitiveness. By following the pattern of ensuring that all the needs of employees are met, the management of Barclays Bank PLC enhances the motivation level to deliver outstanding performance and, as a result, keep employees satisfied (Radda et al. 2015). Being highly supported by the organization, the staff shows a tendency to work effectively under the clearly defined rules as well as patterns that remain stable for years. For this reason, the employees of Barclays Bank PLC tend to resist any type of change when it comes to the transformation of operations or business structure.

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2.1.3 Position As for the position, it determines the place of an organization in the industry in relation to its direct competitors. The management of Barclays Bank PLC shapes its positioning from the perspectives of core activities. The entity is positioned as a locally established bank with regional subsidiaries that has a goal to deliver the best banking experience to specific customers. The segments are divided by services, such as current account, saving products, personal loan, credit card, mortgage, investment, and pension. Each segment is dominated by consumers from six age groups: 18 to 24 years old, 25 to 34 years old, 35 to 44 years old, 45 to 54 years old, 55 to 64 years old, and 65+ years old (Bari & Syazwani 2018). At the same time, the most popular services that have equal representation among all age groups include credit card and current account. Despite this fact, the entity is highly focused on diversification of its services to meet the needs of the greatest number of consumers. The annual strategic report 2020 of the company states that diversification is the factor that helps Barclays Bank PLC maintain resilience in the highly competitive business environment (Fulop et al. 2020). It is crucial to add that in 2020, 46% of the total income were generated solely by investment banking. Hence, the popularity of credit cards and current accounts does not outperform investment banking in relation to financial reward.

2.1.4 Ploy A strategic ploy plays a critical role for Barclays Bank PLC by allowing the company to effectively deal with the threat of competition. Creativity can be defined as a critical component of the ploy (Maina 2017). Barclays Bank PLC has been operating in the banking industry for more than 120 years so that it has a comprehensive understanding of the industry, needs of consumers, and shareholders. As a result, it becomes possible to pioneer innovation implementation. Barclays Bank PLC was among the first banking companies that introduced credit cards and ATMs. Since 2012, when the company became the major sponsor for Tech Hub in Manchester, the UK, technology has become an integral strategic aspect of business development (Oliver 2019). Nowadays, innovation of the company is focused on design, as the goal is to ensure that consumers can enjoy the experience using the services of Barclays Bank PLC. It is crucial to add that the company is strongly focused on the use of the Internet for supporting online banking, social media to remain in constant contact with consumers, and advanced features of web design to make the experience of online banking pleasant.

2.1.5 Perspective Barclays Bank PLC is a company that is focused on formulating its strategies in accordance with legislation and considers a few legal and ethical aspects before making the final decision. At the same time, the entity is focused on making all the business processes eligible (Oliver 2019). For example, the partnership with Tech Hub can be defined as a strategic decision since it allowed the company to source the most popular innovative software able to satisfy the needs of a culturally diverse audience. Apart from that, Barclays Bank PLC works with innovative start-up companies by providing them with financial support to develop a strong commercial linkage between innovative technologies created by these companies and bank (Goffin & Mitchell 2016). That is why, the company is focused on investing in employees' training, which helps encourage them to bring innovation into all the business-related processes and, as a result, maintain the high competitiveness level.

2.2 The Main Strategic Challenge Faced by Barclays Banks 2.2.1 A Low Level of Flexibility of The Management Barclays Bank PLC is a developed company with strong management and leadership. Despite the long-term success of the business, there is a possibility to define three strategic challenges faced by the entity that can affect its long-term stability due to a considerable competition threat. The first challenge is represented by a low level of flexibility of the management. Most of the business 7|Page

processes have been unchanged for a long period of time. At the same time, the banking industry is changing rapidly, hence forcing companies to adapt tier plans and strategies. The lack of flexibility in decision-making can result in the loss of market share for Barclays Bank PLC.

2.2.2 Low Effective Performance of Employees It is crucial to add that the employees of the company are highly effective only when it comes to the process of working under stable conditions. Competition leads to a situation when Barclays Bank PLC should constantly adapt to new conditions so that employees should have a high level of flexibility to accept a change. The key consequence of resistance to change shown by the employees of Barclays Bank PLC is the high retention rate. It is possible to expect an increase in the expenses associated with human resource management. In the long-term, these expenses decrease the possibility to invest in innovations and, as a result, decrease its competitiveness.

2.2.3 Overreliance on The Diversification Strategy Finally, the third aspect that contributes to the severity of the strategic challenge faced by the organization is the overreliance on the diversification strategy. The entity offers a diversity of services and products to meet the needs of consumers from six age groups. At the same time, the strategic reports show that investment banking is the most profitable for Barclays Bank PLC among all other services. By utilizing the diversification strategy in the long-term, there are chances to face financial losses associated with the need to maintain products as well as services that are not highly popular among consumers.

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3. The Development Process and Evaluation of Barclays Banks’s Guiding Policy The following section provides several suggestions on how to deal with the challenge without affecting the level of profitability. The company is negatively influenced by the growing competition in the industry due to the lack of effectiveness of internal business processes.

3.1 Guiding Policy to Address the Strategic Challenge Based on the strategic analytical review of Barclays Bank PLC, it is possible to state that the major strategic challenge faced by the company is competition. At the same time, there are internal business processes that negatively affect the ability of the financial institution to remain competitive in the banking industry in the long term. Such guiding policy is focused on addressing the root causes of the decreasing competitiveness of Barclays Bank PLC to ensure that it can maintain its leading position in the industry in the long term despite the changes in the business environment. There is a need to focus on investment banking as the major se...