Barclays Bank Plc is one of the major global banks, offering financial products and services with in different banking sectors such as commercial, retail, and investment. Hiring more than 156,000 employees, operating in fifty countries and serving 48 million customers across the globe, the bank is listed on the London and New York stock market (Barclays Plc 2009 Responsible Banking Review, 2009). For the financial year 2008, the bank declared a profit of £ 6.1 billion before tax (Datamonitor, 2009). The bank operates with in well- organized 'clusters'. The global retail and commercial banking business cluster is accoutnbale for retail banking, commercial bank, GRCB Western Europe and GRCB Emerging Markets and Barclay card (Barclays PLC Sustainability Review, 2009). The investment banking and investment management business cluster are accountable for operations of Barclays Capital, Barclays Global Investors, GRCB Absa, and Barclays Wealth (Barclays Plc 2009 Responsible Banking Review, 2009). The head quarters of the bank is known as 'Group Centre' accountable for functional operation (Barclays Plc 2009 Responsible Banking Review, 2009). This paper aims to idnetify, examine and evaluate the strategic business practices employed by the bank. The paper has been organized in to three sections: a) Idnetifying and assessing the strategies that have been deployed by the bank and their resulting outcomes, b) assessing the current strategic situations and c) making recommendations for improvements.
Section 1: Identifying and assessing the strategies that have been deployed by the bank and their resulting outcomes
One of the major global strategies practiced by the Barclays Bank Plc is 'sustainability strategy' for its continued global existence and market dominance across the global market. The Bank envisions business sustainability and growth explaining sustainability as 'building relationships and accepting being accountable' (Barclays Plc 2009 Responsible Banking Review, 2009). The adaopted stratgeic initiatives by the bank, have been observed as:
Encourage stakeholders' involvemnt in carrying out research initiatives and establishing partnerships.
Establish dialogue with governments, non-governmental organizations marketing research activities (focus groups etc.) with the cross section of employees representing the bank.
Engage in continued activities such as hiring external consultants / auditors (Deloitte LLP) to assisst in making its business transparent to its stakeholders.
Develop the strategic intent of the bank in terms of offering diverse banking experience such as commercial banking, investment banking, and retail banking in the UK.
Ensure that the business development is a result of different projects such as product / service development, market expansion etc.
Along with market expansion, the bank is also engaged in development of the markets where it operates so as to support the commercial and retail banking in the chosen countries in addition to the UK market.
Most importantly, the bank has been consistently observed to be enhancing its operational business excellence in the global finance sector.
Assessing the outcomes of the strategic development initiatives undertaken by the bank, the paper first takes a brief account of the situation faced by the bank within last five years (Barclays Plc 2009 Responsible Banking Review, 2009; Datamonitor, 2009). The bank is encountered with industrial challenges along with facing business challenges. Thus the issues such as reduced number of customers, employee turnover, loss of market share, reduced market dominance of the bank etc. need to be addressed in order to continue with 'business sustainability' goals. Further on, the escalating inflation rate in the UK coupled with recent economic recession had affected the financial sector, as a whole (Protchard, 2008).
In the same context of challenging situation, the strategic initiatives undertaken by the bank had resulted in remarkable outcomes. Taking a holistic approach towards assessing the outcomes, the bank earns its competitive and strategic advantage in the global markets it operates. Secondly the bank also practices an effective corporate governance policy that ensures the stakeholders of the transparent operations, revenues etc. of the bank (Thompson, 2009). As an example, the bank aspires to adopt innovation in the banking sector by means of developing and offering innovative ad technically advanced products and services. The bank specifically concentrates on its value chain, through improving its supply chain management initiatives. Prior to the examined period, this area arguably remained unattended to its full potential. The bank has been now actively observed to be establishing long- term relationship with its suppliers' base so as to strengthen strategic alliances. Secondly, the bank only had one supplier, however due to the recent regulation exerted by the regulator requirements the bank today ties with six suppliers (Daley, 2005). As stated, enhancing its supply chain has resulted in providing value- added products and services to its customers. Barclays Bank Plc. has also been observed to be offering 'inclusive banking products and services' to its customers as a result of strategic initiatives. Inclusive banking refers to assisting those potential customers who are disqualified from the financial system but can now benefit from them. This has been achieved by means of opening 1.77 million bank accounts for low- income customers.
As a result of its ethical business practices resulting from corporate governance programmes such as corporate social responsibility (CSR), the bank now practices 'sustainability strategy' by means of demonstrating its long- term commitment towards stabilizing and developing emerging (India, China etc.) / under developed economies where it operates, carrying out ethical business initiatives such as reducing carbon emission, reducing the consumption of gas, water, electricity, making community investments, embracing diversity and making investments in building long term relationships with diverse groups of stakeholders. The outcome of embracing diversity has been evidently noted as an increasing number of female employees (from 21 percent in 2007 to 25 per cent in 2008) at senior positions at Barclays.
Section 2: Assessing the current strategic situations
The bank is currently challenged by rapid changes in the global economy, political instability, increasing competition and so forth. The following challenges have therefore been identified form the reviewed secondary sources (Barclays Plc 2009 Responsible Banking Review, 2009; Datamonitor, 2009):
The bank faces the issues pertaining to global economic depression, affecting various industrial sectors specifically the banking and finance sector. This threatens the bank in various ways such as major clients being bankrupt, losing significant number of customers, shrinking market share etc. According to analysts, the world is in a financial storm, where the US Federal Reserves ahd allowed the inflation genie out of the bottle, making its credibility fall below zero (The Telegraph, 2011). As a result of which the Barclay's chief equity strategist ranks the economic depression as an "inflation shock underway" and predicts its destructive impact for financial assets" (The Telegraph, 2011).
Operating in global competitive market, the bank is challenged to continually provide the customers with innovative and competitive services and products so that the affects of credit crunch can be lessened or other wise the bank will be faced with cut- throat industrial competition.
In terms of operational management, the bank needs to identify and manage the strategic risks that can result in further reduction of its market dominance, market share. The bank also needs to address the risks associated with business diversification, market expansion and development. In addition to operational risks, the bank also needs to address the financial risks and their impact incase they are materialized.
Secondly the bank must also continue to practice its promoted diversity at work programmes in order to retain the skilled employee in the bank. In case of negligence to such practices, the bank is at risk of getting unsatisfied group of stakeholders.
Lastly, the bank must also address the needs of managing and extending the common investments across the globe so that strategic alliances can be formed. This issue is important to be addressed so that the promoted global strategy of sustainability could be exerted achieving global presence and supremacy.
Section 3: Recommendations for improvement
Drawing on the analysis made and challenges identified in this report, following recommendations for improvements have been made:
With a goal of maintaining its sustainability practices, resulting in increasing market share, customer database etc. the bank should explore more possibilities of business mergers and acquisitions with different financial institutions across the globe. The opportunities can be explored by means of forming strategic alliances with financial institutions such as investment banks etc. that are at the verge of declaring themselves bankrupt due to distressed economies. The strategic deals can be made through acquiring their businesses for an agreed period of time, say five years with agreed percentage of profit margins that will be shared and handing over the business to principal owners by the end of term time.
Design and develop such business policies that support the re- structuring of business models in terms of being flexible and making business divisions (such as retail banking, consumer banking and investment banking) resilient against external environment (intense competition, distressed economic situation, changing stakeholders' need and demand etc.). For example, due to recessed UK economy, job redundancies may not be an appropriate step to be taken by the management, rather an approach that ensures that the positions that are getting redundant should be redefined and accommodated in a comparable or diverse capability. The management should also train and develop its people so that they would be provided with diverse set of skills and competencies to perform in re-new positions.
The bank has been observed to be practicing differentiation strategy to obtain its competitive advantage in the market place. Therefore in order to further unleash the possibilities, the management should also aim to design cost differentiation strategy. Low cost differentiation strategy can be executed through accomplishing economies of scale, reducing cost of doing business and so forth.
In terms of organizational infrastructure, it has been suggested that close attention should be paid to further develop the Information Systems along with placing stringent control measures on security issues. It has been evaluated that execution of any risks that threatens the business credibility and performance can cause sever damage to the organization (Floyd, 2001). Hence the information systems should be consistently developed and monitored in order to ensure that occurrence of risk (fraudulent activities, hacking, sniffing, security breach etc. of the valuable organization's and customer data and information) can be mitigated.
With in the same context, the bank should also design business continuity plan that can be executed in case of occurrence of a disaster such as terrorist attacks, flooding, power failures, etc. Such disasters have the capability of severely disrupting the business operations. Along with business continuity planning, the bank should also devise disaster recovery planning. The bank should also ensure / revive the compliance with the regulatory obligations such as ISO / IEC 27002:2005 and Sarbenses Oxley Act (SOX) and etc. (BSI 2008)
The bank should make significant investment in research and development (R&D) initiatives so that customers' needs and can be well understood. In addition the bank should also concentrate more on constructing customer relationships through taking strategic initiatives such as customer relationship management (CRM) programmes. This initiative makes certain that the continued relationship with the stakeholders' results in business profitability (Chen and Popovich 2003).
The bank should also develop its performance management system due to the realized shifts in the business environment resulting in redefining performance levels etc. As a common practice, the performance management system should be developed including the Balanced Score Card (BSC) tool suggested by Kaplan and Norton (1996) so that the process of business decision- making can be facilitated, financial benefits can be tracked and monitored, customer satisfaction levels can be reviewed and measured.
In order to implement the recommendations that have been made above, the bank must also implement a change management programme to ensure sustainability, profitability and growth of the business (Carey, 1989). While implementing these recommendations, the management needs to realize that there will be resistance to change, hence a comprehensive change management programme should be designed and put in place. Secondly the management should also demonstrate its long- term commitment to implement the recommended strategies to make sure that the return on investments can be realized.
