Business Finance and Law - Barclays Bank - Essay Example

ANALYSIS OF BARCLAYS BANK Background of the Organisation Barclays Bank is among the leadingbanking institutions in the world. Thomas Gould and John Freame co-founded the bank in 1690s in United Kingdom. However, the current name of the institution originates from third partner; James Barclay in 1736. Currently, the Bank ranks among the top three largest banking institutions in United Kingdom. In addition, the organisations principal avenues of interests include investment management, investment and retail banking (Barclays.com, 2015). The institutions management strategy has enhanced its growth to various markets in Europe, Asia and Africa making it among the ten largest banking organisations in the world. In this context, Barclays Bank operates in 60 countries worldwide with the primary focus on Europe. The institution is among the largest lenders in the world based on the market capitalisation measurements. The core operations of the bank are the investment and retail banking in various parts of the world. However, different forces acting on liberalised economies in most of the European Union nations due to the introduction of Euro and globalisation (Barclays.com, 2015) are influencing investment banking. The Barclays Bank provides services to multinational corporations operating different market models worldwide. The bank plays a great role in the banking sector by financing various government projects in different regions worldwide. Moreover, the bank provides services to individuals and corporations in the emerging economies in Africa, Asia and Europe. The operations of the company comprise of two major business that include the commercial and global retail banking (GRCB) as well as the investment banking and management business (IBIM). The strategy of the organisation aims at enhancing growth by diversification of their profit base. In addition, the organisations approach focuses on benefiting the customers through time and market-based growth. The management strategy of the Bank is its primary driver in the world banking industry (Rao, Rao and Sivaramakrishna, 2008). The strategy of the Barclays Bank is to provide a complete portfolio of services in various countries in the world. In addition, the strategy entails different concepts of providing a wide range of opportunities in order to facilitate growth by enhancing its market share and diversifying its products. Furthermore, the banks strategies encompass three primary concepts that include invest, learn and grow. The success of the bank is also facilitated by the ambition of the group to be one of the major banks in the global market. In this case, the banks management focuses on helping the banks clients and customers worldwide achieve their financial and investment goals (Rao, Rao and Sivaramakrishna, 2008). The strategy also enables the organisation to embrace various technological advancement in the banking is a crucial contributor to the success of the bank (Barclays.com, 2015). Barclays Bank was the first banking institution in England to introduce the concept of credit card in its operations. This concept enhanced the customer base of the bank because it facilitated the service provision criteria in the company. In addition, the idea of direct investment is the key driver of the banks success in its operations. The criterion of outsourcing its services to partner banks in different parts of the world has enhanced the growth in the bank’s direct clients and customers. Other primary drivers of the bank’s success based on its management strategy include enhancing its model of operation for processing trade, minimising the business trade cost in relation services infrastructure and people. In addition, bank’s strategy highlights on the aspect of improving its trade services and development of a feasible, long-term and non-competing partnerships (Barclays.com, 2015). The idea of outsourcing the aspect of processing of its trade services to ABN AMRO enables the bank to focus on enhancing the customer service (Rao, Rao and Sivaramakrishna, 2008). Swot and Pestle Framework of Barclays Bank Swot Analysis Barclays Bank is among the largest financial institutions in various aspects of banking such as commercial banking, retail banking and investment banking. In addition, Barclays Bank is a primary provider of other financial services like wealth management, credit cards, online banking and management of the investment. The banks United Kingdom division provides financial services to approximately 15 million customers and 800, 000 organisations in the country (Cadle, Paul and Turner, 2010). Furthermore, the institution has one of the biggest branch networks in United Kingdom, which includes cash machines network and approximately 2500 branches. Regardless of the extensive network of the bank’s branches in the world, financial services consolidation might influence the operations of the bank in future (Barclays.com, 2015). Strengths Reduction of business risks due to large-scale operations Barclays Bank operates in approximately 60 countries in Europe, Africa, Asia, United States, Latin America, Middle East and Australia. The bank ranks among the best 100 financial institutions in the world based on the revenues. In addition, Barclays Bank customer base worldwide exceeds 35million according to different surveys. Moreover, the retail division of the bank provides services to more than 15 million customers worldwide (Cadle, Paul and Turner, 2010). On the other hand, the banks have over 800, 000 business in United Kingdom (Barclays.com, 2015). The large size of the bank’s operations in various parts of the world promotes its success by reducing the operations risks. The organisation also benefits from economies of scale because of the extensive network in various parts of the world (Rao, Rao and Sivaramakrishna, 2008). Profit and Revenue Diversification Barclays bank operations are in various markets worldwide. The institution operates in more than 60 countries around the world. In addition, Barclays is a leading provider of financial services in United Kingdom and most countries in the world (Cadle, Paul and Turner, 2010). The diversification of the banks profits is an essential factor in its growth. In this case, the banks operations are not affected by the decline in financial markets in the both Europe and United States during the 2008 recession. The non-United Kingdom revenue in the bank has increased significantly after its acquisition of Spains Banco Zaragozano and its stake in controlling South Africas Absa. Consequently, the banks share of retail banking in United Kingdom declined in 2008, which had minimal effects on the overall profits of the Bank (Barclays.com, 2015). In this context, the diversification of revenue and profits based on business operations and geographical location protects the organisation from a decline in particular markets that reduces its volatility. Credit Card and Online Business Barclays Bank was the first institution to utilise the credit card services in the world. The service enables the banks customers to transact with other banking institutions in various parts of the world. The institutions credit card service has expanded tremendously to other countries in America, Asia, Europe and Africa since its inception in 1966. The managementss ability to control the service effective has seen an increase in the banks revenue and profits. In addition, the online banking service provided by the bank is a crucial contributor to the increased customer. The service allows the customer to undertake their banking activities in their offices and homes, which reduces the operation costs and congestions in the banking halls. Weaknesses Trading operations weakness resulting in lower income in trading The banks net trading revenue reduced to £1329 million in 2008 from £3759 million in 2007. The reduction in the net revenue relates to increased losses in the credit line of business. Most of the companys overall net losses occurred from the sale and purchase of securities as well as the revaluation of derivatives and securities. Moreover, the overall loss in the organisations financial assets was at a fair value of approximately £6,602 million in 2007. The trading revenue of the bank accounted for 17% of its overall revenue in 2008. In this context, weakness in the institutions trading operations contributes to a decline in the trading revenue. The weakness also affects the companys revenue diversification (Barclays.com, 2015). Failure to Implement the ABN AMRO agreement Barclays Bank initiated an informal multi-billion merge for ABN Amro Holding in 2007. The bank was among the largest financial institution in Netherlands with an adequate presence in Europe and Asia. Failure by the bank to complete the deal affected its market share in the banking sector of Netherlands (Mueller, 2011). Exposures of the bank’s capital credit markets The exposure of the capital credit avenues affects the performance and position of the bank. Barclays Bank has subjective in United States through Equifirst mortgage and Barclays bank capital literature (Barclays.com, 2015). The capital of the Bank has over £36 billion of to various institutions such as the United States subprime, Alt-A mortgages, commercial mortgages, insurers, leveraged finance and structured vehicles for investment. The credit provisions and impairment charges increased to £5,419 million in 2008. The exposure in the credit market might continue to influence the banks P&L statement as well as the balance sheet, which could impair it growth in particular, markets (Cadle, Paul and Turner, 2010). Opportunities Retail banking in UAE and India likely to enhance growth The launch of the Barclays banks retails banking services in United Arab Emirates in 2007 is essential in supplementing its growth. The banking institution started it operations in India in 1970s (FitzRoy, Hulbert and Ghobadian, 2011). However, it has enhanced its operations through the introduction of Barclays Capital in Indias major investment bank. The corporate banking sector in UAE and India was initiated in 2006, which is essential for facilitating the growth of the bank in the industry. The introduction of the retail banking in United Arab Emirates and India promotes the growth of Barclays Bank in various ways (Barclays.com, 2015). First, there is an adequate market in the two economies due the tremendous increase in the number of middle and upper-class individuals (Hitt, Ireland and Hoskisson, 2009). Secondly, the number of foreign investors is increasing in the country, which is the crucial market base for retail banking. Investment in retail banking in other regions in the world such as Africa and Latin America provides a reliable avenue for enhancing the growth in the banks income and retail customers. Most of the economies in Asia, Africa and Latin America are experiencing continuous growth that is an important avenue for the growth of the banks retail market (Cadle, Paul and Turner, 2010). Online banking Online banking is one of the major elements of the current banking industry. Barclays Bank has invested in internet banking in order to attract the young retail customers. In addition, most individuals in different markets prefer transacting on the Internet, which is convenient and time-saving. The banks online banking provides an excellent opportunity for growth in customer base, which influence it net income. Mobile Banking Mobile banking encompasses the concept of integrating mobile communication in the banking sector. Barclays Bank is among the first financial institutions in the world to adopt the concept of mobile banking in their services. Mobile banking provides the bank with an opportunity to increase its market in various parts of the world. Furthermore, the integration of the internet in mobile banking is another crucial opportunity for the growth of the customer base in future. In this case, most individuals and corporations engage in various aspects of online and mobile banking while transacting on a global platform (Barclays.com, 2015). Globalisation Globalisation involves the expansion of the banking services to various regions across the world. Globalisation results from the advancement in the transport and communication technologies, which promotes the movement and interaction of people across the globe. Globalisation might enhance service provision in various departments in the bank, which is important in promoting the net income (Hitt, Ireland and Hoskisson, 2009). In addition, it facilitates the process of recruiting competent individuals in the management that enhances the management strategy of the company. Threats The banking sector is competitive which limits the effective success of the bank. The emergence of locally based banks in various parts of the world might hinder the growth of Barclays bank on the global platform. In addition, most governments in the developing economies engage in banking agreement with the international banks such as the World Bank, which might limit the involvement of Barclays Bank in infrastructure development (Barclays.com, 2015). In addition, the economic policies adopted by different countries in the world limit effective operations of the Barclays bank at an international level (Hitt, Ireland and Hoskisson, 2009). The growth in the revenue and market share of the bank might be limited by stringent policies and competitiveness of the banking industry. Pestle Framework Political Barclays Bank operates in different economies worldwide. The variances in political atmospheres of the respective countries of operation influence the activities of the bank. For example, the regulation to provide the political donation in certain South African parties affects the banks net income in the specific countries. In addition, political instability in Asian and Middle East economies influences the operations of the banks (Harrison, 2013). The continued conflicts in Middle East have triggered the closure of the banks operations which impacts on its profits and market share. Similarly, effective operations of the banks in most African countries are hindered by political unrests (Suresh and Paul, 2010). Economic Barclays Bank is among the leading financial institutions in the world. The economic recession experienced in different parts of the world influenced the growth of the organisation. In addition, fluctuations in the economic development of developing economies limit efficient operations of the banks (Barclays.com, 2015). For example, the economic gap between the rich and the poor in India limits the operations of the bank to the upper-class individuals in the society. In addition, changes in the value of the currencies of various countries impact on the revenue of the bank. Socio-cultural There are various social-cultural factors affecting the growth and operation of the bank in different countries worldwide such as corruption, attitude of the populace and the cultural practices and beliefs (Hitt, Ireland and Hoskisson, 2009). Some individuals in conservative economies in Asia and Africa depend on the traditional techniques for saving their incomes, which hinders growth in the banking sector. Technological The introduction of the internet, mobile and forms of cashless banking is an essential contributor to the growth of the bank (Suresh and Paul, 2010). Legal Regulations by different authorities regarding taxation influence the operations of the bank. In addition, most governments enact laws that regulate various aspects of the banking sector, which limits effective competition in the market (Hitt, Ireland and Hoskisson, 2009). Environmental The regulatory environment of the banking sector in United States and the United Kingdom are unstable which affects the operations of the bank adversely. Furthermore, the indirect and direct taxes levied on the banks limits the growth in revenue (Harrison, 2013). Culture of the Barclays Bank The success of the majority of multination corporations depends on the organisational culture and principles that they adopt and apply. The culture of the Barclays Bank in relates to customer responsiveness, work motivation, customer organisation and personality. In addition, the principles of the bank reflect reward management, leadership, change management, communication and job satisfaction (Harrison, 2013). Barclays Bank operates in the banking service industry implying that its success depends on the quality of the banking services provided to the customers. In this case, the banks responsiveness when dealing with the clients queries determines its success in retaining and attracting new customers. Barclays bank achieves customer responsiveness in various ways. First, it is the culture of the bank to attend to the needs of the customers appropriately in order to enhance the quality of its services. The banks have a customer care department in various branches across the world, which are responsible for handling the queries of the customers (Barclays.com, 2015). Moreover, customer services are provided through telephone and email communication, which promotes efficiency in handling the needs of the respective customers. Every personnel in the bank are oriented towards handling the customers in a friendly and professional manner (Hitt, Ireland and Hoskisson, 2009). Secondly, product diversification is utilised to meet the needs of the customer segments in the bank regardless of their economic or social status. The bank has segmented its services to suit various individuals in the society that promotes efficiency in responding to the customers demands (Suresh and Paul, 2010). The success of the bank starts with responding to the needs of the customers at various levels of service provision. Theinternet and mobile banking is also essential in promoting customer service at Barclays bank. The institution has adopted different avenues of interacting with the customers effectively such as the social media, email services and the banks websites. In this context, customers tend to inquire about various aspects of the banking directly from the customer service team. The aim of the bank is to maintain a customer-oriented culture in order to maximise its profits and market. The bank has invested in technology that contributes to the introduction of various products in the market such as mobile and internet banking, as well as the Barclay card. The products provided in the market aim at satisfying the needs of the customers through enhancing the quality of service provision (Suresh and Paul, 2010). Barclays Bank has a culture of examining and understanding the personality and behaviour of employees. The regulations of the bank allow the management to promote effective interaction among the employees that is crucial to the creation of new ideas regarding the market (Hitt, Ireland and Hoskisson, 2009). The culture of personality among the employees entails qualities, characteristics, skills, grooming, competencies and attitude. The personality of the workers in various branches and departments of Barclays Bank is core in promoting customer service and innovation. In addition, the attitude and grooming of the employees determine the impression of the customers regarding the banks services (Barclays.com, 2015). The visible behaviour and interaction of the employees and the management determines the motivation as well the attitude of the workers towards providing quality services to the customers. The culture of the bank also promotes communication among various parties in the institution. Communication is an essential factor in developing a positive attitude towards work among the employees. In addition, it helps in minimising conflicts among the workers, which improves productivity (Hitt, Ireland and Hoskisson, 2009). Effective communication between the customers and the employees determines the quality of services provided to the clients. It is imperative for an organisation to establish an effective communication culture in their operation. The communication culture adopted by Barclays bank stipulate the chain of command in the organisational structure, which is important in enhancing efficiency and commitment the employees (Barclays.com, 2015). In addition, the culture also identifies the roles of each personnel in order to eradicate conflicts of responsibilities among departmental managers and the senior management. However, the communication culture, which is used by the bank, promotes freedom of expression among the employees that creates a healthy working atmosphere (FitzRoy, Hulbert and Ghobadian, 2011). The culture adopted by the bank promotes motivation among the employees in various ways. First, the bank rewards their outstanding employees through promotions and increase in remunerations (Witcher and Chau, 2010). Secondly, the bank creates good work conditions for the employees in order to enhance job satisfaction. Job satisfaction at Barclays Bank is achieved through flexi-time concept, job enrichment, stock ownership, and empowerment. The leadership strategy of the organisation allows the employees to contribute to certain aspects of the decision-making process (Barclays.com, 2015). References Barclays.com, 2015. Barclays. [online] Available at: http://www.barclays.com/ [Accessed 6 Apr. 2015]. Cadle, J., Paul, D. and Turner, P. 2010. Business analysis techniques. 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