Performance Analysis of Barclays Bank - Case Study Example

Performance Analysis of Barclays Bank Introduction Performance evaluation of organisations is a critical step in determination of the institution ability to grow and expand despite the challenges that are presented by the market. Performance evaluation looks into performance of organisations in the face of challenges, opportunities and risks that are present in the market and attempt to highlight both the strong and weak points of the organisations (Barclays Bank, 2013). The London exchange FTSE 100 listing of companies provides the names of organisations that have displayed exemplary performance and are listed under the best 100 according to the performance at the bourse. One of the top companies in the banking industry according to the FTSE 100 listing is the Barclays bank, an institution that has had a fair share of opportunities and challenges, but still remain on top of other multinationals (Dash & Das, 2013). Barclays bank is a British based banking multinational that has continued to dominate the banking industry in not only the United Kingdom or Europe, but also other continents of the world. Based in London, United Kingdom, Barclays bank was categorised into the universal bans category due to its widespread presence in most countries and regions in the world. Today, the bank operates in over 50 countries with over 48 million customers evenly spread in different sectors of the world economy. The great performance and dominance of the company has been attributed to its cluster categorisation, which provides customers with a wide range of banking services (Barclays Bank, 2013). Barclays bank currently boosts three major divisions made up of the corporate and investment banking, wealth and investment management and the retail and business category. Barclays bank was established in 1690 by James Barclay and has grown to be a major force in the industry through partnerships, collaborations, mergers and acquisitions. For example, the backhouse’s bank and the gurney bank formed a partnership with the company and this strengthened not only its capital base but also the market presence in the country. Analysis of Barclays bank financial performance The great performance of Barclays bank has stood out significantly and this has been attributed to the proper management and customer care approaches it has adopted. According to an annual report released by the company in 2011, the company’s solid position improved by 11% tier one ratio. This was accompanied by a £161 billion pounds improvement in the liquidity pool of the company relative to the figures that the company posted in the previous financial year. Though the company maintained its gross leverage, impairment to the company declined by 39%, a demonstration of a strong market performance and presence (Ray, 2014). The company’s adjusted profits before taxations also increased as compared to the financial year 2010. While the 2010 report posted an increase of 8%, 2011 financial year had a 10% increment in the pre-tax profits posted by the company. Due to the proper performance base, Barclays bank increased its overall lending base to the households in the united kingdom, increasing the amount to £9.9 billion as compared to the £7.5 billion that was availed as household loans in 2010 (Nick, 2014). The dividend paid to the shareholders also increased by a single pound per share, resulting into an increase on the divided per share paid to shareholders to £8.5 in the 2011 financial year. As a result, the figures posted in the total shareholder returns report demonstrated great financial performance of Barclays further showing an improvement in the nature of management at the company (Dash & Das, 2013). Management performance analysis The great and impressive financial performance of Barclays bank was as result of the adoption of proper management approaches and patterns which enabled the company to rise above the challenges and utilise its opportunities to rise. Barclays has a management structure that has ensured efficiency at its operational level and reduced bureaucracies that prolong policy formulation and adoption in the organisation. Currently, the company is made up of 13 directors who make important decisions at the helm of the organisation assisted by over 140,000 low-level employees and senior managers (Hall, 2013). To ensure that the company remain relevant in the technology driven and dynamic market, Barclays has adopted a policy of employing young employees to drive its agenda. The efficiency of the remuneration committee has been attributed to the great performance of the employees due to high motivation and determination. The commute provides guidance and advice on strategic policies that guide the remuneration, HR activities and promotion in the organisation (Joseph, 2014). With motivation of the employees as its key mandate and role, the committee has enabled the organisation to achieve its primary goals of improved performance through the proper appraisal and payment of the employees. In this role, the committee provides a wide variety of incentives to the employees including incentives to motivate them, policies aimed at attracting and retaining the best employees among other services (Joseph, 2014). The development of share option and schemes for the employees has furthered upped its management performance as they develop a sense of ownership in the company. This increases their willingness to serve the organisation with dedication and commitment. The adoption of an engaging and participatory business approach in which the opinions of the employees are factored in the management decision has further contributed to the stunning performance within the management level (Hall, 2013). Market performance of Barclays bank The analysis of Barclays bank performance in the market provides greater insights on the performance on other sectors such as finance and management. This is because the market plays an integral role in the company success and influences the management decisions and policies adopted. Though Barclays was established in the 17th century to serve the United Kingdom market, it has grown to become a major banking industry player in different economies of the world. The bank today has branches in Asia, Africa, America, Middle East and other European countries that were not initially covered. In most of these economies, the shareholding into the bank is a consortium of the government, public agencies, corporate players, insurance companies and nationals of the countries. This diverse market categorisation has contributed to the great market performance of the organisation and increased its dominance in the banking industry globally. The adoption of effective market strategies such as market segmentation has been attributed to the success of the company (Hall, 2013). Market segmentation is the decision to separate the market into different sections made up of different groups of customers with varying needs and product desires. With Barclays bank, the segmentation is based on regions, nations and even cities or streets which has led to the emergence of branches such as Barclays bank PLC Ethiopia (Barclays Bank, 2013). Following this separation, the different regional and state units are empowered to further segment the market based on the social groupings. As a result of this policy, the company has enhanced its ability to identify the demands and forecast market reaction to different products (Dash & Das, 2013). Market targeting approach adopted by the company has also contributed to its exemplary performance in different demographic markets across the globe. Currently, Barclays has adopted a differentiated targeting approach that appreciates the different segments that are available in the market. As a result, the company adopts different marketing strategy to different market segments and this increases the success factors of the approaches. For example, the company has continuously developed specific products for the students’ fraternity, which appreciates their versatile demands and financial challenges. The use of segmentation assessment criteria has also enabled Barclays to determine the whether the markets are actually measurable, significant and readily accessible for its products (Jagwani, 2012). Barclays bank market environment analysis The performance of the company cannot be evaluated independently of the market that it operates in which significantly influences its success, failure or overall performance. By analysing the external environment of the company, the alignment of its policies to the strengths, weaknesses and performance of the competitors is enhanced and this contributes to the improvement in the overall performance. The population of the United Kingdom today stands at 70 million, a number that has continued to expand due to natural causes, immigration among other demographic factors (Touryalai, 2014). Out of this, the banking population is categorised into different professions, which include the civil servants, students, business owners and foreigners on tourism visas. The policies adopted by the company which influences its performance is affected by a number of political and legal developments in the country (Joseph, 2014). For example, the instability in the union has continued to affect the market of the company due to the push of Scotland to secede. This has also affected the stability of the banking regulatory measures adopted by the United Kingdom which have forced the company to amend its financial and banking policies periodically (Frimpong, 2010). Political instability also affects other markets serviced by the company including Asia, Africa and Middle East, developments that have forced the company to change its strategies and approach to the market. However, the great economic performance registered by the end of 2011 academic year has opened new markets and opportunities to the company. For example, the unemployment rate in the country has declined by 4.2%, providing a positive picture and expansion opportunities to the company (Jagwani, 2012). Competition in the market also affects the performance of Barclays in both the United Kingdom and parts of the market including the United States and Australia. Banks such as the HSBC, bank of America, JP Morgan among others have crouched into the market that was initially controlled by Barclays bank and significantly reduced its market share. The royal bank of Scotland has also strengthened its dominance in the Scottish market and entered new markets that were traditionally controlled by Barclays bank (Dash & Das, 2013). SWOT analysis in relation to performance of Barclays bank The great performance of Barclays bank can only be judged on the backdrop of the analysis of its strengths, weaknesses, opportunities and risks both in the domestic and international markets. This reputation has further been improved by its numerous awards, which have listed it as the best personal banking service provider, the best lender and the most student friendly bank in the United Kingdom (Jagwani, 2012). Barclays bank has also developed a unique brand that stands out strongly in highly competitive market through its sponsorship of the English premier league. The presence of a number of operation units in different parts of the globe has also provided the group with strong economies of scale, a fact that has enabled it to advance loan services to students and low salaried members (Touryalai, 2014). Despite these essential strengths, a number of weaknesses, which are mostly market associated, has also affected the performance of the company. First employees in some branches have threatened to picket and boycott work over salary and remuneration reasons. This has tainted the image of the company and eroded the investor confidence on one of the best banks in the United Kingdom. The adoption of effective market strategies such as market segmentation has been attributed to the success of the company. Market segmentation is the decision to separate the market into different sections made up of different groups of customers with varying needs and product desires. With Barclays bank, the segmentation is based on regions, nations and even cities or streets that have led to the emergence of branches such as Barclays bank PLC Ethiopia (Touryalai, 2014). Conclusion Barclays bank as was established by James Barclays has experienced massive revolution and become not only a force in the United Kingdom but to other parts of the globe. Established to address the needs of the domestic market in the 17th century, the company has changed to embrace the technology averse 21st century. Today, it is considered as the third best bank globally best on the market capitalisation, the asset base and the diversity of its services. The great rating of the bank has not been achieved overnight, but rather through sound management policies and approaches that are cognisant of the dynamic market (Jagwani, 2012). The great performance and dominance of the company has been attributed to its cluster categorisation, which provides customers with a wide range of banking services. Barclays bank was established in 1690 by James Barclay and has grown to be a major force in the industry through partnerships, collaborations, mergers and acquisitions (Ritson, 2014). As a result, the financial performance of the company has maintained a positive trajectory as evidenced by the financial reports released by the company since 2010. The progressive development of the company has been without challenges and mistakes but the management has remained strong, which has enabled it to grow and become a major banking company. In this paper, the performance of Barclays bank from the financial, management and market angle were analysed to demonstrate how the company has grown to be where it is today. References Barclays Bank., 2013, Barclays Banks acquisition of ING Direct UK highlights the continuing impact of the banking crisis 2012, Marketwatch: Financial Services, 12, 11, p. 41. Dash, M, & Das, A 2013, Performance Appraisal of Indian Banks Using CAMELS Rating, IUP Journal Of Bank Management, 12, 2, pp. 31-42. Frimpong, J 2010, The Financial Performance of Commercial Banks in Ghana: A Post-FINSSP Analysis, Banking & Finance Letters, 2, 3, pp. 349-360. Hall, C 2013, Anything for You Big Boy: A Comparative Analysis of Banking Regulation in the United States and the United Kingdom in Light of the LIBOR Scandal, Northwestern Journal Of International Law & Business, 34, 1, pp. 153-180. Jagwani, B 2012, Efficiency Measurement in the Indian Banking Industry: An Application of Data Envelopment Analysis, Vision (09722629), 16, 4, pp. 315-331. Joseph, S 2014, Barclays unites sponsorships under values-driven strategy, Marketing Week (Online Edition), p. 5. Nick, G 2014, Barclays sees its investment bank profits slashed by half, Evening Standard, 6. Ray, D 2014, Barclays to close quarter of UK branches and cut jobs, Money Marketing (Online Edition), p. 12. Ritson, M 2014, Will Barclays betray its brand purpose now its bonus season?, Marketing Week, p. 10. Touryalai, H 2014, Wall Streets March Madness: What To Know About Bank Stress Tests, Forbes.Com, p. 23. Read More