Strategic Analysis of Barclays Bank India - Case Study Example

Running Head: Strategic Analysis of Barclays Bank India Name: University: Course: Date of Submission: Introduction Strategic management refers to actions clearly thought out in detail by the management of any organization with an aim to achieving the goals of the organization. Decisions are considered to be strategic by an organization depending on their scope and scale, size of required resources, the significance of the risk posed by the decision, and also if it is a long term decision (Philip& Craig, 2003,pp.23-34). A strategy is a deliberate decision conceived by senior managers to respond to the challenges facing the organization. Strategic decisions are of great magnitude, they affect the whole organization in a great way. They are set in a time scale of medium to long term depending on the organization and the industry in which it operates (Hill & Jones, 2007, pp.89-90). Barclays bank and its strategic management Barclays bank is a global bank and provides a wide range of financial services including retail banking. Barclays Bank which is a UK based global financial service provider was established in Indian retail banking sector in May 2007. Barclays bank currently uses aggressive strategy in which it utilizes the corporation internal strengths to develop a market for its new products (Barclays Bank of India, 2007, pp.45-56). To penetrate the markets the bank usually uses the market development strategy. Other strategies used by the bank consist of product development, integration with other banks and as well as concentric diversification. In addition, the bank has an integrated universal banking strategy that helps serve the customers and clients as well as optimizing risk-adjusted returns for the shareholders. The centre of Barclays bank India strategy and business model is the client and customer focus. Services are available to onshore and offshore clients, large Indian corporate, multinationals and SME’s. The bank has products for a variety of clients which is a strategy that has helped them gain a tremendous growth. Moreover, leveraging the domestic balance strength with the reach and in-depth expertise of the global network is another strategy which helped the bank gain growth over other banks. Barclays bank too uses product breadth strategy which involves serving clients across all their needs through a wide range of distribution channels. In order to compete more effectively the bank introduced a unique and innovative financial products as well as services. The bank mainly focuses on customer empowerment as well as bringing the unbanked and underbanked segments into the banking fold. The bank has several innovative as well as technological products which includes; Kudumb saving account, smart budget card, Hello Money service, Indian Platinum Debit Card, seven-year personal loan and Barclays Premier League Card. The bank has opened a 24/7 branch in Delhi and so far it’s the only bank operating 24/7 in the city (Kumar & Tapan, 2007, pp.67-89). To deal with competition as a late foreign bank, the bank has opened five branches in five cities hence becoming the India’s fastest growing foreign bank. Moreover, the bank offers tailor made solutions for clients thus maintain their competitive edge in the industry. High quality services provided by Barclays bank India is another strategy plan which is usually used by the bank to win customer’s over its competitors. Speedy services like insurance services, accounts opening and facilities including free credit cards along with e-banking play a greater role in its growth. As far as economies of scale are concerned Barclays Bank India has been trying to tap unsaturated markets in rural areas of India through continuously finding new markets and entering them (Mockler, 2002, pp.50-54). In addition, the bank has created products for different industries which has helped them maintained their competitive edge. Furthermore, the experience of the Barclays team is another added competitive advantage (Cox & Clegg, 2008, pp.45-50). The bank has been in business for a long time and has ample experience in the market. This thus adds to the quality of the products and service offered by the employees. Barclays bank currently uses high technology to carry out as well as reach out its operation to its branches all over India The bank uses e-banking, mobile banking in relation to high technological support. The diagram below shows the current and initial strategy plan for Barclays Bank India Change in Barclays Strategy (Mockler, 2002, pp.50-54) Barclay’s Product life cycle A product’s life cycle (PLC) can be divided into different stages depending on the revenue generated by the product. The product life cycle (Mockler, 2002,pp.50-54). Barclays since its initiation in May 2007 has undergone tremendous growth and its products as well. When the bank introduces a new product on the market it usually undergoes five stages of a of product life cycle .The first stage is usually the development stage normally referred to as the incubation stage .During this stage, Barclays bank usually introduces an innovative product to the market hence no sales are normally gained at this stage(Mockler, 2002, pp.50-54). Four stages of the product lifecycle Introduction stage The introduction of the products in the market commences the product life cycle. The initial stages are difficult as the market tries to adapt and start using the product. Growth stage This is the stage where the product gains a customer base and starts its growth. The growth of the bank is shown by the raising clients in the market. The bank has grown to large customer base in India. Maturity stage The maturity stage is where the client base stops growing and is saturated to the point that there are few clients joining the company. The bank in India however has yet to reach its maturity stage has there are still more clients joining the bank due to diversifying the product range that is offered. There is more innovation such as the bank is entering new markets(Mockler, 2002,pp.50-54). Decline stage The decline stage is where the products no longer attract more customers and where the products start losing market. The bank in India has not reached the decline stage. Product differentiation and positioning In terms of product differentiation Barclays bank India uses a strategy which works for urban and niche as well as corporate customers. In addition, the quick and efficient services provided by the bank in association with ambience customer environment attracts a lot of customer are compared to other banks. The Barclays microfinance group usually works across with Barclay’s businesses, product groups, geographies and their clients primarily as way of building domestic markets in rural and untapped areas(Barclays Bank of India ,2007,pp.45-56). Future sustainability Developing new products to suit customer’s needs and attract new customers The bank is keen on developing new products that are suited for different clients in the market. This helps their sustainability in the market. It helps retain the customers and attract new customers for the bank. Moreover, the bank has made products more affordable as well as reducing the bank’s operating costs (Barclays Bank of India, 2007, pp.45-56). Another strategy is expanding the geographic exposure through providing diverse revenue sources to different business segments and large number of customers as well as clients. Customer service The bank offers great customer service that helps retain the customers while attracting other customers. The employees are concerned for every customer and they offer great attention to everyone and their needs. Prompt service is offered and no delays. Broadening reach The bank has broadened its reach to more geographic regions in order to ensure they can sustain their company in the future. In increasing the base of their operations, they ensure that they reach more customers and thus increase the volume of business. Becoming more inclusive-broad range of customers The bank has diversified their range of products to suit a large board of customers. The customers that are in small and medium enterprises are included in the plan of future sustainability of the bank. The bank has broadened its base in terms of the products they offer. The bank therefore serves both the rich and the poor and tries to tailor make products for different clients. Responsible lending For future sustainability, the bank concentrates on responsible lending. They advise the clients on the best options in regard to how they take loans and if they have the ability to payback in good time. This helps the bank to avoid defaulters and to ensure that they do not lose a lot of funds in the loans departments (Barclays Bank of India, 2007, pp.45-56). The bank also part in responsible borrowing to ensure that they can pay back their debts in due time and avoid penalties and huge debts. Investment management The bank is keen on expanding the already large asset management company in the world. The Barclays bank is the biggest asset management company and to uphold the future of the bank, they thus plan to continue expanding the already large investment management base. Risk management To ensure future sustainability of the bank, there has to be sound risk management structures in place. The bank has concentrated on having sound risk instruments to avoid facing huge risk factors that do not go hand in hand with expected returns. Capital The bank concentrates on growing of their capital base. In doing this, they ensure that the bank has strong foundations. The Indian Barclays bank concentrates on the returns in order to serve the shareholders needs which are the foremost concerns of the bank. Growing income for the bank is another priority of the bank and over the years the bank gained high levels of growth as shown in the graphs below (Barclays Bank of India, 2007, pp.45-56). Number of customers Number of distribution points (branches and sales centres) Key facts   2008 2007 2006 Number of distribution points 836 550 214 Average liabilities balances £7.6bn £5.1bn £4.0bn Average asset balances £7.1bn £3.6bn £2.3bn Balance sheet information       Loans and advances to customers £10.1bn £5.1bn £2.7bn Customer accounts £9.6bn £6.2bn £4.2bn Total assets £14.7bn £9.2bn £5.2bn Performance ratios       Return on average economic capital 9% 15% 103% Cost:income ratio 71% 74% 68% Cost:net income ratio 84% 80% 74% Other financial measures       Risk Tendency £350m £140m £35m Economic profit (£11m) £26m £308m Risk weighted assets a £15.1bn £10.5bn £3.3bn How Barclays copes with competition: Interest rates The bank offers favorable interest rates as compared to their competitors. This helps the bank to have a competitive edge in the market in India. The Indian market is composed of a large percentage of small and medium sized clients, to draw them into the banks clientele, the bank has to offer favorable interest rates to clients (Charles,2005,pp.89-90). In-branch customer service The bank has in-branch customer services where each branch has its own specialized customer care group. This helps to deal with the clients of different regions according to their needs. This helps the bank to retain customers in the future and to attract more customers to ensure their sustainability. Call centers They have established call centers that the bank customers can call if any problem or need arises. This helps create a competitive edge against its competitors. By making the services they offer of high quality to match the products, the bank aims to offers better customer care than competitors. Future of Barclays bank India In the future Barclay’s Bank India sees itself providing financial help to various microfinance institutions, rural banks, small and medium enterprises at a cost which is affordable to all. In order to gain more capital the bank will utilize direct investments in MFIs as well as through buying bonds issued by various financial institutions. For Barclays bank to gain success and face the current challenges in the competitive retail banking sector the bank should introduce new and more innovative products as well as formats such as express branches, online touch points and direct sales agents, alongside traditional branches. Individuals living in urban areas are fully exposed to the buyer information including services and products offered by Barclays bank India than those in rural areas (Jai Ballabha, 2004, pp.12-34).With this mind the ban intends to expand its services further into rural communities hence it is expected that in the coming years Barclays with further gain a tremendous growth in the competitive retail banking sector. The bank should invest $ 100 millions more in its operations which will help the bank to leverage the current India’s phenomenal growth in the next five years. (Kumar, D & Tapan, 2007,pp.67-89) References Barclays Bank of India (2007).Monthly Review, Volume 21. India: Barclays Bank, Pp.45-56 Charles, M (2005). Statistical tables relating to banks in India. Michigan: Reserve Bank of India, pp.89-90 Cox, H & Clegg, J (2008). The Growth of global business. New York: Routledge,pp.45-50 Hill, C., and W & Jones, G (2007) .Strategic management: an integrated approach.Publisher: Cengage Learning, PP.89-90 Jai Ballabha, P (2004). Multinationals in India: managing the interface of cultures.Publisher: Sage, pp.12-34 Kumar, D & Tapan, R (2007).The Cambridge economic history of India, Volume 2. Publisher: CUP Archive, pp.67-89 Mockler, R., J (2002). Multinational strategic management: an integrative entrepreneurial context-specific process. New York: Routledge,pp.50-54 Philip, S & Craig, J., C (2003).Strategic management.2nd ed.Publisher: Kogan Page Publishers, pp.23-34 Read More