Corporate Strategy

1.0 Introduction

Without deploying any strategic measures, businesses might not be able to come to terms with the current demands and specifications of the target mass.  Wit and Meyer (2014) responded that erratic corporate policies prevents the consumers’ from being competitive in the market, thereby, preventing from earning profit. Thus, corporate strategies help firms in order to remain competitive and also prevent the company from drifting away from the environment and starting to fail. Warner (2011) determined that corporate strategies help firms to create vision and mission statement that should be communicated to the shareholders such that the policies and operations of the stakeholders remain tangent with the current objectives. However, Agarwal and Ramaswami (2010) identified the necessity of corporate to make correct decisions at all level without strict supervision. The staffs should be engaged in decision making process such that they develop knowledge with regards to tactical policy framing, thereby, build its skill set in order to meet the firm’s objectives.

Barclays is a British multinational banking and financial service company with operations in retail, banking and investment banking (Asiedu and Esfahani, 2008). Currently the firms operate in around 50 countries and territories serving 48 million consumers’. The strategy of the current banking corporate is to: help the customers to achieve their ambitions while its values include: respect, integrity, service, excellence and stewardship (Biemans and Harmsen, 2005).

The chapter will focus on the several corporate policies of Barclay’s bank and critically evaluate its current strategies to meet market edge.

1.1 Nature of organization’s environment and industry structure

Barclays bank is intending ot expand its operation in national and international frontiers. By the investigation of the competition, the readers can be made known of the current industry structure and external market environment of Barclays bank.

  • Entry barriers:

Not only in UK but also in other developing markets, the entry barriers are high. However, Black (2010) noted that especially the developing markets face high entry barriers as it is mostly regulated by the governments and the central banks. A lot of control is imposed on the banks operating in the developing markets with respect to interest on loans and deposits as well as controlling the supply of money. While the bank have been able to create a dominant position in the developed markets, it is still not known in the development markets as people are mostly investing in  governments and public sector banks.

  • Rivalry among the competitors:

Brynjolfsson and Smith (2004) noted that both in the emerging and developed markets, Barclays have it face competitive threat. The reason behind high market rivalry faced by Barclays is a result of the involvement of the public and microfinance institutions.  The banking consumers might be motivated to purchase from other public banking firms. However, in UK the current case study bank faces threat from HSBC and Royal Bank of Scotland (Caldwell and Hayes, 2007). The UK consumers are distributed among the three banking firms, thus preventing the scope of Barclays to develop a monopoly in the market. Future policies can thus be built to acquire major market stakes.

  • Suppliers’ bargaining power:

The suppliers of Barclays are basically the people from whom the bank raises finds (Geroski, 2006).  In other words, the funding source of Barclays is basically the customers and the depositors who invest funds in the bank for personal merit. In order to attract customers’, Barclays have raised its interest rates in order to motivate its customers’ to invest in the bank (Grossman, 2007). Doing so have assisted the bank to ensure sustainability. In order to strengthen the market position, Barclays have introduced Card system so as to attract more clients and thereby improve the quantity of available funds. 

  • Bargaining power of the customers’:

The bargaining power of the customers’ is high. The presence of several banking firms in UK has raised the available substitutes for the banking consumers of UK. Hoffman and Novak (2002) denoted that the consumers of UK can gain loans and others services from any of banks of the country thus limiting the power of the marketers. In event of any issues, Barclays is prone to face a loss in customer base and drop in profitability. However, Scaperlanda (2007) stated that Barclays is currently experiencing market advantage through its e-banking and insurance facilities. No other banks are yet to offer such robust banking facilities to its customers. 

  • Threat from substitute products:

As a result of the presence of several banking firms in UK, the threat of substitute products is high. Almost all the banking firms of UK offer similar products and services to its customers. Thus, the consumers could easily gain access to their requirements from any banks without any need to be the loyal customers of Barclays bank. However, Howard (2003) denoted that Barclays have focused their strategies to compete with unconventional companies in order to gain higher market return. While such policies could act as a motivating factor for the UK’s consumers, the target mass of the developing markets have high tendency to switch over preferences.

1.2 Effectiveness of the current market strategy of Barclays

Humphrey (2007) responded that the corporate strategy of Barclays is to transform the objective of a sustainable return on equity above the equity cost within the altered regulatory and economic environment. It has also made advancements in corporate structure (as mentioned in the appendix). The bank has made smaller alterations within the market strategy so that it remains sustainable in the market. However, Barclays have maintained a focus on ‘Go-To’ bank such that the consumers’ develop a feeling for visiting the bank for meeting the financial requirements (Krykilis and Pantelidis, 2003).

The changed market strategy of Barclays includes the task of altering its regulatory landscape, especially with regards to leverage and market sustainability.  According to the economic environment, Barclays have lowered its interest rate, thereby, lowering its volatility level. In addition to the latter specifications, Barclays have tried to improve their performance quality. Luk et al. (2002) denoted that in future, the investment bank of Barclays will account for no more than 35% of the Group Risk Weighted Assets. This will lower the risk level and increase its spree of effective operations in the near future. Mulligan and Hastie (2005) also mentioned that the future policy of Barclays is aimed at around delivering improved returns and growth by utilizing its current strengths in high growth areas and maintaining its focus on cost. Doing so is considered to assist itself in meeting its goals and objectives.

Barclays have followed ‘stretch’ strategy as its managers have tried to develop strategies on the basis of its current available strengths. Nieswiadomy (2006) reflected that stretching refers to using resources to yield fresh opportunities. As a part of the repositioning policy of the bank, Barclays tried to offer improved returns by capitalizing on its strengths and concentrating on its high growth areas. The reason behind the current strategy is to develop its performance. Thus, the bank is not following any market driven policies. Often by using the current strengths, Barclays might be soon able to tide over its weaknesses or threats. However, Scaperlanda (2007) criticised that sudden market needs might require the addition of fresh marketing model that is wholly ignored in the ‘stretch’ strategy. The current strategy even ignores the task of the managers to adapt the current resources based on the identified opportunities. Although, such policies might prove effective at times, Barclays might not be able to operate as per changing market necessities.

 

1.3 Compliance with competitive industry conditions of Barclays, UK

In the past few years, the producers of UK banking industry have managed to put focus on the maximization and upliftment of the wealth of the shareholder. Crossan et al. (2008) suggested that during the particular period the industry used to enjoy the monopoly as the customers had less choice to play the tune of the businesses. Thus, the proprietor has been forced to focus on the profit maximization to mitigate the needs of the customers in the highly competitive market. María-Teresa et al. (2012) argued that brands that ignores to serve preferable services to the customer seems to be diminished in the later future, as the consumer are fretful regarding the firms activities and seek to improve the consumer welfare as well as the public general. On the other hand, Barclays PLC has been considered as one of the reputed and oldest bank in UK, which operates in the segments of personal banking, corporate banking, investment banking and wealth management. Meyerhoefer et al. (2008) mentioned that despite of the long term experience as the leading financial firm, Barclays managed to content with the global challenges like competitions from other established banks and the future  financial institutions. Therefore, customer relationship management has become a foremost strategy for Barclays and its other strategic alliances have created a lot importance on the customer focus.

Barclays in the past few years has stepped up its campaigns to uplift the customer relationship management through several programs. The company made a partnership with the Elactra card services to provide Electra loyalty management system for the customers perceiving Barclay’s card. Schmitz and Knorringa (2007) mentioned that such program targets customer loyalty and allows the customers perceiving the products of Barclay to win rewards in the different channels. On the other and the bank has focused on the clients who had embraced the alternative banking channels for example the usage of debit and credit cards for the transactions, internet and mobile banking. Black (2010) has stated that Barclay has completely recognized the customer relationship management and believed n the partnership with electra card service which has helped the brand to provide the customers with a technological platform that enables the bank to serve the customers according to the preferences. Moreover, the bank believes that the loyal customers will be able to entrust the relationship with the bank and such practice will serve Barclay with an edge over the competitors.

1.4 Application of portfolio market response or exploitation of synergies

In today’s scenario banking industry has been considered as the highly competitive industry. Tellis (2008) stated that the particular industry is vastly capitalized with total share holders’ funds of approximately one billion. This calculation itself shows that corporate strategy needs to focus on the exploitation of synergies. In some industries, firms require to provide a national network, which reflects the significance of the economies of scale. Warner (2011) mentioned that the national network implies the most efficient number of firms in the particular industry.  For example when T-mobile synergized with Orange in UK, has justified the merger on the particular ground. On the other hand Araten et al. (2004) mentioned that the key advantage of synergy is the potential economies of scale that arises in. On the contrary, Geroski (2006) argued that the specific approach could be quite extensive, if there lies a high fixed cost in the industry, and elaborated that if the merger was a vertical merger, the scope for economies of scale becomes lower for the particular firm. However, it makes sense for Barclay to have a merger in order to avoid duplication, and the consumer could earn the benefit from the single firm with lower cost. Moreover, if Barclay manages to gain monopoly power from the merger, it does not have to lead to high prices which sufficiently have been regulated by the government.  However, rice controlling power of the government might enable Barclay to attain the benefits of the economies of scale whereas the customers do not need to face the monopoly prices.

On the other hand Howard (2003) argued that a new firm ay experiences diseconomies of scale from the increased size. After the merger, the new firm might lack the same degree of control and might struggle to motivate the workers.  Therefore, the proprietor of both the merged firms needs to e careful during the execution of the strategies, in case of any discrepancy the firm might to face a slaughter in the customer base. Hence, Barclay needs to be very careful, as customers are quite sensitive regarding the banking industry, in case of any discrepancy in the service, the bank might have to experience a hindrance in the brad value.   

However, the manager of the particular bank can adopt the strategies like virtual marketing, e-marketing; need to focus on the search engine optimization in order to trap the human trafficking. And sometimes need to focus on the pop up add for the networking. Such practice will help the brand to grab the attention of the customers who are looking for the banking services. Such networking will facilitate the bank to enhance its customer base by gaining the loyalty of the customers and also the brand value as well.

1.5 Implications for creativity in strategic thinking and leadership in an organization

Effective strategic innovation often leads the brand with new technological advances that continue to advance the existing consumer market and drive economic growth. However, the strategy generally employs a large number f creative and competent individuals who can not only introduce the new product, but also can notice the completion. Humphrey (2007) stated that innovation in the financial services often takes the shape of enabled products and finds out the new ways of interacting with the potential customers for which the firm heavily relies on the new technologies. Such practice will aim to address the gap by unearthing the merits and demerits of the cooperation mechanisms between the market players (Nieswiadomy, 2006). Such practice can facilitate the firm from gaining the cooperation through the leveraging of complementariness, achieving cost reduction, gaining stronger credibility and accessing new resources and networks. Every firm has the sole objective of attaining maximum profit, therefore such practice can help the firm to expand the profit margin and therefore, the brand value of the firm might get enhanced. The penetration and acceptance of various innovations needs to accelerate with the gradual collaboration and cooperation of science and assorted crafts and industries.

On the other hand, leadership has been considered to be one of the most important factors of an organization. A single leadership style might not be effective for implementation at all conditions, In other words, the leadership styles of companies vary with respect to the current workplace condition. Barclays might opt for any of the leadership approaches in order to motivate its staff during organizational change. Tellis (2008) determined that the authoritative leadership style is generally undertaken during any crucial decision making. In events when Barclays has to soon decide upon any issues or undertake quick changes, authoritative leadership styles can be used. The chances of time loss in crucial decision making are prevented, thereby, giving place for quick action as per current needs. However, several staff might not prefer the present style as they might hate dominance.

A teamwork approach can be followed by leaders of Barclays as it encourages the involvement of all the employees in corporate decision making (Black, 2010). The chosen leadership style is considered to be effective in order to make its staff efficient enough to shoulder responsibilities. Democratic approach is quite similar to teamwork and is often preferred by staff. However, the latter approach consumes much time in decision making and might not be suitable during crucial or quick decision making.

All the recommended leadership approaches can be followed at Barclays, depending on the current situation. However, in order to ensure that the chosen leadership approach yields desired results. The leaders of Barclays are supposed to: motivate the staff towards strategic decision making, close communication and periodic evaluation of respective goals.

1.6 Considerations in between global strategies and localizations

Basically, globalization refers to growth of trade and investment, supported by the growth in the global business and congomerleration of economies around the world. Internationalization might be described as the procedure of adopting the techniques in international markets by developing varied types of inventive products and services. As per Geroski (2006), there are two dimensions of internationalization such as international market selection and market entry strategy (Howard, 2003). With the help of global process theory, Barclays became successful in entering varied types of emerging and developing market economies. Other than this, by entering the emerging markets, introduction of varied types of inventive products proved extremely effective. This strategy proved highly beneficial for Barclays that enhanced its market demand and profitability (Meyerhoefer et al. 2008). Internationalization process theory creation of new demands in the existing market by introducing highly advanced products, after analyzing the demands of the target customers.  It is quite similar to the aspects of Uppsala model. As per the model, an organization may increase the demand within the existing markets by presenting a wide range of trendy technological services (María-Teresa et al. 2012). A similar technique was used by Intel at the time of expanding into new markets that helped the organization to enhance its market share and customer database as compared to its competitors such as HSBC, Standard Chartered, and Royal bank of Scotland (Nieswiadomy, 2006).

On the other hand ‘localization’ can be termed as another important factor that is important for the business expansion. Schmitz and Knorringa (2007) mentioned that localization helps a brand to adapt a product or content to a specific local. Here the specific goal of the proprietor should be to provide the product or services with the look and feel of having been created for the target mass to minimize the local sensitivities. Therefore a perfect localizing of product will serve Barclays with numerous customer base and with larger opportunities for business growth as it expands the market reach of the bank across borders and languages. Humphrey (2007) supported that 72.4% of customers prefer to go for the services provided by the banks in the native languages. Such practice helps the brand with greater exposure in the competitive market which serves the brand with a potential increase in demand which leads to more business. On the other hand, Grossman (2007) argued that many business does the mistake of tacking on localization towards the end of the process development, the moment before the product is about to launch. Therefore, the banking industry needs to focus on the integrated localization process, in order to prepare and present the product for a new location, culture and audience.  Hence forth, Barclay should focus on both Globalization and location strategy in order to expand its market.  Localization helps the business with a medium to achieve the short term goals, on the other hand globalization helps the business to have a wider market reach and accurate identity in the international market.

Conclusion

From the above research, it could be concluded that the Barclays, UK has followed devised strategies and cultures. However, the manager of the particular bank has identified the important global and local strategies in order to attain a wider expansion of the business. On the other hand, the company has chosen predominantly ‘fit’ and ‘stretch’ strategy for gaining a competitive advantage over the rival brands in the market of volatility.

 

 

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