Barclays bank PLC has been a leading figure amidst other financial institution and a big brother

in 6 continents namely; Europe, America, Australia, Asia, Middle east and Africa. Barclays bank
PLC has played a vital role in retail banking and other wealth management schemes owing to
their wealth of experience, historical culture and structure which has come in handy in the past
300 years of their existence. This has placed them on a higher pedestal, they also record an
outstanding delivery service to the societies and countries in which they operate.

Our group analyzed Barclays bank and its market effectiveness both on the macro and micro
environment. The PESTLE analysis lies on the performance of the external environment such as
their political, economic, social, technological, legal and environmental impose on the bank.

The political analysis entails the laws and ethics of various regulations and policies made by
different governments in the environments the financial institution finds itself. This has made
Barclays bank PLC conform to the laws and ethics of each government so that their goals will be
achieved and accomplished.

The economic analysis is based on their global recognition as one of the leading financial
institution in modern banking and this has given Barclays bank PLC successful economic
strength. Despite, all the competitive challenges faced, its management has been able to create a
better stability in its economic stand.

The social analysis explains the incentive got from the resources given by the organization.
Barclays bank PLC tries as much as possible to create opportunities in each society, by so doing,
they boost a good relationship with the public and its environments.

The technological analysis brings about the improvement and introduction of modern technology
that increase and stabilize the work rate for the past years. This technology has broadened the
transactions and improved Barclays bank PLC with the latest trends in global business of modern
era.

While micro environment pointed out the performance, management & staff, infrastructure &
delivery of the internal environment in the business that are well governed.
Analysis of the Market Environment

External Analysis

This analysis focus on the macro-environment, the market and the competitors of
Barclays, to identify its opportunities and threats. According to Porter (1985), PESTLC
analysis ensures that the performance of the company is aligned positively with the powerful
forces of change that are affecting business macro-environment. Hence, it groups
environmental influences such as political, economic, social, technological, legal and cultural
forces impact on the bank.
The United Kingdom (UK) population which currently stands at approximately
70million, with a slide increase in immigration, independency and dependency ratios. A shift
in population always affects economic growth, thus affect the bank.
Increased in UK employment rate of 70.6 per cent, about 25.3million households, and a
consistent downward strength of divorce and dissolution (of about 121,700 to 113,900),
influences the banks performance. This increase brings about economic competitiveness and
high circulation of money, thus fuelling the economic growth of the country.
UK is a multicultural society which entails co-existence of different communities defined
by their race, ethnicity or faith. So sociocultural environment is diverse and dynamic, which
implies the bank need to stay in touch with the social and cultural shifts.
The science, engineering and technological, and entrepreneurial cultures made UK
economically successful, thus, impacting a positive change on the banks
performance. http//www.statistics.gov.uk, www.ons.gov.uk, www.oup.com/uk

Macro-environment

Political and Legal

Unstable regulatory environment in UK.

Regulation to give political donation as part of their democracy support to the major
South African parties.
Political stability in UK, Europe, United States, Asian (India) and southern part of
Africa, influences the groups growth.
The new Basel rules on bank capital which requires all banks to hold top quality core tier
one capital equal to 10 per cent of their assets, adjusted for risk. (19:09/ financial times/6th
June 2011).
The Project Merlin Agreement which states that UKs biggest banks are committed to
lending more money in 2011, especially to small businesses, to pay less in bonuses than they
 did last year and to be more transparent about their pay packages. (15:42, BBC Business
News, 9 February 2011).
Plan to increase bank levy to 2.5billions pounds this year-raising an extra of 800million
pounds, will be a threat on Barclays bank PLC. (18:04,BBC Business News,8 February 2011).
Direct and indirect taxes levied.
Recovery of national recessionary period and increased in employment rate.

Economic

Increase in UK gross domestic product by 0.5percent.

Inflation is steadily held on Consumer Prices Index at (CPI) 4.5 per cent and Retail Prices
Index (RPI) at 5.2 per cent in May 2011.
UK retails sales fall to 1.4 per cent in May and interest rates have been kept at the record
low of 0.5 per cent again this year, by the Bank of Englands Monetary Policy Committee.
UK unemployment fell 88,000 in the three months to April this year to 2.43 million, the
biggest drop since the summer of 2000.
The value of the average home in UK, rose by 0.1% from April to May 2011 to 160,519,
but prices were 4.2% lower than the same period a year ago.
The European Central Bank signaled rise in Eurozone interest rate in July 2011, from
1.25 per cent.
Inflation in the Eurozone is 2.7% while euro falls to 1.44880 dollars against the US dollar
in the first quarter 2011.
High inflation in China and India in 2011 while Japan is in recession.
Increase loan rates and consumer prices in Korea.
Middle East and North Africa unrest affecting the Dubai-based Dnata, emirates aviation
industry.
Import costs in developing countries rising by up to 30 per cent as a result of high oil
prices and shortfalls in production due to bad weather which have contributed to higher food
prices.
Jersey tax information exchange agreements with 17 of the G20 countries.

Technological
 New telecommunication systems, including fibre optic telecommunication and Internet to
facilitate mobile banking and online banking.
Global launch of the next generation financial kiosks such as NCR Self Serv 4 which is a
cashless kiosk, ideal for non-cash transactions such as appointment check-in and account
services and Self Serv 8 features cash-deposit capability suitable for bill payments, equipped
with touchscreen technology, the machines are loaded with NCR APTRA software
applications that are PCI and EMV compliant.
New technology such as Mix-and-Match software for 3D digital signage and kiosks
SWIFT code to facilitate the international payment system in banks.
ATMs are currently in operation at all the local commercial banks.
Global increase in computer literacy and easy access to computer
More half of the global population is computer literate and has access to internet
services.

Internal Analysis

The internal analysis focused on the banks performance and its internal environmental factors
such as its management, staff and infrastructures, in order to identify its strengths and
weaknesses.

1. Performance

From Barclays annual report 2011(www.barclays.co.uk), the Barclays group PLC has more solid
positions on capital with 11 per cent core tier one ratio (10.8 per cent Q4 2010), and a liquidity
pool of 161 billion pounds than they started last year. While groups adjusted gross leverage is
maintained at 20 times and impairment is down 39 per cent considerably, giving the groups first
quarter (Q1) 2011, a loan loss rate of 76bps (Q1 2010:112bps). Adjusted profit before tax of the
group, excluding own credit and gains on acquisitions and disposals this year, up to 10 per cent
to 2,004 millions pounds (8 per cent in 2010). Excluding own credit, return on equity increased
to 10.1 per cent (9.3 per cent Q4 2010), return on tangible equity increased to 12.1 per cent (11.4
per cent Q4 2010), and return on risk weighted assets increased to 1.5 per cent from 1.4 per cent
in Q4 of 2010. (See appendix). Increased in gross new lending to UK house holds and businesses
amounted to 9.9 billions pounds indicates improvement on 2010 year ended amount of 43
billions pounds gross new lending plus 7.5 billions pounds of UK loans gotten from the
acquisition of Standard Life Bank at the beginning of the year 2010. The Q1 2011 dividend of
1.0 pound per share, with earnings per share of 8.5 pounds. Over 2010, the group ranked in the
top quartile Total Shareholder Returns (TSR) of its global competitors, this position is
progressively maintained in the Q1 2011 implies good performance indicating good management
by objectives this year.

2. Management and Staff

The management is made up of thirteen highly skilled and qualified directors and has
147,500 staff and senior executives. Most of the staff are young and have the requisite
capabilities, and are re-trainable for newer systems and technology.
The remuneration Committee provides governance and strategic control of remuneration,
human resource activities and senior management development.
The Committees objective in relation to remuneration is to motivate its employees
towards excellence in business and personal performance by offering incentives, attract and
retain employees of ability and experience.
Staff is encouraged to part take in share option and share purchase schemes and have a
substantial sum invested in Barclays shares.
Staff is kept informed of matters of concern to them in many ways, such as business unit
news magazines, intranets, briefings and mobile phone SMS messaging. These
communications facilitate the achievement of a common awareness among employees.
Staffs share their views and feedback on issues that matters to them. Periodic employee
Opinion Surveys results reported to the Board, all employees and to its European Works
Council, Africa Forum, its recognized union in the UK and other recognized unions
worldwide. Road shows and employee forums also take place. In addition, regular and formal
consultations with its recognized trade unions and work councils
internationally. www.barclays.co.uk
Infrastructure and Delivery

The group is investing heavily in infrastructures in order to perfect its client services and
better reach to its global customers and clients, explains why the group is facing high
operating costs.

Customer Analysis

Markets

The bank has branches in the UK as well as operations throughout Europe, Africa,
Middle East, Asia and America.
The market stakeholders consist of the governments, other public Sector bodies,
corporate entities, insurance companies, professionals, public servants, pensioners, teachers,
students and national residents in the above market segments. www.barclays.com
 Market Segmentation

Market segmentation is the splitting up of a market into different groups of customers

with distinctly similar needs and product/service requirements. There is now widespread
agreement that market segmentation form an important foundation for successful marketing
strategies and activities. (Wind, 1978; Hooley and Saunders 1993).It implies it ensures that
the elements of the marketing mix namely; price, distribution, products and promotion, are
designed to meet particular needs of different customers.
Barclays group divides its market into different geographic units such as nations, states,
regions, cities or streets. For example Barclays bank PLC Zambia.
The group also uses demographic segmentation to split its market in to groups on the
basis of variables such as age, family size, family life cycle, gender, income, occupation,
education, generation, nationality, religion, and social class. This type of segmentation is easy
to measure and enables the bank to identify the right product offer to meet the specific needs
of customers and improve its customer perceived offerings. For example, improvements of
student account offer such as no monthly fee, an interest-free overdraft facility up to 2,000
pounds from opening the account. www.barclays.com

Market Targeting

Barclays bank PLC uses the differentiated targeting approach which recognizes that there
are several market segments to target, each being attractive to the marketing organization. As
such, to exploit markets, a marketing strategy is developed for each segment. For example,
Barclays targeted the student market segment in UK, and its rationale for acquiring students
was that there was an opportunity to establish a long-term relationship with students and, to
target a new customer annually.

The bank uses effective segmentation assessment criteria such as ensuring that its various
market segments are measurable, substantial, accessible, differentiable and actionable, ensure
a segment is useful for targeting.

Market Positioning

Market positioning is the act of designing the companys offering and image to occupy a
distinctive place in the minds of the target market. (A.Ries and J.Trout, 2000). The main
purpose of positioning is to build the banks brands in the minds of the customers in order to
maximize potential benefit to the bank.
 Kotler (1997) argued that Positioning is the act of designing the companys offering and
image so that they occupy a meaningful and distinct competitive position in the target
customers minds. Therefore, positioning is all about how customers judge a products
attribute relative to that of its competitors, and its ability to deliver against the promises made.
The bank has applied a good positioning of its brands to target markets. For example,
Barclays found that an incentive offering mobile broadband would have the most appeal to
students, the bank partnered with orange to offer 25 percent discount on its mobile broadband
schemes to those who signed up for a Barclays student account.
It also established a working group to oversee the new student proposition such as no
monthly fees, an interest-free overdraft, free debit cards, mobile phone banking and a net
work of local branches. This is to build its brands in the minds of its target customers by
effectively and efficiently meeting their needs.
Orange and Barclaycard recently launch Quick Tap the UKs first contactless mobile
phone payments service, allowing consumers to make purchases on the high street using their
mobile phone Customers can make purchases 15 and under nationwide by simply tapping
their Quick Tap mobile handset against a contactless reader at over 50,000 stores. Hence, the
group has good positioning strategies.

Branding

Branding is a means to distinguish the products or services of one company from those of
another. (K. Moore and Reid, 2006). Therefore, a brand is a logo, name, symbol, design or
image, or any combination of these, which is designed to identify the product or service.
Its slogan Take one small step garnishes its branding.
Barclays group does branding of its products/services with respect to its target customers
needs. The group has different brands such as Barclaycard and its contactless mobile payment
brand , online banking, offshore banking and investment, UK premier and personal banking,
business banking, Barclays corporate, international banking services, Barclays capital and
Barclays wealth. www.barclays.com/productand services, www.oup.com/uk/orc
,

Marketing Strategies

Mission

The mission of the Barclays group is to make available products as well as services to
help the customers to achieve their financial goals that would in turn lead to economic growth
as well as increased employment.
Marketing objectives
 Customer and client driven, that is putting their needs first so as to develop a long term
sustainable business.
Aims to meet clients needs while establishing a business with different sources of
revenue, business segments, customers and clients, and geographic exposure.
Aims to serve clients across all their needs through a wide range of distribution channels.
To effectively managed the risks taken by its clients.
Ensures financial discipline required to deliver returns is retained.
Demonstrates the groups wider value to society both globally and in every community it
serves.
Financial objectives
Operating within its capital resources
Generating returns in excess of its cost of equity
Sustaining growth in selected market and geographies.

Supply strategies

Barclaycard and orange newly developed Quick Tap contactless mobile payment
service which allows consumers to make purchases on the high street using their mobile
phone for the very first time. Barclaycard is providing Orange customers with 10 cash added
to their account upon activation, and 10% cash back on all Quick Tap purchases made in the
first three months.
Barclays Capital, the investment banking division of Barclays Bank PLC, recently
announced the launch of the Algorithmic Inflation Momentum Switching (AIMS) index,
designed to generate excess returns from the US inflation market. The reason being that
market participants switch from nominal bonds to TIPS when concerned about inflation.
Barclays Wealth international offers discounted international online payments to
investment and mortgage advice from our specialist advisers. It provides you with immediate
access to your money as well as control over your day-to-day spending wherever you
are. www.barclays.com

Demand Strategies
 Target students and matured wealthy Nationals returning home or resident locally,
including doctors, lawyers, managers, entrepreneurs and retired persons.
Product differentiation so as to gain competitive advantages in the market.
Frequent adjusted slogan to continuously build its brand image.

Positioning strategies

The bank is currently perceived to have a poor customer services compared to its peer
group that is their service offering and quality are not very much outstanding as portraits by
its branding.
So the banks aim is to also move to the top position for service offering and service
quality through its innovative product developments and improved service quality so as to
defend its strong brand image.
Ensures effective data management is improved.
Competitors Strategies
Improve the quality of customer services by training staff.
Increasely promote ATMs, online banking, Barclaycards and telephone banking services
that will provide greater convenience to customers.
Offer unique innovative Barclays Wealth-management and Barclays Capital
products/services that will attract the target markets.www.barclays.com
Marketing Mix Strategies

Product

Barclays offers personal banking and credit card facilities through Barclaycard to
customers. The products and services for personal customers include: bank accounts (from
entry-level through to premier), a range of credit cards through Barclaycard, saving accounts,
loans, insurance, online banking and mortgages through Woolwich.
The also offers corporate and business banking, investment banking and Wealth
management -which focuses on private and intermediary clients worldwide, providing
international and private banking, investment management, fiduciary services, and brokerage.
The group ensures these products and services are always available to satisfy customer
needs. www.barclays.com

Price
 The group ensures the prices are affordable with respect to the target customers. For
example, no monthly fees, interest free overdraft and 25% discount on its mobile broadband
schemes to those who signed up for a Barclays student account.
Also a discounted international online payment to investment. www.barclays.com

Place

The bank positions its product and services in such a way that they are be accessible at
customers convenience such as Barclays replacement debit card delivered to customers home
in two working days, availability of Quick Tap contactless reader at over 50,000stores.
Mobile phone banking and increase in a network of local branches.
ATMs at strategic locations throughout the country.
Increase franchises.
Promotion

Word-of-mouth campaign, literature in branches, TV advertisements, sponsorships,

business magazines and news papers, and bill boards.
Online advertising on website and direct mail to prospective students.
Phone prospective customers or visit them at their residents or place of business to sell
products and services to them
Develop an advertising campaign programs targeting the selected groups of customers.
Personnel and Services

Develop a performance appraisal system that will allow for feedback throughout the
fiscal year which determines annual salary increments and the quarterly bonuses such as
travelling allowances, reward for sales volumes in order to motivate staff.
Recruit more people that possess the required skills for the tasks available and provide
each of them with a job description setting out clearly the job expectations and goals, as well
as the required job-related behaviors.
Offer good training to both existing and current staff for the job required task.
Improve on customers services by training both top management staff and subordinates to
be customer-centric.
Porters five forces

Thomson, Strickland & Gamble (2007) pointed out that the character, mix, and subtleties of the
competitive forces operating in a companys industry are never the same from one industry to
another. Far and away the most powerful and widely used tool for systematically diagnosing the
principal competitive pressure in a market and assessing the strength and importance of each is
the Porters five forces model of competition.

The Five-Forces Model of Competition

Source: Porter (1979)

Pearce and Robinson built upon Porters theory and postulated that designing viable strategies
for a firm requires a thorough understanding of the firms industry and 20 competitions which
involves defining the industry boundaries and structure, competitive analysis and operating
environment (Pearce & Robinson, 1997). Cole (1996) argued that Porters five forces can be
utilized by firms in their formulation of strategy, and especially in their assessment of their
strengths and weaknesses. According to Porter (1998), the first fundamental determinant of
industry attractiveness is profitability. Competitive strategy must grow out of a sophisticated
understanding of the rules of competition that determine an industrys attractiveness. Gregory,
Lumpkin and Taylor (2005) noted that the five forces influence the creation of competitive
advantage in different ways. Power of buyer and threat of substitution influence the prices that
firms can charge, power of buyer can also determine cost and investment. The bargaining power
of suppliers determines the cost of raw materials and other inputs. The intensity of rivalry
influences prices as well as the costs of competing in areas such as plant, product development,
advertising, and sales force. The threat of entry places a limit on prices and shapes the
investment required to deter entrants.

Five forces
In order to analyze the company effectively, Five competitive forces will be
used to study the potential threats within the market that will impact to the
Barclays. The Porter Five Forces model is the analysis that is focusing on the
environment factors which influences to the profitability of the industry,
therefore; understanding the forces will help the company to come up with
the strategy to generate the profit in the long term (Porter, 2008).
Threat of New Entrance
In order to entry to the banking sector, new entrants are required to have a
high investment (capital). Also, they will be needed to comply with all
regulations from the authorities. Enormous amount of funds must be
available in order to come in this industry. In addition, the operating costs in
banking sector are large with many factors such as open up branches, high
investment on employees and IT system investment. Banking industry has a
high learning curve which means that new competitors must spend times
and resources to study the trend of the market. In addition, another factor
that may deter new banks is the reputation. Incumbent firms are all well
known to people; new company will lose their opportunity to come into the
industry as people would not trust in new entrants. In order to raise
depository, they need to give a higher rates than the current firms which will
be a higher cost for the new business than the incumbents. Moreover, the
advantage for incumbents is that they are enjoying with the economy of
scale and scope from providing variety of services. The switching cost is high
as people are getting used to with their current banks and processes to
switch to other banks are difficult. However, there are some services banks
need to concerned. The example is the online payment services which try to
facilitate for people to make the transaction more easily. PayPal is one of
those payment services that might drive down the profit of banks. This is an
example of the services that might come in the future as financial services
are large which banks might not be able to focus on every product. Thus,
the threat of new entrants is moderate.
Threat of Substitute products
The financial sector is large in term of products and services. The banking
sector is also included in the financial industry. With the variety of financial
products and services, the possibility of substitute products is high to bank.
For the case of deposit, people might instead invest in bonds rather than just
stick with the saving account as stock might be a better alternative
investment in the environment of low interest rates. In addition, many
financial institutions, apart from banks, also provide variety of products that
is similar to banks to service customers. For investment investors, plenty of
products available in the market give people a choice of investment as well
as for the institution. However, banks by its feature are still a significant
factor driving the economy. Many products and services are only provided by
banks. Therefore, the threat of substitutes is moderate.
Threat of existing rivalry
The competition in the banking sector is high by its nature as banks are
completing to gain more customers by offering a better rate than
competitors. The competition on giving higher rates for deposit and lower
rates on loan can be expected. In addition, another factor to drive the
reputation to clients is how ethically they are. People are aware on the ethic
of bankers as well as the corporate governance in doing businesses
Customers perceived value towards the satisfaction is crucial for banks to
focus. When any errors or frauds happened, people may switch to other
banks if they found that it is more secure to do transactions with other
trusted company. For the investment bank, the factors that customers
concerned are fee and return. Banks need to compete on giving the lowest
fee to induce customers to open the account with the company. And, return
is from the past performance of the trading team which implies how good
they are to generate the profit for customers. Furthermore, there are also
financial institutions that operate similar to banks which mean bank industry
will not only compete with each other but also with other financial service
providers as well .Therefore, the threat of existing rivalry is high.

Bargaining power of customers

The power of customers in the banking industry is moderate. The account of
deposits can be mainly divided into two accounts; saving account and time
deposit account. For saving account, customers can easily transfer the
money into their current account for daily uses which means these types of
accounts are held for the personnel used that give low interests income.
People are less sensitive to the change of interest rates. Moreover, banks
tend to promote their services along with the normal account such as credit
card. The clouding network of services gives privileges benefit to customers.
Thus, there are high switching costs for the accounts as people have already
get used to with services of bank such as internet banking and transfer
processes. In contrast, customers deposit in the time deposit account is more
sensitive to the change of interest rates which they will search out for the
bank that give the best rates. This shows that people are having a high
bargaining power on banks. In addition, in some case such as investment
account and deposits account; customers are freely to switch their account
to other banks if they feel uncomfortable with the services whereas some
fees might apply.

Bargaining Power of Suppliers

The suppliers of funds to bank are depositors. Banks, in turn, pay interest
rates to service suppliers as a cost of borrowing. Higher interest rate on
deposit is the main factor in attracting people to save in banks. People
compares rate between banks to find the best rate. As mention in the
bargaining power of customers, saving account and time deposit account are
different in term of sensitivity to interest rates. Bargaining of time deposit
customers are higher than saving account. Banks need to offer the best rate
they could to attract people to deposit with them. This means creditors, time
deposit, are having high bargaining power. On the other hand, to choose
which banks to deposit for saving account, customers compares not only the
interest rates given but also judging on customer services and how facilitate
and easy to access to the account as well. Thus, the network system and
branches are also important to gain many suppliers. This makes the
bargaining power of suppliers to be moderate.