Business Strategy in the Financial Industry

This document discusses strategic planning in the financial industry, including different strategy definitions that fit with organization strategy. It explores the challenges faced by the UK financial sector and the strategic implementation process. The document also distinguishes between wholesale and retail banking and evaluates the effectiveness of strategic models in retail banking.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Q.1 Explain strategic planning in relation with financial industry and critically explain
different strategy definitions fits with organisation strategy.......................................................1
Q.2 Identify challenges faced by financial sector of UK and explanation of strategic
implementation process...............................................................................................................2
Q.3 Explain strategic implementation and distinguishes between wholesale and retail banking
.....................................................................................................................................................3
Q.4 Critical evaluation of strategic model and provide example to reflect specific application
to retail banking...........................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business strategy is organisation plan to achieve its vision, mission, objectives and
utilising financial performance with the help of business model. Tesco Bank is British retail bank
owned by TESCO Plc located in UK (Eisenbach and et. al., 2017). In this assignment strategic
planning will be defined in relation to financial industry and explanation of various definitions
that fits with Tesco Bank strategy. It will identify challenges that UK financial industry faces and
process of implementation. It will also describe strategic implementation and differences
between wholesale and retail organisation from financial industry. In last, critical evaluation and
effectiveness of strategic model will be included.
MAIN BODY
Q.1 Explain strategic planning in relation with financial industry and critically explain different
strategy definitions fits with organisation strategy
Strategic planning is systematic way of taking essential business decisions, determine
tactics and implement actions that directs financial industry in the direction of future vision and
objectives. It includes redirections and direction of existing organisations in financial sector so
that it can achieve profitability and growth. It is analytical process which helps industry to
formulate strategic plans and its implementation with the help of projects. It is also helpful in
reducing risk and take full advantage of opportunities present in micro and macro business
environment of financial industry.
According to Tara duggan, organisation establishes plans and strategies so that their
operations measure and analyse customer satisfaction so that it helps in improving business. In
this organisation study attributes that effects levels of customer satisfaction. In this three
important aspects are taken into considerations that are improved, experience, repeat sales and
loyalty (How to Measure Customer Satisfaction for Strategic Management, 2019). Tesco Bank
has strategy which is Customer Driven and will help bank to achieve its organisational objectives
and complete its vision in financial industry. In this bank will rewards its loyal customer that will
help it to earn their trust. It has introduced Tesco Clubcard which helps in recognising and
rewarding such loyal consumers and proviodes points on debit and credit card spending, loan
repayments, discounts on prices for different services provided by bank (The strategy behind the
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Tesco Clubcard relaunch, 2019). This will only increase level of satisfaction of existing
customer and does not help bank to increase its market share. This strategy will not assist in
growth or development of organisation in industry.
Q.2 Identify challenges faced by financial sector of UK and explanation of strategic
implementation process
Financial industry faces many challenges from internal and external business
environment which posses different threats to its operations and survival. Some of them are as
follows:
 Customer Retention is one of major issues faced by financial institutions as competition
is high and switching cost is less. Consumers demands about personalisation, automated
services and easy access to bank services.
 Cybercrime breaches data that are involved in financial services cost millions to
institutions. This possess threat to information of customers and security of data used by
different organisations (Strategy, 2017).
To ensure that Tesco Bank is effective in implementing strategy related to introducing Clubcard
for customer satisfaction it has to apply steps of strategic implementation process, steps are as
follows:
 There is need to Evaluate and Communicate Strategies, this step ensure that plans
made are in same direction to achieve organisational objectives of Tesco Bank will
ensure that its Clubcard is effective in increasing level of customer sartisfaction.
 Next step is to Develop implementation structure, in this roles and responsibilities are
assigned and authority is delegated to departmental managers of Tesco Bank will
formulate work plan and design processes to implement strategy.
 Third step is to Develop supportive policies and programs, in this Tesco Bank will
establish monitoring, performance management and feedback system so that proper
control is exercise over operations (Yuliansyah, Gurd and Mohamed, 2017).
 Budgeting and allocating resources is concerned with allotment of resources to
different departments of Tesco Bank.
 Last step is to put Strategies into actions, in this Tesco Bank will provide training
sessions to personnel wherever needed and apply controlling measures.
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Q.3 Explain strategic implementation and distinguishes between wholesale and retail banking
Strategic Implementation: It refers to execution of strategies so that long term
objectives of organisations are achieved. It is simply a technique by which organisation develops
resources, culture, personnel and system to put plans into motions. It is critical process for
success of organisations as this address issues that hinders the processes that are employed to
achieve organisational objectives. This involves delegating tasks and responsibilities to
departments so that business goals are attained (Sheedy, Griffin and Barbour, 2017).
Wholesale banking is provisions that provides services to corporates, real estate developers,
institutional customers, etc. ING Bank is wholesale banking in UK which is expert in providing
financial services to corporate and institutional customers. Retail banking is provision that
provides financial services to general public like Tesco Bank. There are many differences in
these two types of banks, some of them are as follows:
Differences ING Bank Tesco Bank
Infrastructure They deal with corporates,
SMEs so there is no need to
have more branches and thus
they are less in numbers
(Shuen, 2018).
In order to capture more share
of industry it is important for
retail bank like Tesco to open
more branches as compared rto
wholesale banks.
Operations There operations are more
complex and lengthy as they
do not deal with general
public. Processes are more
specific and client oriented.
Such bank's operations are
large in number as they cover
each and every aspects of
financial services .
Customer Expectations In this sector, customer
expectations are low as they
are few banks which deals in
wholesale banking services.
Such bank deals in complex
In this sector customer
expectations are high because
switching cost is less. This
impacts decisions of bank as
they have to develop strategies
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operations and thus takes time
to process.
which increases level of
satisfaction and expectations
of customers.
Q.4 Critical evaluation of strategic model and provide example to reflect specific application to
retail banking
Ansoff's growth matrix is essential tool for strategic planning to identify opportunities to
increase revenues for business (Peng, 2017). Tesco Bank will use this model to evaluate
opportunities so that it can increase its customer satisfaction level with the help of alternatives.
The explanation of model is as follows:
Market Penetration: It is most common strategy used in retail banking to increase their
market share with existing products or services. It is relatively low risk strategy for Tesco Bank
as demographics of customers are already known to organisation. This does not proves out to be
successful as there is very less scope for business to increase its market share and relatively
expensive strategy to apply.
Product Development: In this strategy company focuses on introducing new products in
existing markets. It is appropriate in case where customer loyalty is high and bank wants to meet
increasing demand of consumers. This will help Tesco Bank to be competitive in nature so that
changing preferences can be met. This is risky as predicting ever changing nature of consumers
is difficult.
Market Development: In this strategy existing products or services are introduced in
new marker segment. This will help Tesco Bank to control its growth strategy and increase
market share. It is risk plan as market segment will be unknown for company which can possess
hurdle for organisation (Zukin, 2017).
Diversification: In this strategy new products are developed for totally new segments for
market to diversify in industry. This will help Tesco Bank to capture market share at regional or
local level so that its business objectives are achieved. This is most risky strategy as market is
uncertain and to offer new services to non-existing market is riskier.
For Tesco Bank in order to increase level of customer satisfaction, product development startegy
is appropriate as company is already introducing new product named 'Clubcard' for loyal
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customers so that they can avail discounted prices on different services provided by bank. This is
even less risky as taste and preferences of customer is already known to bank (Hryckiewicz and
Kozłowski, 2017).
CONCLUSION
Business strategy is plan of organisation to attain its objectives and achieve its long term
vision so that it can survive in industry. Strategic planning is actions that any business takes to
determine its course of plans to achieve organisational objectives. There are different challenges
like customer retention and increasing cyber crime in financial industry which creates threats for
sector. Strategic implementation is putting plan into actions and it is series of sequential steps
which helps in implement of strategy in organisation. There are differences in wholesale and
retail banking services and in last Ansoff's growth model is applied to make strategy for growth.
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REFERENCES
Books and journals
Eisenbach, T. M. and et. al., 2017. Supervising large, complex financial institutions: What do
supervisors do?. Economic Policy Review. (23-1), pp.57-77.
Hryckiewicz, A. and Kozłowski, Ł., 2017. Banking business models and the nature of financial
crisis. Journal of International Money and Finance. 71. pp.1-24.
Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross‐cultural
management. pp.52-66.
Sheedy, E. A., Griffin, B. and Barbour, J. P., 2017. A framework and measure for examining risk
climate in financial institutions. Journal of Business and Psychology. 32(1). pp.101-116.
Shuen, A., 2018. Web 2.0: A Strategy Guide: Business thinking and strategies behind successful
Web 2.0 implementations. O'Reilly Media.
Strategy, B., 2017. Business Strategy. MARKETING. 1(2). p.3.
Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
improving organizational performance. Humanomics. 33(1). pp.56-74.
Zukin, S., 2017. The city as a landscape of power: London and New York as global financial
capitals. In The Globalizing Cities Reader (pp. 113-119). Routledge.
Online
How to Measure Customer Satisfaction for Strategic Management. 2019. Online. Available
through: <https://smallbusiness.chron.com/measure-customer-satisfaction-strategic-
management-51164.html>
The strategy behind the Tesco Clubcard relaunch. 2019. Online. Available through:
<https://www.campaignlive.co.uk/article/strategy-behind-tesco-clubcard-relaunch/
905040>
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