Business Strategy: Analyzing Macro and Internal Environment for Starling Bank

This report analyzes the macro and internal environment of Starling Bank to develop effective business strategies. It examines the impact of political, economic, social, technological, legal, and environmental factors on the bank's operations. It also assesses the bank's internal strengths, weaknesses, opportunities, and threats using the SWOT and VRIO models. Additionally, it applies Porter's five forces model to evaluate the competitive forces in the banking industry.

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART 1............................................................................................................................................1
P1 Explain the appropriate framework and analyse impact and influence of macro
environmental factor of organisation and strategies...............................................................1
P2 Assess the internal environment and capabilities of organisation by using relevant models 4
P3 Apply Porter’s five forces to evaluate the competitive forces of market of an organisation.6
PART 2............................................................................................................................................8
P4 Apply a theories or models with interpreting strategic planning for organisation............8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is defined as a strategy which is developed by organisation in order
to achieve business objectives. In other words, it can be said that it is a combination where
they have to perform activities in order to attain goals to remain competitive in market. In
this report Starling bank is taken as a base consideration (Bıçakcıoğlu-Peynirci and
Tanyeri, 2020). It is a digital challenger bank which is located in United Kingdom where
they mainly focus on opening current as well as business accounts. The headquartered of
Starling bank is located in London. In this report, there is internal environment which tells
organisation about their strength, weakness, opportunities and threats. There are macro
environmental factors and competitive environment and some strategies. The main
strategy of Starling bank is to increase their market share and generate revenue so they
have to develop strategies in order to gain market share.
MAIN BODY
PART 1
P1 Explain the appropriate framework and analyse impact and influence of macro
environmental factor of organisation and strategies
The best framework which analyse the impact of macro environmental factor is PESTLE.
It is a tool which is used to identify the external factors that affect so that organisation can
understand that factor before launching any product or developing any market strategies
(Bigelow and Barney, 2021). In context to Starling Bank, they have to increase their
market share and revenue for their bank so that they have to identify the external factors
which are mentioned below:
 Political Factors: The main influence of political power is banking and financial
markets. For this government has made rules and regulation for financial institutions
as they are doing because they are receiving a lot of saving from public. They use a
dual banking system in order to regulate banking system. The political factor of
Starling bank is uncertainty during Brexit period delaying European expansion.
Positive impact: The positive impact is that political is stable in United Kingdom
because the rules and regulation made by financial institutions remain same for many
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years. This will help Starling bank to increase their market share and revenue so that
they can operate their system in banking industry.
Negative impact: The negative impact is that if they try to increase their share, some
legal issues occur which affect the functions of banks. Due to change in tax policies
and trade tariffs which will directly impact the functions and strategies of Starling
bank.
 Economic Factor: The main issue is that there is slowdown in the growth of United
Kingdom which affects the activities. This factor includes many factors such as GDP,
interest and inflation rates and many others (Hertati and Safkaur, 2019).
Positive impact: Starling bank provide loans, cards and other facilities to their customers
such as people or business which include any type of business whether larger and small
which positively impact Starling bank to implement their changes.
Negative impact: It directly affects the market share of Starling bank when there are
changes regarding economic system which will impact the profit of banks. Because of the
decrease in economic growth it will adversely affect the strategies of Starling bank.
 Social Factor: Nowadays social factor become the most important factor in relation
to their behaviour, attitude and lifestyle of people in society. In every part of society
people are focusing on doing online transaction which positively impacts the banking
industry.
Positive impact: The positive impact is millions of people are adopting digital
services in relation to finance which help Starling bank to fulfil their strategies.
People want an easy way of transaction, e-statement and many other facilities which
help them to easily transfer money from their account to other account.
Negative impact: The negative impact is that they make their mobile app or banking
website complicated which adversely impact which lead to lower the satisfaction
level of customers. As trust and security is the critical factor for achievement of
strategies in banking sector.
 Technological Factor: The technological factor means that people are using online
transactions that help Starling bank to achieve their strategies which are increasing
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market share and helps in generating revenue in their banks (de Sousa Jabbour,
2019). Because customers are using technologies such as mobile banking such as
taking insurance, loans, debit or cards and other facilties when doing online
transactions.
Positive impact: The positive impact is that it helps selected bank to achieve their
objectives by using latest technology and making their mobile or website application
easy so that it increase satisfaction level of customers. Because of using a
technological awareness they can positively impact the factors of selected
organisation and can implement strategies efficiently.
Negative impact: The major issue and problem is due to increase in cyber security as
this becomes major issue because it steals data and other personal information of
customers from banks. This many negatively impact bank and it become difficult for
them to implement their strategies.
 Legal Factors: There are different legal laws, regulation for banking industry which
impact the financial institutions and banks as they have to follow various rules and
regulation in banking industry which is General data protection regulation which help
Starling bank to protect the data of customers (Hsu, Moore and Neubaum, 2018).
Positive impact: The positive impact is that United Kingdom is very strict to follow
legal rules and regulation which help banks to perform their activities in an efficient
manner. The positive impact is that they can follow all rules and do not involve in
any illegal activities in banking industry.
Negative impact: It means that there are various branches of banks in different
countries so according to that they have to follow all rules of different countries. If
not adopted, then it adversely affect the performance of banks and financial
institutions.
 Environmental Factor: The last factor is environmental factor as banks and other
financial institutions have to take measures to protect the environment (McAdam,
Bititci and Galbraith, 2017).
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Positive impact: The positive impact is that Starling bank they have to reduce carbon
footprints by using digital technology as all work done paperless and use recycled
debit cards which help them to make environmental friendly.
Negative impact: They have to follow all rules and regulation in order to remain
environmental friendly as compared to other banks in banking industry.
From the above analysis of the macro environment it is concluded that there are
various factors help them to make strategic management decision to implement them
successfully. It will help Starling bank to develop strategies which help in increasing
market share and revenue of organisation. With the help of this management of
selected bank with the help of external factors they can analyse and develop strategies
where the improvement is to be done. By making effective policies, Starling bank can
overcome the problems and can implement and adopt the changes accordingly.
P2 Assess the internal environment and capabilities of organisation by using relevant
models
Internal environment is the areas which can be controlled by organisation as it
indicates the strength, weakness, opportunities and threats of organisation. To assess
the capabilities, the SWOT and VRIO is the best model which help organisation
which is Starling bank can effectively implement their strategies in an efficient
manner (Lawton, 2017).
SWOT: It is a toll which help Starling bank so that they can analyse internal factors.
To overcome their weakness and threats and can build their strength and use
opportunities to meet the set objectives of organisation.
Strength
 Starling bank is the first digital
challenger bank of innovate banking.
 They received various awards such as
Best British bank, best business banking
provider 2019 and so on.
 Millions of customer and business
Weakness
 The main weakness is that they have
limited presence in countries and
provide less service.
 They have advocating profligacy.
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accounts as they have gained more than
30,000 SME accounts and 2, 10,000
current accounts.
 They provide various offerings to their
customers.
 Starling Bank is the biggest financial
institution in Europe.
Opportunity
 They are growing base of customer by
opening current account of customers
and business accounts of small &
medium.
 The opportunity is that they are
providing services digitally which
increase satisfaction level.
Threats
 The major threat is competitor as there is
increase in competition in banking
industry.
 Fluctuation of client from their bank to
other is the threat for Starling bank.
VRIO: It is a framework which stands for valuable, rareness, imitability and
organisation as this model is generally used by large organisation because they have to
analyse the resources, knowledge and skills of employees in order to gain competitive
advantage in industry. In context to Starling bank, they have to gain market share and
to increase their revenue so they have to analyse this model which is mentioned below:
Valuable Rare Imitable Organisation
Technology Yes No No No
Brand image Yes Yes No No
Financial
resources
Yes Yes Yes No
Human
resources
Yes Yes Yes Yes
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 Valuable: With the reference to the selected bank they have to fulfil their strategies
which is increase in market share and revenue so they to provide better services to
their clients which will help them to remain competitive in market (Nayak,
Bhattacharyya and Krishnamoorthy, 2019). The main valuable resources of Staling
bank are management, staff members and effective transaction.
 Rareness: This means they have to analyse that they are giving services is rare or not.
In relation to Starling bank rare services and offering done by organisation in order to
increase their market share. As they are digital challenger which is rare because they
first provider of digital and mobile banking services.
 Imitable: This type of factor means the services provided by them is unique which
means their rival is not copying as Starling bank is the one who have digitally started
their banking services which help them in increasing their customer base as this help
them to implement their strategies successfully.
 Organisation: The is the last factor of this framework which means the banking
services provided to their clients must be managed and control in an appropriate
manner which means the transactions and many other data should be recorded
properly in bank and if these are not properly managed then it leads to ineffective and
decrease in profitability level of organisation.
From the analysis of external factor, it is analysed that with the help of these two
models which are SWOT and VRIO Starling bank can easily identify where they have
to improve and at which area effective strategy should be used in order to increase
their market share. By identifying this they can easily overcome their threats and
weakness which help them to gain competitive advantage. On the other hand, VRIO
framework is used to identify the skills, structure of organisation.
P3 Apply Porter’s five forces to evaluate the competitive forces of market of an
organisation
Porter’s five forces is an analysis used by organisation to take effective business
decision in relation to banking industry. This model is important because it help in
understanding the strength and weakness with opportunities and threats in banking
industry (Munandar, 2017). With the reference to Starling bank, the Porter’s five
forces are discussed below:
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 Threat of new entrants (Low to moderate): In banking industry, if any new
competitor or any new bank is entered into new market. So, it is difficult for them to
because customers only trust those banks that are in baking industry for long time
period. The threat of new entrants is low because customers only hold one account for
their financial loans and services. On the other hand, small banks can operate their
banks in regional area.
 Bargaining power of suppliers (Low): The power of supplier is usually low to
medium because there are four major suppliers that have capital in banking industry
such as deposit, mortgage and loans. They have to make sure that there are resources
available to give better services to customers who include withdrawals and
borrowings.
 Bargaining power of buyers (High): The bargaining power of buyer is that with the
increase in technology which is internet as well as mobile banking (Oldman and
Tomkins, 2018). As customer easily shift to another banks which give low interest
rates on loans, high rates on fixed deposit and other. This takes attention of customer
in banking industry.
 Threat of substitutes (High): The substitute is relatively high in market which means
that non- financial institutions are substitute rather that banks because they offer same
services as per the banks and competitors in market.
 Rivalry among existing competitors (High): This is the last force which is high in
banking industry because to attract customer banks are in competition as they tend to
give fastest services, easy transaction and many other facilities. Nowadays, many
banks are merging with other banks in order to invest their money in advertising and
marketing.
Starling bank is a digital challenger as they can use the disseised information from
above which help them to implement their strategies. With the help of this analysis
they can easily gain market share and manage their function and activities of their
bank. Standardisation management can help them to save cost and provide better
services to their customer.
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PART 2
P4 Apply a theories or models with interpreting strategic planning for organisation
TOWS Matrix: TWOS matrix is a matrix which is continuous process with an
examination of external factors with opportunities. This analysis provides a strong
view and tends to follow long term policies. Afterwards, an organisation takes into
account its own capabilities and limitation (Pati and Bandyopadhyay, 2017). The next
step is to analysis the factors externally which are linked to external analysis to
develop a policy.
Basis Strength Weakness
Opport
unities
The main strength is that starling bank
have Small and medium business
customers and is a digital challenger which
has introduced mobile application in
banking industry. Which they have
opportunity to retain customer by opening
their accounts by giving offers.
The opportunities are that they can
attract customer by giving offers,
interest rates and inflation rate but it
can be major weakness is when
there competitors is market are
coming with high interest rate in
fixed deposit and offers to give them
loans on low interest rate. So, the
opportunity can become the
weakness for selected bank.
Threat The strength is that starling bank is digital
challenger and provide the services of
internet and mobile banking. But this
strength can become threat when the
information of customer steal when doing
online transactions that it become difficult
for them.
As they can overcome the threat of
online banking but it can be the
weakness as this will reduce their
customer.
Strategic Planning and business plan: The strategic planning is used by Starling
bank to set objectives, strategies so that they can assess that staff members in bank
can effectively achieve for common goals (Stašák and Schmidt, 2019). The strategic
plan of Staling bank which is mentioned below:
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Objectives and strategy of Starling bank: The business strategy is to increase the
market share and generate revenue with this they can achieve the objectives of
business organisation. They have to gain competitive advantage in order to retain
market share which help them to achieve the business objectives.
Vision of Starling bank: The vision of Starling bank is to build the customer base
and provide them better services which help them to retail new as well as existing
customer in their bank. This helps them to attain market share as they are providing
digital banking such as mobile and internal banking to enhance customer base.
Mission of Starling bank: The mission of Starling bank is to revolutionize banking
so that they can build bank and can manage all transactions by using digital
technology which is mobile banking as Starling bank is a digital challenger.
Monitoring and controlling: Monitoring and controlling is important because in
online transaction they have to manage all data so that customer can easily borrow
and transact their money. They have to monitor and protect the data and personal
information of their customers so that their data does not steal by hackers. By using
this Starling bank can increase their market share and generate revenue.
Recommendation: The recommendation is that Starling bank has to follow all legal
rules and regulation which help organisation to overcome any problems of bank. The
main thing is that selected bank has to adopt more technologies and prevent data of
customer and build customer experience (Travis and Hodgson, 2019). Starling bank
is a digital challenger bank which use digital technology which helps business
whether small or large can operate easily. The main recommendation is that they
should achieve business objectives which help them as they have to use the latest the
technology and can make customer better experience with the help of this they can
implement their strategies effectively. This recommendation will help in order to
retain new as well as existing customer.
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CONCLUSION
From the above discussion, it is concluded that business should develop the business
strategy which will help organisation in order to achieve business objectives. There are
some internal environmental factors which include the strength, weakness, opportunities
and threats with the help of this they can overcome the issues and problems so that they
can achieve their objectives by using their strength and identifying the opportunities. The
other external factors include political, economic, social, technological, legal and
environmental factors that help Starling bank when they want to implement their strategy
which is to increase market share by using digital technology which means internet and
mobile banking and also can enhance their profitability ratio. There are some competitive
framework which are Porter’s five forces which include bargaining power of suppliers
and buyer and threats of new entrants and substitutes. There are TOWS Matrix which help
organisation to identify their strength and weakness with opportunities and threats. There
is strategic planning which include the objectives, vision, mission and monitoring and
controlling. With the help of this Starling bank can achieve business objectives.
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REFERENCES
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Online:
PESTLE and SWOT analysis, 2020 [Online] Available thorough:
<https://www.swotandpestle.com/starling-bank/>
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