TSB Bank's Ethical Practices and Performance

The assignment aims to analyze the significance of implementing ethical practices in enhancing the performance of TSB Bank. It highlights the need for the firm to adopt responsible business practices to improve its operational efficiency. The discussion covers relevant literature on corporate social responsibility, ethics, and banking sector challenges.

Contemporary
Developments in Business
and Management

EXECUTIVE SUMMARY
The report analysed the importance of implementing Pestle analysis in TSB bank as it
helps the firm in determining the changes and fluctuation in external factor. IT evaluated that
major turmoil and fallout faced by bank is due to separation of European union law from United
Kingdom. Further, the report found out the influence of Corporate social responsibility and
Ethics on the decision making process of TSB plc like the implementation of these practices aids
bank in managing customer relationship. Moreover, it analysed effectiveness of both practices
that is Corporate social responsibility due to which bank has started using renewable source of
power and energy instead of non non-renewable sources in order to prevent climatic changes and
environment. Thus, the report outlined the various recommendation like, implementing customer
relationship management software which will assist TBS in establishing effective
communication with its potential consumers.
Table of Contents
INTRODUCTION...........................................................................................................................1
SUMMARY OF PESTLE ANALYSIS...........................................................................................1
TASK 1............................................................................................................................................2
Overview of the primary external influencing TSB Bank plc....................................................2
TASK 2............................................................................................................................................5
Ethics and Corporate Social Responsibility influences policies and
decision-making of TSB Plc......................................................................................................5
The effectiveness of the organization’s response in context to Ethics and Corporate Social
Responsibility..............................................................................................................................7
Areas for improvement in context to Ethics and Corporate Social Responsibility to TSB Plc.. 9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................14

INTRODUCTION
Contemporary development in business management focuses on multiple level of
organisational development which stresses on its history, culture, process and environment. The
report will evaluate the primary external factors influencing the function of TSB PLC,
commercial and retail bank in UK. The bank has 550 branches and delivers nationwide financial
services to customers like, loans, mortgages, bank accounts etc. Further, the report will outline
the Ethics and Corporate Social Responsibility practices which influences policies and decision-
making of TSB bank. Beside, it will analyse the effectiveness of banking institution in response
and areas for improvement in context to Ethical and CSR approaches. In this report, Overview
of the primary external influencing TSB Bank plc has systematically addressed. Furthermore,
Ethics and Corporate Social Responsibility influences policies and decision-making of TSB Plc
has been also discussed.
SUMMARY OF PESTLE ANALYSIS
To analyse the influence of primary macro factors the TSB PLC make use of most
effective business strategy which is Pestle analysis which states that instability of political factor
impacts the performance of business for a long run, therefore to come out of financial crisis the
regulation were focused on maintain minimal balance to maintain capital strength to balance the
adequacy of funds. The analysis found out that at the time of financial crisis banks were asked to
maintain fund with minimum common equity tier 1 at ratio of 2.5 percent where TSB maintained
the ratio of 13 percent therefore TSB group was not much affected like other banking institution.
Apparently, changing economic policies influence the business policies and operations and leads
to risky and uncertain situations. Like, when Brexit came up various changes it hindered entire
functioning of regulations, operations, capital, and stakeholders such as, consumer, stakeholders,
employees etc. Moreover, changes in social factors are very usual and changing demographic
factors impacted the TSB banking because the ageing population of UK is increasing in
accordance to data of national statistic due to which the institution launched various programmes
like, wealth management, investment plans etc. However, advancement in technology plays vital
role in enhancing the value of banking services and it denoted that TSB has strong control of
digital tools that is mobile applications which assist in delivering banking services on online
platform. Thus, the report identified legal environment is the major barrier for the functions of
TSB, where banking institution is currently bound with 400 million bound lawsuit which has
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been introduced by HBOS action group. Hence, the Pestle analysis concluded with increasing
impact of carbon foot print in environment customers asked bank to buy and use renewable
electricity and papers in order to minimize waste and preserve natural resources.
TASK 1
Overview of the primary external influencing TSB Bank plc
External business environment consists with external factors that influence business activities
and function in large manner. The element consisted with this environment are uncontrollable
that can not controlled by the company. TSB bank Plc is the retail and commercial bank of UK
and has 550 branches and delivers nationwide services. The services of bank are satisfactory but
there are external factors which influence the functioning of Business. Therefore, to analyse the
influence of primary macro factors the PLC make use of most effective business strategy which
is Pestle analysis. It analysis assist the firm in evaluating the changing market factors which
hinder business performance. Further, it holds the access over all the market factor which can
interrupt the functioning changing governmental regulations, economic policies, environmental
changes etc. The Pestle analysis of TSB bank is described under:
 Political factors: The instability of political factor impacts the performance of business
for a long run because in this the person is liable to keep a check over changing factors
which can influence the internal functioning of business environment. The new capital
rules like UK banking reform act, resolution directive impact the core operations of TSB
bank. Further, to come out of financial crisis the regulation were focused on maintain
minimal balance to maintain capital strength to balance the adequacy of funds. Further, in
accordance in staring of 2015 the banks were asked to maintain fund with minimum
common equity tier 1 at ratio of 2.5 percent where TSB maintained the ratio of 13 percent
therefore at the time of crisis TSB group was not affected much like other organisation
that is Royal bank of Scotland and Barclays. Thus, the major fallout faced by TSB was at
the time of Brexit that is at the time of European law from UK law. Hence, it has been
that it is important for the firm to analyse political changes in order to maintain the
stability of its internal business environment.
 Economic Environment: The changing economic policies influence the business
regulation and operations and leads to risky and uncertain situations. It has been
evaluated that at the time of separation of UK from EU law there are various challenges
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which are being faced by TSB bank Plc is the retail and commercial bank. Due to the
separation there care various new implications which are made because which the price
of currencies had decreased. For banking institution like, TSB the Brexit came up various
changes which hindered entire functioning of regulations, operations, capital, and
stakeholders such as, consumer, stakeholders, employees etc. The major change came in
enterprise was lower interest rate which interrupted the profitability of banks. Apart from
this, after major changes slowly and gradually the economy grew which again assisted
the bank in gaining advantage over profit's ad serving consumer satisfaction. Hence, it
has been evaluated that it is important for the banking institution to analyse the changing
economic factors to determine the chance if risky situation which turn into threats.
 Social factors: Changes in social factors are very usual and it is important for an
enterprise to evaluate theses changes in order to maintain the stability of its business
environment. The social environment includes changes in labour composition, mobility,
democratic trends, market opportunities etc. The changing demographic factors impacts
banking because of the ageing population of UK is increasing in accordance to data of
national statistic. The ageing population is providing various growth opportunities of
TSB PLC as it aims at pension age clients and who have increasing disposable income.
IN accordance to ageing population the banking organisation has launched various
programmes like, wealth management, investment plans and saving policies in order to
increase their credit giving ability and attain growth and development (Kolios and Read,
2013). Hence, it is important for the firm to analyse social environment of business
because it is the only external environment which assist in grabbing new opportunities to
attain heights if success.
 Technological factors: Advancement in technology plays vital role in enhancing the
value of banking services. It is important for TSB to analyse the digital capabilities which
assist the company in making functioning easier and simpler. Moreover, the
technological advancement assist the institution in reaching to large number of
population with one click. The tools of Digital technology like, cloud computing, Bio
metric system and many more are the techniques which helps the firm in keeping
adequate record of clients information without any misinterpretation. Apart from this,
technological tools provide platform to TSB bank for connecting with consumers and
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analysing the changing client expectation from the current banking services. On the other
hand, the financial advancement like, increase in Fin tech organisations, effective digital
drivers assist the organisation in monitoring the stability of financial markets and aids the
institution in making its service cost effective. With regard to technological upgradtion
TSB group make use of every possible advancement to make sure that its services are
reaching effectively to its potential consumers. The institution has strong control of
digital tools that is mobile applications which assist in delivering banking services on
online platform. Apparently, the bank has also invested in security tools like, cyber risk,
security if clients information, management of data and prevention of fraud which assist
the firm in maintaining the confidentiality of consumers information. Hence, this denotes
that it is important for the TSB to evaluate the changes of technological advancement in
order to make banking functions easier and safe.
 Legal factor: It is the legal framework imposed by the government of country which
impacts the functions of Banking institution (Goncharuk, 2016). THE legal environment
is the major barrier for the functions of TSB because it has specific regulations with
regard to every settlement and deal with other firm. The banking institution is currently
bounded to 400 million bound lawsuit which has been introduced by HBOS action group.
Further, the enforcement of legislation on Banks impact their overall plans and
investment policies which hinder their profit making ability. Thus, it has been determined
that it is important for TSB to regularly monitor and review changing governmental
legislation in order to make stable functioning of plans and policies.
 Environmental factors: Analysing the influence of changing environmental factors
plays major role in effective functioning of banking operations. TSB PLC has analysed
that these days the government and its customers are focusing and reducing the impact of
carbon footprint due to which the clients are asking for support from TSB, where the
customers asked bank to buy and use renewable electricity and papers in order to
minimize waste and preserve natural resources (Zalengera, Blanchard and Gondwe,
2014.). In accordance to preserving paper work, the bank started sharing and working on
online document which has assisted the country in reducing carbon footprints to an
extent.
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 Competitive factor- This is another one of the large and major factor that can influence
company's activities and functions. In this factor includes competitors that can directly
influence business operation. Thus, it is very important for company to consider this
factor and analyse the competitive strategies in the market. With help of competitive
analysis tools and technique, firm can analyse and assess the actual strength and
strategies of competitors in the market.
Henceforth, in accordance to overall external analysis it has been determined that it is important
for the firm to make use of Pestle analysis in order to analyse the influence of external
environment on business operations. However, there are many other analysis which assist the
company in determining the impact of external factors like, Industry analysis which states that
Customers and suppliers are withdrawing their money from TSB bank because of increasing
interest rate whereas still the bank has large number of buyers but decrease power and income.
Moreover, the company has several competitors and similar banking polices. In contrary TSB
offers full fledged banking and financial services to its clients and therefore its has strong
consumer base. Thus, the entry of new bankers is restricted by the legal framework therefore the
competition for TSB is form existing rivalries.
TASK 2
Analysis of Ethics and Corporate Social Responsibility influences policies and
Decision-making of TSB Plc and its influnces on policies and decision making within
organisation
Ethics are the moral practices, belief and value of institution in which it is conducting its
business activities whereas corporate social responsibility is the approach which assist the
enterprise in promoting sustainable development keeping in mind environmental and social
benefits (Hinson, Boateng and Madichie, 2010). Therefore, in banking institution it is important
for the organisation to make ethical investing keeping in mind the sustainable development. The
practices of both the approaches impacts the decision making process of institution because these
are focused on making ethical decision regardless of companies profits and loss. Further, the
compliance with corporate social responsibility is the decision which assist the institution in all
its operation as it provides and stable support to TSB as it helps in making effective public
relation. Apart from this implementing the practice of ethical and social responsibility assist the
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firm in establishing stability in functions and attaining competitive advantage. Furthermore, the
corporate social responsibility assist the bank in decision making process and aids in customer
relationship management which is the most critical requirement these days. CSR is practice
which helps the bank in gaining consumer trust and loyalty for long run. In this approach bank is
liable to follow all the sustainable practices keeping in mind the changing requirement of market.
It is approach which helps in formulating decision with regard to benefits of society and
environment which is further beneficial in maintaining the ethicality of the situation (Zadek,
Evans and Pruzan, 2013). Apparently the ethics is the concept which assist the banking
institution in managing risk and threats. According to ethical concept, bank aims at keeping a
record of every transaction to maintain a balance between input and output which is
advantageous and helps in reducing the chance of creating suspense accounting for matching
balance sheet. Apart from this, CSR practices impacts the polices of TBS bank as the CSR
practices and policies ensure that mandatory compliance with social responsibilities and
sustainable development which aims at protecting reputation of institution.
There are various advantages of CSR approach which assist TBS Bank is as follows:
 It assists the bank in fulfilling consumer expectations.
 The CSR approach assist the firm in creating favourable working and business condition
for the company (Carfagna, Dubois and Laidley, 2014).
 It helps in building strong and good public relation.
 CSR approach is beneficial for banking institution as it assist in minimizing
governmental intervention in plans and polices.
 CSR approach aims at making optimum utilisation of resources and assist in minimizing
waste.
 It helps in enhancing the value's ad polices in way to make decision effective for both that
is for institution and for customers of banks.
 It reduces the complexity of social problem like labour composition, mobility, democratic
trends, market opportunities etc.
 Corporate social responsibility assist in reducing the chance of threats and uncertainties.
 CSR approach assist the banking institution in especially focusing on its potential
consumers.
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Hence, it has been determined that it is implementing CSR approach IN TBS is most beneficial
concept as it will assist the institution in regulation smooth flow of business operation. Further, it
helps in framing effective banking strategies which assist the enterprise in maintaining stability
of functions for long run. However, the bank make use of this approach to ensure healthy and
safe working conditions for employees which assist the firm in gaining the trust of al
shareholders and appropriate functioning of TBS. In accordance to this, to strengthen the facts
the bank has complied with statutory law in order to overcome all the shortcomings and
loopholes which can raise question for the bank and its functioning (Ameer. and Othman, 2012).
Thus, with the help of CSR approach it has regulated strict policies of functions and investment
schemes in favour of consumer to gains their trust and to serve satisfaction.
Benefits of following ethical practices in bank which are as follows:
 Implementing ethical practices in bank assist the firm in attaining competitive advantage.
 It assists in hiking the goodwill of the bank for long run.
 Ethical practices assist in resolving ethical issues and problems very easily.
 It helps in hiking productivity and profitability.
 Implementing the use of Ethical practices assist the firm in boosting employees morale
and enhancing market share.
In accordance to benefits it has been determined that implementing the use of ethical practices
assist the firm in formulating policies in manner which aims at protecting rights of employee,
banking institution and its consumers. Further, ethical practices will impact the decision making
and policies of TBS but will assist the enterprise in making effective decision keeping in mind
the interest of all shareholders. There are various ethical issues faced by TBS bank but recently it
has been facing the influence from environmental factors where the government and society is
focused on reducing the impact of carbon foot print However, for this the company will have to
minimum the use of paper and minimum use of non renewable energy for which the company is
has planned to make changes in its process that now it will make use of renewable power and
energy and will perform all the paper work on computers online which will assist the TBS in
making appropriate record of data and preserving environmental and climatic changes which can
leads to global warming (Ford and Richardson, 2013). Apparently, in ethical practices the
company will make changes in process of checking documents as the process of checking
balance is and transaction is monthly where the firm is forced to make suspense account to
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balance the statement but now TBS has planned to check the transaction and investment and
credit details at every third night which will assist the institution in making appropriate record of
data and information. Moreover, it assists the bank in maintaining transparent business
information system with stakeholders which help them in making building reputation. IT is
important because wrongful representation of profits and losses to shareholders generates
unusual expectation in minds of people which leads to cheating and hiding of actual profits.
The effectiveness of the organization’s response in context to Ethics and Corporate Social
Responsibility
The effectiveness of both practices that is Corporate social responsibility and ethics plays
an crucial role in determining changes in organisational policies and decision like, it has been
analysed that before the implementation of CSR and ethical practices the bank used to evaluate
the record of information and transaction on monthly basis whereas the firm has formulated its
checking process where now the management is bound to monitor transaction and customer
information very fourth right which is the effective strategy and assisted the bank in keeping a
check over misinterpretation of information. The increasing concern these days is the tax
avoidance by rich people in order to minimize the tax payment which is not ethical, there are
may large enterprises which have launched various tax avoidance schemes but it is not ethical
because the amount of tax collected is used by the bank in contributing to economic development
therefore the TBS has planned to launch policy here every client in liable to pay tax and no
scheme will assist the person in avoiding tax payment. Moreover, TBS used paper work for
maintaining records of transaction and consumer information but the institution planned to
implement use of technological advancement to make appropriate record of data and transaction
in order to maintain the confidentiality of information and to reduce the use of paper which will
assist in preserving environment from the impact of carbon foot print (Goss and Roberts, 2011).
Apparently, TBS started using renewable source of power and energy instead of non non-
renewable sources which assisted the enterprise in preserving environment from environmental
factors. The bank is planning to establishing corporate social responsibility approach to maintain
effective communication with its consumers. Moreover, with the helps of this system the firm
will able to determine the need of its potential consumers. In addition, it will assist the enterprise
in resolving queries on time without any delay. Thus, with the helps of corporate social
responsibility approach TBS has planned to maintain transparent relationship with its buyers
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which will assist the firm in maintaining effective and trust worthy relationship with its all
shareholders (Ethical issues relating to banking, 2017). By help of corporate social responsibility
firm can develop its impressive image in the market. It assist in enhancing the position and value
of firm in the competitive business environment. Thus it can be said that corporate social
responsibility can assist to the company in attract the new customer as well as retain existing
customers.
In contrast to all the ethical practices the TBS is now focusing on providing short term to
people who really them. It is the ethical police which will assist the bank in gaining consumes
and trust and will enhance its reputation in front of all shareholders. It is important for the
management to think ethically with regard to polices and practices because these are factors
which influence the business and business environment of an organisation (El Ghoul, Guedhami
and Mishra, 2011). Furthermore, the banking institution implemented the use of Ethical practices
in regular working in order to maintain positive work environment like the confidential
information is now handled and discussed only at the level of top level management which
demonstrate the effectiveness in decision making and policies of an organisation. Apparently
previously the institution used to discuss each and every transaction with employees to seek for
alternative solution but with the environment became negative because according to some
employees whose choices were not considered stated that the system is biased therefore to avoid
this and to maintain the ethicality of business environment TBS now discuses the information
with the members who are at top level of management. Hence, it can be stated that with the help
of corporate social responsibility the firm is bale to protect the confidentiality of consumer
information, had a reasonable collection from borrower without wasting time, credit agreements
were made according to the choice of shareholders and lastly documents were not mislead
(Ethical issues relating to banking, 2017). TBS has made revenue seeking investment where the
firm effectively gained the trust of its clients and enhanced its internal functioning. In accordance
to improvised business functioning it has been analysed that implementation of corporate social
responsibility and ethical practices in banking institution assist the firm in stabilising its business
functions (Wu and Shen, 2013). On the other hand, it separated the functioning of cooperated
banking and investment banking with the help of which it is been able to introduce the system of
management and incentive. This plan was introduced in TBS to motivate and boost the morale
and performance of employees. Nevertheless, customer relationship management is the best
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policy of CSR approach which will assist the bank in maintaining appropriate and effective
relation with its clients as it aims at resolving customer queries on time, communicating about
the changing plans and procedure of banks which is the best practice which assist in maintaining
trust worthy relationship with consumers.
Recommendation for Areas of improvement in context to Ethics and Corporate Social
Responsibility to TSB Plc.
In accordance to the study, ethical practices and corporate social responsibility, it has
been analysed that the organisation has established strict rules and polices to maintain positive
work environment and to support environment and its consumers (Zalengera, Blanchard and
Gondwe, 2014.). Further, it has been evaluated that the there are few practices which can be
improved with regard to business environment which are as follows:
 TBS bank should focus on using renewable resources and should aim at minimizing
wasteful activities because these are practices which can assist the firm in protecting
environment factors and reducing impact of carbon foot print and global warming.
 It is important for the company to make use of advanced technology which will assist the
bank in making optimum utilisation of resources and will aid in establishing effective
functioning of banking operations (Ethical issues relating to banking, 2017).
 The bank should focus on implementing the practices of corporate social responsibility
which will assist the firm in building strong business reputation and consumer loyalty.
 The enterprise should work under ethical factors which will assist the institution in
gaining the trust of all key shareholders.
 The firm should focus on providing short term returns to specific consumers who actually
need it.
 The bank should formulate its interest rate policy to gain more and more consumers
instead of focusing on maximizing profits as it will assist the firm in conducting ethical
business operations (Ethical issues relating to banking. 2017).
 In order to implement corporate social responsibilities, the bank should restructure the
internal system which will assist TBS in managing risk and establishing strict governance
by regulating the strict culture with the helps of ethical practices.
 The bank should focus on implementing customer relationship management software
which will assist TBS in establishing effective communication with its potential
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consumers. Moreover, it will aid the bank in resolving clients queries on time (Ethical
issues relating to banking, 2017).
 The bank should aim at maintaining transparent relationship with all shareholder because
hiding profits and loss from key individuals of the company can impact the reputation of
firm for long term.
CONCLUSION
The report has summarized multiple level of organisational development which stresses
on its history, culture, process and environment like, the implementation of business strategy to
analyse the impact of external factors and impact of ethical practices and corporate social
responsibility. Further, it evaluated Pestle analysis of TSB bank which assist the firm in
evaluating the changing market factors which hinder business performance like political
instability, increasing impact of carbon footprint and changing interest rates. Moreover, it
determined that Ethics are the moral practices, belief and value of institution in which it is
conducting effective banking activities while corporate social responsibility is an approach
which assist the enterprise in promoting sustainable development keeping in mind environmental
and social benefits. In addition, report outlined the recommendations like, the company should
make use of advanced technology which will assist the bank in making optimum utilisation of
resources and will aid in establishing effective functioning of banking operations. Thus, it
concluded by stating that TSB, it is important for the firm to implement the use of ethical
practices in order to improve its efficiency of performance.
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REFERENCES
Books and Journals
Ameer, R. and Othman, R., 2012. Sustainability practices and corporate financial performance: A
study based on the top global corporations. Journal of Business Ethics. 108(1). pp.61-
79.
Carfagna, L.B., Dubois, E.A. and Laidley, T., 2014. An emerging eco-habitus: The
reconfiguration of high cultural capital practices among ethical consumers. Journal of
Consumer Culture. 14(2). pp.158-178.
El Ghoul, S., Guedhami, O. and Mishra, D.R., 2011. Does corporate social responsibility affect
the cost of capital?. Journal of Banking & Finance. 35(9). pp.2388-2406.
Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical
literature. In Citation classics from the Journal of Business Ethics. Springer
Netherlands. (pp. 19-44).
Goncharuk, A.G., 2016. Banking Sector Challenges in Research. Journal of Applied
Management and Investments. 5(1). pp.34-39.
Goss, A. and Roberts, G.S., 2011. The impact of corporate social responsibility on the cost of
bank loans. Journal of Banking & Finance. 35(7). pp.1794-1810.
Hinson, R., Boateng, R. and Madichie, N., 2010. Corporate social responsibility activity
reportage on bank websites in Ghana. International Journal of Bank Marketing. 28(7).
pp.498-518.
Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and
environmental (PESTLE) approach for risk identification of the tidal industry in the
United Kingdom. Energies. 6(10). pp.5023-5045.
Wu, M.W. and Shen, C.H., 2013. Corporate social responsibility in the banking industry:
Motives and financial performance. Journal of Banking & Finance. 37(9). pp.3529-
3547.
Zadek, S., Evans, R. and Pruzan, P., 2013. Building corporate accountability: Emerging practice
in social and ethical accounting and auditing. Routledge.
Zalengera, C., Blanchard, R.E. and Gondwe, K.T., 2014. Overview of the Malawi energy
situation and A PESTLE analysis for sustainable development of renewable energy.
Renewable and Sustainable Energy Reviews. 38. pp.335-347.
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Online
Ethical issues relating to banking. 2017. [Online]. Available through:
<http://www.cfbmethodistchurch.org.uk/downloads/cfb-banking-ethics-cig-briefing-paper.pdf>.
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APPENDIX
OVERVIEW OF AN ORGANISATION
TSB PLC is a commercial and retail bank in UK. The bank has 550 branches and delivers
nationwide financial services to customers like, loans, mortgages, bank accounts etc.
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