Analysis of Business Environment Factors

The provided document is an assignment on the topic of analyzing business environment factors. It delves into understanding internal and external factors affecting a company, specifically Barclays. The study highlights technological and economical factors at a micro level, their impact on productivity and profitability, changes in government rules, laws, and technological changes. Challenges faced during research are also mentioned, along with ways to overcome them. The document references various books and journals that support the analysis.

Key Issues In The Business
Environment

index
INTRODUCTION...........................................................................................................................3
1. Macro issues which affect the business environment.............................................................4
2. The impact of Technological and Economic factors at micro level:.......................................7
3. Challenges faced during the research and the possible ways to overcome the challenges.....9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment are the combination of external and internal factor which influence the
company operating situation. The factor of business environment are suppliers, competitors,
technology, government rules and regulation and economic trends.
Barclays is business and consumer bank in UK. They provide transactional, lending, investment
product and services to their customer. It serves customer worldwide.
The report highlights the macro issues which affect the business environment of Barclays bank.
It explains this key issues at micro level. It also explains that how economical, technological,
political and environmental factor affect the business environment. It highlights the major
challenges arise at the time of research and it also provides the ways to overcome this challenges.
The report provides a brief of external and internal factor which influence the business
environment.
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1. Macro issues which affect the business environment
Barclays plc is multinational investment bank and financial service company. It also works with
other business like personal banking, corporate banking, wealth management and investment
management.
PESTLE analysis of Barclays bank
PESTLE analysis is the best tool to cover all the major issues which affect the business
environment of Barclays bank. It helps to analyse the current situation of market and its
competitor.
The government laws, rules and regulation, political changes, environmental changes, social
norms affect the business environment both directly or indirectly (Besley 2015).
Political factor : It involves the government stability and political threats in a country. It
includes :
 Government rules and regulations
 Political instability
 Tax
 Tariffs etc.
Impact of political factor : The government rules highly affect the operating system of Barclays
bank. The bank has to follow the rules because it spread worldwide. Barclays has to accept the
regulation and to apply in the bank to conduct its business effectively. The tax tariff can affect
the inflow of capital in the country and affect the firm productivity and profit. Political stability
is beneficial for the bank. It influences bank to improve their sustainability.
Economical factor : It includes the factors such as :
 Inflation rate
 Exchange rate
 Interest rate
 Tax
 Consumer expending behaviour
 Saving rate
Impact of economical factor : Increasing the rate of unemployment, high tax rate, low
disposable income decrease the credit worthiness and borrowing capacity of customer of
Barclays bank. Increasing the inflation rate also affect the business environment
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(Anagnostopoulou, Drakos 2016). It decreases the savings and investment capacity of customer
which ultimately decreases the productivity of the bank. Increasing interest rate influences the
customer to invest more in the Barclays product and services. Recession in 2018 increase the
inflation rate of UK which ultimately decrease the investment.
Social factor : Social factor play an important role in expansion of bank. Bank has to ensure that
they provide good services to their customer and satisfied the need of the customer and investor.
It includes :
 Gender role
 favourable demographic change
 customer centric operation
 culture, health and safety norms
Impact of social factor : The social change may be threat and opportunity for the bank. The
change in fashion, culture affect the environment of Barclays bank. The ageing customer comes
as a business opportunity for the Barclays bank (Muthinja, Chipeta 2018). Ageing customer has
more level of income like pension and they invest more in bank to secure their future.
Technological factor : Technology make huge impact on business environment of Barclay
bank. The advance technology is a boon for the banks. It helps the customer, employee, suppliers
and investor in their smooth working. The technological factor are :
 Innovation in customer service
 Supply chain distribution
 Rate of technology diffusion
 Technology impact on product offering
Impact of technological factor: The latest advance technology helps the customer to get the
information regarding their transaction, balance, cash transfer, current status of their fund
through online. It also helps employees in maintaining the cash, operating activities, checking the
balance etc. The latest software make their work easy and simple but at the same time it also
creates problem for the employees and customer. The error in system can take huge time to solve
the problem which increase the waiting period of customer and decrease their satisfaction level.
Technology change provide different services to investor by aware them about the different
product of the Barclays bank.
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Legal factor : legal factor control and regulate the Barclays bank activities. It ensures that the
product and services are beneficial to the bank customer and do not involve any fraudulent
activities (Masciandaro, Volpicella, 2016). Legal factor includes:
 Data protection law
 Copyright law
 Employment law
 Discrimination law
 Export and Import law
 Intellectual property right etc.
Impact of legal factor : Change in laws affect the overall business environment. The
employment law set the working hour of employee and also set various rule regarding their
leave, appraisal, rewards and pension. This law binds the organisation to follow the rules of
country.
Environmental factor : It deals with the environmental issue of the bank. The location where
bank set their branches affect the business of Barclays (Menicucci, Paolucci, 2016). It includes
the following factor :
 Limiting carbon footprints
 Save water treatment
 Climate change
 Waste disposable treatment
 Investing in socio-environmental project
 Insurance policy
Impact of environmental factor : Government demands the businesses to reduce their carbon
footprints. Technology helps to reduce the paper work and also the paper waste in the bank. It
helps the employee to work on computer based system which reduces the maintenance of all the
documents in paper.
2. The impact of Technological and Economic factors at micro level:
The internal business environment is one of the factor which plays vital role in the success of the
organisation. The company has control over these factors.
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Technological: Technology may affect the internal factors of the company in many ways it can
have positive as well as negative impact on the internal factors. Internal factors are customer,
competitors, shareholders, suppliers etc. The use of technology has contributed in the working of
the employees. It has made employees work more efficient and effective. The use of different
new upgraded software bank improves the quality of service provide more services to the
customer and also reduce the work of the employee. It helps the employee to provide accurate
work within minimal time. It also helped the investors to invest easily in the various financial
products from anywhere. Technology has also provide security to the business by protecting the
data to avoid cyber crime. With the rapid change in the technology Barclay has proved itself as
the one who is moving with the pace of technology. In UK it is ranked as a digital banking
leader. It was the first bank to start online banking in year 1995. Barclays is one of the few banks
who start processing transaction based of the blockchain technology. Blockchain technology is a
decentralized, distributed and public digital leader that is used to record transaction across many
computers so that any involved record cannot altered retroactively, without the alteration of all
subsequent blocks. In simple terms it can be said that every data has or can have only one owner.
The use of technology has increased the quality of products provided by the Barclay and it
enables the company to meet supply and demand in the market.
If a company does not grow with the growing innovation it can be proved a serious danger to the
company as in this era the technology is essential in every sector.
There is no culture of technology transfer and the companies do not want to transfer the
technologies as the fear that it may create competitors as a result of collaboration.
Economic : The banking industry and the economy are interrelated. Economic factors play and
important role in working of the organisation. The change in government laws, rules and
regulation, highly affect the productivity of banking sector. Market fluctuation based on politics,
terrorism attacks, wars and currency can also affect the business environment. The recession has
affected the flow of income, GDP, per capita income at micro as well as macro level. As the
interest rate is reduced the more people will borrow more money which can adversely affect the
inflation rate. There may be recession which can lead to decrease in consumer spending as their
income will also drop, in such situation business sales will also decrease. This may also lead to
decrease of staff(López-Gamero, and Molina-Azorín 2016). The increasing interest rate helps the
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investor to invest more in the bank product. But if the interest rate decrease it may affect the
investing behaviour of the customers. Barclay has a strong brand reputation in the market as it
has providing its services from 400 years. It has its branches across multiple countries. The
company is economically and geographically stable.
The human resource in the financial sector have skills moderate to high in UK. Barclay should
balance it in order to expand its business not only in Germany but also in other countries.
The economic risk can affect the company as the change in interest rate can affect the working of
the business(Kelly, and McGuinness, 2015).
The company uses various approaches to help the institutions in order to contribute to the
economy such as increasing access to finance, supporting business, giving job opportunities to
youth, lending and social innovation.
Example: A recession of 2008 lead to bank losses, bankruptcies, rise in jobless. When banks
started to identify what is happening there was in immediate deduction in the bank to bank
lending(Gallemore, 2015). The bank who have continued to take loan from other bank realised
that the interest rate has been doubled overnight.
The bank faces difficulty in growing their loan portfolios due to loss demand and increasing
interest on loans. People stops to take loan from the banks for homes and vehicles this hamper
the profitability of the banks.
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3. Challenges faced during the research and the possible ways to overcome the challenges
The objective of this research is to built a framework for the various internal and external factors
and how it affects the Barclay internal business environment and its internal factors. This
research is basically concerned with business environment including its internal and external
factors and its effect the banking sector.
It was difficult to analyse that what internal factors have been affected due to various external
factors such as political, social, economical, technological, environmental and legal factors. I
studied the internal working environment of the Barclay I go through the strength, weakness,
opportunities and threats of the company and how the internal factors such as customer,
shareholder, etc., have been affected due to technological and economic changes in the business
environment with the help of various websites and research papers. I also came to know about
the various factors such as consumer buying behaviour, and what factors can affect the investing
behaviour of the customers. Technology is making a healthy relation between the bank and the
customer as it provide the fast services to the customers, and employees has also been benefited
from the technology(Fernández-Olmos, Ramírez-Alesón, 2017).
What role does internal factor and external factor play in knowing the business environment and
what are the internal and external factor and how they can be managed is proved difficult for me
to understand. I found it difficult to relate how the factors like tax rate, inflation rate, government
regulation affects the customer, clients, shareholders etc.
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CONCLUSION
The above study summarize the various factor which affect the business environment. It explains
the external and internal factor of environment and how they affect the business of Barclays. It
explains the technological and economical factor which affect the environment at micro level
and their impact on productivity and profitability of bank. It also explains the changes in
government rule, law, technological changes and their impact. The study also summarize the
challenges faced during the research and the ways to overcome these challenges.
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REFERENCES
Books and Journals
Anagnostopoulou, S.C. and Drakos, K., 2016. Bank loan terms and conditions: Is there a macro
effect?. Research in International Business and Finance, 37. pp.269-282.
Besley, T., 2015. Law, regulation, and the business climate: The nature and influence of the
World Bank Doing Business project. Journal of Economic Perspectives, 29(3). pp.99-120.
Fernández-Olmos, M. and Ramírez-Alesón, M., 2017. How internal and external factors
influence the dynamics of SME technology collaboration networks over time. Technovation. 64.
pp.16-27.
Gallemore, J. and Labro, E., 2015. The importance of the internal information environment for
tax avoidance. Journal of Accounting and Economics. 60(1). pp.149-167.
Gomes, A.M., 2019. Recession Impact on Global Marketing Performance. Available at SSRN
3336261.
Kelly, E. and McGuinness, S., 2015. Impact of the Great Recession on unemployed and NEET
individuals’ labour market transitions in Ireland. Economic Systems. 39(1). pp.59-71.
López-Gamero, M.D. and Molina-Azorín, J.F., 2016. Environmental management and firm
competitiveness: the joint analysis of external and internal elements. Long range planning. 49(6).
pp.746-763.
Masciandaro, D. and Volpicella, A., 2016. Macro prudential governance and central banks: Facts
and drivers. Journal of International Money and Finance, 61. pp.101-119.
Menicucci, E. and Paolucci, G., 2016. The determinants of bank profitability: empirical evidence
from European banking sector. Journal of Financial Reporting and Accounting, 14(1). pp.86-
115.
Muthinja, M.M. and Chipeta, C., 2018. What drives financial innovations in Kenya’s
commercial banks? An empirical study on firm and macro-level drivers of branchless
banking. Journal of African Business, 19(3). pp.385-408.
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