Strategic Management and Financial Institutions

The assignment delves into the strategic management practices employed by financial institutions. Leveraging Porter’s Five Forces model and Value Chain analysis, it examines how these institutions analyze their competitive landscape and create value for customers. The analysis emphasizes the importance of understanding industry dynamics, internal capabilities, and customer needs in shaping effective strategies.

Running head: STRATEGIC ANALYSIS REPORT
Strategic Analysis Report: Employee Motivation and Productivity
Name of the Student:
Name of the University:

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STRATEGIC ANALYSIS REPORT
Table of Contents
1.0 Introduction................................................................................................................................2
1.1 Background of the organization- Lloyds Banking Group.....................................................2
2.0 Strategic analysis of Lloyds Banking Group.............................................................................2
2.1 Internal analysis of Lloyds Banking Group...........................................................................2
2.1.1 VRIO analysis of Lloyds Banking Group......................................................................2
2.1.2 Value chain analysis of Lloyds Banking Group.............................................................4
2.2 External analysis of Lloyds Banking Group..........................................................................6
2.2.1 PESTLE Analysis of Lloyds Banking Group.................................................................6
2.2.2 Porter’s five force analysis of Lloyds Banking Group...................................................9
3.0 Key strategic issues emerging from the analysis.....................................................................11
4.0 Conclusion...............................................................................................................................11
References......................................................................................................................................12

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STRATEGIC ANALYSIS REPORT
1.0 Introduction
In the strategic analysis report, the selected organization is a banking sector, Lloyds
Banking Group. This particular report is going to evaluate the strategic point of selected banking
group and propose how the emerging tools provides impact on the prospect arrangement of
selected organization. This banking group is selected as it is an organization with accessible data
and this strategic analysis report provides an understanding of strategies into Large Multinational
Corporation.
1.1 Background of the organization- Lloyds Banking Group
Lloyds Banking Group is UK based banking in addition to financial services provider
with operations into England, Scotland and Wales. The latest revenue of the bank is
approximately £39.611 billion on the operating profits of £4.2 billion (Lloydsbankinggroup
2016). The banking group consists of approximately 30 million customers all over various
brands.
2.0 Strategic analysis of Lloyds Banking Group
2.1 Internal analysis of Lloyds Banking Group
There are various methods which are used to find out how the internal environment
affects the strategic point of Lloyds Banking Group. There are two internal analysis tools which
conclude the overall strategic position of the banking sector. The two analysis tools are VRIO
and Value chain analysis.

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STRATEGIC ANALYSIS REPORT
2.1.1 VRIO analysis of Lloyds Banking Group
This internal analysis used to analyze the internal resources of the bank and capabilities
to search out if it is a source of sustained competitive advantages. The factors of VRIO analysis
are as follows:
Valuable: The strategic alliance with other UK banking sector allows Lloyds Banking
Group to provide the customers added value through loyalty program by accumulation of points
(Porter 2016). It increases the number of the customers that will lead to increase into revenue as
well as profit for the bank.
Rare: There are rare resources for Lloyds Banking Group as the bank was the first
capitalize on the alliances (Dhingra et al. 2016). In order to compete into UK and imitate with
the resources, Lloyds Banking Group would have partner with other company that can able to
hold the market share of Lloyds Banking Group.
Costly to imitate: The historical conditions of the Lloyds Banking Group being the first
to form of san alliances that lead the bank to benefit from first movers advantage. Due to social
complex relationship between UK banks, the competitors are hard to replicate it.
Organized to capture value: Lloyds Banking Group are positioned in such way that it
can exploit of particular resources (Gereffi and Fernandez-Stark 2016). Lloyds Banking Group is
used of positive brand image provided by other banking sector to improve a documented brand
to one more level.

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STRATEGIC ANALYSIS REPORT
Valuabl
e
Rare Imitate Organized Result
No - - - There is some competitive disadvantage
Yes No - - There is equal competition
Yes Yes No - Short term of the competitive advantage
Yes Yes Yes No Unused competitive advantage
Yes Yes Yes Yes Long term of the competitive advantage
Table 1: VRIO analysis
2.1.2 Value chain analysis of Lloyds Banking Group
The primary activities into the Lloyds Banking Group value chain are:
Inbound logistics: Lloyds Banking Group as associated with receiving and storing along
with handling of the financial services, inventory control, return of the suppliers and
warehousing (Hall, Foxon and Bolton 2016).
Outbound logistics: It is associated with collecting and distributing of the product to the
buyers as delivery, processing and operations.
Sales and marketing: Competition is growing intense into the banking sector and there
are more international players of Lloyds Banking Group. Attracting and keeping of the
customer’s needs of more focus on the marketing. The bank targets of various customer
segments with proper financial plans in addition to services. Brand image is considered as key
significant concern into the banking brands (Dhingra et al. 2016). Apart from entering into the
new market and gaining of new customers, Lloyds Banking Group retains of existing customers.

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STRATEGIC ANALYSIS REPORT
Operations: From the loans to deposits, Lloyds Banking Group provides of various kinds
of financial and banking operations to their customers. From deposits as well as loans to the
credit cards, the bank provides of other operations such as providing of funds to small and big
projects.
Customer service: The bank provides of transactions services to their customers.
Technology makes the process of customer services more efficient and effective. From ATM to
online payments, this form of transactions processes is provided to the customers (Gereffi and
Luo 2015). Another type of customer service is internet based bill payment system.
The supporting activities into the Lloyds Banking Group value chain are:
Infrastructure of the company: From physical communications towards the technology
and also IT, it plays a key significant role into development along with function of the banks.
Because of increase into rivalry, IT infrastructure plays a key significant role into Lloyds
Banking Group.
HRM: Human resources play a key significant role into the banking sector as trust plays
important role into this particular environment.
Development of technology: Technology becomes a competitive source for Lloyds
Banking Group as it helps to bring of better services than their participants. Technology makes
banking efficient which improves the productivity of the bank (Han et al. 2014). The services are
available online and the customers are not required to go for the branches to receive of the
services.

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Infrastructure of the company
HRM
Development of Technology
E-procurement System
Inbound Logistics: Financial stability and transportation infrastructureOutbound Logistics: Real estate, e-commerce and retail chainsSales and Marketing: Acquisition, offering, advertising, branding, sales supportOperations: Deposits, creditsCustomer Service: Transactions, trading, account management
Support Activities
Primary Activities
Margin
STRATEGIC ANALYSIS REPORT
E-procurement system: It includes of procure of raw materials, acquisition of goods,
services and tendering along with supplier relations.
Figure 1: Value chain analysis
(Source: Han et al. 2014, pp- 72)
2.2 External analysis of Lloyds Banking Group
There are various methods which are used to conclude how the outside environment
affects the strategic point of the selected business. There are two external analysis tools which
conclude the overall strategic position of Lloyds Banking Group. The two analysis tools are
PESTLE analysis and Porter’s five force analysis.
2.2.1 PESTLE Analysis of Lloyds Banking Group
Political factors: It plays a key significant role to determine impact of the organization
on long term profitability in the banking sector. Lloyds Banking Group is operated into foreign

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STRATEGIC ANALYSIS REPORT
money center banks is more than dozens of countries. Before entering and investing in the
market, Lloyds analyze the political stability of UK (Lloydsbankinggroup 2016). It also analyzes
the level of corruption and price regulations.
Economic factors: The factors are inflation rate; rate of interest, foreign exchange rate
along with economic cycle determines the demand and combined investment into UK economy.
The economic factors considered are exchange rate and stability into the currency of host country
(Ahammad et al. 2015). The economic risk of UK exits from Europe which provides a
significant impact on Lloyds Banking Group. Based on the worldwide agreement between
Britain as well as EU member states, the possible propositions to put down EU are confirmed by
reject into worth of pound alongside major currencies. For Lloyds Banking Group, Brexit comes
with negative consequences for regulations, capital with impact on client and employee.
Social factors: There is demographic change into the British population affects the
development of Lloyds Banking Group into UK market. Ageing population of UK comes with
the business opportunities as pension age consumers earn and consists of high disposal incomes
(Agwu et al. 2015). Into the Lloyds Banking Group, there is a shift which means drive towards
savings and investment as baseline service is required for pension age customers.
Technological factors: The banking sector reached tipping point when the evolution of
banking is based on digital platform and change into customer behavior. Financial innovations
leverage the technology to enter into the financial market with cost effective services. Lloyds
Banking Group differentiates technology by investigating into fraud prevention, IT security and
cyber risk.

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STRATEGIC ANALYSIS REPORT
Legal factors: Lloyds Banking Group is subject to lawsuit which is brought by Lloyd’s
shareholder action group. The legal factors that the organization considers to enter into the
market are antitrust law into the foreign money center bank, consumer protection and
employment law.
Environmental factors: The transition of low carbon as well as resource efficient future
affects the economy of UK. Considerations towards local environment are quality of air; flood
and natural disasters are the main concerns. Lloyds Banking Group identifies of current trend
into customers and governments demand to reduce of carbon footprint (Ahammad et al. 2015).
The banking group is committed to reduce of carbon footprint by purchasing of renewable
electricity and reduce of paper for the purpose of online statements.
PoliticalfactorBrexitleduncertaintyPressurefrompoliticalregulationsEconomicfactorsLowergrowthofUKeconomySocialfactorssAgeingpopulationofUKTechnologicalfactorsDigitaldisruptionincludesofblockchaintechnologyLegalfactorsLowercarbonfootprintandresourceefficientfutureEnvironmentalfactorsLloydsBankingGrouphas400millonlawsuitwhichisbroughtbyLloydsshareholderactiongroup

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STRATEGIC ANALYSIS REPORT
Figure 2: PESTLE Analysis of Lloyds Banking Group
(Source: Ahammad et al. 2015, pp- 15)
2.2.2 Porter’s five force analysis of Lloyds Banking Group
The five factors of the Lloyds Banking Group are as follows:
Bargaining power of customers: There is higher bargaining power of the consumers
which provides pressure on profitability of Lloyds Banking Group within long run (Buil, Catalan
and Martinez 2016). It is seen that higher is the bargaining power, higher will be the capability to
seek increase into discounts as well as offers.
Threat of new entrants: There is a medium threat of entrants. New entrants into the
“foreign money center banks” brings up innovation and puts pressure on the Lloyds Banking
Group throughout low pricing strategy, reduction of cost and also provides of unique value to the
customers (Warth and Perren 2014). By build up the economics of scale, it results into lowering
the fixed cost per unit.
Bargaining power of suppliers: There is higher bargaining power of the suppliers.
Lloyds Banking Group buys of various raw materials from various suppliers. The suppliers can
able to decrease margins of the bank can earn a unique value into the market (Wheelen and
Hunger 2017). As higher bargaining power can harm the reputation of the organization, therefore
Lloyds Banking Group should focus on improving and retaining of high customer services
(Porter 2016). The bank introduces of new appliances like smart cards for bank services, it
manages to impress the customers if they hike of the prices in order to match with requirements
of suppliers.

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STRATEGIC ANALYSIS REPORT
Threat of substitute products: There is lower threat of the substitute of products, as
Lloyds Banking Group provides services into the banking sector are not diverse. Most of the
banks which threat the services of Lloyds Banking Group are small banks which try to come up
with new system such that they can able to attract of more customers (Morden 2016). It is hard to
realize that Lloyds Banking Group has substitutes like insurance, real estate in addition to
mortgages. Therefore, it is analyzed that Lloyds Banking Group is not suffering from substitute’s
form of competition.
Rivalry among existing customers: There is extreme rivalry among existing players
which will drive down the price as well as reduce the entire profitability of the banking industry.
By building of sustainable differentiation and building of scale so that there will a better
competition with other banking sector of UK (Avlonitis and Indounas 2015). Lloyds Banking
Group should collaborate with the competitors in order to increase the market size.
Bargaining
power of
customers
Threat of new
entrants
Bargaining
power of
suppliers
Threat of
substitute
products
Rivalry among
existing
customers
0
1
2
3
4
5
6
7
8
Porter's five force analysis

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STRATEGIC ANALYSIS REPORT
Figure 3: Porter’s five force analysis
(Source: Avlonitis and Indounas 2015, pp-259)

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STRATEGIC ANALYSIS REPORT
3.0 Key strategic issues emerging from the analysis
From the internal and external analysis, Lloyds Banking Group is restructuring the
system for their bank and strengthening of their legislative rules and regulations to focus on legal
issues. There is high financial crisis into Lloyds Banking Group. The effects of financial crisis
are that there is lack of trust on the banking industry, falling of real income, scrutiny of closer
regulatory and inconsistency of regulatory responses (Peppard and Ward 2016). The organization
also faces of technology challenges such as online as well as app based banking issues which
challenges the customers. The issues left with that the customers are not able to access of their
accounts. There is service issue related to internet banking. The strategic way that Lloyds
Banking Group follows is investment highly into technology for making the life of the customers
more efficient by providing of demand digital banking services online and mobile application
(Pearlson, Saunders and Galletta 2016). Over reliance on the digital banking channels create of
issues in future.
4.0 Conclusion
It is concluded from both external and internal analysis is that Lloyds Banking Group is
able to manage and navigate better than their rivals. A sustainable business model is
characterized by lower operating cost and lower risks help Lloyds to become the second largest
banking group into UK. The performance of bank linked with UK environment leaves vulnerable
to the macro factors like Brexit, a lower interest environment and sluggish economy of UK. by
understanding of Porter’s five force model and value chain analysis, it is understand that the
managers of the organization can shape the forces and customer values in their favor.

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References
Agwu, M.E., Iyoha, F.O., Ikpefan, O.A. and Atuma, O., 2015. Strategic management of
operational risks in financial institutions. European Journal of Business, Economics and
Accountancy, 3(1), pp.1-20.
Ahammad, M.F., Leone, V., Tarba, S.Y. and Arslan, A., 2015, September. Factors influenceing
the share of ownership sought in cross-border acquisitions-UK perspectives. EuroMed Research
Business Institute.
Avlonitis, G.J. and Indounas, K., 2015. Price management in financial services. The Routledge
Companion to Financial Services Marketing. New York, pp.254-270.
Buil, I., Catalán, S. and Martínez, E., 2016. The importance of corporate brand identity in
business management: An application to the UK banking sector. BRQ Business Research
Quarterly, 19(1), pp.3-12.
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on
foreign investment in the UK. BREXIT 2016, p.24.
Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
Gereffi, G. and Luo, X., 2015. Risks and opportunities of participation in global value chains.
Hall, S., Foxon, T.J. and Bolton, R., 2016. Financing the civic energy sector: How financial
institutions affect ownership models in Germany and the United Kingdom. Energy Research &
Social Science, 12, pp.5-15.

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Han, L., Benson, A., Chen, J.J. and Zhang, S., 2014. The use and impacts of bank support on UK
small and medium-sized enterprises. International Small Business Journal, 32(1), pp.61-80.
Lloydsbankinggroup 2016. Our Group - Lloyds Banking Group plc. [online]
Lloydsbankinggroup.com. Available at: http://www.lloydsbankinggroup.com/our-group/
[Accessed 5 Jan. 2018].
Morden, T., 2016. Principles of strategic management. Routledge.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information
Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Porter, T., 2016. States, markets and regimes in global finance. Springer.
Warth, R. and Perren, A., 2014. Construction of a business model to assure financial
sustainability of biobanks. Biopreservation and biobanking, 12(6), pp.389-394.
Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.