Strategic Management Plan for Starling Bank

This report examines the analysis of internal and external factors affecting the UK based bank named Starling Bank, by devising the Strategic Management Plan.

Management
Plan

Table of Contents
INTRODUCTION...........................................................................................................................3
PROJECT ONE...............................................................................................................................3
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..........................................................3
P2: Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks .........................................................................................................6
P3: Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.......................................................................................................7
Bargaining Power of Suppliers...............................................................................................8
Threat of New Entrants .........................................................................................................8
PROJECT TWO...............................................................................................................................9
P4: Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation..........................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management is used to manage the resources of an organisation by eliminating
the wastage in order to achieve the organisation goals effectively and efficiently. It helps the
organisation to make maximum usage of resources. In simple words, the management formulates
the strategies which outlines the organisation's resources by setting up the goals, evaluating
policies according to the changing environment and competitive market in order to achieve the
desired goals. The strategic management is the the medium to meet the objectives of the
organisation effectively (Parayitam and Papenhausen, 2018). Accordingly, the strategic
management plan are devised which helps in prioritizing tasks, using resources effectively and
ensuring that the stakeholder are contributing their best to achieve the organisational goals. Such
plan help to attain the mission and vision of the company. The report examines the analysis of
internal and external factors affecting the UK based bank named Starling Bank, by devising the
Strategic Management Plan.
PROJECT ONE
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies
PESTLE ANALYSIS
PESTLE analysis is used to examine the external factors affecting the organisation in
driving its desired goals. The key factors which affect the organisation are Political, Economic,
Social, Technology, Legal and Ecological/Environmental. This analysis helps the organisation to
frame the strategic plan to cope with the changing environmental factors. Here environmental
analysis is conducted to identify the factors affecting the working of the Starling Bank. The
outcomes of the analysis helps to gain insight view of the company and allows them to make an
appropriate decision (West, 2018). Further, the Starling Bank is required to be updated with
these changing factors in order to attain growth and success. Thus, these forces determines the
strategies and actions of the company towards its desired goals. Thus, the PESTLE analysis of
the bank are as follows:- Political Factors: The bank was severely affected when England was no more a part of
European Union. As this Brexit effect caused a negative impact on the regulation of
banks.

 Economic Factors: The Brexit effect caused a slow down in the economy as the capital
of bank was adversely affected. Inflation caused during pandemic made stakeholders
think twice before providing funds ton the bank. Social Factors: During the pandemic situation, customer valued the digital space and
thus, the bank adopted the digital use of financial services accompanied by flexibility in
serving. This also caused a trust issue factor in consumers (MacKian and Simons, 2021). Technology Factors: For Hi tech customer Starling Bank offered its services on mobile
app with increased cyber security. Thus, focus on fulfilling the demographic needs of the
customers. Legal Factors: Banks are opened in accordance with the regulations in UK accompanied
by laws such as privacy law, cyber law etc. Some regulations are made with the changing
environment. The delay in change may affect the goodwill of the company in the market.
 Environmental Factors: In the pace of technology the usage of paper was reduced by the
bank in order to attain sustainability in the competitive market .
SWOT ANALYSIS
Strengths
Some of the strengths are:-
 The premium brand image created by
several awards and achievements
received by the bank.
 One of the strength is its pioneer
innovation in the tourism industry.
Thus, creates a monopoly in the market.
 The bank has hiked the market by
opening large number of current
accounts and achieved its goals of
monthly transactions effectively.
 The contribution towards infrastructure
development as it acquires large
amount of market place.
Weakness
Negative factors of the bank are:-
 The services provided by the banks are
limited.
 The main demerit of this bank is its
virtual presence, as consumers faces
difficulty because of its no physical
presence.
 Long term growth of the company can
get affect as the bank makes minimal
usage of its resources (Cerlyawati,
Anggoro and Zainuri, 2017).
Opportunities Threats

These are:-
 The bank shall fulfil new trends in the
customer behaviour and meet the new
demands of the customer by portraying
innovative features. In the pandemic situation, the economy
has undergone many breakthroughs
thus, the bank must focus more on
digital sphere (Nurmi and Niemelä,
2018)
The threats are:-
 There are many other rivalry
organisation which can threaten the
market position of the Starling bank.
 The toughest competition by other
banks can be a threat. This can
influence the consumer behaviour
towards other banks offering better
options.
STAKEHOLDER ANALYSIS
The stakeholders are generally the investors, employees, suppliers etc. who has a great
influence towards the working of an organisation. These stakeholders can be internal, those who
has direct interest in the organisation as well as external, who has indirect influence in the
organisation. Thus, stakeholder analysis is done in order to prioritize the needs and expectations
of the stakeholders according to their interest in the company (Sperry and Jetter, 2019).
The company's stakeholders are categorized in terms of their influence, interest, and levels of
participation accordingly :-
 High Power, High Interest: These are the important stakeholders are to be prioritized as
that influence majorly in the organisation.
 High Power, Low Interest: In respect to their interest, these are required to be kept
satisfied and interest can be withdrawn if over communicated.
 Low Power, High Interest: These people are required to be informed adequately in
respect of major decisions. These play a vital role in the details of the project.
 Low Power, Low Interest: These people are required to be informed periodically, but
will less information. Local Bodies, Public Administrations, Regulatory Bodies, Industry
Associations And Non-Governmental Organisations are the external stakeholder.

P2: Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
VRIO
It is a tool used to formulate the strategies to make a maximum utilisation of resources
and eliminates connected risk in order to achieve the organisational goals accompanied by
competitive advantage. Further this tool is formed after the vision is devised but before initiating
strategic planning (Collins, 2018). Starling bank make use of this tool in order to analysis its
resources and capabilities along with the competitive advantage gained. VRIO is an abbreviation
of :- Valuable: It means the resources which adds value or contributes its best to achieve the
desired goals. The valuable resources of bank are its human resource and Data. Its staff
employed are considered valuable because the formulate strategies and further apply in
order to gain competitive advantage. On the other hand, data is also considered as most
valuable resource in this pace of technology. The bank may increase its capabilities by
making a proper use of its data. Rare: It includes those resources which are rare and provide an effective competitive
advantage. The starling bank hit the market by opening numerous bank accounts. Further
upgraded its debit card to World Debit MasterCard. Also it was the first UK bank which
provide provisions in respect of Apple Pay. Imitable: As the starling bank is considered as secured bank among other leading banks.
It follows the best practice to secure the customers data. Further the bank invest a great
amount towards cyber security and in preventing fraud, with an aim to protect the
customers.
 Organisation: The bank has organised management and structure following the values
and ethics in order to gain competitive resources. Banking operations are conducted
smoothly as the Starling bank has created the proportionate amount of debt and equity in
order to overcome the financial loss. Further the bank offers good interest rate, easy
deposits of cash and cheques along with updated features.
MCKINSEY 7S MODEL
The model is devised to identify the internal components which are required to be
updated according to the changing environment in order to be successful. The Starling bank is

required to adapt model in order to determine its performance and effective strategy. The model
has differentiated components into hard and soft (Wambui, 2018).
Hard ones are as follows:-
 Strategy: In order to build a prestige brand image the Starling bank embraced the
marketing strategy. Bank portrayed its story on television in order to attract new
customers. This strategy was successful in gaining competitive advantage in the market.
 Structure: The organisational structure followed by the Starling Bank is Flat corporate
structure which provides a short chain of command and further no hindrances during
decision-making process. Further it believe in eliminating middle management.
 System: As Starling Bank is the digital based challenger bank and thus, contributes
digitally in the ace of technology. Thus, provides an experience to perform banking
activities on fingertips.
Soft ones are:
 Shared Values: The bank provides the values which they are committed to, such are
providing services impartially, without any discrimination, ensuring equity. Also
provides local culture at its workplace.
 Style: The Starling bank follows the participative leadership styles in which all the staff
member participate in the decision making process. Thus, encourages the morale of the
staff in order to contribute their best.
 Staff: The Starling Bank has 77e employees who are highly skilled in their field. Further
they work hard in order to deliver best results to the clients. Further the bank offers
rewards to their employees in order to motivate them to achieve desired goals. Skills: The Starling Bank formulates the strategies to develop the skills and knowledge
of the work force. As skilled workforce helps the bank to achieve its target on time.
Further organises the program to provide essential skills to the youth employees.
P3: Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation
PORTER'S FIVE FORCES
This tool is used to identify the competitors in the market in order to attain sustainability
in the competitive market. Accordingly the organisation formulates the strategies to prioritize the
completion in the marketplace (Anwar and Hasnu, 2017) . It ensures the organisation in respect

of their profitability and also help to compare with the other rivalry organisations. The Starling
Bank's five forces analysis helps to know whether their market position and its strength are
adequate or not. The following are as follows:-
Competitive Rivalry
The first of five forces analysis the availability of competitors with their ability to
intensify in the competitive market. The Starling Bank has the increasing competition form five
big banks of UK. Thus, such competition is a threat as larger the competitors lower the power in
the hands of bank. The bank experiences tough competition because of its limited services.
Bargaining Power of Buyers
It is important to examine the power of the customers as being the stakeholder they play
vital role in the organisation. The bank is required to satisfy the customers as they possess he
power to switch to other banks. The Starling Bank somehow satisfied the customers by providing
online services especially in the pandemic situation. Further being digital bank, it is trusted and
creates loyalty among consumers by securing their data.
Bargaining Power of Suppliers
This force focuses on analysing the power of suppliers in order to increase the
profitability of the bank. The power of the bank are high as these are the depositors, who
generally invest their money, loans from other financial institutions, free risk instruments such as
government bonds etc. The factors which generally affects are the interest rate, the Starling bank
thus offers good interest rates on account nor it charges extra fees (Papazov and Mihaylova,
2019).
Threat of Substitutes
According to research it is human nature to try new and alternative products. The Starling Bank
has a threat form its rivalry bank and further high competitive environment. The consumer can
switch to other bank offering more benefits at same interest rate. Also the competitors sometimes
becomes successful in attracting consumers with its upgraded strategies. Generally the barriers in
respect of exit strategy are high.
Threat of New Entrants
Starling bank is one of the leading banks because its threats of new entrants are low due
to the strict regulation norms of the UK. Further the banks provides high cyber security and

prevention of fraud which other fails to follow. Also pandemic situation caused mergers and
acquisitions. Based on analysis such threat is a minor concern in this case.
PROJECT TWO
P4: Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation
PORTERS GENERIC STRATEGIES
Porter Generic strategies are formulated to gain competitive advantage in order to sustain
in the marketplace. It helps to determine whether the market position of the organisation is above
or below the average. Starling Bank is highly focused in providing services effectively and
efficiently (Baraza and Arasa, 2017). Thus, by using the advantages as devised under Porter
Generic strategy, bank can effectively segment the market and survive in the competitive market.
The generic strategies for achieving above the average performance in the market are as
follows:- Cost Leadership: This strategy determine the targeted market where the demand of the
customers are high and accordingly organisation offer product at low price. Thus,
Starling bank offers decent perk and interest on current account. Further the bank charges
no monthly fee for its services plus no charges are applied while travelling abroad. Also
in 2020 the bank announced not to charge a fee or interest if an individual enter
unauthorised overdraft mistakenly. The application of this strategy results into high
performance as compared to its competitors in the market. Differentiation: This strategy determine the targeted market where the demand of the
customers are high and accordingly offer them the products or services of unique
features, i.e. offers account for 16-17 years old in order to encourage them to manage
their money. The bank allows to digitally connect with Apple Pay and also the mobile
app provides an feature of optional overdraft which can be turned off or on. Further the
app gives an insight view of the expenses and helps to build budget goals in order to
promote savings of the customers. Thus, unique feature or service is required to be
launched in an effective market so that the firm can maintain its sustainability.
 Focus: This strategy is further bifurcated into cost focus and differentiation focus. The
cost strategy focus on attaining competitive advantage while the latter focus on providing

advantage through its unique features. The level of competencies is required to be noted
before adapting strategy. The loyalty and trust among the consumers are formed by
providing unique features or services. The unique features of Starling bank as discussed
differentiate it with the other bank alternatives (Eppel and Rhodes, 2020). For example
the rival bank of the Starling also offers similar features like the users of alternative bank
which is Monzo, pay no amount for overseas withdrawals via ATM.
Thus, under the Porters Generic Strategies it is recommended to opt cost leadership
strategy for Starling Bank as it will provide a great help to gain competitive advantage in the
market.
BOWMAN's STRATEGIC CLOCK
This strategy tool helps to determines the options for strategies in respect of positioning
of product in order to gain competitive advantage in the marketplace. This strategy provides
options regarding the position of the product through two dimensions i.e. price and perceived
value (Meadows and O'Brien, 2020) .
Low Price And Low Value Added
This is considered as a bargaining strategy which suggests that only way to sustain in the
competitive market is to be cheap so that no one overtake the business. This position is not so
competitive.
Low Price
The strategy focus on the cost for its growth and success, such competition are of intense
nature causing price wars in the market. The bank offers decent interest on the current account as
compared to other along with no monthly charges.
Hybrid
The Starling bank uses its innovative ideas like firm can use the bank for all the payments
and thus, causing reduction in time and cost. Such idea persuade the customers to eliminate the
complexity of payments and managing other accounts. Further the bank make use of post office
branches to make cash deposits and withdrawals.
Differentiation
The strategy focus on product differentiation by offering unique features to the
customers. This strategy allows to form the brand image and loyalty among the customers. For

example, the bank allows not to charge fee if mistakenly used the unauthorised overdraft with an
optional turn on or off feature in the app.
Focused Differentiation
This strategy aims to position the product by targeting the segmented market in order to
achieve high premium prices. If applied strategy correctly, can lead the bank to form brand
image and sustain for long term in the market (Rotondo, Corsi and Giovanelli, 2019).
Risk High Margins
For long term risk positioning strategy is effective if the consumers continue to acquire
services without extra benefits provided by the bank, achieving high profits unless consumer
switch to other alternatives offering extra benefits at low price. But such will not be effective in
short term, as offering services at premium prices are not justified to sustain in the competitive
market.
Monopoly Pricing
Monopoly does not provide any alternatives to the customers, they have the choice either
to buy or not. The main advantage of monopoly is can set whatever price they want to keep.
Regulations in respect of setting price under monopoly is restricted in some countries. The
Starling bank app innovates euro account which enables its customers to switch between sterling
or pound and euros instantly and allows to make transfers and payments across Europe via this
app.
Loss of Market Share
This position is vulnerable to sustain in the competitive market (Çil and Kizilay, 2020).
Setting premium prices accompanied by low value will not help to win the customers. The
Starling Bank in its post stated the pre tax loss amid of corona virus. Further the bank stated that
its lending activity was increased on its participation in the UK government's corona virus
financing schemes. The government role led the bank to boost in its annual revenue.
Thus, in this tool the Starling Bank is required to opt differentiation strategy in order to
achieve growth and success in the competitive market. Such may help the bank to sustain in this
pandemic situation.

CONCLUSION
From the above report it is concluded that strategic management accompanied by its
theories and concepts plays vital role in the organisation to gain sustainability in the competitive
market. Accordingly, the strategies are opted to acquire competitive advantage in the
marketplace. As these strategies help to identify the environmental factors affecting the working
of an organisation and devises effective measures to overcome them in order to achieve the
organisation goals effectively and efficiently. Thu, the report concludes the theories and concepts
which are required to be adopted by the Starling Bank in order to achieve growth and success for
long term.

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