NatWest Bank Business Strategy: Macro Environment and Analysis

This report provides a comprehensive business strategy analysis of NatWest Bank. It begins with an executive summary and an introduction to the company, which operates in the financial services sector. The report delves into the impact of the macro-environment on the organization using PESTLE analysis, evaluating political, economic, social, technological, legal, and environmental factors. It also explores the internal environment and capabilities through VRIO analysis, assessing valuable, rare, inimitable, and organized resources. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive forces within the market. The report then examines strategic planning using various theories, concepts, and models, offering strategic recommendations. The conclusion summarizes the key findings, and the report is supported by a list of references.

BUSINESS STRATEGY OF
NATWEST BANK

EXECUTIVE SUMMARY
Business strategy is defined as formative set of competitive actions as well as moves with
the help of which organisation can effectively able to attract customers while strengthening their
performance in marketplace. Present report has been done on NetWest. Entity conduct their
functioning in financial service sector. This report will discussion macro environment impact
upon organisational functioning. Along with this, Porter's five force model is being covered in
this project as to analyse competative forces within marketplace. In addition to this, models,
theories and various concepts in being discussed in this report as to frame strategic plan. It is
recommended to organisation to effectively analyse factors that are prevailing in business
environment and identify strategies of competitors as to ensure more successful growth.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..........................................................1
M1 Critically analysing macro-environment to share strategic decisions..............................4
M2 Critical analysis of internal environment.........................................................................7
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sectors.....................................................................................................................................7
M3 Strategies enhancing competitive advantage and market position..................................9
P4 A range of theories, concepts and models, interpret and devise strategic planning for a
given organisation..................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is defined as a long term plan of action that are mainly configured as to
fulfil organisational goals as well objectives in a well defined manner. Business strategy allow an
entity to strengthen their positioning and performance in a particular industrial sector. It is a
master plan that are being implemented by organisation management as to secure competitive
positioning in marketplace (Brewster, 2017). In simple words, business strategy states as a
combination of decisions that allows managers to effectively convert organisational vision into
actual strategy. Present report has been conducted on, NetWest. Company offer their services in
Financial services sector and was founded in the year 1968. Main products of company are
Insurance and Banking. In this report formative discussions has been made on, PESTLE and
SWOT analysis as to duly conduct resources and capabilities evaluation. In addition to this,
report cover Porter's Five Force analysis as to have evaluate competitive environment of entity.
Lastly, report include available strategic options for entity with the assistance of Ansoff matrix
and strategic management plan.
LO 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies
It has been evaluated that primary objectives and goals of an entity direct them towards
accomplishment of goals in well defined manner (Cavusgil and et. al., 2014). NetWest operate
their functioning with specific set of objectives that entity can obtain with the formative
assistance of plan of actions. As to develop plan organisation is required to select suitable
strategies and implement effective one into plan and ensure success. For selecting strategies
entity is required to undertake external environment analysis. This will allow managers to take
advantage of strategies as to overcome negative impact of factors that are prevailing in
environment and may impact upon business in number of ways. In context with, NetWest,
manager take advantage of PESTLE analysis as to analyse macro-environment impact upon
business functioning:
Mission- NetWest conduct their operation by having a mission to offer efficient financial
services to customers.
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Vision- Company is having to emerge out as leading financial corporation within United
Kingdom provinces.
Objectives- To increase annual sales and revenue generation of company by 15% and
enhance consumer interaction strategies.
It is essential for an organisation to properly conduct environment analysis and have
proper understanding of factors that are prevailing in environment as to determine the impact of
factors on operations of business (Chen and Jermias, 2014). As to undertake this evaluation
PESTLE analysis is being done my management of entity.
Political factor:
This factor include elements related to labour law, minimum - wage laws, political
stability, tax policy, tariffs, environmental law and trade restrictions (Klettner, Clarke and
Boersma, 2014). It is essential for an organisation to effectively evaluate all these factors and
proper understanding of all of them in order to undertake measures to overcome their negative
impact. Thus, as to reduce negative impact of this company is required to follow all the political
obligations within their organisational structure that falls under country banking system. With
the help of this, organisation can stimulate their growth in best effective manner.
Positive impact: UK is having stable political system that facilitate NetWest to gain
effective growth opportunities.
Negative impact: BREXIT may lead entity towards affecting their long term
sustainability and positioning in marketplace by reducing overall sales.
Economic Factors:
Economic factors mainly include elements that are related to economic growth index,
foreign exchange rate, country GDP, interest rate and governmental activity and laws (Goffee, R.
and Scase, R., 2015). These factor impact upon organisational functioning in number of ways.
Thus, higher Return on Investment influence attention of foreign investors that offer NetWest an
opportunity to expand their operations in best effective manner.
Positive impact: With the help of strong economic conditions of UK NetWest can
effectively able to perform their operations with subsequent growth.
Negative impact: BREXIT somehow affect company functioning in number of ways.
However, this effectively facilitate nurturing and growth of many financial institutions.
Social Factors:
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This factor involves those elements that are interlinked with social values (Klettner,
Clarke and Boersma, 2014). In this components like employment level, age distribution,
religious beliefs, income statistics, growth rate are included. All the factors have significant
impact over activities of organisation. In order to satisfy beliefs and perspectives of society
organisation is required to have proper understanding of factors that are related to community
and individuals (Peng, 2017). Thus, NetWest is required to conduct continuous research and
effectively analyse each and every change and modification in social transformation in order to
ensure their functioning in a sustainable manner.
Positive impact: By understanding society beliefs and value company can effectively able
to increase their brand image among community.
Negative impact: Negligence of social perceptions, values and sentiments may harm
company by decreasing its overall profitability index.
Technological Factors:
Technology is dynamically evolving that makes important for organisations to take
advantage of every update in technological aspect as to ensure high competitiveness in
marketplace (Spender, 2014). Thus, it become essential for NetWest to adopt every update in
innovation and technology as to ensure more competitive advancements along with significant
sustainable growth.
Positive impact: UK is technologically advanced nation that stimulate entities to increase
their efficiency and growth.
Negative impact: In order to adopt dynamic advanced and innovation in technology
NetWest is required to invest huge amount that will affect their budget.
Legal Factors:
This factor include impending and current legislation that may impact upon organisation
in a particular industry (Kiptum, 2019). In this it is essential for an organisation to determine the
impact of national laws upon organisational functioning. There are certain laws and legislation
that has been framed by United Kingdom government and are essential for banking entities to
adopt. Negligence of this may affect NetWest growth. Thus, organisation is required to
undertake use of legislation and laws within their organisational structure as to conduct
operations in a well defined manner.
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Positive impact: By adopting all essential legal laws and measures NetWest can
effectively able to conduct their functioning without any legal hindrances.
Negative impact: Negligence of governmental laws and regulations lead entity towards
hefty legal penalties.
Environmental Factors:
It has been identified that, nowadays those organisations who are focused towards
environment get effective support from government as well as individuals from community
(Wheelen and et. al., 2017). In relation with this, NetWest is required to ensure that any of their
organisational functions does not affect environment. As it lead entity to decrease their growth
and positioning.
Positive impact: By conducting activities such as social awareness campaigns bank can
stimulate their growth in banking sector in a sustainable way.
Negative impact: Negligence of environmental concern affect NetWest by hampering
their brand positioning in marketplace.
M1 Critically analysing macro-environment to share strategic decisions
After analysing Net-West with the help of PESTLE analysis, it is clear that there exist
factors from its macro-environment which have a negative effect on bank (Jones and Jones,
2019). Specific analysis states that BREXIT had brought along some changes in political and
economical factors which are duly affecting its functioning. Along with it there are many other
factors such as dynamically changing consumer perception (social), lacking to cope up with new
techniques (technological), legislation infringement (legal) etc. which effect performance of
NetWest. Specific steps are required to manage such situations NetWest needs to formulate
strategies very thoughtfully and need to make sure that all the laws and legislations are followed
by organisation. With the help of company can effectively able to increase high profitability and
productvity in best effective manner.
P2 Discuss the internal environment and capabilities within organisational contexts
Strategic capabilities are defined as an leader ability with the help of which an
organisation ensure long term sustainable growth within marketplace. Leaders are required to
take advantage of strategies as increase organisational profitability and productivity in best
effective manner. It has been signified that by undertaking use of proper planning entity can
effectively able to fulfil business objectives in well defined manner. NetWest operate their
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business operations within banking segment. Company provide effective services to their
customers with an aim to increase their market holding captivity. Company perform their
operations with an aim to significantly handle customers issues, payment and solve claims in
best effective manner. This has been identified that as to ensure higher success respective bank is
required to undertake effective analysis of their internal resources in a well defined and effective
manner. In this entity by taking use of VRIO analysis can effectively able to ensure competitive
advancements. In this there are different types of factors that are involved with this, tat are rare,
organisation, inimitable and valuable. VRIO analysis in context with NetWest is being defined
below:
Resources
V
Valuable
R
Rare
I
Inimitable
O
Organized
Financial
resources
Yes Yes Yes Yes
Patent Yes Yes Yes No
Skilled workforce Yes Yes No No
Food products Yes No No No
Valuable: This has been identified that, NetWest financial resources are highly valuable.
This significantly provide organisation with an opportunity to increase their funds. It has been
evaluated that financial services to products are highly values that differentiate them from all
other competitors available within marketplace. Along with this, this has been determined that
employees of company are potential, skillfull and talented as in order to increase their potential
company provide their employees within different types of training and developing measures.
Along with this, this has been evaluated that workforce within entity is talented, potential and
loyal that significantly increase organisation to gain high competitive advancements. Further this
has been evaluated that as to choose right person to right place and further appoint them task as
per according to their skills and talent organisation is required to analyse competencies of
workers on a regular manner. In addition to this, it is essential for entity to provide rewards and
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benefits to their employees on continuous basis as to increase overall productivity level of
employees in best effective manner.
Rare: The managers of Net-west have found out that patents make a business different from its
competitors and are rare resources. Since it is difficult to copy products by rivals it gives bank
with an opportunity to grow their business (Wang and Duncan, 2019). It has an overall effect
where sales volume increase which results in increase of profitability and increase in profitability
leads to increase in-overall performance of business. Employees are also trained and motivated
in order to put their best efforts. VRIO states that financial resources of firm are also rare as only
a few of such entities have strong financial resources because these resources are actually drawn-
out profits.
Imitable: All the resources which are acquired by profit reserves of the business in
previous year. Patent is one of them for Netwest as it is not legally allowed to copy a patented
product. Also it becomes necessary for businesses to make sure that all their resources have
optimum utilisation because they are really rare and costly as well. This makes it hard for
competitors to attain these overly expensive resources and invest in research and development.
Organisation: Alliance Governance is distribution network of NetWest which have a
very large network in order to get access to customers with huge net worth to invest. They make
sure that all their products and services are available every place they have their outlets so that
customer never miss on something. This also makes the companies advance competitively.
Through this we can learn that NetWest is utilising all of its resources. All resources are allotted
at right places. This makes company open for any upcoming opportunities and they are also
ready for any threats coming in their way.
SWOT analysis in relation with NetWest is mentioned below:
SWOT Weakness
 NetWest provide periodical training as
well as development secessions to their
workforce as to increase skills and
potential for employees (Minshall and
Featherston, 2019). Bank consider their
employees as an important resources
thus, they provide them attractive
 There is lack of strong financial
planning prevails within organisational
structure of NetWest.
 NetWest is having low current assets as
compared to their liabilities which act
as an major weakness for entity.
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benefits in overall industry.
 NetWest provide customers with large
base of asset that offer better solvency
Opportunities Threats
 With the help of social media tool
NetWest can make significant increase
in opportunity for organisation that
further aid them to gain more
competitive advancements.
 By taking assistance of opportunity of
expansion bank can serve large base of
customers that simultaneously lead
them towards more sustainable growth
prospectives.
 Major threat that will impact upon
functioning of NetWest is political
instability due to BREXIT.
 Bank is facing threat of large base of
competitors within marketplace that
will lower down overall profitability of
entity.
M2 Critical analysis of internal environment
There are advantages as well as shortcomings provided by internal environment of
NetWest. Employees working in an organisation are considered as important resource to
company. It can also be analysed that organisation is lacking in strategy development. They need
to take proper use of marketing opportunities form specific marketing strategies and then
increase overall selling of the organisation. Also it has been analysed that the competition in
banking sector is very tough. Presence of organisations like Barclays and HSBC makes it
difficult to deal with competition.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sectors
There are number of factors that are covered in Porter's Five Forces that allow an
organisation to evaluate factors of external environment and frame strategies to overcome them.
In addition to this, this has been determined that organisation is required to effectively analyse all
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the factors in order to ensure strong strategic edge while ensuring maximum profitability. In
relation with NetWest, Porter's Five Forces evaluation is being mentioned below:
Threat of new entrants:
It has been identified that within financial sector threat of new entrant is basically low. As
in order to make entry into financial sector, organisation require huge amount of funds to set
their market positioning. In addition to this, it has been evaluated that there are various laws that
are being imposed upon financial institutions that are required to be abide by entities. By
undertaking advantage of this situation NetWest can effectively able to increase their
profitability and sales.
Threat of substitutes:
In context with the banking segment, it has been identified that threat of substitutes is
high. As there is strong competition within marketplace due to small and new financial banks as
well as institutions. In addition to this, services that are being offered by these institutions satisfy
customers needs and demand. Thus, it becomes important for NetWest to undertake use of
innovative tool related to financial services as to satisfy customers in best effective manner and
further attract them towards offerings of entity in a well defined manner.
Bargaining power of customers:
This has been evaluated that within banking sector customers bargaining power is low.
As many banks does not afford mas rejection of depositors. This makes customers to shift their
tend towards strong as well as established banking units. NetWest can undertake advantage of
this opportunity and can increase their growth prospectives. In this, bank by offerings their
customers with attractive benefits as well as offers can add additional accounts. This will lead
them towards ensuring position in marketplace. It has been identified that it is important for bank
to satisfy their customers with troublesome services as to ensure more competitive advancements
as per compared to their competitors.
Bargaining power of suppliers:
Within banking industrial segment there is low bargaining power of suppliers as they
supply element at low level. With the help of this NetWest can effectively able to gain high base
of profitability and can further make expansion of their organisational operations in a best
effective manner.
Competitive rivalry:
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