Strategic Analysis of the Royal Bank of Scotland: A Business Report

This report provides a detailed analysis of the Royal Bank of Scotland's (RBS) business strategy, focusing on its strategic direction, evaluation, and recommendations. It begins with an executive summary and an introduction to business strategy, defining the key processes involved in formulating, implementing, and evaluating decisions to achieve long-term goals. The report examines RBS's background, including its history, subsidiaries, and key personnel. It then delves into RBS's strategic direction, highlighting its customer-oriented approach and its aim to become the most trusted bank in the UK. The report discusses the importance of setting objectives, examining the company's environment, setting targets, and analyzing performance. It explores the application of the Ansoff and BCG matrices for strategic planning, including market penetration, market development, product development, and diversification strategies. The report also evaluates the organization's strategy, considering factors such as market share and financial performance, and concludes with recommendations for future strategic initiatives, including focusing on customer service and adapting to market changes.

Business strategy – Royal bank
of Scotland

Executive summary
Business strategy is the process in which include organisational mission, vision,
objectives, policies, plan which are designed to achieve its goals and targets. It helps in
allocating resources in effective manner for particular projects and programs. Strategic
management is high level of managerial activity that are typically planned, guided by top level
management such as Chief executive officer, board of director and implemented by senior
executives. This report is based on royal bank of Scotland which is one of the retail banking
subsidiaries of The Royal Bank of Scotland Group plc, that together with NatWest and Ulster
Bank. It has around 700 branches throughout England and Wales. Its headquartered in
Edinburgh, Scotland, UK. This company deals in finance and insurance sector as well as
consumer and corporate banking. In this regards, RBS should adopt best strategies for competing
with competitors and reduce interest rates for attracting more customers towards banking
services.
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Table of Contents
Executive summary .........................................................................................................................1
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Background.................................................................................................................................3
Strategic direction of Royal bank of Scotland............................................................................4
Evaluation of organisation's strategy..........................................................................................8
Recommendations.......................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business strategy is defined as the management process which involves several processes
such as formulating, implementing and evaluating many decisions that will enable an
organisation to obtain its long term goals and objectives. Generally, top management takes
decisions regarding company's mission, vision, planning and policies in terms of programs and
projects for achieving these objectives. Royal Bank of Scotland is a retail banking subsidiary and
its headquartering is in Edinburgh, Scotland, UK (Astrachan, 2010). It was found in the year
1727 that deals in finance and insurance sector. There are around 92400 employees working and
it has approx. 700 branches throughout England. In this report, marketing strategies of Royal
bank of Scotland defined such as planning, principles and processes that has been used by RBS
to develop its marketing strategies. About recent data it has been suggested that bank should plan
to sell the division and focus on initiative to boost competition within business banking in UK.
This assignment defines about strategic directions and evaluation of RDS as well as it will help
in analysing strategic directions by using various methods and in evaluating the organisation's
strategy.
TASK
Background
Royal bank of Scotland group plc is a British banking and insurance holding company
which is situated in Edinburgh, Scotland. It operates variety of brands such as offering personal,
business, private, insurance banking and corporate finance through its various offices. This group
issues banknotes and it is the only bank in the UK to still print euro1 notes. It owned Citizen
Financial Group which is the 13th largest bank in US. Before the general financial crises, RBS
was very largest bank in the world. Due to a slumping share price and major loss of confidence,
bank fell in the ranking, although it received significant support from the UK government which
holds and manage approx (Bharadwaj and Venkatraman, 2013). 73% stake through UK financial
investments. Through the recent data, company's generated revenue is around euro12.590 billion
and number of employees are approx. 77900. Its subsidiary companies or banks are NatWest,
Ulster bank, Isle of man bank, Adam and company as well as many more. RBS key people are
Sir Howard Davies and Ross Mc Ewan. There are several products of RBS such as finance,
insurance, consumer, corporate, investment, private banking, mortgage and credit cards etc. It is
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a part of UK big four that are largest UK-based banking group including HSBC, Lloyds and
Barclays.
Strategic direction of Royal bank of Scotland
RBS believes in making or creating trust among customers as it will be smaller, simpler
and smarter which focused on UK banks that put the needs of its customers at its core. This
company is customer oriented and they build the relationship among customers. Company wants
more trust and faith of customers for improving its performance and expanding business at
various places. RBS makes strategies for being number one bank for client service and most
trusted bank in the UK (Burlton, 2010). Strategic plan is formulated by the organisation’s
management for obtaining long or short term goals and objectives. They keep in mind external
and internal environment which can affect the business activities. Ansoff and BCG matrix help
in analysing the organisation's strategic directions. There are some factors which must be
considered by the Royal bank of Scotland for formulating strategic plan.
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Illustration 1: Royal Bank of Scotland
source: Royal Bank of Scotland 2018

Setting the objectives: Main aim RBS is to build trust and capture the global market as
well as increase profit margin of company by enhancing its sales. So, for developing the plan,
vision must be clear for its worth.
Examine the company's environment: For every organisation, it is very important to
examine the company's internal as well as external environment. In this, firm identifies about its
competitors, customer’s preferences or choices, effects of any fear and risks, changes in the
technologies, employees and their desires, etc. that support in making decisions regarding
organisation and take actions plan.
Setting targets: Strategies are generally made after setting goals and targets as what
company wants to achieve in future and many questions. RBS bank's targets is to be on the
number one trusted bank among other competitors and capture the market of UK, US, China and
East Asia because it has spread its business all over the world majorly in the Europe (Campbell
and Edgar, 2011). So, Royal Bank of Scotland has to improve its product's quality and make it
attractive for customers such as insurance policies, finance and banking rates as it is offering and
focusing on keeping their customers attached with them for the long term period as well as create
healthy relations among clients by building strong faith.
Planning as per different departments: There are different departments and their sub
units in the company so each one play important role and participate in making decisions for
achieving set goals and objectives as well as doing for the company. RBS always work with its
all departments such as administrations, marketing, human resource, legal, finance, compliance
etc. they all will contributes in company's growth and whole planning will be considered as a
successful.
Analysis of performance: RBS should analysis its past and presents performance and
then compare both that helps in proper planning regarding future growth, achieve goals and
targets, gaining customer's trust and many decisions for an organisation development (Cinquini
and Tenucci, 2010). Generally, plans made tom remove the lacking aspects so that can be create
barriers to the company so it should be removed and will not be a part of a future strategy.
Choosing the strategy:
strategies can be choose in effectively after considering the strengths, weaknesses,
objectives of an organisation by its own as well as first RBS has to identify or analysis SWOT
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for making or choosing good strategy for the further processing that may be expected as a
successful strategy that helps to become world's largest bank and remove financial crises so
Royal bank of Scotland follows Ansoff's matrix for their strategy planning such as:
Market penetrations: It is the most important strategic tools that organisation tries to
grow by using its existing products and services in the markets. RBS tries to increase its market
share in present scenario and it can be achieved by offering more products to the customers as
well as find new customers within existing markets (Klettner and Clarke, 2014). In other words,
company generally increase its sales among competitors by using more promotions and
distributions. So RBS can adopt this strategy for creating more clients and build good relations
for making them loyal. It can be accomplish by price or rates decreasing, building trust,
promotions etc.
Market development: It also a effective strategy that helps in business development as in
this company can expand into new market for maximising its wealth or size using its offerings. It
can be accomplished by different customers segments, industrial buyers for goods, new areas or
country, foreign markets. For every organisation, market development is helpful for making
good strategy to develop the business among competitors. It can be successful if the firm has a
unique product technology that can leverage in the marketplace, and new market should not
different from one and also find suitable customers for particular products. RBS bank can make
planning strategies by expanding its branch at wide level such as geographically or other
countries. It already captured various country's market such as US, China and Europe so it can
develop its business through expansions that will helps in creating or attracting more customers
towards products and services.
Product development: Every company tries to develop its existing products with some
modifications or launch new product in the market to achieve its growth and competitive
advantages. It include extending the product range that available to the company's existing
market. Firm usually conducts research and development programs for developing products and
services as well as finds best alternative that can beat to the competitors (Meskendahl, 2010). It
may be obtained by investments in additional products, acquisitions of other's products and joint
development with another company's ownership. RBS focus on providing the variety of products
as well as redevelopment of existing one to gains more benefits out of it and satisfy the needs of
the consumers.
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Diversification: In this, company try to grow its market share by introducing new
offering in the market. This strategy is most risky so it requires both product and market
development. Various companies adopt this strategy for achieving long term growth and
objectives (Montgomery, 2011). RBS tries to bring the new product or services in the
marketplace with new innovative ideas though it is very risky for the firm but it is necessary for
such diversities in the society.
BCG Matrix :
The Boston Consulting Group is a portfolio matrix that designed to help with long term
strategic planning. It helps in making decisions regarding opportunities for business growth by
reviewing its portfolio of products to decide where to invest according to demand in the market
and take decision about to continue or develop products and services. It also called the growth or
share matrix. There are four types of BCG matrix such as Dogs, Question marks, Stars, Cash
cows.
Dogs: It hold low market share in comparison of other competitors and operate in slowly
growing market (Scholes, 2015). So company can take decisions regarding investments as they
are not worth investing because of low generate or negative cash returns. In other words, some
dogs may be profitable for long time period. RBS should consider its return as well as financial
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Illustration 2: Boston Consulting Group
source: BCG matrix 2018

positions I order to investments so they can choose various strategies in this case such as
retrenchment, divestiture and liquidation.
Cash cows: These are the most profitable brands and should be milked to provide more
cash in any situations. In this organisation make decisions regarding investment for star
positions to support their further growth (Teece, 2010). According to BCG matrix, corporate
should not invest more into cash cow but only support for maintain their current market share.
RBS can adopt several strategies such as product development, diversification etc.
Stars: In this, stars operate in high growth industries and maintain high market share.
They are both as cash generators and cash users. Company take decisions for investments
because stars are expected to become cash cows and generate positive cash flows. Royal bank of
Scotland make strategic plan for investing funds regarding stars matrix. Strategies that can
adopted by RBS are vertical, horizontal integrations, market penetrations etc.
Question marks: These are the brands that requires for consideration. Company hold low
market share in fast growing markets and various losses. It can gain market share and become a
star which would later become a cash cow. It do not always succeed as it can become dogs. RBS
has to consider this factor before expanding the business at another country so they can make
strategy such as product development, market development and divestiture etc.
Evaluation of organisation's strategy
Evaluation of business strategy plan means to examine the effectiveness of the
planning done by an organisation. After analysing the strategies, evaluations is the next step
where plan has implement as well as company make decisions about execution of planning for
achieving organisation's goals and objectives (Verbeke, 2013). Royal bank of Scotland should
consider various factors after evaluating their strategic plans such as:
Internal forces: In this, company understands about their internal environment as well as
its strengths in term of its assets and about various company information or people which helps
in providing proper guidelines to the firm for its future growth. So it helps the company that how
RBS should maximise or expand the business.
External forces: It support to the organisation in evaluating about its customers and
competitors that helps the company in achieving their goals and objectives as well as targets.
Performance measuring: With the help of performance measurement, it can be
determi9ne that whether the strategy the company has made will be successful or not which
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comes to know after evaluation of the present performance. So it must be required that strategy
is based on the recent scenario of the business.
Corrections of performance: In this defined that performance corrections is very
important to achieve competitive advantages as if there is any discrepancy in between the results
or performance as compare to history and past that will rectified and new strategy will be adopt
so company can give good result in future.
There are framework which helps in evaluation process of organisation's strategy that is SAF as
Suitability, Acceptability and feasibility model which deals with overall rationale of the strategy.
Suitability: This method use for analysing the internal forces of an organisation such as
its strengths, weakness, opportunity and threats (Woodcock and Green, 2011). This strategy
ensure about its suitability which must be fits the organisation's missions, reflects, capabilities
and captures opportunities in the external environment while avoiding threats. Generally,
suitable strategy helps in deriving competitive advantages for the company. RBS must be ensure
about its strategies, which are going to adopt for business development.
Feasibility: It concerned with resources as organisation requires or not for implementing
the strategy such as capital, people, time, market access and expertise. So there are methods used
in feasibility analysis but one of the most and important method is conducting a break even
analysis which identifies input and outputs as well as consumer demand to cover the costs
involved. Royal bank of Scotland can evaluate about its feasibility or availability of resources for
implementing its strategic plan and gain more trust from consumers.
Acceptability: It consider about the expectations of stakeholders such as owner,
employees, customers, investors etc. and any expected financial or non-financial outcomes. So it
is very important for all stakeholders to accept the strategy which based on risks and the potential
return for future development (Klettner, 2014). Royal bank of Scotland must concerned this
factor for satisfying employees and customers and try to become most trusted bank in the world
among competitors.
Recommendations
Above this report, there are some recommendations and suggestions that Royal bank of
Scotland must be done as strategy should be made effectively for adoption that helps in beating
various competitors and achieve competitive advantages such as:
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 Royal bank of Scotland can adopt Ansoff matrix for analysing strategies because they
need to adopt one of best strategy.
 They have to build strong relations among customers for gaining their trusts
 BCG matrix support in analysing company's strengths, weaknesses, threats and
opportunities that helps in achieving competitive advantages.
 Strategies can be evaluate through SAF framework that is Suitability, Acceptability and
feasibility.
 RBS should focus on customer satisfactions for long term benefits.
CONCLUSION
Above this project report, it has been concluded that business strategy is the process in
which include company's missions, visions, objectives, plan and implementation for achieving
long term goals and targets. This is based on Royal bank of Scotland which is financial and
banking services provider in UK. Due to some financial crises company fell down or bear losses
so this report helps in adopting several strategies for achieving business growth. It explained
about organisation's strategies with using several matrix such as Ansoff and BCG that helps in
choosing best strategy for the company and also discussed about evaluations with helps of SAF
model. There are some recommendations also given for achieving competitive advantages as
well as company's goals and objectives.
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