MN6008GN Business Strategy Report: Financial Sector Analysis

This report delves into business strategy within the financial sector, examining the complexities of strategic planning and implementation. It begins by outlining the core concepts of business strategy and its application to financial institutions, using Barclays as a case study. The report then addr...Read More

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Challenges to Financial industry............................................................................................2
Defining Strategic implementation and highlighting differences between Wholesale and Retail
financial markets....................................................................................................................5
Ansoff Matrix application to Retail financial sector..............................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and Journals...............................................................................................................11

INTRODUCTION
Business strategy is a tool that helps an organisation in focusing over multiple objectives
and aims that organisation aspire to achieve in near or long future. Through good synthesis and
analysis on different elements crucial for growth of organisation, like goals and objectives of
business, market segments to serve, resources available and required, competition, new and
emerging markets, challenges and opportunities in business environment and many more such
elements, an organisation can formulate strategic plans, necessary for long run growth (Chanias,
Myers and Hess, 2019).
For purpose of understanding strategic planning comprehensively in financial sector,
report have made discussion covering different points. Starting from understanding strategic
planning and challenges before financial markets in United kingdom to understanding strategic
implementation, differences between wholesale and retail financial markets, finally developing a
market strategy for a financial organisation using suitable business model. For availing good
insight in subject matter report have taken instance of renowned financial enterprise of United
kingdom, Barclays.
MAIN BODY
Strategic planning is the process of making different plans, strategies and policies where
any business organisation can achieve meeting its present as well as future goals and needs. It
enables any organisation to establish what is required at present and in future, what should be the
plan to achieve it, how resources should used and appropriated between business operations,
setting up and fulfilling business priorities and many other similar questions that are strategically
important for organisations (Al-Khalifah, 2018). While preparing any strategic business plan it
must be noted that it could be easily comprehended by everyone meaning it must be simple and
clear for use of every stakeholder associated with business, it should be meeting current as well
as future needs for the organisation and most importantly while implementing these strategies
plans time must be given for its effects to settle down and show results, that means
implementation and its evaluation must not be done in rush.
Strategic planning in financial industry is a complex process. This is mainly because of
effects of developments in modern times. Financial institutions all across the world are facing
situation of distress at the time as depositors are keen to draw their money, investors are not
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investing in businesses playing defensive and thus no growth and incomes are being generated in
businesses due to bearish expectations and leakages in financial sector. At such time any
planning does not seem working out completely. Besides that, Government regulators are
monitoring financial operations continuously and inducing over taking actions against non-
performing assets. This distress over business operations are more clearly visible in big financial
companies like Barclays. Barclays is a multi-national financial company that have its core in
financial and baking operations. Barclays is headquartered in London, UK. Besides Banking,
company also follows Investment operations, Corporate Banking, Wealth Management and
Investment management. Distresses faced by Barclays, global economic slowdown due to
pandemic, becomes more clear after recent statement of company that loans granted by
company, of worth 4.8 billion dollar can never be repaid. Similar such situations, have induced
company to not just focus on its own operations but also to urge Government for taking different
measures. In this context, Barclay is seen convincing UK government on facing over Asian and
US market, after government announced exit from European Union (Dimos and et.al., 2020).
Hence, strategic planning for Barclays and many other similar organisation gets
necessary to seek growth revival in present time as well as maintain stability in future also.
Barclays through efficient planning can not only resolve problem of bad-assets but also can
attract new investments. However, planning must be in interest of all stakeholders, should be
simple and sound and focused more on lung term objectives.
Challenges to Financial industry
With many big problems approaching financial industry and deteriorating its health and
growth for present and future as well. Problems that are lying before financial institutions are
making a vicious circle in the sector, where poor investments are leading to slowdown in growth
of businesses and due to poor growth in businesses new investments are not being attracted. In
this context few of major challenges pertaining to financial sector are discussed.
Trust- Trust is said as the backbone of any economy. In economy of a country, people keeps
faith in banks where they deposit money and takes loan to meet their ends, over the belief that
their trust will not be deceived. But in current scenario, as suggested by studies of YouGov, 66%
of the public in Britain do not trust Banks of country for the good interests of society as a whole
(Elbanna, Al Katheeri and Colak, 2020). Distrust spread across the country is the main reason
behind this fact that UK is being seen as one of the most disturbed financial market in entire
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world. It is not advisable to big financial tycoons like Barclays to rely over their brand image and
existing consumer base.
Branches- Branches of commercial banks and many other financial institutions are seen getting
closed, mainly due to over-reliance of people over internet banking and mobile applications for
financial services. This development, although beneficial for society as a whole relating to
technological development of society, but from business point of view this will not allow
management to meet people face to face, build up relation with them and gain their loyalty.
Similarly, tycoons like Barclays have traditionally used big offices, attractive infrastructure and
refreshment services for customers at branches as their Public relation strategy. These strategies
are now seen becoming useless. Companies are now needed to adopt strategies in the way they
are perceived by customers (George, Walker and Monster, 2019).
Brexit- Brexit have made biggest in shaping health of financial industry in United kingdom. This
development have not only affected business operations within the territorial boundaries of
Britain but also affected flow of international investments. This way, this development is more
significant compared to any other one. Earlier, when discussions and debates were prevailing,
much political uncertainty and at that time too was generating negative financial sentiments in
economy. In retail banking sector, to which Barclays belong have witnessed major fluctuations.
Frequent changes in interest rates, foreign exchange rates and strength of economic growth was
affecting strategies of company more frequently in terms of its interest rates, mortgages and vault
cash, reserves and in many other ways.
Data- It is estimated that United Kingdom's data economy, meaning usage of data in conducting
significant business operations as well as role of data in overall economic operations in the
country, could be worth 95 billion pounds up to 2025. These figures marks prominence in using
data under business activities. Financial sector is very much dependant over using data, Barclays
and many other big companies use data as integral part of business operations. Barclays collect
personal and professional data of their customers, investors, debtors, competitors and other
stakeholders directly as well as also depends over data it collect through third parties. A big
challenge before Barclays in this context lies in terms of privacy of data (Hellwig, 2018). Privacy
is big issue in modern world and people are concerned about it very much. They do not want
their details to be shared with any other party without their consent. Therefore, Barclays is
needed an appropriate strategy in this regard. What data should be gathered, where it has to be
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used, what details could be shared and what not, seeking prior consent of people, tools to be used
in analysis are some important question necessitated to be answered from proper strategy.
All such challenges and challenges similar to above issues can better be answered for
Barclays with help of proper strategic planning only. However, it must be noted that there are
some issues which can be implicitly answered in particular strategic planning, but for others
Barclays in required formulating exclusive plans, comprehensively solving each and every aspect
(Hope, 2017).
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Defining Strategic implementation and highlighting differences between Wholesale and Retail
financial markets
Strategic Implementation
Strategic implementation is the process of taking actions that were underlined under
strategic plan of the company. This process brings out actual results for organisation which were
desired under planning process. Thus strategic implementation become critical for organisation
more. Strategic planning and strategic implementation together answer many important questions
crucial for development of organisation as a whole. What, why, how and when regarding issues
and challenges posed by business environment and opportunities to avail bought by business
environment are clarified in strategic planning elaborately and in strategic implementation
actions are taken in same manner. Therefore, strategic implementation brings justice to the
strategic planning in an organisation (Kastner, 2018).
Strategic implementation brings more clarity to the leader about the vision of
organisation, and whether or not actions taken are going in same direction or not. Strategic
implementation ensures engagement of each and every employee as well as senior management
in achieving organisational goals and objectives. Considering case of Barclays, leaders and
senior management in the company while implementing their strategic plan regarding attracting
investments or frequently fluctuating interest rates or seeking government support, it is required
that they constantly monitor implementation process, So that any deviation could be timely
found out and corrected as well. Continue engagement of employees can be maintained and
timely forecast of upcoming challenges can be made. Managements in Barclays are needed 360
degree approach regarding issues, it becomes important as even factors of completely different
nature are seen integrated this time in environment. For example, Health challenges and concerns
after COVID-19 are seen impacting economic order in world and freedom of movement of
people. To gear up economic activities in this time, health institutions have to play important role
so positive health sentiments of people is raised and they try themselves to normalise situations
on their own (Maina, 2017). Activities which are crucial to financial market are halted by health
concerns like investments and procurement decisions have became very sustainable, therefore
Barclays must maintain continued and good relations with health institutions and try convincing
them to take favourable steps, also offering its support, for the sake of Barclays' own good.
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Differences between Wholesale and Retail financial sector
Wholesale Financial sector consists of those institutions which are engaged in business
operation with large scale customers. These institutions generally take deposits and lend money
to big corporates, firms, government and other financial institutions only. Therefore, scale of
transactions in Wholesale financial institutions are also large. Whereas, Retail financial sector
consist institutions which have its operations with range of customers, they include small and
medium size enterprises to individual customers as well. Transactions involved in these
institutions may not be of large scale but number of transactions taking place and number of
customers are huge, this scale up their level of operations.
Report have studied some of the basic differences between two sectors of financial
industry.
Wholesale sector Retail sector
Infrastructure Infrastructure requirements of
institutions in this sector is not
too high. Office set-ups are
few, with one headquarter at
least, mostly situated in
financial capitals or
metropolitan cities of country.
In modern times, these
institutions are in heavy
requirements of good internet
based infrastructure, as their
stakeholders and business
partners are frequently going
digital. This is also reducing
dependence of wholesale
finance sector on large
manpower requirements,
Infrastructure requirements in
Retail financial sector is
elaborated and more extensive
than wholesale sector. As retail
financial institutions have
individual customers and
investors as well, it is needed
for them to have multiple
branches in multiple cities and
towns. However usage of
internet and web-based
operation are also good in this
sector but requirement for
manpower is equally important
for numerous branches and for
personal interaction with
customers.
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Operations Scale of operations are large in
this sector, which involves big
companies, government
agencies and institutions as
their customers. Wholesale
financial institutions manage
finance of these tycoons,
accepts deposits from them
and lend money ,to them.
Other operations of these
institutions is wealth
management of their
customers, like they also make
investments on behalf of their
customers and render valuable
advices to manage money
efficiently.
In this sector also scale of
operation are large but a little
below the level of wholesale
sectors. This is attributed to
the fact that these institutions
have variety of customers from
range of categories, who may
have small deposits but their
numbers eventually bring good
amount for institute. Operation
involved in these institutions
are like banking operations
accepting deposits and lending
money to customers over
security. Beside, credit and
debit card services, cheques
and passbook services,
traveller's exchequer etc.
Wealth management and
guiding investment decisions
of customers is not done for
every individual customers by
these institutions.
Customer expectations Major expectations of
customers from wholesale
financial institutions are to
make good amount of money
from investments that
institutions makes on behalf of
customers and to seek good
amount of credit whenever
Expectations of customers in
retail financial institutions are
generally seen very nominal.
Customers expect reasonable
interests on deposits, loans at
lower rates, efficient card
services and other facilities
provided by institutes.
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required by customers.
Customers are also keen over
seeking valuable advices from
wholesale institutions
regarding wealth management.
Customers are intended to
build long run relation with
these institutions.
Customers in this sector are
seen dealing with multiple
institutions and not relying
over one only.
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Ansoff Matrix application to Retail financial sector
Barclays is a prestigious and influential business enterprise in retail financial sector.
Facing troubles posed by current business environment in this sector, Barclays is needed to
formulate a strategy which proves effective according to current and future business prospects of
company (Sainz-Fernandez and et.al., 2018).
Report have attempted to analyse strategic options available to Barclays with help of
Ansoff Matrix business model.
Market penetration- Under this option, Barclays is required to focus on current markets
available to company at present and in near future. By focusing on these markets, this option
aims at increasing market share of Barclay. This can be done through customer attraction, where
company can lower lending rates for customers, increase share of individual customers in its
portfolio and enhancing personal interactions with them.
Product development- This option for Barclays aims at introducing new products for existing
market segments of company. As existing market segments of company too are diverse,
including range of customers from business enterprises to individuals, Barclays must ad new
features in its product to swipe competition and satisfy customers.
Market development- This is relatively riskier strategy compared to above two, which requires
Barclays to enter new market segments like Non-governmental organisations or in countries
where Barclays earlier had no operations, with its existing financial service products (Tkachenko
and et.al., 2019). If Barclays tries it successfully, this may help company in long term growth.
Diversification- This strategy is most riskier than any other strategy in this model. It requires
Barclays to diversify services it offers to its customers, meaning besides Financial services
offered by company in retail sector, Barclays can try entering wholesale financial market as well.
This fulfils demands of modern time, which do not suggest over-reliance of any big company to
depend on type of services the most. In retail sector investment sentiments are low and Barclays
can try collaborating with big institutions at modern time with long-run vision.
In this way, through strategically focusing over market segments and services rendered
by Barclays, company can achieve relative competitive advantage in market, benefiting it in long
run (Zveryakov and et.al., 2019).
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CONCLUSION
The above discussion in report have thrown light on understanding subject of Strategic
planning considerably. From the discussion it can be concluded that strategic planning is a
crucial part and tool of seeking business growth. Through effective planning an organisation can
analyse current developments in the market and can also make right predictions in right
directions. Many crucial questions pertaining to growth issues can be answered by strategically
and timely, which would bring desired results.
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REFERENCES
Books and Journals
Al-Khalifah, A., 2018. The strategic stabilization of private banks and insurance company in the
financial service sector. Journal of Humanities Insights. 2(04). pp.161-166.
Chanias, S., Myers, M. D. and Hess, T., 2019. Digital transformation strategy making in pre-
digital organizations: The case of a financial services provider. The Journal of Strategic
Information Systems. 28(1). pp.17-33.
Dimos, S. and et.al., 2020. On the impacts of allowance banking and the financial sector on the
EU Emissions Trading System. Euro-Mediterranean Journal for Environmental
Integration. 5(2). pp.1-25.
Elbanna, S., Al Katheeri, B. and Colak, M., 2020. The harder firms practice strategic
management, the better they are. Strategic Change. 29(5). pp.561-569.
George, B., Walker, R. M. and Monster, J., 2019. Does strategic planning improve
organizational performance? A meta‐analysis. Public Administration Review. 79(6).
pp.810-819.
Hellwig, M. F., 2018. Competition policy and sector-specific regulation in the financial sector.
MPI Collective Goods Discussion Paper. (2018/7).
Hope, J., 2017. Achieve culture change to implement your strategic plan. Dean and Provost.
19(4). pp.1-5.
Kastner, L., 2018. Business lobbying under salience–financial industry mobilization against the
European financial transaction tax. Journal of European Public Policy. 25(11).
pp.1648-1666.
Maina, J., 2017. Effects of Environmental Factors on Performance: A Case of Barclays Bank
(Doctoral dissertation, United States International University-Africa).
Sainz-Fernandez, I. and et.al., 2018. Development of the financial sector and growth of
microfinance institutions: The moderating effect of economic growth. Sustainability.
10(11). p.3930.
Tkachenko, V. and et.al., 2019. Development and effectiveness of financial potential
management of enterprises in modern conditions. Financial and credit activity:
problems of theory and practice. 3(30). pp.85-94.
Zveryakov, M. and et.al., 2019. FinTech sector and banking business: competition or symbiosis?.
Економiчний часопис-XXI. 175(1-2). pp.53-57.
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