Strategic Analysis of Starling Bank: Business Strategy Report

This report provides a detailed business strategy analysis of Starling Bank, a digital challenger bank in the UK. It begins with an introduction to business strategy and the importance of achieving competitive advantage, followed by an analysis of the macro environment using PESTEL analysis, considering political, economic, social, technological, environmental, and legal factors. The report then examines the internal environment, including SWOT and VRIO analyses to assess the bank's strengths, weaknesses, opportunities, and threats, as well as its resources and capabilities. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive forces within the banking industry. Finally, the report explores strategic planning, including developing strategic directions, objectives, and tactical actions for Starling Bank. The analysis incorporates relevant frameworks and models to provide a comprehensive understanding of Starling Bank's strategic position.

Business Strategy

Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1 ................................................................................................................................................3
P1 Use appropriate frameworks and analyse the impact & influence of macro environment.........3
M1 Evaluate the macro environment to determine and inform strategic management decisions . .5
TASK 2.................................................................................................................................................5
P2 Examine internal environment and capabilities of give enterprise............................................5
M2 Discuss internal environment to assess strength & weakness of firm internal capabilities,
structure and skill set ......................................................................................................................8
TASK 3 ................................................................................................................................................8
P3 Critically apply the Porter Five Force model and evaluate competitive forces .........................8
M3 Devise correct strategies to improve competitive edge and market position based on
outcomes .......................................................................................................................................10
TASK 4 ..............................................................................................................................................11
P4 Use range of theories, concepts and models and interpret and devise strategic planning for
firm ................................................................................................................................................11
M4 Develop a strategic management plan that has tangible and tactical strategical priorities and
objectives ......................................................................................................................................12
D1 Critique and interpret information and data applying environmental and competitive analysis
to produce a set of valid strategic directions, objectives and tactical actions................................13
CONCLUSION .................................................................................................................................14
REFERENCES...................................................................................................................................15
Books & Journal: ..........................................................................................................................15

INTRODUCTION
In this contemporary business environment, strategy is important without which is it is not
easy to achieve goals as well as objectives (Banker, 2018). Business strategy is to be defined as set
of actions or tactics that are used to achieve competitive advantage. Main aim of this report is to
critically understand the importance of business strategy in organisation. Starling Bank, a digital
challenger bank located in United Kingdom. It was founded by Anne Boden in January, 2014. The
bank also has its mobile application on both iOS and Android phones. Bank has also received a Best
British Bank Awards in 2018, 2019 and 2020. This report consists of influence of macro
environment, PESTEL analysis, SWOT, VRIO analysis, internal environment, Porter Five Forces,
range of theories and concepts.
TASK 1
P1 Use appropriate frameworks and analyse the impact & influence of macro environment
In business, it is essential to focus on environment so that it is easy to achieve competitive
advantages. In this flexibility of market, it is necessary to have relevant information regrading
changing market so that decisions are undertaken in proper manner (Christodoulou, 2020). Starling
Bank is British well known bank and it is too affected by macro environment at wider scale. So,
PESTEL analysis is used to examine the macro environment. It is further discussed as follows-
PESTEL analysis
It is framework which is used to determine the external factors that impact on overall
organisational structure. This is a time consuming process as because relevant information is
needed and correct type of market research analysis. It consists of several elements which are to be
considered and are mentioned as follows-

Political factors
It is component in which it focuses on factors like foreign trade policy, political stability
and instability, corruption etc. This reflects about intervention of government within economy. In
relevance of Starling Bank, due to impact of Brexit, it is postponing the expansion of Europe. This
makes it is difficult for bank to explore new opportunities or expand business in other countries.
Economic factor
This is another factor in which it focuses on elements such as inflation and deflation rate,
disposable income of consumers, etc. In context of chosen bank, due to impact of COVID 19, there
has been a decline in growth rate of economy. This limits the potential ability of firm at larger level.
The impact of economic factor is wider as well as broader which affects all banks activities (Çitilci,
2020).
Social factor
It is element which states the behaviour, attitude, taste or disposable income of customers.
With changing period of time, every has become dependent on digital transformation. With social
element, a trust and security has build up between customers as well as bank. Social factors are
critically to be consider so that it is easier for Starling Bank to access the change needs of customers
or individual towards banking industry (Cohn, 2017).
Technological
This is a factor which comprises of use of artificial intelligence, advanced software and
hardware etc. In context of Starling Bank, they have they have high intelligence and
Illustration 1: PESTEL Analysis
Source: What is a PESTEL analysis, 2020

commercialization data. Moreover, they have increased the concern for cyber security. With
increase of technology and internet, it has become crucial to use technology in appropriate way so
that competitive advantages are easily obtained.
Environmental
This is also crucial element of PESTEL in which it specifies about elements like waste
management, environment protection, etc. In viewpoint of selected organisation, they have updated
their policies as well as processes to protect environment and sustainability.
Legal factor
In this element, it states that in business rules, regulations and legislations are critically to
be focused. In relevance of chosen bank, legal department of firm make assures that every activity
is being carried out with proper considerations of all the laws. With sudden change in market, it is
necessary for HR manager of Starling Bank to have appropriate credential about the changing
policies, procedures and legal laws.
M1 Evaluate the macro environment to determine and inform strategic management decisions
To determine the macro environment, it is essential to use PESTEL analysis so that strategic
management decisions are undertaken in correct way. Also, it is necessary to for chosen firm to
have information about market which assist them in accessing and using of appropriate strategies.
Further, main benefits of determining macro environment is that it helps in making changes and
analysing of factors that can impact on entity.
TASK 2
P2 Examine internal environment and capabilities of give enterprise
In organisation, both external as well as internal analysis is needed to be consider so that
business operations and functions are executed in proper manner. In banking industry, the internal
management plays crucial in development of banks operations and work objectives. In context of
Starling Bank, they also have internal environment and to examine it VRIO as well as SWOT
framework has been explained below-
SWOT analysis
It is a framework which is used to analyse internal capabilities of enterprise to achieve
objectives. This is an effective tool which is being mostly used by organisation to access their
strength, weakness, opportunities and threat (da Costa, 2019).
Strength
 Main strength of Starling Bank is that is
Weakness
 Starling Bank has limited service with no

that is that it is provides digital services
to customers as well as clients which
reflects their higher effectiveness in
market.
 It has received several awards and
accolades.
physical presence.
 Due to BREXIT, it is difficult for the
bank to expand their business.
Opportunity
 As they mostly aims at digital banking,
they have huge opportunity in mobile
banking area.
 They also has opportunity of offering
banking as a service.
Threat
 The banking industry has high
competition in market (Feng, 2017).
VRIO Analysis
It is type of framework which is used to access the internal situation of enterprise. With
consideration of this model, it become easy to understand the changing situation within business
Illustration 2: VRIO Analysis
Source : VRIO: From Firm Resources to Competitive Advantage, 2016.

easily (Fosher, 2018). In context of Starling Bank, they uses this model and which is further
discussed as follows-
Valuable- This is a element of VRIO which consists of resources which is valuable to firm
and enhances the productivity level. In relation of Starling Bank, there valuable resources are there
employees, digital technology systems. They keep these valuable resources are priority level.
Rare- This is another component of VRIO in which it states about the resources that are rare
and needed to be used at the time of emergency. For example- Client network and their private
network are to be viewed as rare resources. The resources which are rare are being used with
proper considerations (Jumono, 2019).
Imitable- In this component, it specifies that degree up to which resources can be imitated
or not. This factor shows that it is necessary to analyse the imitable resources so that strategies can
be implemented in easy way. In relevance of chosen bank, they assure that imitable resources such
as information are to be kept confidential as it can be used by competitors (Goffetti, 2018).
Organised- This is component, which shows that whether the resources are organised or
not. In relation of selected bank, they have financial resources which are well organised. It is
necessary to organise everything in systematic manner so that it is easy to achieve goals in
appropriate way.
Resources Valuable Rare Imitable Organised Impact
Employees,
digital
technology
system
Yes No Moderate Yes High
Client
Network
Yes Yes No Yes High
Information
and data
Yes Yes Yes Yes High
Financial
resources
Yes No Yes Yes High
Therefore, from above discussed matter it has been examined that VRIO internal
environment as well as analysis is needed to be conducted with proper considerations. It is essential
to focus on both above discussed frameworks which are SWOT and VRIO so that internal situations
are easily understood. Furthermore, relevant information are required to be obtained so that
frameworks are applied in appropriate manner.

M2 Discuss internal environment to assess strength & weakness of firm internal capabilities,
structure and skill set
Internal environment are crucial to be analysed so that internal capabilities of firm are
accessed easily. In relation of selected bank, the strength and weakness of firm internal capabilities
are discussed as follows-
Strength
Main strength of internal capabilities is that internal capabilities structure of Starling Bank is
hierarchical in nature and on the basis of which they are able to take decisions in appropriate
manner.
Weakness
Due to involvement of many people and complex structure it is difficult for them to deal
with uncertain situations in market (Kang, 2017).
Skill set
The skill set of firm shows employees capability to deliver positive results at workplace.
Strength
Main strength of skill set is that Starling Bank has a ICT skills employees who deliver
higher productivity at workplace.
Weakness
Weakness of skill set is that due to high competency level of other rivals, it is not easy for
bank to achieve competitive advantage (Kawira, 2017).
TASK 3
P3 Critically apply the Porter Five Force model and evaluate competitive forces
The market comprises of large, medium and small enterprises that have large number of
competitors. With changing situation of market, it has become essential to focus on competitive
forces that affects business operations. In reference of Starling Bank, they have to be aware of these
competitive forces so that decisions are taken in correct way. So, framework has been applied is
discussed below-
Porter Five Force model

According to this model, it states that industry uses five forces to analyse and determine the
competition level in firm. The structure of market is wider and broader which shows that it is
essential to have appropriate information about such forces in order to execute business activities in
proper manner. This framework is crucial to be focused as it help in gaining proper information
about the market and objectives which are needed to be achieved. The forces are mentioned as
follows-
Bargaining power of suppliers-
This is a competitive force which reflects about the power of supplier in market, Suppliers
are important for businesses as they help in reaching to customers and clients. In context of Starling
Bank, they have power of supplier is moderate as buyers are many and bank can switch easily to
other suppliers (Lui, 2018), So, bank make assure that appropriate suppliers are being accessed for
business perspectives. It is important to have suppliers so that it is easy to access to resources and
customers.
Bargaining power of buyers
In this, it states that it is crucial to be well aware about buyers power so that it is easy to
access to decisions effectively. The power of buyer is high when they purchases products in large
quantity, substitutes are many, buyers are price sensitive etc. In reference of selected bank, they
have many customers and they have high power as because they can switch to other banks easily.
So, it is necessary for manager of bank to make assure that correct approaches are being used to
deal with buyers so that both buyers and firms objectives are met at appropriate aspect.
Illustration 3: Porter Five Force Model
Source: Porter's Five Forces, 2013.

Threat of substitutes
It is force which reflects about substitute which is a replacement of a product or service
available in market. It is necessary to have appropriate information about the products or service
that replace firms products. In relation of selected bank, threat of substitute is relatively high. As in
United Kingdom, there are many other commercial banks (Murawski, 2018).
Threat of competition industry
This depicts about the competition industry within a market in which enterprise is
operating. The banking industry has a wide cope as well as competitors in market and it shows that
there are wide range of competitors in banking sector. So, threat of competition industry is high.
Threat of new entry-
It is anther component in which it states about the threat of new entry over the business. It is
essential to be well aware about new entries within market. In banking industry, the threat of
banking industry as new entrants is low. In relation of selected entity, the threat of entry is low as
because it affects the it is not easy for new entrants to access the market and customers.
So, above discussed matter shows that it is necessary to have appropriate information about
competitive forces so that business objectives are achieved in appropriate manner. Furthermore, it is
critically crucial to be active so that goals are accomplished. It is duty of manager to make assure
that correct type of knowledge is used to examine the forces within marketplace (Vigna, 2018).
M3 Devise correct strategies to improve competitive edge and market position based on outcomes
Strategies are essential to be used so that competitive advantages are achieved within period
of time. In relevance of selected firm, they also devise strategies and which are used by them with
proper considerations. So, appropriate strategies to improve competitive edge and market position
are describe below-
 Financial planning- It is an appropriate strategy which is needed to be focused as because
to improve market position financial planning is required at priority level. In context of
Starling Bank, they should opt this strategy so that financial resources are used in correct
way (Feng, 2017).
 Forecasting- This is another strategy which is to be adopted by Starling Bank. It is because
in business forecasting is required. To do forecasting appropriate analysis and research is
required. So, it is critically crucial to focus on forecasting so that information is gained
which can be used for reducing future problems.

TASK 4
P4 Use range of theories, concepts and models and interpret and devise strategic planning for firm
In enterprise, planning is essential which is to be conducted in such a way that business
goals are achieved (da Costa, 2019). In this competitive era, it is necessary to use strategy and
conduct planning on the basis of which it is easy to access organisational goals and objectives. So,
in relation of chosen firm they uses strategic planning which is briefly explained as follows-
Strategic Planning Process
 Mission- Starling Bank mission is to create a bank like no other and treat customer as first
priority by using best technologies.
 Goals- Starling Bank goal is to help people in monitoring of their money, budget and plan.
 Objectives- Main objective of bank is to help people and business firms to provide services
and products through digital platform.
Illustration 4: Strategic planning process
Source: 4 Key Elements Of A PR Campaign Plan, 2019.

 Strategies & tactics- Starling Bank uses both strategies as well as tactics in proper manner
so that competitive edge is achieved. For example- they prefer differentiation strategy for
their development of business.
STP
The implementation of strategic planning is not easy and it requires appropriate knowledge
of market. So, market approach STP is required at wider scale and it is an affective method which
is needed to be used in correct way. In relation of chosen bank, STP is explained below-
Segmentation
It refers to dividing of market depending on different factors such as demographic,
geographic etc. In reference of selected firm, they segment their market on basis of geographic
basis. It is important to do segmentation so that focus is clear and accordingly strategies are
implemented (Cohn, 2017).
Targeting
It is also another crucial component of STP in which it focuses on targeting of audience
which have capability to purchase the product or service. In relevance of selected company, they
target audience such as financial institutions, customers, etc. (Çitilci, 2020).
Positioning-
It refers to increasing goodwill or image in minds of customers. It is necessary to increase
the positioning of a brand so that strategic advantages are achieved. Further, this is critically
essential to use tools as well as techniques that can increase positioning of firm. For example-
Starling Bank uses social media platforms and campaigns to enhance their positions in market.
Thus, above listed paragraph shows that strategic planning is to be carried out in such a way
that it is easy to access competitive benefits within marketplace. Furthermore, with correct business
environment analysis, manager of firm can execute strategic management and planing process in
most effective manner. Moreover, appropriate resources needed to be used so that issues does not
arise in future period of time.
M4 Develop a strategic management plan that has tangible and tactical strategical priorities and
objectives
Strategic management plan is beneficial which is required to be carried out with detailed
analysis to achieve competitive edge. Also, in context of Starling Bank, they need to be aware
about tangible and intangible tactics priorities So, both are mentioned as follows-
Tangible strategical priorities
 Employees of Starling Bank are the strategical priority.