Report: Analyzing Macroeconomic Issues in UK Banking Sector

This report examines the significant macro issues influencing the UK banking sector. It begins by outlining six key macro issues: political, economic, social, technological, environmental, and legal factors, using the PESTEL analysis model to identify their impacts. The report then delves into how these factors affect banking operations, with a focus on Barclays as a case study. It highlights the impact of technological changes and legal factors, particularly employment laws, on the organization. The analysis includes both the negative and positive impacts of these factors. The report also acknowledges challenges faced during the research, such as data collection and communication, and suggests effective planning and language understanding as solutions. The conclusion emphasizes the comprehensive effects of these macro issues on the UK banking sector and Barclays, offering a detailed understanding of the business environment.

KEY ISSUES IN
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Macro issues in business environment.........................................................................................1
Factors impact on organization ...................................................................................................3
Two challenges faced while carrying out the report....................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Issues in business environment is very challenging situations which impact on business
success and growth. Challenges of changing laws and regulations, climate change, technology
changes and other are the factors that create many issues for organization and in their businesses
environment (Kolk, 2016). The present report is based on Banking sector within UK which get
effected by macro issues. This report explains macro issues in businesses environment that is
significant for Banking sector. It clarifies potential impacts at micro level due to any 2 identified
issues. Furthermore, this report justify any 2 challenges that has been faced while carrying out
the tasks and also explain some appropriate suggestion to overcome such challenges.
MAIN BODY
Macro issues in business environment
Macro issues in business environment influence banking sector within UK economy as
whole. Political factors, economic factor, technology, environment, social and legal factors is the
6 types of macro issues that has affect banking sector and its business functions the most
(Sammut‐Bonnici and Galea, 2015). PESTEL analysis is one of the best and appropriate
academic model that helps to describe and identify macro problems in banking environment. All
these above factors is significant for UK banking sector and impact on their services and another
functions.
Factors or macro issues-
Political factor- Political factors is the activity which is related to government policy,
law and regulations. It is administrative practice that have impact on company or organization
over all operations. Most business operators keep an eye on any political elements such as new
regulatory shifts and legislation which have substantial effect on how organization operates
(Gomes and et. al., 2015). Government laws and regulations impact UK banking sector, 2016 is
very challenging political environment for many banks in UK, banking sector characterised by
new regulatory and superior rules like EU bank recovery and resolution directive and UK
banking reform Act. Negative impact- It required from banking sector and organizations under
working to follow new regulations or rules which is quite difficult for them as they changed
whole structure of business. Positive impact- If banking sector have some flexibility at some
stage in their business structure to adopt or implement new capital rules, they can run its
functions and services easily more than before.
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Economic factors- Different economic factors have to be taken into account when
determining actual and expected future beliefs or values of investment portfolio or business.
Economic factors include, interest rate, taxes, lobar costs, government policy and management.
Uncertainty and economic risk of UK exist from European Union poses the most significant
issues to banking sector as whole (Weissbrod and Bocken, 2017). UK banking sector is
depended on eventual global contract between EU member states and Britain, which get affected
after leaving of EU. Brexit come with possible negative impact for capital, regulations and
operations as longer.
Social factors- This factors of macro environment represents demographic norms,
characteristics, values and customs of population within UK banking sectors operates. It included
population trends such as population growth rate, income distribution, lifestyles attitude, career
attitudes, health consciousness, safety emphasis, cultural barriers etc. Macro issues or social
environment also include changes in people's lifestyles, social mobility, fashion and another
demographic trends that impact on banking sector within UK. It directly affects their financial
budgets, market growth, profitability etc. these people like to save money which is quite
comfortable for them to get used in any situations. More over these individual belief that it is
better to keep money for down payments in saving account in bank rather than investing it
because stock market is volatile in short way. They think that if they invest lose its values and
money as well which cannot be recover. They considered saving that is easy for them if people
want resources or access and need money for it quickly.
Technology factors- Technology factors pertain to innovation in technology that affect
operations of banking sector within UK economy. It refers to level of innovation, technology
incentives, technological change, automation development and research, amount of technological
awarenesses that market have (Paul, Yeates and Cadle eds., 2014). All these factors may impact
banking sector decision making process the most. When it comes to technological environment,
banking sector have reached the tipping level where digital capabilities is driving evolution of
banking so faster, every facet of it accessed through digital platforms, changing customer
expectations and behaviour dramatically. It is changing how customer handle their funds or
money, if UK banking sector does not provide mobile application to its customers they cannot
grab their attention and increase profit. It posses as negative impact on UK banking industry and
lower down it reputation in market rather than before. But if banking sector offer mobile app to
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its customers and implement this new technology in business they can garb the attention of
people and increase more and more profit as make strong consumer base.
Environment factor- It includes environmental and ecological aspects such as weather,
environmental, climate offsets and climate change which especially influence banking sector in
UK. People with use of new technology for example mobile banking applications, it helps to
reduce use of paper. Avoid use of paper in process of transfer funds or money to another person
in banking sector will grow more and more, many people will use mobile banking app,
customers prefer online banking, transfer funds and handle money through online. It provides
benefits to banking sector and connect many people with them via online mobile technology
apps, it poses positive impact on it. But use of mobile banking app, there are many issues is
taken care of through online banking facilities. Consumer apply for credit cards online, pay and
buy cheques online and have all of its banking questions reply online. These services at some
extent impact environment which is not beneficial for banking sector and their profit margin.
Legal factor- Although legal factors have some overlap with political elements they
include specific laws like discrimination laws, employment laws, patent and copyright laws,
antitrust laws, customer protection laws and health and safety laws. In short, it is clear that
banking sector in UK need to know what is and what is not legal in order to run as whole
business ethically and successfully. Employment laws is considered in legal factor that affect UK
banking sector the most, under these laws' government focuses on workers rights. Changes in
employment laws make impact on whole industry and its profitable funds negatively. But if
banking sector implement all the changes under employment laws in its current agreements they
can satisfy their workers and make them comfortable at workplace and assure about their
concern for them, as it states positive influence.
Factors impact on organization
Legal, political, environment, technology, social and economic factors affect banking
sector in UK the most. All these factors will potentially influence on Barclays organization,
Barclays is one of the British international investment bank, they offer customers financial
services. Company is organized into four businesses core such as corporate banking, investment
management, personal banking, wealth management. All the core of their businesses is get
affected by many factors and make difficulties for them at some extent.
There are the two issues or factors impact Barclays financial service company-
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Technology factor- In competitive business environment, technology changes is very
essential to beat competitors in market place (Zhao, Pan and Lu, 2016). Technology change is
based on demand of current environment or business needs. It refers to level of innovation and
research and development activity of company. Digital technology affect banking sector the
most as it also impact on Barclays bank. Many another banks offer their consumer mobile app
services which is quite beneficial for people as they can transfer funds, collect cheques, and pay
bills via smartphones. It impacts on Barclays services very much, they need to implement this
technique in their business structure and provide to their consumers. Another bank offer for
mobile app influence organization operations and its market reputation or position.
Negative impact- Firm may loose their customers base if they cannot implement new
technology in their business. Their profitability and productivity suffer a lot due to new
technology and people avoid their services more and more. The biggest negative affect of
technology changes is loss of customers. They can loss to achieve organizational desired goals
and business objectives which poses as decrease of market share.
Positive impact- Thus, if Barclays offer this services to its clients to get the better
outcomes and grab competitive advantages, they can run its business functions and all operations
effectively. If organization adopt new technology as provide mobile banking services to people,
they can be able to serve its best and gain the best advantages. It impacts positively on company
growth and success, with the help of mobile banking service clients feel comfort to do some of
their banking action more easily through this application. Like they can pay money to anyone
easily, transfer money etc.
Legal factors- These factors have both internal and external sides, certain laws impact
overall banking sector and organization that are working under this industry for example
Barclays. In certain country while there are few laws and policies that impact on company
growth, success, profit margin, financial budgets and another activities which also affect on their
market reputation and position. Employment laws is one of the factors which is considered as
legal factor that influence on organization employment laws and policies very much.
Negative impact- Government make new laws in context of employment and mention
and include few more rights of workers. Employment law concern that workers have few
minimum legal rights, involve the rights to get the best health and safety services, to receive the
week's notice per year of their services up to maximum of 12 weeks (Kabakova and Plaksenkov,
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2018). Workers have the rights to get the minimum wages and good salary packages. They have
the rights to get minimum stage of paid holiday. They have the rights to raise their voice against
discrimination against potential and existing workers. If Barclays financial services bank cannot
adopt this rules or stages in their employee agreements they cannot be able to give its effective
services to people.
Positive impact- If Barclays bank implement all the rights which has been mentioned in
employment agreements by government, they will be able to perform its best and operate each of
their functions and managed operations appropriately in UK.
Two challenges faced while carrying out the report
I faced some challenges while carrying out the above task for example, data collection is
one of the most difficult think to do. I faced problem while collecting relevant data or
information in context of macro issues that impact on banking sector within UK economy. Data
collection is organized approach to collect information and measure from different of sources.
Another challenge is communication, I face difficulty while I try to communicate with
another people to get information and relevant data related to task.
Suggestion to overcome such challenges-
Effective Planning for collecting data is one of the best way to overcome within data
collection challenge. Before gathering data about chosen topic I need to make good plans include
how to gather data, what types of sources which I need to used etc.
Thus, to overcome with communication challenge I need to understand different
languages and identify it appropriately which helps to get the best outcomes.
CONCLUSION
The present report discuss impact of political, legal, technology, social and other factors
on Banking sector in UK. It has been concluded that all these factors affect Barclays financial
service company as whole. This study discussed about the impact on technology factors and
legal factors on organization operations both negative and positive sides. Furthermore, this study
discuss that individual person face 2 main challenges while carrying task such as data collection
and communication, but with the help of appropriate ways they get overcome with these
challenges.
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REFERENCES
Books and Journals
Gomes, C.M. and et.al., 2015. Management for sustainability: An analysis of the key practices
according to the business size. Ecological Indicators. 52. pp.116-127.
Kabakova, O. and Plaksenkov, E., 2018. Analysis of factors affecting financial inclusion:
Ecosystem view. Journal of Business Research. 89. pp.198-205.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Kopnina, H., 2017. Sustainability: New strategic thinking for business. Environment,
Development and Sustainability. 19(1). pp.27-43.
Paul, D., Yeates, D. and Cadle, J. eds., 2014. Business analysis. BCS, The Chartered Institute for
IT.
Sammut‐Bonnici, T. and Galea, D., 2015. PEST analysis. Wiley Encyclopedia of management.
pp.1-1.
Weissbrod, I. and Bocken, N.M., 2017. Developing sustainable business experimentation
capability–a case study. Journal of Cleaner Production. 142. pp.2663-2676.
Zhao, X., Pan, W. and Lu, W., 2016. Business model innovation for delivering zero carbon
buildings. Sustainable cities and society. 27. pp.253-262.
Online
Pestle Analysis of Banking Sector. 2017.[Online]. Available through :
<https://123writing.com/free-sample/pestle-and-swot-analysis-of-lloyds-banking-group-
2016-2017>.
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