This is a London school business strategy assignment in which we discuss Strategic planing for organization and strategy approaches, evaluation and selection.
LO1: PROCESS OF STRATEGIC PLANNING
Q 1.1 Define the terms and state the mission, vision, objectives, goals and core competencies of your chosen organisation.
|Mission||Mission can be defined as long term statement of an organization which makes it different from its competitors. Mission of a company is the range of its business and defines the values of the company.||Barclay’s mission is to make their customer accomplish their financial goals by providing better financial products and services and providing excellent job opportunities and work conditions for its employees which would eventually lead to economic growth.|
|Vision||Vision statement defines the long term desire of the company based on which the company defines its mission. Vision should always be defined first.||The vision of Barclay’s is to become one of the leading financial service provider in the world which is valued both by their employees and their customer by delivering high quality product and providing better work conditions to their employees at the same time.|
|Objectives||Objectives can be defined as measurable or intangible long term results which an organization seeks following its mission.||The main objective of Barclay’s is to build healthy relations with its clients, understand the business and develop accordingly so that it can spread its business world-wide.|
|Goals||Goals can be defined as those short term objectives which are tangible in nature and hence can be measured. The performance of an organization is calculated based on their achievements with respect to their goals that were set up.||The main goal of Barclay is to attain maximum profit without negotiating their values and thus beat its competitors in terms of growth and become the best bank not only in UK but in the world.|
|Core competencies||Core competencies are the skills, knowledge and experience that an organization possesses as a result of gradual development in their process. Hence core competencies are those strengths of the organization which cannot be copied by other organizations.||Barclay’s leadership competency includes the ability to be resilient in nature and to work under strict and ever changing deadlines, to sustain pressure and deliver high quality services to its prominent clients on consistent basis.|
Q.1.2 For your chosen organisation, describe the key issues encountered in strategic planning.
Strategic Planning: Strategic planning can be defined as planning a strategy by allocating its resources to the best of their ability and in such a way that they provide high returns. Strategic planning involves a proper assessment of organization’s vision and mission and the available resources in terms of human capital, financial resources, etc. and use them wisely in a planned way to avoid any unforeseen risks due to lack of planning and thus compete with its competitors in a better way (Juin, 2000).
The main problems Barclay had to face were when it went global. It became essential for it bring a change within the organization. Older ways of operation needed a change and new methods needed to be inculcated to sustain the new change in organizational structure. This demand for change in their business strategies. The main problems which Barclay faced in their strategic planning were:
- Shortage of credit available in the market: It has been observed that in Europe and America, there has been an uncertainty in the retail sector because of lack of funds in the market. The fluctuations in the market value and deteriorating confidence of Bank of England in the stock market has made Barclay think about their functioning and revise their business strategies so as to compete by compromising in their profit margins.
- Understanding business in other countries: Another problem that Barclay faced when it went global was the difference in the way business use to run in different countries. It required a thorough investigation and learning of new culture and understanding the need and requirement of the new customers. Implementing a rigid business strategy throughout can lead to undesirable consequences and the company soon realized that it has to be flexible in defining its strategies in different countries.
- Rising customer needs: The customer needs are ever increasing. It was tough for Barclay to reach to the top of the tree, but it was even tougher for them to sustain their market position because of the ever increasing demands and expectations. With the increasing number of customers it became tougher for Barclay’s handle them. It was brought up by Antony Jenkins, the Chief Executive of Barclay PLC in their strategic review in 2013 that their customers’ expectations have gone up and it is important to solve their problems then and there before they leave them and walk away.
Q.1.3 Compare and contrast two different planning techniques which you could apply to your chosen organisation.
BCG Matrix: BCG matrix also known as the Boston Consulting Group Model is a growth rate chart which was proposed by Bruce Henderson in 1970. According to BCG matrix, the company’s performance can be measured from two variables: market shares of the company and the growth rate of the company. Growth rate tells how demanding the company is while the market share tells how much strong the company is compared to its other competitors.
Based on the two variables, any organization can apply BCG matrix as a tool for its strategic analysis to find themselves in four possible outcomes. These are:
- Question mark: During early age of any company or unit, the company shows high growth rates but their market shares have very less value. Thus, before launching new product or establishing new unit, Barclay should see whether the question marks are worth investing or not.
- Star: The second stage which the unit or company experience is the star stage where the company experiences high growth rate and also high market share values. The main reason for this is because the company is known by many people.
- Cow: If the company turns out to be good, it turns into a cow once it has spent some years in the market. The growth will be slow but the market share will have high value.
- Dogs: Dog or dead dog is the stage where the company is dead. This means the company is neither growing nor the company has high market shares (Vieregger, 2013).
Ansoff Analysis: Ansoff is another strategic analysis tool which helps an organization to understand their product and market growth and can analyze and plan accordingly. Based on the Ansoff analysis, an organization can have four phases of business strategy:
- Market Penetration: Market penetration is used by the organization to sell existing product into the existing market. Barclay uses latest internet technologies to provide financial service like e-banking to its existing customers.
- Market Development: In this stage, the organization looks for new market to sell their existing products. For example: Barclay can look to provide financial service for children below 18, who are allowed to make small transactions with the consent of their parents.
- Product Development: In this stage, the organization looks for new product to sell in the existing market. Thus, new methods to provide financial service with ease can be implemented by Barclay to its existing stock of customers.
- Diversification: this stage involves high risk as it involves selling of new products to new markets. It becomes important to have a good knowledge and expertise about market and product to incorporate diversification as business strategy (Kok's, 2008).
LO2: BE ABLE TO FORMULATE A NEW STRATEGY
Q 2.1 Conduct an organizational audit on your chosen organization by carrying out a SWOT analysis.
NAME OF COMPANY - Barclays
STRENGTHS· The global presence of Barclay’s makes it easy for the bank to take risk and explore new markets. · Barclay was the first bank to start cashless transactions through cards. The first credit card was launched in 1966. Hence, Barclay is keen to launch new products. · With a long history and great experience in this business, Barclay has become a Brand especially because of its various sponsorships in the football league. · Barclay has opened several new branches which focus on satisfying customer needs and solving their problems. This makes it more demanding compared to its competitors.
OPPORTUNITIES· Barclays saw the opportunity to attract new customers during Lehman’s collapse. They also acquired lot of their assets too. · Despite its failure in 2006, Barclay still has Asian countries to expand their business and sees them as new opportunities. · The bank charges put by Barclay were challenged in the court. However, the charges were considered enforceable and hence no repayment was asked from the bank.
WEAKNESSES· Barclay’s working in an ethical way was questioned while its operation in Zimbabwe which lead to several controversies. The risk involved with reputation is high and thus should be dealt with great precautions. · Barclay was unable to expand their business in Asian countries and was beaten by ABN Amro in 2006. · In 2009, the Bank delayed in paying its dividend which raised questions in the eyes of the investors.
THREATS· Barclay might lose its customers to specialized service providers which provide more specialized approach in their work. · In the year 2000, Barclay closed many of its branches which were not encouraging while its competitors kept their branches opened. · Acquisition of Lehman’s assets can be threat if the economic crisis continues for a longer period.
Q 2.2 Evaluate the business environment for your chosen organisationby doing a PESTEL analysis.
PESTEL ANALYSIS FOR BARCLAYS
|Description||Company example i.e. how your organisation is affected by this factor|
|POLITICAL||Political factors include the role of government, Wage and Safety Laws, health and safety laws and Taxation rules and regulations imposed by the government.||Banks provide political stability in the country. Barclays being a historic bank shares a good bond with the government but has also faced many issues because of the rules and regulations imposed by government which hampers their growth.|
|ECONOMIC||Economic factors include FDI regulations, Budget, Inflation rate, Per capital income of people, Interest rates imposed by the bank, GDP growth of the country, etc.||Barclay always faced tough competition because of the number of banks available. Barclay lost its market value to Bank of Scotland which provided better services to its customer. Small banks in UK also hamper the economic growth of the bank. In 2008, profit of Barclay fell by 14% because of the economic crisis.|
|SOCIAL||Society and the culture of the organization include work culture, ethics, values, organizational behavior, teamwork and relationship with customers.||In the year 2000, Barclay closed down as many as 170 branches which resulted in many people turning unemployed. The reputation of the bank was also threatened because of the insecurity it caused. Barclay also suffered client’s anger in the year 2010 when it increases it overdraft charges in UK.|
|TECHNOLOGICAL||Technological factor includes new and emerging technologies like internet and mobile banking and the ease and threats related to these new advancements in the technology (Dess, 1995).||Barclay was the first bank to start cashless transactions by introducing credit card facility. It always looks to use new and emerging technology in its service. Internet and mobile banking are being used intensively, which poses threats like hacking, virus and Trojan, etc. In the year 2010, Barclay customers complain when they were unable to check their balance through net banking. Barclay also installed F-secure antivirus to keep its system free from malicious activities.|
|ENVIRONMENTAL||Environmental factors involve working in environment friendly manner to avoid unwanted circumstances like Global Warming||As discussed Barclay is known for its innovation. It has been one of the first company to make use of computers and online banking, etc. which involves no use of paper work and thus lesser cutting down of trees, etc.|
|LEGAL||Legal factors include laws and legal aspect of any country like consumer and labor law, etc.||Being a public limited company, Barclays pays tax at 23% and not 28% which benefits to the government. Barclays follows taxation framework in all the countries where it operates.|
Q2.3 Define and explain the significance of stakeholder analysis.
Stakeholder: Stakeholders are those groups of people with whose help the company continues to run and who are affected by the good or bad performance of the company. Some of the stakeholders in an organization are the owners, investors, employees, customers and government. Thus, it can be said that stakeholders are those people who have some has some venture invested in the company.
Stakeholder Analysis: It is important to use stakeholder analysis to know the functioning and working environment of an organization. Stakeholder analysis involves listing down of the stakeholders and then understands their relationship with each other. This helps in identifying not only those who are directly affected by business strategies but also those set of people who are indirectly affected by new business strategies (Freeman, 2010).
Barclay has been successful in using stakeholder analysis and building good relationships with them. There are special committees which take care of the internal like employees and owners and external stakeholders like customer and government.
Barclay shares its information with all the employees in order to maintain transparency in their approach. It makes sure that the internal stakeholders are given accurate details so that they are aware of company’s condition and feel secure. It is important to share necessary information with its stakeholders so that the company can easily takes further steps and make strategic changes with the consent from its stakeholders and thus processes like merger, acquisitions, collaborations, etc. can be smoothly carried out.
LO3: UNDERSTAND APPROACHES TO STRATEGY, EVALUATION & SELECTION
Q 3.1 Define four strategic options available and explain how they may be implemented within your chosen organisation.
The four type of strategic options that can be implemented by Barclay’s are:
- Market Entry Strategy: When a company like Barclay plans to expand and tries to enter new markets, it becomes important for it to implement this strategy. One way of Market Entry Strategy is Exporting which helps a company to make minimum investments and can acquire international market. But this strategy is for product based companies. For service providers like Barclays, they ought to make Capital and management investments to increase their market share value in foreign markets (Kamau, 2013).
- Substantive growth strategy: Barclay has been into the market for three hundred years, which makes it an expert in knowing about market and taking risks. Therefore, it can go for related diversification, which would involve providing existing financial services to new market. Suppose Barclay wants to expand its business in Asia, it would be better to acquire small banks which operate in Asia to know the culture and day to day working of banks in Asia rather than setting up of their own business. This is known as Substantive Growth Strategy (Nandi, 2011).
- Limited Growth Strategy: Another approach which Barclay can apply is the limited growth strategy which involves market development. Diversification involves huge risk as it requires great knowledge and expertise of market as well as new product or service. It is beneficial for companies like Barclays to look for market development where they sell their existing services in new markets. Market penetration can be considered as the first step by Barclay for setting up business in Asian countries.
- Retrenchment: Retrenchment strategy is applied by a company when it is facing a down period and its survival in the market looks threatening. Though, Barclay is experiencing great success at the moment, they can look for retrenchment if any unforeseen and undesirable circumstances occur. The main strategy will involve divesting themselves from less or non-profitable projects. Another option available will be to acquire new business depending upon the situation (Pearce, 1987).
Q3.2 Using your analysis from Q3, recommend an appropriate future strategy for your chosen organisation
Since, Barclay is looking for an expansion in their business; it needs to implement new business strategy and Ansoff matrix is the best tool to be used for analyzing the strategy. Barclay has been a big Brand name to the world. This leads to both advantage and disadvantage when entering into a new market. The biggest advantage is that the company need not establish itself as it is known world-wide and can invest minimal on advertisements and promotions. On the other hand, the disadvantage is that known to deliver quality product and provide better services to its customer, the expectation of new customers will be high and it would be a tough task for Barclay to fulfill their customer’s requirement.
It can be seen that the company can apply market penetration or marketing strategy as both will be advantageous for the company. However, it will be always better to go for market penetration first so that the level of risk is minimal. In case of uncertainty about the market, it is better to go slow and provide your best service to capture new customers first. Once established, Barclay can look to target new customers like Children by making plans which involve children making small transactions. Market development requires a good understanding of the behavior of people in an area and country before selling new plans and ideas and thus should be followed only after market penetration (Stokes, 2000).
Diversification is the fastest way to grow in this competitive environment but involves huge risks. Barclay being a leading company and an old company has both resources as well as expert knowledge and therefore can risk itself by applying diversification as business strategy to explore new markets. In case of failure, the company has enough funds which can take it out of unforeseen situations.
LO4: UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY
Q 4.1 Focusing on your recommendation in Q3.2, compare the roles and responsibilities needed to implement the suggested future strategic plan.
In order to grow and establish into the new markets, Barclay needs to perform the following activities to implement new business strategies:
- Understand the new market and the functioning of other small and local banks to understand the customer’s demand.
- Apply resource based strategy to know how to properly make use of the available resources in the best possible way.
- Apply distinctive and reproducible business capabilities which can be achieved by creating new resources to manage the new and ever changing customer demand.
- Training and Development plans are require to make new recruits trained how to work under pressure and develop new skills required for better performance of the company.
Roles and responsibilities of different people and their comparison while implementing the new business strategy:
- Head Finance: Financial control of the bank is the responsibility of Head Finance. Thus, new plan requires him to have qualitative and quantitative analysis about new business market to establish new policies for its customers.
- Head Risk: The person is responsible for managing the team and deliver high performance. It is responsible for training and development of the employee and also deals with complex cases involving credit problems faced by customers.
- Human Resource: Human resource is responsible to hire new recruits and manage them while setting up of new business. It is the responsibility of human resource to provide better working conditions to its employees so that they can work effectively.
- Employees: While establishing new business, the older employees should share their experience to the new recruits so that they are aware of the proper functioning of Barclays. It is important that the employee should understand that new customers can have different demands and they should know how to provide better service without compromising on core values and competencies of the company.
Q4.2 Identify and evaluate resource requirements you will need to implement a new strategy within your chosen organisation.
Human Resource: Barclay has dedicated employees who are capable of working under pressure and can adhere to strict and changing work deadlines. The employees know and believe in their service to the client as they are aware of the positive outcomes in terms of healthy relationship and good reputation of the company. Thus, it is essential that whenever Barclay extends its business and seeks for new market opportunities it hires employees who are capable of working according to the culture of Barclay. Any new branch will involve recruitment of new people like the Branch Manager, the Account Managers, Accountant, Receptionists, Guards, etc (Lengnick-Hall, 1988).
Financial Resources: The main financial resources for Barclay are the parent company and investors. The profit made from their business and their expansion is major source of finance that can be used to implement new business strategies and seek for new markets (Pfau, 2002).
Time and Materials: To start a new branch in a new country, Barclay would first require time to assess the market and understand the culture and demand of the people. Making a physically existing branch would require both time and money to get it created. The materials like table, chair, computers, store rooms, etc. would be required for the branch to come into existence. However, the bank should have a similar appearance to that of any branch based in UK to make it looks like a different bank among its competitors in that country.
Q4.3 From your responses in Q4.1 &Q4.2, create a Gantt Chart that shows the activities required and time scales for the implementation of your recommended strategy. Discuss the activities and targets to monitor your strategy.
To establish itself into the new market, Barclay needs to undertake following steps:
- Requirement gathering: It involves proper understanding of the demand of new customers, market trend and day to day functioning of bank in that particular region. It would require around one or two months to gather requirement.
- Internal analysis: Internal analysis tells the company about their existing resources and how to increase it. It can take around 2 months time to understand and increase resources accordingly.
- External analysis: External analysis as mentioned above is based on SWOT analysis and PESTEL analysis. It will take another 2 months for the company to do these analyses about that particular region.
- Building new branches: It involves either acquiring old branches or setting up new branches which will take around five to six months time.
- Buffer time: This time is kept extra by the company which can be used if any of the above tasks are unable to get finished during the stipulated time period. One month of buffer time can be kept.
Thus, a total of 12 months are required for setting up of new branch by Barclay.
It can be represented through following Gantt Chart
|Tasks||Start Date||End Date|