Barclays plc is a major global financial services provider operating in Europe, the United States, the Middle East, Latin America, Australia, Asia and Africa. It is a holding company that is listed in London, New York and Tokyo. It operates through its subsidiary Barclays Bank PLC.Barclays plc is the 18th largest company in the world according to Forbes Global 2000 rankings (2007 list) and the fourth largest financial services provider in the world by Tier 1 capital ($32.5 billion). It is the third largest bank in the United Kingdom based on market capitalization.The bank's headquarters are at One Churchill Place in Canary Wharf, in London's Docklands, having moved there in May 2005 from Lombard Street in the City of London

Constituents of the group:

Barclays Bank PLC Mercers Debt Collection Agency Barclays Bank Delaware (formerly Barclaycard US, originally Juniper Bank,

acquired 2003) Barclays Retail Bank — UK clearing bank Barclays Commercial Bank — Dealing with medium and larger corporate UK

business.UK banks Barclays Wealth — Stockbrokers, Offshore and Private bank Barclays Private Clients International Ltd. — subsidiary based in the Isle of Man

with branches in the Channel Islands Barclays Private Equity Barclaycard — Global credit card business Barclaycard US — separate from the Barclaycard global operation, this is the

corporation's US credit card operation (formerly known as "Juniper Bank"). Issues branded credit cards such as US Airways, Midwest Airlines, Frontier Airlines MasterCard, Airtran Airways Visa card, and Apple Store Visa and MasterCard accounts.

Barclays Capital — Investment bank Barclays Global Investors — Investment management company Woolwich plc — UK mortgage brand Barclays Africa — To be transferred to ABSA (South Africa) Barclays Spain Barclays Portugal Barclays France Absa Group Limited (South Africa) Firstplus Financial Group PLC Barclays Partner Finance (formerly Clydesdale Financial Services)

Porters Five Forces

Entry Barriers (High)The emerging markets such as India and Africa are highly regulated by the government and also by the central banks. A lot of decisions such as regularization of interests on loans and deposits as well as money supply are controlled by the central banks of these countries.There are entry barriers which check the entry of any foreign bank in India. A lot of control is kept on the deposit taking, loan lending and also the number of branches to be operated in the market. The brand identity is not wide spread for Barclays since people will like to invest in government or public sector banks and not private bank for the safety of their deposits. Also due to restriction on the number of branches people in the rural areas would remain untapped.When it comes to product differentiation Barclays strategy works for urban and niche or corporate customers. The quick and efficient service provided by Barclays along with the ambience attracts a lot of customers.

Rivalry among the Existing Competitors (High)_

When it comes to competitors in emerging markets we could include a whole lot of public as well as private banks along with NBFCs and microfinance institutions in rural areas are wide spread in rural areas.Existing from such markets even more difficult as compared to entry due to high regulations and the time it takes to wind up the business.

Supplier Power(Medium)

Threat of Substitutes

(High)

Barriers to Entry(High)

Buyer Power(Medium)

Rivalry(High)

However the strategy used by Barclays in Africa is a good strategy. Acquiring major stakes in Absa gives them easy entry in an untapped market as well as also brand visibility.

Bargaining power of Suppliers (Medium)

The suppliers of a bank are the people from whom the banks raise funds. In most of the markets Barclays is a non listed company. So the major source of funds comes from it customers (depositors), who become Barclays suppliers in this case.The customers or the depositors have a high bargaining power in the market. Any bank giving a higher rate of interest would attract a larger number of funds towards it. This explains why private bank offer higher rate of interest as compared to other banks especially the term deposits. Also the BarclayCard offers a lot of attraction to the customer and attracts funds important for bank sustainability. However presence of other banks in the market both international and local players in the market provide a higher threat of substitutes in the market. Any bank which hikes the rate in the industry gets higher volume of funds.

Bargaining power of the Customers (Medium)

The customers for Barclays will be the people utilizing the products offered by it, the depositors, the card users and other service users. The customer has a high bargaining power since there are number of banks operating in the market which offer similar services. However Barclays rank high on the quality of services provided by them. This is of high importance for satisfied customers. Speedy service and facilities like free credit cards along with e-banking score high on customer satisfaction list. When it comes to buyer information only the urban customer is aware of the services offered by Barclays bank. In markets except India Barclays provides insurance services too.

Threat of New Entry (High)

Economies of scale in banking sector would be tapping markets which are still unsaturated and expanding their reach to a large number of customers which would mean higher net profit margins through volumes. Barclay as been trying to do this by continuously finding new markets and entering them. Their surge into emerging market in Western Europe, Africa (through Absa) and India shows their continuous effort to plunge into new markets. However they face high competition from financial companies as well as microfinance institutions how are providing easy financial solutions to the poor and weak and also the small entrepreneurs. As new player are entering into the market everyday, Barclays face a high completion from them. These institutions work at the ground level and hence have a better reach to rural customers. Hence they have a better access to the distribution channel. The markets like that Africa face a lot of political upheaval and hence can pose a major danger to the bank and the banking sector as whole. Resistance has been seen in markets like India by public sector banks as well as political parties when private banks entered the scene.

Threat from Substitutes(High)

There are plenty of substitutes in the retail finance industry such as moneylenders, NBFCs, microfinance and also the insurance companies. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony, General Motors and Microsoft all offer preferred financing to customers who buy big ticket items. If car companies are offering 0% financing, why would anyone want to get a car loan from the bank and pay 5-10% interest? In highly fragmented markets like India customers have a high propensity towards switching to other substitutes, especially in case of private banks which are comparatively new in the market.

Value Chain Analysis

The whole value chain is divided into two types of activities:-

Primary Activities

Secondary Activities

Primary Activities

This includes:

Inbound Logistics:

This includes the suppliers who fund the activities of Barclays. These include the

investors who invest in its shares, commercial papers and also the foreign investors.

Barclays is working more closely with their medium and high risk suppliers to identify

potential issues and take steps to address them. For this the bank has issued a Corporate

Responsibility Supplier Questionnaire.

All new medium and high-risk suppliers are required to complete the questionnaire and it

is also a condition of renewing the contract for existing relevant suppliers.

The results of the questionnaire have a 10% weighting in assessing our supplier’s

suitability. The information helps us to ensure that we engage with the right suppliers and

that they have suitable corporate responsibility policies that are in line with our standards.

Operations:

The operations of Barclays PLC include the following:

UK retail banking

Personal Customers

Home Finance

Local Business

Consumer Lending

Barclays Financial Planning

Barclays Commercial Bank

Larger Business

Medium Business

Asset and Sales Finance

Barclaycard

UK Cards and Loans

Barclaycard Business

Barclaycard International

International Retail and Commercial Banking

Absa

Western Europe

Emerging Markets

Barclays Capital

Rates

Credit

Private Equity

Absa Capital

Barclays Global Investors

Index asset management

Active asset management

iShares

Barclays Wealth

Private Banking

Offshore Banking

Brokerage

Wealth Structuring

Closed Life Assurance

Outbound Logistics:

These are the ways Barclays reaches out to the customers:

Consumer Loans

Cards

Mortgages

Personal Loans

Branch Banking

e-Banking

The Group is trying to reach out to the customers in more than these conventional

ways. For example Barclay India has started with Barclays Hello Money- The

revolutionary Mobile banking service.

First time introduced in India by any commercial bank as a banking solution for

the general public.

Market and Sales:

Barclays PLC is a major global financial service provider engaged in retail and

commercial banking, credit cards, investment banking, wealth management and

investment management. Operating in over 50 countries and employing 135,000

people, they have a customer base of over 30 million customers and clients

worldwide.

Margins:

For a bank or in this case a financial company the margins come from the charges

such as interest charged or the brokerage or fee charges for the financial services

rendered minus the operating costs. In these times when most of the markets are in

recession making profits are not easy but still the company is growing at a reasonable

pace. The profit did not increase rather decreased from 5195 to 5095 million euros.

However seeing the industry trends especially after the sub prime crisis and recession

in US economy, the results show a stable growth.

Support Activities

The supporting activities include all those activities which support the core activities

of the business. These include:

Firm Infrastructure:

Most of the companies under the Barcleys group are investing heavily in

infrastructure for better client service and better reach. This explains why they are

facing high operating costs.

Human Resource Management:

Remuneration Committee

The Committee has been constituted to provide governance and strategic oversight of

remuneration, Barclays Human Resource activities and senior management

development.

The Committee’s objective in relation to remuneration is to ensure that it incentives

excellence in business and personal performance and enables the Group to attract and

retain employees of ability and experience.

The Committee aims to achieve this by:

– ensuring clear and quantified individual and Group performance goals are in place

supported by rigorous performance appraisal systems;

– creating externally benchmarked remuneration frameworks for each major business

that provide an evidence based approach to decisions;

– reviewing past remuneration decisions against objectives; and

– approving the specific remuneration packages of executive Directors and other

senior executives.

In relation to HR and senior management development, the Committee’s objective is

to ensure that the Group’s people resources are managed to maximize business

performance support the long-term success and growth of the business and protect the

welfare of all employees.

The Committee aims to achieve this by:

– ensuring there are appropriate succession and talent management plans in place;

– providing oversight of Group level policy on HR matters including those related to

the mobility of employees within the Group; and

– monitoring health and safety and equality and diversity issues across the Group.

Technological Development:

With the number of branches increasing and the area of operations going international

banking sector is relying more and more on technology so as to reach to its wide

spread customer base. However technological improvements involve a lot of cost.

Barclays uses technology to reach out to its operations which are wide spread over

continents.

In order to reach out to the customers Barleys uses e-banking, mobile banking etc. ,

which require a high quality of technological support.

These are also used to keep historic bank record, customer records, records of present

and past employees etc. The records are so well kept that Barclays can supply

information on branches such as when opened, by which company and a history of

the building. They usually have photographs, dates of opening, history of the original

bank which opened the branch, lists of managers and information on the building.

SWOT Analysis

Strengths Weaknesses

• Brand strategy through different brands

like various football leagues

• Distribution channels

• Various sources of income

• Diversification

Integration of operations

worldwide

Lack of well trained staff and

high attrition problems

Opportunities Threats

Emerging markets in Asia

• New Central and Eastern European EU

members

• Focus on improvements in European and

US operations

High exposure to risks in the

financial market

Increasing competition and threats to

the banking industry from other

companies

Difference in the government

regulations in all the countries.

SPACE Matrix

Strategic Position & Action Evaluation (SPACE) Matrix is another management tool used to help analyze a company. It can also used to determine what sort of strategy the company should undertake. The SPACE Matrix is broken down into four quadrants as being aggressive, conservative, defensive, and competitive. Additionally, the SPACE Matrix analysis functions upon two internal strategic dimensions which are financial strength (FS) and competitive advantage (CA). Besides, the SPACE Matrix methodology also studies two business’ external strategic dimensions such as environmental stability (ES) and industry strength (IS). The CA (values from -1 to -6) and IS (values from +1 to +6) are representing by the X-axis of the Cartesian graph whereas the FS (values from +1 to +6) and ES (values from -1 to -6) are representing by Y-axis. After drawing these SPACE matrix graph, the overall strategic positioning of a company can be determined.

SPACE matrix

  Internal strategic position External strategic position

Y-axis

 

 

 

Total y-axis score:

+5.00 -2.00 = +3.00

Financial Strength (FS) (score: +6 best, +1 worst)]

+6: Operative earnings per share increased

+4: Liquidity slightly decreased

+5: Revenues increased

+5: Return on Equity increased

+5: Efficiency ratio stable

Average: +5.00

Environmental Stability (score: -1 best, -6 worst)

-2: Price or interest range of competing products

-1: Inflation rates

-2: Technology Changes

-3: Competitive Pressure

-2: Demand Variability

Average: -2.00

X-axis 

Total x-axis score

-1.25 + 4.80 = +3.55

Competitive Advantage (CA) (score: -1 best, -6 worst)

-1: Market share -2: Service Quality -1: Customer Loyalty & reputation -1: Management Experience

Industry Strength (IS) (score: +6 best, +1 worst)

+6: Growth Potential +5: Profit Potential +5: Financial Stability +4: Resource Utilization +4: Technologies Know-how

Average: -1.25

Average: +4.80

SPACE Matrix Graph

According to the graph above, we noticed that Barclays falls into the aggressive quadrant

of the SPACE Matrix. It is located at the coordinates of 3.55 for x-component and a y –

component of 3.00. It shows that Barclays has a strong competitive position in the market

with rapid growth. It is also indicates that Barclays should adopt an aggressive strategy. It

Conservative

DefensiveCompetitive

Aggressive

+1 +2 +3 +4 +5 +6-1-2-3-4-5-6

+2

+4

+6

-2

-4

-6

(3.55, 3.00)

needs to use its internal strengths to develop a market penetration and market

development strategy. Other possible strategies include product development, integration

with other banks and also concentric diversification.

Barclays Microfinance Group- A New Profit Center

Expanding Access to Financial Services

Why Microfinance?

Microfinance is providing financial services to people who cannot access formal banking

services. These services often include very small loans, typically less than $100, savings

and insurance products.

The Size of the Market

Although it's difficult to get accurate statistics, some estimates suggest that there are

more than a million small businesses in emerging markets. The number of micro-

enterprises is thought to be even larger. This is a huge potential market for Barclays,

which is why they should develop a wide range of microfinance services for these

entrepreneurs.

A useful benchmark was established by an analysis of ‘alternative financial institutions’

in the developing world in 2004. It counted approximately 665 million client accounts at

over 3,000 institutions that are serving people who are poorer than those served by the

commercial banks. Of these accounts, 120 million were with institutions normally

understood to practice microfinance. Reflecting the diverse historical roots of the

movement, however, they also included postal savings bank (318 million accounts), state

agricultural and development banks (172 million accounts), financial cooperatives and

credit unions (35 million accounts) and specialized rural banks (19 million accounts).

Regionally the highest concentration of these accounts was in India (188 million accounts

representing 18% of the total national population). The lowest concentrations were in

Latin American and the Caribbean (14 million accounts representing 3% of the total

population) and Africa (27 million accounts representing 4% of the total population).

Considering that most bank clients in the developed world need several active accounts to

keep their affairs in order, these figures indicate that the task the microfinance movement

has set for itself is still very far from finished.

Barclays with the help of its subsidiaries worldwide and Absa in South Africa can come

up with a new profit center which can be launched under the name Barclays Microfinance

Group.

Trends in Microfinance

The Emergence of MFIs

Microfinance is not a new concept; the difference today is that it is becoming

increasingly commercialized. Although the United Nations and the World Bank continue

to provide useful services in this area, as they have for decades, microfinance is moving

further into the commercial world, through an emerging layer of microfinance institutions

(MFIs) acting as agents for banks and insurers. This layer sells financial products to

urban, semi-urban, and rural markets, while the financial institutions remain as

aggregators though securitization. Non-profit MFIs such as Planet Finance have paved

the way for widespread microfinance, crossing the chasm into the commercial world.

Grameen Bank Bangladesh and Bank Rakyat Indonesia has provided outstanding

business models for how to make microfinance both a commercial and social success.

The Life Insurance Corporation of India and the India MFIs such as Spandana and

Shepherd, aided by sound regulations, has also played a major role in the commercial

development of the microfinance sector.

The layer is responsible for technological innovation to increase security, regulatory

transparency, and scalability. It must reduce repetitive tasks, remove costly processes,

and move the function to point of sale, which is the first lesson in lowering costs.

Following outreach success, it must provide data warehousing to achieve sustainability

and subsequent profitability. So we are looking at capacity building, credit rating, and

access to wholesale finance arising from this layer.

This white paper will examine how the layer can be technologically advanced and how,

in the long term, this layer will get absorbed into the very institutions that now securitize

microfinance

Services provided

The services can be provided by developing commercial relationships with microfinance

institutions, investors and networks as clients and partners.

The Barclays Microfinance Group will work across Barclays businesses, product groups

and geographies to provide leading microfinance institutions and their clients with

financing, capital markets, transaction services, hedging, saving, remittances and

insurance products.

This would help Barclays to build domestic markets in developing countries.

The key to make this strategy a success is to make the products affordable for the

customers and also to keep the operating costs low so that the group is able to survive.

The products which can be introduced are:-

Distribution of the products

The above Diagram represents the distribution Barcleys Microfinance could follow for

remittance as well as collection of funds.

The diagram above shows how the services would be provided by Barclay Microfinance

at various levels of distribution of different types of loans.

Future of Barclays Microfinance

In future we as Barclay see ourselves providing financial help to various microfinance

institutions, rural banks, small and medium enterprises at a cost which is affordable to all.

The help will be extended through direct investments in MFIs or by buying bonds issued

by such institutions as well as directly to those entrepreneurs who come up with brilliant

and feasible ideas.

Barclays Microfinance

Model used for partnering with MFIs would be:

Future Profits and Projections

Book1.xls

Purchasing of Loans

Customers

Barclays Microfinance

Purchasing of Bonds

MFIs, Rural Banks