Coursework 1 - Microeconomic concepts

Every organization has to analyze its business environment before making policies and strategies for its day to day operations, marketing and promotional efforts, and competing with the industry rivals (Loudon, Stevens, & Wrenn 2004). The key factors of the business environment that affect the business operations of a company include political, economic, technological, environmental, cultural, and demographical factors. This essay will explain various markets structures which are monopoly, oligopoly, perfect competition and monopolistic competition. The purpose of this paper is to discuss the impacts of different environmental factors on the business operations of Barclays. The discussion has been made in the light of international accepted

microeconomics concepts and practices. Market structures Monopoly is a market structure, where only a single seller producing a product having no close substitutes. This single seller may be in the form of an individual owner or a single partnership or a Joint Stock Company. Such a single firm in market is called monopolist. Monopolist is price maker and has a control over the market supply of goods. On the other hand, Perfect competition a market structure characterized by a large number of firms so small relative to the overall size of the market, such that no single firm can affect the market price or quantity exchanged. Perfectly competitive firms are price takers. Moving on, in an oligopoly, there are only a few firms that make up an industry. This select group of firms has control over the price and, like a
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monopoly, an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a result of market forces. In addition, Monopolistic competition is the market structure in which there exists fierce competition among firms, each of which is the monopoly producer of one or several of the many varieties of the good or service (Britton, 2006) . Barclays is a UK based organization engaged in the business of banking and financial services. Headquartered in London, Barclays is currently serving over 48 million customers in more than 50 countries of the world. It has been rendering customized and tailor-made banking products and financial services for more than three Centuries (Barclays 2012). The market structure which is most applicable to Barclays is oligopoly. Banking & Financial industry is very much exposed to a stiff and strong competition; especially among the top and well-developed market leading competitors. Barclays, despite being one of the most successful banks, always has to make its corporate strategies in accordance with the current marketing trend. The top competitors of the Barclays include Standard Chartered Bank, Lloyds, HSBC, The Royal Bank of Scotland, etc. These top banks give a strong competition to Barclays in different fields of banking operations like competitive interest rates, more innovative products and services, effective marketing and promotional activities, sales volume and growth rate, financial strength, market share, and overall customer satisfaction. To survive successfully, Barclays ensures that all its strategic decisions are effective enough to compete with those of competitors Barclays is ranked among the Top 4 banks in the United Kingdom with the Standard Chartered Bank, The HSBC Group, and The Lloyds Banking Group. Being a large scale banking company having operations all over the United Kingdom,
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Barclays has to keep itself abreast of the changes in its external environment and strategize to encounter any potential factors that may affect its business operations in a negative way. With an analysis of its internal and external environment, Barclays gets acquainted with the key issues, threats, and opportunities present in its own organizational setup as well as in the banking industry of the United Kingdom. The Political Factors In the United Kingdom, political changes and policies for banking and financial institutes are quite favourable. The Interest rates are subject to changes as per the Central bank's policies. Barclays adheres to these policies and regulations set by the U.K. Government (Barclays 2012). Sudden changes in laws and regulations also affect the marketing and business strategies of Barclays. For example, the Government can impose any new law or statutory requirement any time which Barclays must have to follow. To prove itself a responsible corporate entity, Barclays is duly adhering to all the laws, regulations, policies, and procedures (Wilson 2002). For example; the Equal Employment Opportunity laws, environmental protection law, the marketing and business ethics, etc. Barclays has designed its marketing strategies according to the requirements of the Law and the ethics followed in the business world. It does not include any contents, text, or visuals which may hamper the feelings or emotions of any class or religion of the society where it operates (Ritchie & Crouch 2003). Economic Factors The cost of doing business in the United Kingdom market is much higher than majority of the countries in the World. Barclays has set up a large system of banking services in this market to compete effectively and encounter the economic problems (Lancaster & Withey 2007). The economic forces are quite unpredictable and very much challenging
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for Barclays. The economic crunch in the world' financial market has also affected the new projects as well as the existing business operations of Barclays in the UK market. The increasing rate of inflation, unstable exchange rates, strict regulations for credit approval, and diminishing purchasing power of customers are all bringing negative impacts on Barclays. Technological Factors Rapid advancements in Technology have also impacted the banking and financial sector. To meet the challenges imposed by technological forces like security problems, one-click banking, and fast processing of financial transactions, Barclays has to keep its business processes and organizational setups up-to-date and aligned with the technological changes. Barclays has installed highly advanced Banking software, security systems, ERP (Enterprise Resource Planning), and customer relationship management software in its retail banking branches and offices in the United Kingdom. A 24/7 non-stop internet banking is offered to the UK customers to make their banking much easier and efficient than ever before (Barclays 2012). It has to invest a large amount of its financial resources on improving and up gradation of these systems. Environmental Factors The business environment in the United Kingdom is quite stable for the financial institutions but they have to meet certain rules and regulations set by the Government. Barclays meets all these rules and regulations including the environmental protection laws, environmental friendly business operations, risk free banking, anti-money laundering, etc (Barclays 2012). The environmental factors like high fuel and energy price, industry slow down, and pollution concern are also big challenges for Barclays. To meet these challenges, Barclays is using the most fuel efficient and environmental
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friendly power generators, electronic systems, and electric equipments in its offices at all its regional offices and branches. Demographic and Cultural Factors The demographic environment for Barclays is under continuous development. The infrastructure of the countries where Barclays operates is becoming more and more attractive and giving opportunities for new companies to come and emerge into their developing markets and industries (Ritchie & Crouch 2003). These new companies are the biggest threat for Barclays. To encounter the threats imposed by the developments and trends, Barclays has boost up its expansion strategy into different regions; especially Netherlands, Ireland, etc. The cultural factors are also kept in mind while developing and implementing business strategies in the local operations. Barclays is present in many regions which are quite distinct with respect to cultural values. Therefore, it develops strategies keeping in view the life style, consumption patterns, income levels, family size, customer preferences, and other factors of the target market. For instance, it promotes the easy credit facilities in the regions where the income level of the target market is not very high but their family size is large. These are the potential target market for Barclays loan facility. To respond to these cultural factors, Barclays has made the credit terms more relaxed and easier as compared to those in the developed regions. To conclude, Barclays is one of the largest banking groups in the United Kingdom and among the Top level banks in the World. In order to keep its local customers always satisfied with its business operations and combat its competitors effectively, Barclays has always strategized its business practices in the light of an environmental analysis of its micro and macro environment. The political,
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environmental, and demographical forces always go in favour of its business, while economic and competitive forces give stiff challenges in both its product categories as well as profitability. Barclays has to keep itself updated with the changing customer requirements and the strategies of its competitors so that it can offer the best banking products and financial services at the most competitive rates.

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REFERENCES Barclays (2012) Barclays at a Glance. http://group.barclays.com/About-us/Barclays-ata-glance Accessed 04/03/ 2012 Barclays (2012) Key Facts. http://group.barclays.com/About-us/Barclays-at-a-

glance/Key-facts - Accessed 04/03/ 2012 Britton, C. & Worthington, I. (2006) The Business Environment. 5th edition. Financial Times/ Prentice Hall, UK. Hill, C., & Jones, G. ( 2007) Strategic management: an integrated approach. United States. Cengage Learning. United States Lancaster, G., & Withey, F. (2007) Marketing Fundamentals. ButterworthHeinemann.UK Loudon, D. Et al (2004) Marketing Management: Text and Cases . Routledge.UK Ritchie, B.J. & Crouch, G.I. (2003) The competitive destination: a sustainable tourism perspective. CABI. Australia Wilson, A. (2002) The marketing audit handbook: tools, techniques & checklists to exploit your marketing resources. Kogan Page Publishers. UK

Word Count - 1451

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