Capabilities and Core Competence of Barclays
Barclays is a global financial institution that offer a variety of services for instance retail and commercial banking services, investment banking and management services, wealth management and credit cards services. Barclays has superior performance as it has been leading in profitability in relation to other institutions involved with banking and financial services.
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This is shown by the returns it makes on the capital invested. Barclays has been using its resources efficiently especially human resource or employees (over 147,000) through strategic management hence enabling it to maximize its profits. Barclays has managed to utilize modern technology to enhance efficiency and effectiveness in its operation.
For example, with the support of Microsoft services and IT consultancy, it managed to develop a back-office solution based on SQL application. This had various advantages, for instance, database queries are solved easily and they no longer slow position updates, performance of web services increased by 30 percent, the capacity to process more trades per second increased and the scalable solutions of the SQL server enhanced growth and development of the institution.
The Barclays capital has achieved guaranteed reliability and performance with new fixed income solution. Technology has enabled traders to make good decisions based on the up- to date information they receive from the system. Barclay’s capital is a success due to the upgrading of its trade management system which can now produce increased trade volumes. Barclays has also provided financial and risk management needs solutions. It has proved to be useful to governments, corporate firms, and other institutions.
Treasury risk management has been another factor that has led to the success of Barclays bank. It has done this by investing its capital in various treasury centres through which various teams rely on Barclays corporate banking well established units for advice on all financial matters especially on treasury risk management. The Barclays bank works by striking a balance between performance, participation, and protection of the clients.
It utilizes its corporate banking capabilities and the fact that it is specialized in the provision of services to offer specific risk management solutions since they have a profound understanding of clients need and therefore knows how best to cater for the needs and solve problems. Barclays has good pool of assets and sales finance that offer diversity in financial solution like in stock and asset finance and invoice discounting. It is also innovative and flexible in carrying out its activities for example in lending and sourcing for capital.
Globalization of its activities has also enhanced its success (Anonymous, 2007). It has also gone a step further to ensure that a majority of people access banking services. This is done through financial inclusion which entails providing those that do dot have access to banking services with financial products and services that satisfy they needs and enhancing effective use of the products and services.
Barclays has been undertaking the financial inclusion with an aim of attaining commercial sustainability, promoting economic growth and improving the quality of life of the people they serve. In 2002, Barclays initiated entry level business account that enables customers to access compensation facilities and wages/ salaries. This especially targets the low income earners and new customers in the banking sector. It has also invested in affordable credit services that attract a large number of people (Anonymous 2009).
Sustainable Competitive Advantage of Barclays
According to Hill and Jones (2008), competitive advantage is usually attained when a company perfectly matches its resources with the marketing trends. Competitive advantage is realized when a company is able to offer the same or more benefits as those offered by competitors but at a lower cost. Barclays has a competitive advantage since its profitability is much greater than the profitability of other banking and financial institutions.
It has a sustainable competitive advantage given that it has managed to retain its above average profitability for many years (from 2000 to present). A sustainable competitive advantage leads to superior performance. Barclays has got a good brand name and has created a good public image due to the achievements it has had. It is ranked as the 21st largest company in the world. It is the largest financial institution globally based on market share and the second largest banking organization in the United Kingdom in regard to its asset size.
According to BBC news (2010), Barclays being the fourth- biggest bank will take over Woolwich which is among its competitors. This is expected to boost Barclay’s image. The combination of strengths from the two strong companies will definitely improve the status of retail banking in the United States. Barclays in addition incorporates outsourcing in its operation so as to take advantage of global opportunities.
Outsourcing enables the company to concentrate on the core functions that lead to its growth and development as other functions are taken care by the outsourced organizations. Barclays has also invested in knowledge as a resource and offers specific information to its clients to enable them make the right decisions and creating a good customer relationship. It has also utilized its strong resources such as well trained and qualified employees to ensure that its operations are executed professionally and successfully.
Barclays has used the aspect of cultural diversity and globalization as a source of international competitive advantage. This is evident in its operation in different countries with diversified cultures. Financial inclusion initiative and credit facilities discussed under question 1 has established Barclays as a leader in the financial sector as compared to other financial institutions as it has attracted many low income earners hence boosting its reputation (Anonymous 2009).
Barclays has the advantage of the provision of a variety of offshore saving accounts and banking services from which customers can choose the best that suits their specific needs. Although other financial institutions offer credit cards facilities, Barclays surpass them due to the Barclaycard freedom program that gives the card holders the advantage of earning points for every purchase transaction made.
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These points are used as cash after accumulation. The card also gives the owners other benefits like identity protection and travel discount services. Barclaycard also increases online banking. Due to the competitive advantage associated with Barclays its profits increased from 2000 to 2001 for example, personal financial services from 423 to 498 and business banking from 1,102 to 1152 £ millions (Chelmer, 2010).
The growth in personal financial services was as a result of growth in savings, technology, increased customer recruitment etc. The major source of Barclays Sustainable competitive advantage is its excellent strategic management, utilization of modern technology, its diversity of products and services, its large market share and accumulated strong resources which lead to its overall success (Ackrill and Hannah, 2001).
Ackrill, M., & Hannah, L. (2001). Barclays: The Business of Banking, 1690-1996. United Kingdom: Cambridge University Press.
Anonymous (2007). Treasury Risk Management. Work Management Journal, pp. 7.
Anonymous (2009). Barclays: CSR Case Study Series. Web.
BBC News (2010). Barclays Buys Rival Woolwich. Web.
Chelmer, C. F. (2010). Barclays Credit Card. Web.