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

Supplier Power
(Medium)

Barriers to Threat of
Entry Rivalry Substitutes
(High) (High) (High)

Buyer Power
(Medium)

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.
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 • Integration of operations

like various football leagues worldwide
• Distribution channels • Lack of well trained staff and
• Various sources of income high attrition problems
• Diversification

Opportunities Threats

• Emerging markets in Asia • High exposure to risks in the

• New Central and Eastern European EU financial market

members • Increasing competition and threats to

• Focus on improvements in European and the banking industry from other

US operations 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 Financial Strength (FS) Environmental Stability

(score: +6 best, +1 worst)] (score: -1 best, -6 worst)

+6: Operative earnings per share -2: Price or interest range of

increased competing products

+4: Liquidity slightly decreased -1: Inflation rates

Total y-axis +5: Revenues increased -2: Technology Changes

score:
+5: Return on Equity increased -3: Competitive Pressure
+5.00 -2.00 =
+3.00 +5: Efficiency ratio stable -2: Demand Variability

Average: +5.00 Average: -2.00

X-axis Competitive Advantage (CA) Industry Strength (IS) (score:

(score: -1 best, -6 worst) +6 best, +1 worst)
Total x-axis
score -1: Market share +6: Growth Potential +5:
-2: Service Quality Profit Potential +5:
-1.25 + 4.80 = -1: Customer Loyalty & reputation Financial Stability +4:
+3.55 -1: Management Experience Resource Utilization +4:
Technologies Know-how
Average
: -1.25 Average: +4.80
SPACE Matrix Graph

Conservative Aggressive

+6

+4
(3.55, 3.00)
+2

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

-4

-6 Competitive
Defensive

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
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

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.
Model used for partnering with MFIs would be:

Customers

Purchasing
of Loans
Barclays
MFIs, Rural
Microfinance
Banks

Purchasing
of Bonds

Future Profits and Projections

Book1.xls