Barclaycard Strategies - Essay Example

Barclay Card Strategies I. Chapter One: Introduction Currently Barclaycard is using both the Information Technology and computer technology as a strategy in the facing it’s many competitors and also in penetrating the modern market. The strategy has greatly assisted this organization in flourishing in terms of business and also in facing the competitors, this has made Barclaycard the market leader in the credit card supply and provision. They should not drop this strategy but should go for more strategies and incorporate them so as to be in the right direction as far as business operations are concerned. II. Chapter Two: Alternative Strategies Another strategy for them to adopt is marketing strategy which is a very powerful measure to give them an added competitive advantage in the business arena. Consequently it will allow the organization to focus on concentrating its resources on the greatest opportunities so as to boost sales and attain a sustainable competitive advantage.1 Marketing strategy can be termed as a high-level formula involving the "generals" of the organization in determining how to bank and upgrade the firms strengths while taking advantage of its opponents/ competitors weaknesses. Barclaycard should therefore consider making e marketing strategy a major component of their various strategies. This is because the strategy will define how Barclaycard will engage its clients, predictions and the overall competition in the marketing field for assured success. A marketing strategy will serve as the base of a marketing plan. The plan contains a set of specific actions necessary to successfully implement a specific marketing strategy. For example: attaching low price tags to their products so as to attract more customers. Once the organization establishes a relationship with consumers, it will sell additional, higher-margin services which will enhance the consumers interaction with the low-cost service. However, the marketing plan should have a sound strategy which is fundamental in achieving the desired marketing objectives accompanied by measurable results. 2 The marketing strategy will adequately integrate Barclaycard’s marketing goals, its policies, and sequences of action into a solid whole. The strategy’s objective will be that of providing a foundation for the development of a tactical plan, thereby allowing the e organization to effectively and efficiently carry out its mission. The strategy should flow from the organizations mission statement since the strategy is derived from much broader corporate strategy, missions and goals With every marketing strategy being unique, both generic and specific strategies can be categorised in a number of ways. Michael Porter categorized the strategy on the dimensions of strategic strength and scope where the scope referred to breath of penetration while strategic strength referred to the organization competitive advantage. Barclaycard should apply strategies that are s based on market dominance, cost leadership, product differentiation and the market segmentation. (Hamel and Prahalad, 1994) Another direction to be taken by Barclaycard is the Innovation strategy which deals with the organization’s rate of new product development and business model innovation. It ensures that the company is on the cutting edge of technology and business innovation. There are three types, pioneers who initiate the invention, the close followers who imitate or copy the work of pioneers and there are also the late followers who follow what have been invented. Another direction is the application of the Growth strategies by asking questions like “How should the firm grow?” There are a number of different ways of answering such a question, but the most obvious being the combination of horizontal integration, vertical integration, diversification and intensification. Wobbly model is a traditional model that best explains the above strategy. In the book authored by The Profit Zone (Peter, 1989), Boston consultants Adrian Slywotsky and David Morrison there are proper display of an unusual strong position of case studies. The subject’s being’reinventors’ who have achieved radical change. They include Nicholas Hayek of Swatch watch fame: General Electric Jack Welch: Coca-Cola’s Robert Goizueta: financial services maverick Charles Schwab, the: Intel’s Andrew Grove: Walt Disney’s Michael Eisner: Percy Barnevik the ABBs virtual founder: and Bill Gates of Microsoft. The above mentioned have a common fact of creating’ and accumulating enormous corporate and personal wealth. Yet none has reinvented the company in modern management model. The book makes it clear that the reinvention that really counted was that of the business, rather than the culture. The leader’s radical changes in the business design have seen them generate profit-protecting power making them very stable in the marketing arena. They however derive the highest power through application of the very most effective strategic control point. the way in which Microsoft owns the standard a very good convincing example and So long as the MS/DOS operating system is the heart of the personal computer, Microsoft has a dominant platform on which to build a series of quasi-monopolies. The authors gives the strength of this control a higher order than just managing the value chain, which they attribute to Coke and Intel – though in true facts Intel comes very close to owning the standard as well. Coke also uses a series of super dominant positions to consolidate its expansion worldwide, working through huge anchor bottlers which it has been controlling very effectively. Only one other strategic control point is ordered as high in the book - thats own the customer relationship, which is cited as the key to GEs success. Strapko supposedly arrives at this control point by overseeing in the spirit of three simple Profit Zone questions: (Strapko, 1990) 1. Who are the largely profitable clients? 2. Which customers have the highest profit growth potential within that group? 3. What blend and height of investments are needed to meet those clients requirements efficiently and enable proceeds growth to occur? The Aggressiveness strategies also seeks to know whether a firm should grow or not, and if so, how fast. The scheme divides strategies into building, holding and harvesting Barclaycard can also specialise on serving other card issuers this will indeed triple their sales and boost their sales volumes. For example, they can supply their cards to the Bank of Scotland, National Westminster and the Royal bank of Scotland Pricing strategy – Borrowing on Credit cards has proved very expensive to some people in the UK. In this case Barclaycard should consider reducing interest charged to borrowers so as to reduce the burden of high cost associated with the use of Barclaycard. The will lead to a considerable rise on the company’s customer base. They should also focus on reducing counterfeit and aim at increased internet security plus other remote transactions. The company should also further the acquisition strategy as they did in the year 2002 where they purchased the eighth largest internet provider in the United States that goes by the name UK operations of Providian. This had a very big impact on their general operations and it resulted to massive expansion of the company accompanied by greater returns. The organization should shun any instance of waste. In this the company should aim at reducing any form of material or financial waste and this will lead to an automatically well adjusted financial results. The organization should employ the SWOT analysis strategy, in so doing it will be able to point out their own strengths, opportunities, weakness and threats. Later on they can be able to convert the weaknesses into strengths and threats into opportunities making a step ahead in the business operations of the company. Internet entrepreneurs’ management strategy is a useful tool in making new and numerous opportunities in the web. Barclaycard should fully venture on this strategy so as to establish and open up markets across the globe. (Walton, 1985) Application of risk/creativity/initiative/ideas strategy will be an important move to Barclaycard. The organization should understand that business is a risk and should therefore apply creativity without fear; new initiatives should be employed, with new ideas being pumped in the business. Taking these risks will later bring considerable returns to the business. They should also think on the future business strategic management on focusing on the future business activities. These they can do by forgetting the past business history and concentrate mainly on the future plans. The organization should think big regardless of their size because it is only their thinking which can help them grow. Research has clearly indicated that the outstanding problems facing marketers lie in the use of specific functions. Most senior managements have committed to the philosophy, even though their junior managers may be distrustful about the degree of that commitment. Moreover, there is little evidence to show that this new-found belief has led to positive action. Indeed, if we get a closer look at the marketing activities they do subscribe to, using the 4Ps framework say, there is very little evidence that marketing practice (as opposed to the theory) has been widely embraced. In particular, pricing is largely on a cost-plus or competitive basis, promotional budgets are small (and spent more on sales promotion than advertising or public relations), place is not relevant, and marketing research is more or less all second-hand. 3 The marketer, in real life, does not face each decision with a copy of a text-book in his or her hand is always ready to work through the various lessons. Instead the marketer begins with a quite specific environment; which will immediately limit the range of factors to be explored to a small subset of the literally hundreds explored in this book. To the insightful marketer the range of options to be explored will usually be obvious. Beyond this, the position will be further constrained by the resources available to deal with them. For instance, theory always says that the first step is marketing research, but if your competitor has just made a major revolution in strategy you may have just days to react - where research may take months. 4 Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven. Thus, for example, new products will emerge from irrational processes and the rational development process may be used to screen out the worst non-runners. The design of the advertising, and the packaging, will be the output of the creative minds employed; which management will then screen, often by gut-reaction, to ensure that it is reasonable. Indeed, the most successful marketer is often the one who trains his or her gut-reaction to simulate that of the average customer. For most of his or her time the marketing manager is likely to be using his or her considerable intelligence to analyze and handle the complex, and unique, situations being faced; without easy reference to theory. This will often be flying by the seat of the pants, or gut-reaction; where the overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing employed! This, almost inherent management, is what is sometimes called coarse marketing; to distinguish it from the polished, artistically pleasing, form favoured by the theorists. It is often relatively crude and would, if given in answer to a business school examination, be judged a failure of marketing. On the other hand, it is the real-life world of most marketing. Evolutionary model may sound like bad news for the countless consultants who earn their livings from different techniques designed to change individual behaviour and whole corporate cultures. To the managers who employ these consultants it equally sounds like bad news to them. Their training and development efforts are misplaced, with their evolutionary behaviour patterns being inimical to the ideal of contemporary company, as clearly described in the HBR by Professor Nigel Nicholson of London Business School. The model has the following characteristics: Fact-based practicality. Entrepreneurial risk-taking. Collegiate, combined, non-argumentative relationships. Detailed analysis before judgment. Totally open communication. Objective assessment of results. Recognition for achievement, not status. Flat, non-hierarchical structure. 5 The only point on which the two lists agree is the virtue of smallness. The model modern company also seeks to avoid having large concentrations of people. If you believe Robin Dunbar, professor of psychology at Liverpool University, this preference harks back all the way to primitive life on the Savannah Plain. The larger the animals brain, Dunbar found, the larger the size of the group. The brain limits the size of the biggest group that a human being can handle to one hundred and fifty. So Europes most-admired company, ABB, averaging only fifty people at its one thousand five hundred units round the world, is following atavistic patterns as well as modern theories of visibility, self-sufficiency and control. Thats one of Nicholsons two supporting examples: the other, Richard Bransons Virgin, is much less reasonable. Virgin is a loose, entrepreneurial grouping with an inconsistent record of achievement. The example really fits better with Nicholsons suggestion that the one fifty limit explains the persistent strength of small to midsize family businesses throughout history. The model of modern management works in the following ways: It acts on fact-based expediency, and at the same time encourage people to feel emotional and openly put across their emotions. It encourages risk-taking by setting entrepreneurial and challenging targets, while being reasonably tolerant of failure. It expects and makes possible aggressive debate, but insist on fully collaborative execution of agreed plans. Establishes system that compels objective analysis on those involved. Have open communication, but include the grapevine in the process. Bases all promotion and incentive on objective assessment of results, but celebrate success and award medals at every opportunity. Find ways of recognizing achievement that also enhance status. Forget the idea of a flat, three-tier structure, but dont use the hierarchy for management purposes. Check constantly to ensure that everybody belongs to a small group with which they identify, but which operates within a collegiate framework. Use the fixed groups and the temporary teams to provide opportunities for leadership. III. Chapter Three: Recommended strategies I would recommend use of marketing strategy by the company as this will earn Barclaycard a more competitive advantage over its business rivals. By employing the strategy the organization will open upper it’s market scope since it will discover new territories which will come along with new customers and a wider market for the credit cards. Marketing strategy will serve as a base for a marketing plan which will involve pricing a very important tool in the capturing and retention of markets. This will lead into increased sales volume reflecting high profits which will steer Barclaycard into greater heights. (Taylor, 1994) Innovation is another strategy that I can not hesitate recommending. This will ensure that the firm comes up with new inventions and innovations which will help in coming up with improved products and services that will provide a good base on how to counter the competitors. With new product development and new business model innovations Barclaycard will be well positioned in the globe in terms of it’s services and the business models/ strategies that it applies. It will therefore accomplish some business mileage as a result of the application of the innovation strategy. IV. Chapter Four: Conclusion Barclaycard will continue ‘flying high’ if it incorporates its current strategies with the above discussed strategies. More emphasis should be put on the recommended strategies so as to attain higher returns. References Hamel, G. & Prahalad, C. (1994.). Competing for the Future, Harvard Business School Press, Boston, MA, Huber, G (1984)"The Nature and Design of Post-Industrial Organizations," Management Science, 928-51. Jarvenpaa, S. & Ives, B. (1994) "The Global Network Organization of the Future," Journal of Management Information Systems, 10(4), spring, pp. 25-57. Leonard-Barton, D. (1995). Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation, Boston, MA, Harvard Business School Press, Malone, T. & Crowston, K. (1991) "Toward an Interdisciplinary Theory of Coordination," Technical Report 120, Center for Coordination Science, MIT. Nonaka, I. 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