Overview of the case
The case addresses the challenges that made Barclays lose its competitive superiority. The company was previously enjoying dominance in the European market and was ranked ninth among other banks with key resource capabilities (Buechel 49). However, internal organizational issues as well as failure to take advantage of the opportunities in the market limited the growth of Barclays to the extent that it was facing major challenges including loss of investor confidence, plummeting staff morale, and poor decision-making by the executives (Buechel 50).
The key challenge for Barclays
The key challenge for Barclays is restoring effective governance structures since the majority of its problems are the result of leaders failing to have a vision for the company. Since most of the issues are internal and need structural adjustments, the executives need to play a key role in the structural overhaul as well as positioning Barclays in the global scene.
SWOT Analysis of Barclays
Key strengths
The strength of the firm is generated by the fact that it has high resource capabilities due to the large assets it possesses (Buechel 50). Additionally, Barclays seems to have established itself in the UK market and has a huge potential of acquiring new customers if only the operations were streamlined.
Weaknesses
The firm’s management is incompetent and incapable of having a clear view of the market changes. With only two acquisitions and 57 divestitures in a span of twenty years, it means that executives had failed in making an effective decision that could have enabled Barclays to avoid the problem it was facing (Buechel 50). The effects of poor decision making are seen in the case where there are higher costs of operating the business since every department has its own HR, IT and finance division as a way of shifting away from interference by the executives (Buechel 51). Moreover, the executives failed to implement an effective communication policy since the case of demoralized employees means that bottom-up communication was lacking in the firm. The managers also failed to have in place effective Management Information System, which is among the best ways of integrating business activities and enabling everyone to understand the objectives of the organization. With poor MIS, it is, therefore, likely that failure to have a transformational leader like Matt Barrett would have seen the company expose itself to the risk of being acquired by competitors.
With demotivated workforce, it is unlikely for an organization to make significant steps in terms of overall performance since such situations lead to a hostile working atmosphere where the bond between employees and management is destroyed. Demoralized employees at Barclays were the result of ineffective performance standards and possibly failure to appreciate their efforts. The fact that Barclays was operating at higher costs means that it lacked proper financial incentives to keep its workforce dedicated and committed to their work. Failure by Barclays to take advantage of the global opportunities limited the firm's expansion plans such that it had to cope with intense competition in the domestic UK market. Since most of its revenues were from its domestic operations, it means that Barclays was not generating enough revenues to help it acquire other firms and improve its functional operations. Barclays had failed to generate higher revenues such that the shareholders were finding it hard to cope with the situation. Opportunities available for Barclays
Opportunities
A key opportunity for Barclays is the fact that the market is expanding hence decision to shift its operations globally will be key to improving growth and stability of Barclays (Hitt, Ireland and Hoskisson 226). By penetrating international markets, Barclays will have made significant steps in acquiring new customers, expanding its resource capabilities and avoiding losses from a saturated UK market (Hitt, Ireland and Hoskisson 227).
Threats facing Barclays
The fact that investors lost confidence in the company is destructive for the firm since it is the investors that risk their money to invest in the company. Loss of investors’ confidence, therefore, means that the company’s reputation and the likelihood of attracting new investors is minimal since no one would want to invest their resources in a loss making organization. Stiff competition in its domestic markets is also a major threat which makes it necessary for Barclays to consider differentiating customers offers, diversify its sources of revenue as well as acquire other firms to expand its resource capacity (Hitt, Ireland and Hoskisson 37).
Key stakeholders
Barclays needs to restore the confidence of its capital market stakeholders who include; investors and key suppliers (Hitt, Ireland and Hoskisson 22). In addition, the company has to create a value based management as suggested by Matt so as to enhance the effectiveness of internal stakeholders including employees and managers (Hitt, Ireland and Hoskisson 22). Lastly, it is clear that customers, suppliers, and the host community are counting on growth and sustainability of Barclay’s operations as primary external stakeholders (Hitt, Ireland and Hoskisson 23).
The strategy by Matt is good since it would see Barclays expand its operations beyond The UK as well as enhance its governance mechanism due to the inclusion of young and more energetic executives into the decision-making team. In addition, the strategy addresses the need to acquire other firms, differentiate customers offering and diversify the sources of revenue which are all key to restoring the competitive advantage of Barclays and strategically positioning the company in the global marketplace. A key recommendation for Barclays would be to create a proactive organization were employees, and other external stakeholders are given the chance to take part in the decision-making processes.
Works Cited
Buechel, Mlina. Barclays: Matt Barrett's Journey-Winning Hearts and Minds. Lausanne: International Institute for Management Development, 2007. Document.
Hitt, Michael, Duane Ireland and Robert Hoskisson. Strategic Management: Globalization and Competitiveness. Stamford: Cengage Learning, 2015. Document.
