Case Study on Barclays Bank

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Case Study on Barclays Bank Introduction This case study paper will analyze the economics of Barclays, one of the largest financial providers in the UK and in the world. It will also use Barclay’s example to illustrate the peculiarities of banking industry functioning. Overview of the Business Barclays is an international financial services provider operating in more than 50 countries and serving more than 42 million customers worldwide. It engages in commercial banking, investment banking, wealth management and asset management. Its commercial banking arm offers services to British and international customers, including current accounts, savings accounts, mortgages, insurance, credit cards and consumer loans. It has a majority stake…show more content…
Brand equity is very important: confidence is the key in banking, so new entrants might find it difficult to develop an initial level of confidence. Access to necessary inputs (liquidity) is also hard to gain for new players. At the same time, learning curve advantages are relatively unimportant, since innovation is not the most important profit driver in banking. Also, banking does not rely heavily on proprietary technology. Researchers argue that economies of scale are of little importance in financial services industry. However, specialist knowledge might deter new entrants, as major banks know markets and customers much better than new players. There is also scarcity of important resources such as qualified expert staff. Conclusion: medium threat of new entrants - Threat of Substitution: Given high brand loyalty of customers and close customer relationships, threat of substitution is lower than in other industries. However, higher quality of service and lower price of competitors might encourage customers to switch. Therefore, customer retention relies on Barclays’ remaining price-competitive, offering excellent customer service, and maintaining high switching costs. Conclusion: medium threat of substitution - Rivalry: Banking sector is becoming increasingly more concentrated; concentration decreases the intensity of rivalry. However, there are factors that enhance the intensity of rivalry in financial services, such
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