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In order to compete in an industry driven by statistics and analytics, Barclays must emphasize data driven decisions throughout its corporate structure.4.Fragmented core divisions:a.Operating fragmented core divisions such as HR and Finance creates additional costs as well as bureaucracy and inefficiencies. Barclays must consolidate these shared services.B A R C L A Y S | 9
BARCLAYS: MATT BARRETT’S JOURNEY – WINNING HEARTS AND MINDSc.Financial AnalysisDefinition: Financial analysis is used to assess the viability, stability and profitability of a company or operating division. The analysis is done using quantitative historical performance found in the financial reporting documents (Balance Sheet, Income Statement, and Statement of Cash Flows). The goal of the analysis is to understand a company’s financial health through its profitability, solvency, liquidity, and stability.Given the financial information provided in the case, it is clear that Barclays is lagging behind its competitors in cost control measures, and has allowed both PP&E and Staff Expenses to rise above its competitors’ average.*Operating expenses as % of incomeIn addition, an analysis of the company’s divisions and their respective earnings contribution reveals that Barclays heavily relies on its Retail Financial Services division for a large portion of its earnings; this suggests that diversification might be needed. NOTE: Further analysis into the average contribution of each revenue stream for other players in the industry is needed before diversification can be entirely justified.B A R C L A Y S | 10
BARCLAYS: MATT BARRETT’S JOURNEY – WINNING HEARTS AND MINDSB A R C L A Y S | 11
BARCLAYS: MATT BARRETT’S JOURNEY – WINNING HEARTS AND MINDSIV.STRATEGY FORMULATION Summarize Barclays’ strategic position as it relates to its current strategy and the components thereof.a.Summarize Barclays’ current strategy.Barclays’ current strategic objective is to drive profits by consolidating internal functions and expanding its international presence. The company is a major player in the UK financial services and retail banking industry but has lost ground internationally despite rapidly rising market capitalization. Fragmented internal divisions and a lack of aggressive expansion have brought up the need for extensive managerial and structural changes to the firm. This prompted the hiring of a new CEO, Matt Barrett, who established a series of restructuring goals for Barclays to remain competitive.b.Strategic AnalysisDefinition: Conduct an analysis of Barclays’ business strategy by using the 4 P’s Framework. The 4 P’s Framework is used to understand a company’s strategy based on its Position (Mission, Values, and Vision), Priorities, Payments (what it will spend its money on to reach those priorities), and Performance (how it will measure success).