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…
Porter’s Five Forces Analysis
Barclays’ business model will be analyzed using Porter’s Five Forces Model (Porter, 1979).
- Suppliers: Given the nature of the banking industry, Barclays’ suppliers are its customers at the same time. Individuals and companies depositing money with Barclays act as suppliers of liquidity. Supplier concentration is not a serious threat, since Barclays serves over 42 million customers and clients worldwide. There is little threat of forward integration: most Barclays’ customers/suppliers are individuals or small companies. There is no differentiation of inputs: money is the only input. Importance of volume to suppliers is high, since banks offer better deals for larger sums of money deposited. Switching costs are medium to high, since banks use a variety of methods to secure long-term contracts and retain their customers/suppliers.
Conclusion: low to medium suppliers bargaining power
- Buyers: Customers of Barclays are generally dispersed; however, there are certain areas of Barclays’ activities (such as wealth management) where customers are more concentrated and powerful. There is little differential advantage in the industry given the