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Adapting Business to the Environment

Paper Type: Free Essay Subject: Business
Wordcount: 2735 words Published: 2nd Aug 2018

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Success of every business depends on adapting itself to the environment within which it runs on. For e.g. if there is any change in government policies an organization has to change its internal policies accordingly that could be wages, taxes, working hours and so on. Changes in technology have replaced type writers to computers. All these external factors are beyond the control of a business, so all business organization have to adapt themselves to change in order to succeed. Hence understanding of various factors of Business environment is necessary.

Business environment is categorized by two categories i.e. Micro Environment and Macro environment, Micro environment factors deals with internal factors like employees, Suppliers, Customers, Stakeholders, Media. Macro environment factors deals with external factors like technological (PESTEL forces), Economical, Political, Social, Legal and Environmental (Palmer and Hartley 2006).

The above factors have direct or indirect influence on an organization. For e.g. Change in environmental norms have forced car manufacturers to come with a new technology which will keep pollution under control. Due to increased work stress some governments have eased working hours from nine to eight hours which in turn increases cost. Due to increased crimes on women new laws have been added for safety of women, women working in call center in night shifts needs to escort to her home by a security guard which means added cost to a business. If the value of domestic currency increases it will be difficult for export houses to match the prices with international competitor as the prices of raw material overseas might not have changed with the forex change.

Change management is a structured approach to moving individuals, teams, and organisations from a current state to a desired future state. Change Management includes both organizational change management processes and individual change management models, which together are used to manage the people side of change. Stated simply, change management is a process for managing the people-side of change. (Referencing)

Survival of fittest is not the criteria, it is one who adapts to change quickly is successful, before taking products or services to an end user it is imperative that an organization should have or must do their home work on existing business environment based on above factor, by doing so it will help an organization to formulate corporate strategy, marketing strategy sales strategy HR strategy, product development strategy and help the organization to be a part of value chain.

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Research conducted by McKinsey (LaClair, 2002) and by Prosci (Best Practices in Change Management report, 2007) has demonstrated a direct correlation between achieving the business objectives of a change and effectively managing the people side of that change. Prosci’s research with nearly 400 organizations showed that a project had five times the probability of meeting objectives if they implemented “very good” or “excellent” change management practices.

Based on the PESTEL theory and Change management we will be discussing various challenges faced by an organisation. The company selected as a matter of this study is Barclays. In last five years Barclays had to deal with economic, social, legal and environmental challenges. It had to deal with Change management

Organisation Description and Background

Barclays is a major global financial services provider engaged in retail banking, credit cards, corporate banking, investment banking, wealth management and investment management services with an extensive international presence in Europe, the Americas, Africa and Asia.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs more than 144,000 people. Barclays moves, lends, invests and protects money for more than 48 million customers and clients worldwide (www.barclays.com). http://group.barclays.com

Challenges faced by Barclays towards it Stakeholders

Mainly in last 3 years Barclays faced lot of challenges due to recession. Barclays share value had dipped to the lowest which became a major concern for all stake holders. Last year, Barclays restructured its business model by merging corporate and investment banking together and leave retail and small business customers with the global retail bank. This made Barclays to focus more on retail banking.


Barclays always believes in its stakeholders by listening, responding and working in partnership which is also one of the main reason that the share price of Barclays grew at fast rate in spite of economic slowdown.

Share prices of Barclays for last five years (guardian.co.uk) http://www.guardian.co.uk/business/barclay

Credit risk impacts of a changing climate

Change in weather may influence the business in more possible ways than imaginable. Hence, due consideration is given when assessing the credit risk while issuing credit to a business.

Physical risks such as damage to fixed assets arising from storm, seismic activities; Supply chain deficits arising from scarcity of natural resources like water, changing patterns of customer needs due to change in extremes of temperatures. The annual average of Global surface temperature would inevitably rise by 2-4 degree centigrade by year 2100 (Source IPCC 2007)

All these factors but not limited to effect the company’s balance sheet in various ways like increase in costs, scarce raw materials etc, changes the business operations practices and conditions, Or may reduce or stimulate the demand of the product or services of the company in question.

To redress the challenge Barclays developed collaboration with Acclimatize experts in the field of Climate Risk Management. The primary sector identified most affected by the changing climate were businesses that are dependent on massive fixed assets, such as energy, and sectors like chemical & fertilizer, Pharmaceutical and tourism among many others. Hence it was imperative for Barclays to include Climate change as part of mainstream business planning and risk management.

As audiences of these reports were from a non technical background, these reports were developed accordingly for different geography’s and time horizons.

This also helped Barclays to identify the opportunity presented by the climate change, like change in demands of product and services and early mover advantage, in addition to mitigating risks associated. This also helps understand and monitor the interests and needs of external stakeholders including Government regulators, insurance companies, and investor’s and competitor suppliers. This helped Barclays to reduce and at times eliminated the adaptation lag, in turn giving an edge over competitors, and better understanding of rapidly changing stakeholder’s position. “Climate Proof” projects at the inception phase by incorporating the adaptation measures that are robust in the face of climate change.

Challenges on build internal capacity on adaptation

This was achieved by raising awareness, developing a corporate understanding of climate risks, assigning responsibility for adaptation to staff and adopting a consistent approach. Involving and taking inputs from the staff for more acceptance and ownership.

Some Geographical Locations are more vulnerable than others.


Places that are already having very high temperature or very low temperatures (Permanent Frost Inhabitable) are at higher risks. Cities exhibiting Urban Heat Island effect (Frequent building of pool of hot air) exuberate high temperatures. Mean sea level rise, increased storms surge heights, wave heights, coastal flooding and erosion.

Decreased seasonal precipitation, increased risks of drought, subsidence and wildfire.

Water resources dependent on glaciers (those areas dependent on glacier melt are probably observing increases in water resources in the short term, as glaciers melt faster, but over time, the loss of glaciers will lead to decreases in water resource availability),Subsidence-prone soils.

Regions with high rainfall, floodplains, Landslides and contaminated Environment land and water Areas at risk from tropical storms.

Project Vietnam

Barclays with partnership with CARE is implementing Change microfinance.

The objective of the project is to establish a community managed savings and loan association.

Target of this project is to help young people in urban and semi urban areas

Despite of the economic boom in last 15 years there has been a very big population of disadvantaged youth in southern Vietnam, which suffers from the underlying cause of poverty and with high rate of rural-urban mobility there is lack of employment and opportunities, and poverty is prevailing on large scale.

CARE and Barclays’ approach to the problem is to increase the understanding for significance of saving and improve their skill in managing household finance.

This is aimed to benefit and reduce poverty among 10,000 venerable people, at least 50% of which are women and migrants through Group Savings and Loans. To appeal to the masses of the targeted populations the program is called Group saving and Loans GSLs.

Other Key objectives

To establish at least 500 GSLs to develop a culture of saving and community management and support

To provide guidance for group members to aid them in developing business plans and making loan applications. These in use by International Labour Organization, German sustainable development agency GTZ and the Vietnam Chamber of Commerce and Industry

To build the capacity of the local partners, the Youth Union and the Women’s Union, to encourage financial literacy and entrepreneurial skills among group members by providing training on business planning and household finance management. Manage and expand Group Savings and Loans. Support is also being provided to help to develop new financial products tailored to the needs of the groups, such as savings, loans and micro-insurance.

Enhanced economic security through an improvement in financial inclusion. The promotion of entrepreneurship and support for livelihood opportunities for young people and their families. This is to be achieved through the development of a culture of savings, an increase in financial literacy and an improvement in entrepreneurial skills and general confidence in public,

This has also helped CARE’s local partners from an increased capacity in managing community-based microfinance. In addition, they are gaining experience in establishing microfinance services for young people and providing business and entrepreneurial training.

Change management

One of the examples of change management Barclays did was on communications, biggest challenge was how to communicate its restructuring plan to 45,000 employees, cause if the restructuring was not communicated in effective way it could lead to chaos and also lead to attrition. So Barclays came with a plane which included following, but to start off they adopted top three elements.

Involve audience by engaging them

To simplify the message to employees by informing what was important for the business

Ensure all information was attributed to brand values and organizational priorities

To Ensure face to face delivery plays a vital role

Using appropriate communication channel

Involving audience by engaging them

If top level managers wanted to share information they used a newsletter format, but if there was any information which was very important they used a video or presentation on their internal website.

To inculcate change successfully, Barclays involved its employees by taking their opinion by having open communication

Simplifying the message

Important challenges were communicating the most important objective of the business.

Thorough understanding of the stuff which they are working on

Work as team

Giving high priority to customer, just the way we wanted to treat.

Performance based promotions.

Focus on Face-to-Face Delivery

To share financial results CEO went on road show in which he asked questions and also addressed concerns that employees had. This presentation reiterated that change had been made and the communication between CEO and front line employees was progresses in smooth way.

By following this change management in communication new leadership team joined hand together and concluded on one agenda, Employees were given the priority of tasks and number of miscommunication going across was reduced drastically, objectives got cleared.

Merger and Acquisition

In 2008 Barclays acquired core assets of Lehman brothers which are fourth largest investment bank in US which filed for bankruptcy. By acquiring this Barclays made its strong presence in US in Investment banking and trading business. This also added value to Barclay’s financial capital. Initially employees were scared about their job loss. Though profit was down by 24% but there was asset inflow.

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After acquiring Lehman Brother’s now Barclays is facing court trials. Lehman is filling a case against Barclays for allegedly ripping it off to the tune of $11bn over the deal. In this deal Barclays took over 10,000 employees and made a strong presence on Wall Street. Barclays is accused of negotiating some discounts on assets with co-operation of Lehman top executives who were offered better and more pay.( http://www.guardian.co.uk/business/2010/jun/21/barclays-lehman-brothers-court-case 30/07/2010 guardian.co.uk, Monday 21 June 2010 21.21 BST

In 2005 Barclays acquired Absa, and in 2007 this acquisition was criticized from the governor of the South African Reserve Bank saying that it will expose bank to greater risks in economy than acceptable. Whereas it over came all the criticism by offering better products and services to customers. In 2008 Barclays became the first bank in South Africa to reach one million internet users.

Sustainability of Barclays

Faith and level of confidence was brought down in this year, share prices almost went down drastically. Many banks which had good financial assets were acquired by competitors. Barclays was not an exception even it had to undergo financial challenges which was brought by credit crunch. They had to raise capital to meet the new laws introduced across the banking sector. Barclays had to raise capital in way that it did not take much preventive measure. This caused lot of turbulence amongst stakeholders.

To overcome the above challenge Barclays started diversifying business and making it presence in market and sectors which were growing rapidly. Banks strength lies on diversification in terms of Business, Geography and products. Barclays made strategic move by acquiring Lehman Brother’, The UK Goldfish Credit card business, Expobank in Russia, The Italian residential mortgage business of Macquaire Bank limited and PT Bank Akita in Indonesia

Introduction on new products and innovation

In 2008, Barclays introduced Mobile banking, now customer can pay their bill just by sending SMS, they can check balance in their account. Barclays also launched Al-Safi Investment platform, which is Islamic Finance equal to Shariah format for both conventional equity strategies and also a prospect to gain from falling prices. Barclays also launched new investment products to help investors diversify their portfolio when market is uncertain or volatile and it was called Commodity investment index. Barclays focuses on new innovation to help clients for e.g. Contribution Pension plans offers wide diversification and bestows solutions on income. By understanding this Barclays developed a product called “SponsorMatch”



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