PESTEL ANALYSIS OF BARCLAYS PLC
PESTLE analysis is very useful for studying the environment in which a company operates and accessing external factors influencing the company in the markets it operates. PESTLE is the acronym for the following categories of investigation: political, economic, sociological, technological, legal and environmental (Cheverton, 2004; Partridge and Sinclair-Hunt, 2006).
Discussing the political factors influencing operation of the banks in the national, local and regional levels and legislation, it should be mentioned that banks have always been to a certain degree regulated by the government (Benston, 2000). For example, government determines the fraction of ...view middle of the document...
In these environmental conditions Barclays Plc has to operate in the global market. Besides, there are several countries in the African region and the Eastern Europe that tend to set bank monopoly from inside of the country (Selgin, 1996).
Among the economic factors, GDP growth and interest rates in the main countries of Barclays’ operations should be discussed. Without any doubt, the UK proves to be the leading country of the company’s presence. Bank’s diversification by geography can be seen from the following diagram.
Figure 3: Profit Diversification by Geography
Source: Barclays 2008 Annual Report
Besides UK, the economic indexes of the USA and an African country, for example, South Africa should be analysed.
The GDP growth rates in the discussed countries appear to look the following way:
Figure 4: United Kingdom GDP Growth Rate (Adjusted by Inflation)
source ONS 2009
Being the main country of the bank’s operation, the United Kingdom demonstrates the greater fall of the GDP in comparison with other discussed countries. Up to the present time this fall constitutes -4.1%.
Figure 5: United Stares GDP Growth Rate (Adjusted by Inflation)
Source: Bureau of Economic Analysis, 2009
In spite of the fact that the world financial crisis originated in the USA, this country demonstrates not as deep fall of GDP as in the UK.
Figure 6: South Africa GDP Growth Rate (Adjusted by Inflation)
Source: Statistics South Africa, 2009
South Africa demonstrates the smallest drop of -1.3% if compared to the three countries. At the same time, South Africa showed higher indices of growth prior to the financial crisis. It may be concluded that the higher the GDP indices are, the greater amounts of money come through banking system, and the more favourable position Barclays plc would have in a given country. However, it cannot be stated for sure that South Africa provides better conditions for Barclay’s operation. The economy of the USA proves to be the largest and most of the bank’s transactions are carried out in the UK.
Interest rates in the discussed countries appear to look the following way:
Figure 7: United Kingdom Interest Rate
Source: Bank of England, 2009
Figure 8: United States Interest Rate
Source: Federal Reserve, 2009
Comparing interest rates in the UK and US, it can be stated that the US...