Natwest Bank Essay: Sustainable Strategy Report.

NatWest or National Westminster Bank is one of the largest retail and commercial bank of United Kingdom. The bank was established in the year 1968 by the merger of Westminster Bank and the National provincial Bank. The following report is based on the sustainable strategy report of NatWest Bank.

Natwest Bank has seen torrid times in the last few years with a number of problems emerging one after the other. The main problem as of now is the failure of the online banking system which has resulted in a huge customer backlash from the bank. The customers face huge risk as they are in the fear that their online accounts may be hacked. The online failure of the bank will have a direct impact on its reputation and will prevent them from attracting potential customers. The bank will also lose the support of the stakeholders in such a case. The management of Natwest must issue a strong statement to the media and assure the customers about the safety of the accounts as well as appoint a networking expert to make sure such incidents do not happen in the future.

The PESTEL analysis of Natwest Bank is an analysis of the macro environment that has a direct impact on the mentioned bank of United Kingdom. The external factors usually are not in the hands of the business organization and thus they may act as a threat or opportunity to the success of the business organization (Armstrong et al. 2015).

Political

• 2016 was a challenging political environment for United Kingdom because of the present situation of BREXIT. The political situation of Britain is thus quite problematic for the bank to make progress.
• As a result of BREXIT the UK government has to amend the constitution and change the legal, economic and political rules and regulations of the country. Therefore the management of the mentioned bank has to amend their own rules and regulations which was earlier based on European Union laws and regulations
• Trade regulations will be implemented on UK which will have a direct and long lasting impact on the business transactions of Natwest bank as they will have to abide to a number of different rules that will affect their performance

Economical

The economic system in UK is in shambles after the announcement of the country’s separation from the European Union (Armstrong et al. 2015). The management of the bank will have to come up with new policies to effectively deal with the situation. However the bank can attain profit from its overseas facilities where there are no such risks involved.

The success of the bank depends on the economic growth rate of the country and vice versa. 

The social network of the organization depends on the demographics like age, gender, income and other such related elements (Bhardwaj and Malhotra 2013)

Education is one of the key aspects in the determination of the social analysis of the Natwest bank.

The leisure habits of the people are also another important consideration of the organization.

The implementation of the latest technologies has been of great help for the mentioned bank as because they have been able to easily cope up with the complex pressures of modern banking (Armstrong et al. 2015)

Porter's Five Forces Analysis

The implementation of the latest ERP software in the server of the bank proves the efficiency of the bank to handle both domestic and international banking with ease

The use of the technology has been of great use for Natwest to make sure that they maintain a competitive edge over their rivals

Environmental concerns are one of the biggest challenges that the bank faces and increasing pressures has forced them to rethink and formulate a new environmental policy to address the concerns.

The bank aims to stop the printing of statements and intends to start issuing e statements to all the customers within the coming years. The following plan is a part of the green banking initiative of the management

Some of the corporate offices of the bank and some branches have installed solar panels that have been a positive development for the installation of the green energy of the bank.

As mentioned earlier the legal system of UK is to be amended in the coming years as a result of BREXIT. As a result of the change the management of the bank has to amend the constitution to make sure that they adhere to the new banking regulations of the country.

The bank also needs to adhere to the different rules and regulations of the different countries outside United Kingdom where they operate.

The sudden change in the business environment is one of the most important factors for the paradigm shift in the policy of the organization. Some of the main forces for the change are;

The New Normal- The new mindset of the new business organizations, increased competitions from the other market forces and the use of latest technologies and innovations has been the new trend of the banking industry (Bhardwaj and Malhotra 2013).

Disruptive Technologies- The main problem that exists in NatWest is the use of disruptive technologies. The ERP system used by the bank is way too old for the modern business transactions. The customers of the bank expects hassle free and fast services which forces the bank to install new technologies ion the bank.

Shifting values- After the announcement of the British Prime Minister about the complete separation of United Kingdom from European Union has made the bank to start shifting jobs from UK to the European Union region (Bhardwaj and Malhotra 2013). This is done basically to make sure that the organization can do as much as business which would be deemed off if they decide to keep their main business within the United Kingdom.

Ansoff Matrix

Increasing Stakeholder Influence- Stakeholder influence is one of the most important aspects for the success of the business organization. Involving the stakeholders in all the activities of the banks helps them to stay updated and provides room for a smooth transaction. Some of the different strategies by which the bank has involved the stakeholders are;

The creation of local business growth enablers to support SME’s

Conduction of regular meetings and conferences with the stakeholders of the bank to make them aware of the different steps and plans of the future.

Climate Change and finite Resources- Climate change and finite resources are two of the most important factors that determine the corporate social responsibility of the bank. The management of NatWest has involve4d themselves in different environmental initiatives and provides funds at a very low rate of interest for projects involved in the betterment of the environment. In a bid to save the finite resources of the world, the bank has tied up with a number of Governments of the countries where they operate to provide necessary funding to take preventive measures to stop the degradation of the finite resources in that country.

The competitive dynamics of the particular organization can be best explained by the use of the Porter’s Five Forces Analysis.

Figure No 1– Porter’s Five Forces Diagram

Source- (Bhardwaj and Malhotra 2013)

Porter’s Five Forces Analysis is one of the business tools that analyses the market and determines the profit percentage of the given product or service. There are four different components of the Analysis namely;

Buyer Power- The power of the buyers is perhaps the most important concept that needs to be considered by the management of the bank before the launch of new product or service in the market. The presence of a large number of powerful buyers makes the management powerless. This happens just because the bank has a large number of competitors in the market who offer the same kind of products in the market, thus increasing the options for the consumers to choose from such vast range.

Supplier Power- The suppliers in a bank do not offer physical products but rather offers software and other solutions that are needed to maintain the business in a proper way. The main suppliers of such kind of products and services are Microsoft, Quick Heal and many other computers based graphical products that are needed for the organization to prove the main determinants of the organization. The products are less important as because they can be replaced with other existing products at any given point of time.

Strategic Measures

Competitive Rivalry- Competitive Rivalry is one of the most important aspects of consideration for NatWest as because there are a number of main competitors in the UK market that throws a direct challenge to the bank. Banks like Barclays, RBS has a huge customer base in their ranks which makes it difficult for the organization to attract customers and sell their products.

Threat of Substitution- The threat of substitution is an essential factor when the management considers the balance of power in the UK market (Bhardwaj and Malhotra 2013). The main threat to NatWest is the emergence of digital currencies like bit coin and the increasing importance of digital payment gateways like PayPal and Stripe. The more these digital

Threat of New Entrants— The threat to new entrants in the traditional financial markets has raised serious doubts on the existence of the banks. The bank lies in a typical environment with big guns in the industry like Barclays and RBS while new business competitors in the form of digital transactions. However the amount of funds and the large scale investment in the UK market by NatWest will prove to be the superior force and will thus have no effect on the entry of new forces in the market (Bhardwaj and Malhotra 2013).

NatWest has relied on some special strategies to survive in the market. The strategies have been designed in such a way that it curves a successful growth for the organization.

One step at a time- A proper planning by the efficient management of the organization helps in the growth of NatWest globally and also across UK. The products of the bank are launched one at a time to make sure that the organization does not fails to deliver the value of a certain product.

Sponsoring- The bank tries to grow its brand value by means of proper and efficient advertising. The bank is the proud sponsors of the England national cricket team and is also sponsors other sports and other events.

Collaboration- NatWest Bank has collaborated with quite a number of foreign banks and other financial institutions in order to deliver the best value for the business. Apart from this regionally it has tied up with different other corporate to deliver additional products for their customers (Bocken et al. 2014).  

Figure 2- Strategy Diamond

Source- (Bocken et al. 2014) 

Strategy is all about making some important choices and decisions for the future. The Strategy diamond is a business tool that shows the way on how the actual bits and pieces of the strategy are and what are the ways in which they fit together. The main objectives of the strategy diamond are it to integrate important choices into a much bigger picture. The five elements in the strategy diamond are mutually interactive with each of the element shaping the others with a possible refreshment of time and circumstances.

Importance of Sustainable Strategy

Arenas- The management of NatWest has identified the core technologies that act as a game changer in the modern banking industry. Modern ERP systems, software updates are the key to success for the bank. The implementation of the latest core banking solution software by NatWest has been a game changer in the banking segment of United Kingdom (Boons and Lüdeke 2013). The newly formulated strategy of the bank has stressed on the importance of banking in rural and less known areas including small towns and districts. NatWest management has decided to shift their focus on to the new generation and offer new products like e banking, internet banking, online funds transfer, online banking app and many more as such.

Vehicles- The bank has decided to attain the strategic goals by establishing new branches in different small areas and towns of UK. However as far its overseas business is concerned it intends to tie up with different local banks for the purpose of expanding its presence on the global front as well as offer superior quality service to the foreign customers.

Differentiation- The main aim of NatWest is to offer their customers quality products that would cater to their individual banking needs and will help them to achieve the best results in the industry (Bouma Jeucken and Klinkers 2017). The better the products and the service of the mentioned bank, the better will be its brand image and its ability to retain the customers.

Staging- Staging involves the proper implementation of the different strategic plans of the organization. The proper staging of the strategies helps the bank to lower the cost and increases the scope for further improvement by the organization and will also help the organization to deliver better goods and services for the customers.

Sustainability is one of the key factors for the success of every single business organization. A proper and measurable sustainable strategy helps the organization to make sure that their existence in the future will not add to any negative impact within the industry (Skinner 2014). The main focus of the bank is to be concerned about the environment and take different CSR initiatives to make sure that there is a reduction in the use of energy and the sustainable investment funds. The bank has decided to stop issuing paper in ATM’s or in any other form in banks. Such reduction in the use of paper will help them to take appropriate measures to stop deforestation and eventually act as a small part of changing the environment (Slack 2015).

References

Product/Market	Market Penetration	Product Development
Existing Market	Increasing the amount of sales in the already present market and retain the customers	Offering New products by means of innovation and the application of the latest technologies
New Market	Market Development	Diversification
	Development of New markets and venturing into lesser known markets	Offering new products to the new markets helps to increase the business of NatWest

Table No 1– Ansoff Matrix

Source- (As Created by the author)

Market Penetration- NatWest bank has specific achievable strategies that help them to penetrate the existing market and retain the loyal customers and also to draw potential customers towards them. Such relationship marketing activities helps the mentioned bank to increase their business and expand (Peteraf Gamble and Thompson 2014).

Product Development- The product development strategy involves the offering of new products to the existing markets. The core banking system and the e statement alerts were introduced by the management of the bank just a few years back. However there are many constraints attached to the strategy like high investments, technological failure and the risk involved in project management (Dyllick and Muff 2016).

Market Development- NatWest has the aim to establish branches in some small districts and towns and offer completely new range of products for the local customers. The following strategy is undertaken by the bank to maintain their greater banking role.

Diversification- The following strategy is employed when banks offer completely new products to new markets. NatWest mainly innovates products based on relevant diversifications like net banking, rural banking, insurance plans and many more as such.

Low Price/Low Value- The following business area is not a good position for the business. The presence of the mentioned bank in such a position will imply that the bank has been unable to differentiate their product and fails to deliver the value of the products to the customers.

Low Price- NatWest has taken a cost minimization strategy to make sure that they can compete in the lower cost category of the market in rural areas and small towns. The products introduced in these areas fetch low value but have high demands which make them successful (Weber 2014).

Hybrid- The hybrid position involves the element of low price, but also involves product differentiation. The NatWest bank aims to persuade the customers that there is added value for the goods through the combination of proper price and an acceptable level of product differentiation (Peppard and Ward 2016).

Differentiation- The aim of the following strategy formulated by the management of the mentioned bank is to make sure that they are able to offer their present as well as their future customers the best products. The different products of the bank come with high quality and brand value. This helps NatWest to enjoy a superior competitive advantage in the market.

Focused Differentiation- The strategy aims to position the product at the highest price levels (Hughes Cox and Akhir 2016). The mentioned bank utilizes this strategy to promote the best products or the premium products of the banks.

Increased Price/Standard Product- The following strategy is the high risk strategy as the bank offers these products to the customers without any substantial offerings. The profits are high in case these products are sold at a high price.

Increased Price/Low Value- The absence of alternatives in some of the markets served by NatWest helps them to offer products at any given price they intend to and the products does not have a price cap. Monopolies are tough markets where customers are least important.

Low Value/Standard Price- The position is the direct cause for any disaster in the market. The bank must offer the high value for the products to make sure that they have much better competitive advantage in the market.

The many strategies formulated by the management of the mentioned bank are not all equal and of the same importance in nature. Some of the strategies carry the tag of urgency while the others are slow movers (Hughes Cox and Akhir 2016). The management must ensure to appoint a team or some members of the team to implement the strategy in a proper way so that the employees gets accustomed to the new system.

Discovering and developing innovative and core banking solutions and making them available to people all over the world is the key contribution to create value for society. According to Larson et al. (2017) nearly a century of driving change to provide the customers a great banking experience help them to have a proper economical balance within the industry.

The company knows that it takes more than professional banking to win the hearts of the customers. That is why they work in partnerships with customers, suppliers, professionals and non-governmental organizations to deliver the proper banking services to the customers. TBL also creates value by promoting responsible and ethical business practices throughout our global value chain, helping us to continuously reduce any adverse impact resulting from our activities.  

The strategic measures for the implementation of strategic measures include;

NatWest must prepare a roll out plan to implement a strategic change or finalize a strategic plan for the market.

Alignment of the budget to the priorities and funding the different projects.

Setting up sponsorship teams for each core strategy.

Setting up a date for the annual plan and the review of the business.

Establishing key success measures and a proper tracking system. 

References

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Bhardwaj, B.R. and Malhotra, A., 2013. Green banking strategies: Sustainability through corporate entrepreneurship. Greener Journal of Business and Management Studies, 3(4), pp.180-193.

Bocken, N.M.P., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.

Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-19.

Bouma, J.J., Jeucken, M. and Klinkers, L. eds., 2017. Sustainable banking: the greening of finance. Routledge.

Dyllick, T. and Muff, K., 2016. Clarifying the meaning of sustainable business: Introducing a typology from business-as-usual to true business sustainability. Organization & Environment, 29(2), pp.156-174.

Hughes, R.T., Cox, K. and Akhir, E.P., 2016. Modelling the alignment of information systems and business strategy: an example from sustainable procurement. In the 24th International Software Quality Management (SQM) and INSPIRE Conference. Bournemouth: SQM/INSPIRE.

Larson, A., Larson, A., Larson, A. and Larson, A., 2017. Method: Entrepreneurial Innovation, Health, Environment, and Sustainable Business Design. Darden Business Publishing Cases, pp.1-7.

Pastushko, A., Karyagina, M. and Girchenko, T., 2014. Marketing strategy «growing» of the customer of bank.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.

Skinner, C., 2014. Digital bank: Strategies to launch or become a digital bank. Marshall Cavendish International Asia Pte Ltd.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.

Weber, O., 2014. The financial sector's impact on sustainable development.