This article will critically measure the tactical position of Lloyds Bank Group and propose how appearing technology may impact on the future position of the organisation. Lloyds bank group was chosen as it is a business with accessible information and the record will help with the overall knowledge of strategy and technology within a sizable multinational company.
As set up in the introduction the company decided on is Lloyds Bank Group plc (LBG). Lloyds Bank Group plc, formally known as Lloyds TSB became the U. K's major retail bank after the acquisition of Halifax Loan company of Scotland in January 2009, Appendix 1 gives a brief time line of LBG from its roots in 1765 to its position as the U. K's most significant retail bank.
Lloyds Banking Group has a base of over thirty million customers throughout varies brands held by the group such as Cheltenham and Gloucester and Scottish Widows, the companies assets total 1. 1 trillion and an in depth view of the company's balance sheet can be seen in Appendix 2.
In today's economy many financial companies are experiencing some form of financial difficulty, this can be observed in the collapse of North Rock, Lehman Brothers and Fannie Mae. Lloyds is no exception as it was just lately bailed out by the government with a 260bn loan to secure its toxic debts, this now means that the federal government now possesses 43. 5% of Lloyds. ( www. ft. com/Lloyds get away plan put to test, Oct 16 2009).
The company however, is convinced it can harbour all of those other economic recession and emerge using its position as the U. K's most significant lender still intact, a recent statement by Lloyds leader reinforces this affirmation " the current economic climate has relocated into recession and the global financial crisis is ongoing. The outlook is tough with this retail impairments expected to increase. . . the main element point however, is that we have a definite view if where our business is going and what needs to be achieved. "( http://www. lloydsbankinggroup. com/home/values, 2009 ) The assertion granted advises that the company has a "clear view of where our business is certainly going" which properly leads onto another section that will critically evaluate the current tactical position of Lloyds Bank Group.
This record will critically measure the tactical position of Lloyds Banking Group and propose how growing technology may effect on the future position of the company. Lloyds banking group was chosen as it is a firm with accessible information and the record will aid with the entire knowledge of strategy and development within a big multinational organization.
As set up in the release the company preferred is Lloyds Bank Group plc (LBG). Lloyds Bank Group plc, formally known as Lloyds TSB became the U. K's largest retail bank after the acquisition of Halifax Loan provider of Scotland in January 2009, Appendix 1 gives a brief time type of LBG from its origins in 1765 to its position as the U. K's major retail loan provider.
Lloyds Bank Group has basics of over thirty million customers throughout varies brands managed by the group such as Cheltenham and Gloucester and Scottish Widows, the firms assets total 1. 1 trillion and a detailed view of the business's balance sheet can be seen in Appendix 2.
In today's current economic climate many financial companies are experiencing some type of financial difficulty, this can be seen in the collapse of North Rock, Lehman Brothers and Fannie Mae. Lloyds is no exception as it was lately bailed out by the government with a 260bn loan to secure its harmful money, this now means that the federal government now has 43. 5% of Lloyds. ( www. ft. com/Lloyds evade plan put to check, Oct 16 2009).
The company however, is convinced it can harbour the rest of the economic recession and emerge using its position as the U. K's most significant loan provider still intact, a recently available affirmation by Lloyds leader reinforces this statement " the overall economy has moved into downturn and the global financial crisis is ongoing. The prospect is tough with this retail impairments likely to increase. . . the main element point however, is that people have an obvious view if where our business is going and what needs to be achieved. "( http://www. lloydsbankinggroup. com/home/values, 2009 ) The assertion granted advises that the business has a "clear view of where our business is going" which properly leads onto another section that will critically evaluate the current proper position of Lloyds Bank Group.
3. Current Strategic Position of Lloyds Banking Group
This section is split into three individual parts and uses proven tactical indicators to look for the current tactical position of LBG. As the business has assets disperse over many sub companies ( Cheltenham and Gloucester, Scottish widows etc) the research will be focused on the client service sector of Lloyds retail bank
3. 1Internal Environmental Analysis
In order to understand the internal environmental analysis the company's mission and purpose assertions will be analysed.
The Lloyds goal statement granted in the company's website advised that their goal is "to create deep, long lasting customer relationships that assist our customers achieve what's important to them. " This means that that their strategy with customers is to make a mixture of mental and social principles with them i. e. they are really creating emotional principles " what's important to them" and the social values focuses on " long lasting customer interactions. " How these values are created can be seen by using the frame for Porters value string and applying it to LBG in physique 3. 1. 1.
Ref Porter. M. E, "The Competitive Advantage", 1985
Figure 3. 1. 1
The main purpose for the value chain is to show what activities contribute to the company's overall margin. The margin in this instance is perceived customer values. The primary value string activities recognized for Lloyds are discovered as Procedures, Marketing and Sales, CUSTOMER SUPPORT and Work Allocation. These activities directly increase value creation but wouldn't normally be operational with no support activities.
Lloyds key competencies is its efficiency and customer service, its capability to quickly offer with customers demands and offer with them correctly help generate the margin that the company is looking for. The margin for most others such as Microsoft or Mercedes is to produce economic earnings but from a person service point of view it is to supply the customer with interpersonal and psychological value. This is done so that an inexpensive value will hopefully be created later in the personal savings and investment sector at LBG.
It is recognized that if a customer is pleased with the company's efficiency and service with relatively trivial demands i. e. transferring direct debits, starting bank accounts, they will then become more likely to recognise the group as successful when it comes to other products and services. This is especially beneficial when the client is seeking to use something that will create an economic income such as home loans and unsecured loans.
Lloyds note that the client recognising their ability to handle their designated processes efficiently and appropriately as a fundamental element of their future, this is reinforced by the business's vision statement "our vision is usually to be accepted as the best financial services company by customers colleagues and shareholders. " The eyesight statement is just a bit unusual is doesn't point out growth which is usually a priority and key drivers for some organisations. It instead mentions the shareholders, this can be that Lloyds want to gain the confidence of the shareholders before beginning to focus on the growth as the primary driver.
This could be because of the ongoing recession and want to maintain their position as the U. K's most significant bank until the recession shows indications of declining. Once or if this does happen it is likely a new perspective declaration will be given.
As the shareholders are talked about in the vision statement this gives them a high level of ability within the lender, this can be a lesson learned from the horizontal diversification that occurred when they received HBOS, as the HBOS shareholders lost self-confidence due to the finance institutions growing dept the talk about price plummeted leading to the takeover.
Figure 3. 1. 2
From the matrix it could be seen that the shareholders would be category D, key players. As key players within the Company the energy will be shared with the executives within the business. For Lloyds this will be Chief Executive Eric Daniels and his Exec Management Team, a view of the team can be seen in body 3. 1. 3
Figure 3. 1. 3
Ultimately Eric Daniels has the power to make any decisions within the business but he can be affected by his executive management team and the shareholders. This electricity structure makes up part of Lloyds' ethnical web. The ethnic web is split into six sub categories and can be used to show what makes up the culture of the company (physique 3. 1. 4)
Figure 3. 1. 4
Stories: From surveys conducted by Lloyds over 50% of customers believe processes protected in the survey have improved within the last a year( ref Llyodstsb. com / news release, 04/03/2009). The tales concerned with the corporation are not always heading to be from a customer's perspective or in a positive light. Regarding to Quarter 3 staff questionnaire (Appendix 3), only 30% of employees in former HBOS business centres are satisfied with their job compared to 88% in original Lloyds business centres, this causes testimonies of unmotivated personnel, unwilling to donate to company by working extra hours and not suggesting the business to friends and family as a spot to work.
Symbols: In the retail sector all clubs are led by status symbols, which is dependant on an primary traffic light system.
Red = under 90 % of designated workload being processed
Amber = 90-95 % of selected workload being processed
Green = 95-100% of chosen workload being processed
Blue= 100+% of designated workload being processed
There is also company specific jargon that is utilized and grasped by every colleague.
Power Structure: As covered previously in this section, LEADER Eric Daniels makes any decisions that will impact the business at a commercial level, these decisions can be affected by his executive team and shareholders but ultimately lay with him. Diagram 3. 1. 5 provides a sign of the energy composition and the decisions that are likely to be made:
Figure 3. 1. 5
Organisational Structure: The organisational structure for Lloyds in similar to the power structure as is hierarchical with Eric Daniel at the pinnacle filtering all the way down to branch and control colleagues.
Control Systems: The LEAN process has strong adjustments over how existing operations are carried out and exactly how new techniques are shaped. Another control system is the colleague grading system, this involves every colleague to be graded quarterly by a balance score card, which is a representation of the employee's quality, efficiency and contribution to the business. These are completed to guarantee the colleagues are undertaking their tasks effectively and correctly
Rituals and Exercises: Employees have a much a establish amount of work given to them every day and monthly meetings are presented for every business centre with the respective General Director.
After evaluating each facet of the culture web it can be concluded the culture within Lloyds is regimented and static. That is because of the rigid management framework and daily regimens, all further managed by the LEAN process. This might not exactly be considered a negative culture when analysing the market and field it is at. A company with thousands of employees needs a strict management and power framework to ensure a well balanced organisation, particularly when it is required to protect and service people's finances a day per day. This culture has proven that it could work as Lloyds now gets the biggest customer platform of any U. K lender, providing it with the most significant market show. The culture web helps offers an indication of Lloyds talents and weaknesses that will influence its tactical position.
To complete the critical analysis of Lloyds' tactical position it is necessary to look at the exterior environmental factors that are impacting the business.
3. 2 Exterior Environmental Factors
There are several methods you can use to determine how the exterior environment has effects on the tactical position of any company, this section will cover two methods and conclude with the business's overall strategic position.
One method that is trusted in environmental examination is Porter's Five Pushes analysis. Figure 3. 2. 1 gives a sign of Porter's Five Causes.
Figure 3. 2. 1
(Ref Porter, M. E, How competitive forces form strategy, Harvard business Review, 1979. )
Bargaining electricity of customers: This force is different within the bank section compared to a company retailing a specific product. Customers don't have a high degree of bargaining electricity unless they are really high investors within the business but these customers make up significantly less than 5% of the overall customer bottom.
Threat of new entrants: In the banking sector there is very little risk of new entrants, the key concern can actually be rival brands merging or the acquisitions of another brands to generate larger/stronger banks that will then dominate a more substantial sector of the marketplace.
Bargaining power of suppliers: This will not particularly apply to Lloyds bank group, it is because it is providing something to the customer rather than a physical entity. There may be some degree of source within the company i. e. office resources and food equipment but this will have no effect on the overall all value of the service.
Threat of substitute products: This section poses the major threat to the business's market share and is also closely linked with section 5. - Competitive rivalry in a industry. Currently Lloyds five different current profile available but each loan company offers virtually identical products to one-another so a lot of the company's capital and time is spent on marketing services and researching new ones. The competitive rivalry is unique to the bank sector as it includes possible customers money and assist with copy from rival companies to theirs to be able to gain larger market shares.
If a company's market share is deemed to be too big by the monopolies commission payment is can force that company to sell elements of its infrastructure off, as it classifies the company's success and domination unfair to all of those other companies competing in that particular sector. This idea of political issues being one of the external environmental issues can be an idea that originated in PEST(Political/Legal, Economic, Socio-cultural and Technological) research. This framework may also be used to ascertain factors which could affect Lloyd's current proper position.
As mentioned recently there are politics and legal implications of any company growing too powerful, this is apparent within LBG as it has become the concentration of the monopolies commission. U. K. Chancellor of the Exchequer Alistair Darling said "Everything you really want to do is to acquire quite a significant divestment" by RBS and Lloyds. . . If we don't possess more competition we're going to end up with perhaps half a dozen big providers and that really would represent a significant major decrease in choice which just would not be appropriate, "
If a company's market share is deemed to be too large by the monopolies fee is can force that company to market elements of its infrastructure off, as it classifies the business's success and domination unfair to all of those other companies competing for the reason that particular sector. This idea of political issues being one of the exterior environmental issues can be an idea that was developed in PEST(Political/Legal, Economic, Socio-cultural and Technological) evaluation. This framework will also be used to determine factors that may have an impact on Lloyd's current strategic position.
Political/Legal: As mentioned previously there are political and legal implications of an company growing too powerful, this is apparent within LBG as it has become the emphasis of the monopolies percentage. U. K. Chancellor of the Exchequer Alistair Darling said "What you actually want to do is to own quite a substantive divestment" by RBS and Lloyds. . . If we don't have more competition we will end up with perhaps half a dozen big providers and that really would represent quite a major reduction in choice which just wouldn't normally be appropriate, " This notion of offering of elements of these banks in addition has been supported by the Western european Commission so it is likely that this has a solid possibility of taking place which would dramatically reduce Lloyds market share(Bllomberg. com/Lloyds sell off will supercharge competition, 01/11/2009).
Economical: There are plenty of economical factors that are currently impacting on LBG, one of the key factors is low interest rates, this does encourage people to invest in the cost-effective generators Lloyds offers i. e. mortgage loan, but the low interest rate coupled by the highest unemployment of 7. 9% (information. gov. uk, 14/10/2009) means they are generating revenue but not at the pace they would like.
Sociocultural Factors: One of the primary sociocultural factors that is benefiting all finance institutions is the country's increasing use of the internet and their self confidence in using it. As more people use internet bank this means that the firms need to hire less staff the deal with the customers' requirements because they are carrying it out themselves. As the demographic of UK individuals which may have been brought up using computers ( Informed from 1970's onwards) is continually increasing this may be something that finance institutions are aware of because as the public's confidence in using automatic machines and the internet rises, the need for branch and producing staff decreases, presenting the lenders smaller operating costs, generating a larger profit margin. One report printed by Cahoot advises that "67 % of internet users in London prefer to conduct their finances online, with only 25 % preferring to go to a standard bank" (www. easier. com/view/News/Finance, 2005).
Technological: The main scientific factors that are being applied to banking is principally centered on security. Whether its customer confirmation software or fraudulence prevention the customers security is always a top main concern, "ICBA Community Bank Technology Study, released earlier this month, 81% of the 1, 280 respondents said keeping customer data secure was their most pressing issue. Fifty-seven percent said they intend to increase spending on security technology over another two years while 51% said they'll increase spending on fraud recognition technology" (searchfinancialsecurity. com/Community bankers to increase security spending, 27, Oct 2008)
3. 3 SWOT Analysis
The information gathered and processed in this section suggests that Lloyds is using one of its core competencies to keep its high market show which is its efficiency, insurance firms a rigid regimented framework and a clear indicator of how it generates value for its customers it intends to stay as the nation's largest retail loan company. While Lloyds strength is its efficiency in working with customers demands the mentality behind the efficiency also reveals it weakness. The weakness is now that as Lloyds focuses on reducing process times with the Trim job, it is sacrificing many of its customer services skills and customers may feel isolated as their requests are no more met with phone calls or personal words but general automatically produced ones. However Lloyds can claim that it now hold the largest customer platform for just about any retail bank or investment company in the U. K so its balance of efficiency and customer service must be right. This balance may change in the foreseeable future as customers are more accustomed to working with computers and not place very much emphasis on the level of personal service.
Since the "market meltdown" shows no signs or symptoms of receding yet so when other companies continue to struggle this may present Lloyds with more opportunities for horizontal diversification. If other finance institutions begin to have difficulty (much like HBOS) Lloyds may again acquire another national lender, further cementing itself as the U. K's most effective bank. This might all depend on certain regulatory commissions. Already Lloyds are sketching the attention of the monopolies commissions due to its size as recently discussed, this may therefore establish a hazard to Lloyds if the Monopolies percentage decides elements of Lloyds are to be sold off to ensure reasonable competition.
3. 4Strategic Conclusion
From the examination conducted in this section it is evident that Lloyds current proper position reaches the pinnacle of the U. K bank sector, which through its carrying on of central competencies such as efficiency and its own demanding work driven culture within the company, it intends to remain. This plan may only be before economic tough economy has died, but the mission and vision claims both support this evaluation.
4. Growing Technology
This section will identify rising technologies and exactly how they may impact on the future position of Lloyds Banking Group. It will not be specific to one technological advance but to a location of technology that is already present within the banking sector. This may be split into three sub categories, each with a specific piece of technology.
4. 1 Personal Verification
"We use signatures every day to authorise visa or mastercard trades, documents and agreements" (Ravi Das, Advisor for HTG Alternatives, Keesing Journal of Documents of Personality, concern 24 June 2007). The use for verifying signatures has been around for more than 100 years, for this time the signatures have always been verified by individual judgement. This technique not only takes time to evaluate the signature but may bring about an error as it has been performed by the human. Signature confirmation technology eliminates both these problems created by individuals verification, enough time used is reduced to the processing capacity for the computer which is almost immediately and it illuminates the possibility of a mistake.
One company that supplies signature confirmation software for repayment trades and in digital techniques is Softpro. Their product Signplus "encompasses data and personal safe-keeping, maintenance and display as well as signature verification. "(www. softpro. com/products/signpro, 19/10/2009)
This technology is not necessarily emerging today, however the growth in computer control power behind the program now means that signatures can be confirmed instantly. Therefore the technology not growing, buts its capability to be built-into the bank sector is emerging.
4. 2 Cosmetic Recognition Software(FRS) Combined With Fingerprint Recognition
Facial recognition software is another security feature that's not necessarily rising but increased computer electricity has managed to get open to mainstream companies. Companies such as Toshiba and Asus already use cosmetic popularity software in their notebook computers known as Recognition 2. 0. 2. 32 and Smartlogon 1. 0. 0005 respectively ( www. theregister 19/02/2009). The laptops use webcams together with facial biometric software instead of the more typical account logon (www. theregister 19/02/2009). This type of software can not only be utilized as a security measure within the bank sector but can even be used to service customers better, this will be analyzed in more depth in section 5. The necessity for high computer processor power is because of the sophisticated algorithms used in acceptance software.
The continual increase of computer handling ability is not the only real growth in this field that will help bring FRS to the mainstream, the introduction of new simpler algorithms will also help. These new algorithms are being produced by a team of technicians at Florida Atlantic University, their technique for putting into action the algorithm "isn't only faster and works with low resolution images such as CCTV, but also solves the variant problems caused by different light levels and shadows. " (www. gizmag. com/face-recognition-algorithm, 22/10/2009)
The two-fold improvement in processing electricity and software means that FRS is now easier and cheaper to make use of. This technology can be combined with other security features such as fingerprint acceptance.
Fingerprint recognition has been around for almost a century, since being in 1914 by Sir Francis Galton it offers lasted the test of time because of fingerprints' uniqueness and the efficiency in acquisition of fingerprints. Nowadays fingerprints are registered directly into data bases where they can be extracted whenever if needed, while this technology is not rising it'll be found in conjunction with the previous solutions to ensure the highest level of security. Another section reveals how this technology could be carried out.
5. Implementing Technology
The technology identified in section 4 can be integrated in to the company in many various ways. It can be used as security for employees getting into business centres or as previously acknowledges, the FRS could be utilized for employees to log onto their computers but these ideas would not add any value to the client if implemented. This section will study the possibility of integrating the rising technology with the view of adding to value to the client.
One of Lloyds' key competencies is its efficiency, it is how quickly and properly they deal with a customer's need. Because it has implemented LEAN into its techniques, any software or piece of technology that could add to the efficiency of an activity would be greatly received. This is where signature verification software could stand out in Lloyds.
In Lloyds Glasgow processing centre the execution of Trim has recommended a dramatic decrease in the amount of separate entities that make up an activity. The entities which may have been removed are mainly based around connection with the customer, this type of decrease has been mirrored across all Lloyds sites. An example of a pre Trim process compared to a post LEAN is seen in Appendix 3
For a specific example the procedure of a person changing their name or address has been evaluated. As can be seen from Appendix 5 the process is now dominated by verifying the clients signature which constitutes 70% of the daily workload for the Change of Name and Address Team (CONA). The task is undertaken by 32 personnel in the one CONA team, if Lloyds brought in the software that automatically confirmed the customer's personal and processed this then your workload would effectively be cut by 70%. From Appendix 5 it could be seen that any signatures that cannot be verified then a predetermined notice is delivered to them, a task easily capable of your personal computer.
This is just a good example of one process that would benefit from signature verification software, In Glasgow Service Centre alone, there are six more procedures that would gain highly if applied, especially as Lloyds continue steadily to use LEAN the mentality to drive on the automation of operations is obvious.
5. 1 Implementing Face Recognition
Facial identification can be utilized, not only in customer security but also in increasing customer service. It can add to efficiency by automatically recognising a person when they walk into a lender and their information will be on the member of staffs screen when they arrive at their designated desk. This may only slightly add to efficiency but may be the first rung on the ladder in the ladder to the branch becoming completely computerized with the customer interacting with your personal computer interface in the future.
5. 2 Implementing Face Reputation Software with Fingerprint Recognition
If Lloyds were to make a "hole in the wall structure" that combined FRS with fingerprint acknowledgement this might show customers their level of dedication to security increasing the customers' psychological value. If the device were to be branded this could stop the threat of new entrants as it would be founded as the first or original lender dedicated completely to customer safety. This would stay away from the risk of new entrants and could also provide more of market share. The much better "hole in the wall membrane" on its own would not lead to the thought of a totally secure lender but using this with the other security methods stated previously would enhance the overall security and efficiency of the company, as it could dramatically reduce the risk of a person identification being stolen if their fingerprint and confirmation of these face was required before a exchange.
If the increased security actions along with methods in increasing workload capabilities mentioned in the previous chapter were put in place into Lloyds it might lead to an elevated market show which is what would be the main catalyst from the customer services point of view. The leads to the questionnaire in appendix 4 concluded that today people are valuing the security with their money before their satisfaction with the service they received, therefore the execution of the technology could increase Lloyds competitive benefit within the bank. As people's conception of the lender changed if Lloyds were to use the security features, this would lead to a change in the ethnic web.
The stories people told about the company would differ from it as an ordinary bank or investment company to one that they feel their money is safe with and they know any demands they make will be dealt with effectively and effectively.
In regards the companies value chain the actions will be the same but the margin will be better as there will be a reduction in the client service and functions due to confirmation software exchanging many staff, this might also lead to a reduction in the quantity or staff required in individuals resource management. Really the only increase in the worthiness string would be I. T development as more computers and different control technology will require regular revisions and services to ensure efficient work.
If these implementations were to take place it can be argued that it could benefit the future strategic position of the company. This might be scheduled to Lloyds increasing their main competency of efficiency while adopting security minded position on bank. These assumptions are also predicated on the understanding that the populations upsurge in use of personal computers and self confidence in security software in conjunction with a rise in ID robbery will continue steadily to increase. If indeed they do and Lloyds have implemented the security and process measured mentioned in section 6, they may contain the perfect balance of the bank that individuals can rely on to look after their finances effectively and securely but also offer with any products/requests they want quickly and accurately.
This would give Lloyds a more substantial competitive benefits over other banking companies but only of the technology was executed before the other finance institutions. The impact on the business would also coincide with the business's vision and objective statements that they would like to "help customers achieve what is important to them" and "be accepted as the best financial services company. "
This survey has critically assessed the tactical position of Lloyds Bank Group and exactly how growing technology may effect on the future of the company, by doing this objective it has additionally contributed to the entire understanding of strategy and advancement within a corporate and business environment.
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