How Barclays is using its resources and capabilities to achieve sustainable competitive advantage

 

 

Firms are becoming increasingly aware of the importance of integrating a company’s competitive advantage with its distinctive competences with regard to ensuring an organization’s success. Research has shown that an organisation can be said to have a sustainable level of competitive advantage if it is comprehensively implementing a value creating strategy that is not being presently used by either a current or potential competitor. Moreover, such a competitive advantage is achieved in the instance that the benefits from implementing this particular value creating strategy cannot be replicated by its competitors. This essentially means that competitive advantage is created only after efforts by competitors to duplicate the advantages of the value strategy have distinctly failed. This is seen as the reason why a large number of organizations are increasingly focusing on putting in place methods as well as strategies that are difficult to replicate. This paper critically examines how Barclays has engaged as a strategy the use of its resources and capabilities in a bid to generate sustainable competitive advantage.

Organisational resources                                                                   

Johnson, Scholes & Whittington (2008: pg. 95-96) argue that the most basic concept defining an organisation is that of resources. Tangible resources can be described as the physical assets that make up an organisation whereas intangible resources are the non-physical assets such as information, reputation and knowledge. Ordinarily, an organization’s resources can be described in terms of its physical, financial, human as well as intellectual capital resources. The Resource-Based theory argues that firms are characterized by resources that provide them with the opportunity to comprehensively achieve both competitive advantage as well as high levels of performance. This particular advantage can only be sustained over a long period of time if the firm is able to protect itself against imitation or transfer of these resources. A growing amount of research is positing that a firm’s performance largely depends on its internal resources including employees, training as well as knowledge and skills (Johnson et al, 2008: p. 96). In addition, by applying the Grants model and the Barneys model, this will ensure that Barclay has better dominative strategies and thus will better its marketing strategies.

This particular theory also points that in determining strategies that will enable an organisation to sustain its advantage, an organisation should consider the dominant resources and learn how to distinctly implement them (Dubrin, 2006: pp. 18-19). The determination of these resources will enable the firm to not only identify but also classify its resources and determine its strengths as well as weaknesses. Moreover, it will enable the organisation to integrate its strengths into distinct capabilities as well as key competencies. It will also provide the organisation with the chance to assess the level of profit that can be derived from these capabilities and competencies which will in turn enable the firm to critically identify the most appropriate strategy that would ensure the comprehensive exploitation of the firm’s capabilities (Dubrin, 2006: pp. 19). On the other hand, by applying the six forces model, it will improve its market dominance and opportunities.

A Company’s Competitive Capabilities

Capabilities often refer to the ability that a company has to take advantage of its available resources. These capabilities can be seen in the processes as well as routines that enhance the organization’s ability to distinctly manage the relationship between the available resources and thus enable the turning of inputs into outputs. In this regard therefore, an organization’s capabilities can be categorized into its marketing, manufacturing and human resource capabilities. As Thompson and Strickland (2004: pg 96-97) argue it is important to make a distinct between capabilities that are at a threshold level and those that will enable the organisation to effectively achieve a superior amount of competitive advantage and subsequently enable the organisation to achieve a superior level of performance. Threshold capabilities are essential towards ensuring that an organisation is able to meet the requisite requirements within a specific market (Hubbard & Daniel 1998, p33). These could be resources that would be helpful to meet minimum customer requirements or they could be threshold competences  that are critical towards ensuring the effective deployment of resources that would not only meet customers requirements but would also enhance other specific strategies that the firm might have put in place. Thompson & Strickland (2004: pg 118) present examples of competitive capabilities as ensuring short development times with regard to bringing in new products to the market, a distinctly strong dealer network as well as effective partnerships with core suppliers. Moreover, competitive capabilities can be defined as the ability for an organisation ensures that it has measures that will keep the firm’s pipeline with a constant supply of innovative products.

The Relationship between Company resources and Capabilities

Grant (2010: pg 149) argue that the challenge with regard to actively developing capabilities is that little is known about the relationship between resources and capabilities. Consider that in many instances, the firm that demonstrates an impressive array of capabilities is not necessarily the one with the largest amount of resources. Dubrin, (2006: 98) puts it that functional resources as well as capabilities often encompass not only the financial , physical and human assets in each area of the organisation but also covers the ability of the individuals within each area to critically formulate as well as implement strategic objectives and policies. When properly implemented, these particular resources and capabilities have the opportunity to further strengthen the organisation and enable it to carry out a wide range of value added activities. In addition, the effective implementation of a mix of these resources and capabilities enables an organisation to effectively support a wide number of strategic decisions (Jeff 2008, p22).

This clearly shows the manner in which resources have a distinct and direct impact on the competitive capabilities of an organisation. Indeed once an identification of the resources has been made and effectively used, the firm has the opportunity to put in place strategic plans that would ensure the company has a strong competitive capability over its rivals whether present or potential. As Hamel and Pralahad (1996: pg 35-37) it is often not the size of the resources that a firm has that determines the organization’s capability but the incentive that the organisation has with regard to leveraging these resources to enable it to have a distinct superior advantage over its competitors (Hussler, Penin & Michael 2012, p372). The organization can take advantage of its present resources by either ensuring that the efforts of each group or department are aligned and placing firm focus on those processes that have the biggest impact with regard to achieving customer expectations (Sadler 2003, p22). Organizations can also improve their capabilities by putting in place measures that will ensure the active conservation of resources. This can be achieved by recycling the resources and capabilities through a wide range of markets and product generations or co-opting these resources through strategic alignments with other companies (Thompson & Strickland, 2004: pp. 97-98).

With regard to enabling a company to achieve sustainable competitive advantage, it is important to consider that sustainable competitive advantage is achieved when an organization’s resources are not only valuable but also rare and inimitable as well as appropriate. In this regard, acquiring a well as preserving this sustainable competitive advantage are a responsibility of the resources and capabilities of the organization (Franke & Timoth 2006, p22). This is because a firm knowledge of these resources and capabilities ensures a distinct improvement of the organisation with regard to responding to customer needs. Indeed the absence of these capabilities ensures that an organization’s strategic capability does not remain the same (Thompson & Strickland, 2004: pp.98).

How Barclays is using its resources and capabilities to achieve sustainable competitive advantage

Formed in 1690, Barclays has grown over the years to become one of the largest banks worldwide (Tecee 2009, p33). With operations in over 50 countries and well over 48 million customers, the bank has been comfortably able to operate in a wide range of areas including retail, wholesale and investment banking as well as wealth management, mortgage lending and the provision of credit cards. In order to effectively manage its operations, the bank has essentially divided itself into different business clusters namely Corporate and Investment Banking, Wealth and Investment management as well as Retail and Business Banking (Barclays, 2013: p. 1). The firm employees more than 155,000 workers spread out over its branches operating across the globe which has been critical in enabling the organisation to stay a step ahead of its competition. The large number of employees’ forms an important resource for the company and the company has put in place measures to ensure the employment of highly skilled individuals but also the motivation of its already employed workers (Barclays, 2013: p. 1).

A firm knowledge of the resource Based Strategy is seen as crucial towards ensuring the competitive advantage of a firm is established. The advantage for this tool can only be achieved with the effective implementation of the various resources available to the firm. At Barclays, management has implemented this particular strategy to convert the company’s short term competitive advantage into a more sustainable one. With this in mind, the firm has sought to ensure that it strengthens it human resource by encouraging its employees to take part in regular training. Indeed Barclays has sought to ensure that every employee whether existing or new is provided with this opportunity (Brown & Fraser, 2005: p. 2-3).

This training provides a range of benefits for the workers at Barclays by significantly enhancing their motivation which has a subsequent effect on improving the efficiencies of the process carried out at the Bank. Moreover, carrying out this training helps the bank to distinctly reduce its employee turnover which in the end helps to promote a more positive image of the company (O’reilly 2013, p22). In addition, the training provides employees with the opportunity to increase their skills and knowledge which aids in the active development of the firm’s capacity to not only create but also adopt a wide range of new technologies as well as methods that further enhance service delivery. The bank is also characterized by a number of capabilities defined within its processes of performance appraisal, a firm focus on career development as well as thorough methods of carrying out both recruitment and selection. All the above mentioned processes are key in enabling the organisation to not only employ skilled workers but to ensure that the worth of an employee with regard to the efficiency of his work is distinctly measured (David, 2003: 35-36).

Barclay’s organizational structure is another example of its capability with the firm being distinctly divided into numerous work groups as well as work units based not only on their levels of expertise but also on the employees resources and knowledge. The company also has a distinct chain of command with the head of department reporting to the County head. Indeed each of the workers within each group of Barclays is tasked with their own distinct roles and activities which further help to streamline activities at the bank and enable it to distinctly serve its clients in a more improved manner (Fleisher & Soussan, 2007: pp. 22-23). Barclays’ corporate social responsibility initiatives are a key competency for the firm.  The company has sought to ensure that their CSR initiatives are aligned with the marketplace and therefore actively represented through its products and services (Fleisher & Soussan, 2007: pp. 25-26).

This particular strategy has been key in enabling Barclays to ensure the promotion of its brand name especially as the company’s initiatives have continued to gain recognition among institutions such as the United Nations. By promoting equality and fairness within the workplace, the firm has continued to harness its human resource capability which has further worked to significantly boost the company’s reputation as a fair employer thus attracting a growing number of interested individuals willing to work at the bank. Moreover, the company has put in place a pension scheme that was designed to ensure that employees felt a growing sense of the certainty of a good retirement which was sign cant in enhancing the levels of employee loyalty (Hitt et al, 2003: pp. 35-36).

Conclusion

Organisational capability is described as a firm’s ability to take advantage of its resources to such an extent that the organisation will be able to survive within an ever changing business environment. In order for organizations to achieve this competitive advantage it is therefore critical that they learn to link their resources and capabilities which are critical components in enabling them to provide better services to their customers. The level of sustainability of an organization’s competitive advantage is seen to depend on the ability of an organisation to harness its strategic capabilities and ensure that they are not only valuable to customers but are also rare enough for competitor to face a challenge in replicating them. In the case of Barclays, the management has put in place measures to tap into the vast human resource capability in a bid to ensure the constant flow of innovative products.

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List of References

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