1.

INTRODUCTION Barclays in the mid 1960s, realised the importance of change in order to achieve its goal of being the market leader in banking and other financial services. Barclaycard is the top credit card processor and consumer lending services in the United Kingdom. Barclaycard is not an independent company but just a department of Barclays Bank. It has its main office located in Northampton. It has a global coverage with operations in UAE, Germany, Spain, Greece, Italy, Portugal and Africa. This geographical spread coupled with its information technology competence is responsible for the competitive strength of Barclaycard. Since the emergence of credit cards business in the United Kingdom there have been other players in the market. (e.g. Lloyds, Royal bank of Scotland and Royal Bank). This paper therefore, aims to critically analyse the strategic processes, positioning and successes of Barclaycard in credit card market. Hence presents a comprehensive Market Analysis report.

2. MACRO-ENVIRONMENT ANALYSIS The macro environment analysis and will critically evaluate the factors that ignite changes in the credit card business environment. a) Drivers of change: The introduction of white paper on credit card borrowing in 2003 , by the UK government which tends to affect the profitability of Barclaycard business. The introduction of new power for regulation and new forms of credit card policy by the Minister., The introduction of honesty table which came as a result of the government enquiries into decline in interest rates of credit card. The published average revenue stream from credit card issuers and processors enhance the strategic development by credit card business organisation. Technically, the introduction of smart or chip card affected card processing and the credit card business in general. The transition from paper to electronic processing that introduces large scale economics din card processing.

b) Impact of Change: Barclaycard negotiated a franchise from Bank of America to start the credit card business in UK. The launch of the brand Barclaycard attracted 30,000 retailers who signed up six months after the launching. Global leadership in operating ATM Expansion: Barclaycard grew to be the largest credit card business in the UK, Europe and Africa. The provision of multi-card readers to manhunt various links There was an increase in the product range and services to customers. Which was induced by competition between UK card issuers? The introduction of credit card for corporate business functions. The roll out of chip card to combat fraud. c) Result of Change: The Loss incurred for the first decade of the operations of Barclaycard as it builds up its card and market volume. Barclaycard issued the first ever credit card in the UK. Started the first loyalty scheme in the UK. Globalisation of service and products. Barclaycard increased its customer base in the credit card business sustainable. Development of high pricing strategy to assist the parent organisation. The transition from paper to electronic processes induced Barclaycard to improve the electronic processing using its IT. Barclaycard formed strategic alliances with partners in the market .

3. MICRO- ENVIRONMENT
a. INDUSTRY AND COMPETITORS ANANLYSIS

The porters five forces model will be applied in this section to analyse the competition in the market. 1. The threats of Entry: This includes various barriers preventing new entry from competitors in the industry. The open membership of Visa and master card encourages entry by other credit card business organisations. The availability of product range differentiation in Barclaycard by designing a comprehensive package to potential and existing card holders. Barclaycard enjoys unequalled customer loyalty as their existing customers..

Barclaycard was the only bank card business operator that engages in card issuer and as well as an acquirers. The benefit of economics of scale enjoyed by Barclaycards, reduce the threats of entry. The scope of coverage and geographical spread of Barclaycard signifies its market share value as the largest card business in the UK.

b. The power of buyers: The customisation of credit card services makes it possible for customers to choose their cards rather banks.. The high patronage recorded in business to business and routeing business expenses in Europe. The huge response from retailers when Barclaycard brand was lunch exemplified the capacity of buyers.. The influence of the customer power was high as shown in the increased pressure to reduce card rates. c. The power of supplies This is high with the dominant market share of Visa and MasterCard that determines the processing of credit card transactions The introduction of Nectar in conjunction with Sainsbury, Debenhams and BP justifies the strength suppliers. The increased need and request fro outsourcing of card service providers. d. Threats of substitute: Customers cannot switch easily to substitute as Barclaycards maintaining price and service leadership in the credit card business environment. Threats of substitute are restricted by the technical competence and geographical coverage of Barclaycard, which is underpinned by its consistent development of strategic relationships with other partners. Although the high premium charges by Barclaycard could have made customer to shift to other substitute, but this was later restructured to the benefit of the end users. e. Competitive rivalry: Threat of competition is quiet low. Because Barclaycard has developed strategic alliance with other service providers and partners in the business. Collaboration cannot be copied. The low charges offering by competitors like Lloyds and royal bank of Scotland was a potential competitive strength against Barclaycard pricing policy. Competitive rivalry is reduced with the global coverage of Barclaycards operations coupled with its technical competence. The capital base of Barclaycard has a huge capital base that could be challenging for competitors.

The huge market share acquired by Barclaycard is undiluted. Competitors basically have to maintain services levels with their existing customers so that they do not lose the captured market. 3. COMPETITORS ANALYSIS 1. The Milers and Snows strategic type of concept is applied. The generic strategies of (Miles and Snows, 1978) For the purpose of this paper, it is clearly shown that Barclaycard is the PROSPECTOR type of organisation. Why is Barclaycard a Prospector? Being the first in the market: Barclaycard has a wide product market differentiation and it is an innovative company. Hence, maintained leadership in the market place. Example of the strategic steps taken in this process is: I. Collaboration with other players II. Introduced the first credit card in the UK III. Being the first credit card to have institutional presence on the internet 2. The competitors These include: I. Royal Bank of Scotland II. Bank of Scotland III. Lloyds IV. Westminster. from the over view of the case study, the competitors jointly possessed certain attributes of a REACTOR ORGANISATION. 4. MARKET ANANLYSIS This is important to compare the market sizes, both actual and potential. For the Propose of strategic positioning of Barclaycard in the market place. Actual Market: Since the launch of credit card in the UK, 40 years ago. The significance of its products has attracted many customers. These include individuals, government and corporate bodies. In 2003, the under listed data were established about the market situation. i. ii. iii. iv. v. Total cards holder in the UK Barclaycard market share Nearest competitors market share Official merchant/ Business retailers Possessions of Multiple card holders = = = = = 11million 27% 5% 90,000 2 cards to every 50 card

Trends for important market development

i.

The Emergence of transparency in credit card industry as facilitated by the introduction of white paper on credit card burrowing in 2003.The criticism of Barclaycard by the office of fair trading, after advertising a zero percent forever card deal. Profitability in credit card business was threatened by regulatory changes. This called fro a new strategy to sustain product offering in friendly environment. But managers wondered whether these development might result in return to cash only transaction and thus, would they be beheading the king of plastic? (Johnson and Scholes, 2005). The potential for growth in continental European market as shown in the credit card research report of 1997 in the UK. This is will be a useful template for forecasting new areas of business development.

ii.

iii.

6. CUSTOMER ANALYSIS The customer analysis involves how Barclaycard could leverage the customer base with the product offerings. To critically assess the significance of different customers and their contribution to the overall performance of the company. 1. Customers: At Barclaycard, the service model offers B2B (business to Business) and B2C(Business to customers). Business to Businessi. Corporate cards ii. Purchasing cards iii. Government procuring card Business to Customersi. Retailers ii. Individuals

7. MARKET SEGMENTATION The Market is segmented based on the purchasing pattern and power of the customers. These include: Customise card - Gold card Non price features such as extended purchase warranties, purchasing protection insurance and travel accid4ent cover Low income segment This was driven by Barclaycard alliances with other players Nectar A loyalty scheme from Barclaycard in conjunction with other partners in the market. Emerging segment

i.

The acquisition of UK operations of providan helped Barclaycard to access a new market segment and brought with it half a million new customers. This is a potential market for further development.

7. INTERNAL ANALYSIS Core Competence: Barclaycard possess a lot of competitive strength which have help in its operations over these years. The ability to sustain the changing market environment is not unconnected to these possessed competencies. Information technology (Internet powered operational), interconnecting and interoperating hardware. The overlapping membership of the two technology platform fro payment systems.(i.e. Visa International and master card). The ability to retain the advantage gained through early entry and remains a market leader. Continuous improvements in industrial standards Building strategic relationships with other partners on continuous bases.

8. SWOT ANALYSIS The SWOT analysis tends to synergize the strength and weakness of Barclaycards in order to address the threats and opportunities in the marketplace. Strengths: Barclaycard strength in the market and could be summarised in the following statements: Barclaycard is the current leaders in credit market with about 34% of total credit market and 27% of transaction values. The optimum usage of high technology and providing customers with the best and most convenient ways to proceed with financial and. Establishing alliances and relation with well-known and important firms and associations within the UK. Low production cost due to the long experience in the market throughout the years which makes it possible to cut cost. Well-know and recognised brand name by general public. Weaknesses:

 The low transaction value per card is low compared with other competing banks in the market, although the total transaction value percentage is high. An (APR) of 25% annual Percentage Rate is much higher that competing offerings.

Opportunities: Increasing percentage of spending on credit and debit cards in retails, public and merchants centres enhances more investment opportunities. About 50% of adults in UK are still without credit cards so advertising campaigns are launches to increase the number of cardholder with Barclaycard. The usage of technology such as internet banking to enhance the introduction of new products and services. A new loyalty scheme is essential for the existing customer hence facilitates the introduction of retail cards to enhance customers base. Threats: Competitors in the market with similar services and products. A friendlier APR card issued by these new entrants into the market. Sales was threatened to be reduced by the launch of debit cards and smart cards. The appearance of other form of competitive credit such as interest-free credit. The increasing fraud rate associated with the use of credit card. CONCLUSION Barclaycard in the credit card business is succeeding relatively to market competitiveness. The ability of any organisation to succeed the volatile market forces is not unconnected to its strategic process and positioning. Having achieved market leadership, the challenge therefore for Barclaycard is how to sustain this status.

BIBLOGRAPHY. Barclaycard [online] .http://www.competition commission.org.uk/ Barclays plc trading update, risk management,

[online]:www.investorrelations.barclays.co.uk Fergus, B. (2004) international growth: www.investorrelations.barclays.co.uk Hoffman, g. (2004), consumer credit: growth on the cards, p.3, 9, 10 [online]. at: http://www.investorrelations.barclays.co.uk Johnson and Scholes, (2005), Exploring corporate strategy. Miles, R, & Snow, C 1978. Organizational strategy, structure, and process. new York: McGraw-hill. Price water house coopers, (2002), precious plastic: http://www.pwcglobal.com/uk