Page 15 - Barclays Bank (B) Teaching Note

Threat of Existing Rivalry

Barclays’ bargaining power is severely constrained by

existing rivalry. This is because there are many other

alternatives to Barclays, such as HSBC, Lloyds and RBS.

Most banks offer similar services and products with

competition on giving higher rates for deposit and lower

rates on loan prevalent. With this intense competition to

gain more customers by offering better rates than

competitors, the result is that this drives down prices and

profitability. Therefore, Barclays’ offerings might be

dependent upon their track record and reputation as

customers judge how ethically they are. People are aware

of the ethic of bankers as well as the corporate
governance in doing businesses

For the investment bank, customers are concerned with

fees and returns. Banks need to compete on giving the

lowest fee to induce customers to open the account with

the company. And, return is from the past performance

of the trading team which implies how good they are to

generate the profit for customers.

Barclays’ response to Intense Rivalry

• By building a sustainable differentiation

• By building scale so that it can compete better

• Collaborating with competitors to increase the

market size rather than just competing for small

market.