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14. INTRODUCTION
Barclays in the mid 1960’s, 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. 15. 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.

3. • 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 porter’s 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.

4. 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 Miler’s 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.

5. 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. Total cards holder in the UK = 11million
ii. Barclaycard market share = 27%
iii. Nearest competitor’s market share = 5%
iv. Official merchant/ Business retailers = 90,000
v. Possessions of Multiple card = 2 cards to every 50 card
holders
 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.
ii. 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).
iii. 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.
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 Business-
i. Corporate cards

6. ii. Purchasing cards
iii. Government procuring card
• Business to Customers-
i. 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.
i. Emerging segment
• 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 un-
connected 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.

7. 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.

8. • 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.

9. 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

10. 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