1.Executive Summary:-
This report explains the challenges of RBS in the domestic and the global market. In the introduction the concept of business environment is given. IN this section t he readers can find the factors which affect the business externally and internally. For the sake of business before entering in any new market the firm must understand the business environment of the business. Therefore, PESTEL and SWOT analysis of the Royal bank of the Scotland is given. In main body the report has done the PESTEL and SWOT analysis. Along with this analysis report reveals the history of the organisation and the position in the financial market. Main body give the information about the challenges from political side, economic, and the technological changes, as well as the demand of society. In this report anyone can find the challenges and consequences faced by the RBS in the recession and bad condition of the business in that period. This analytic study on the RBS is really worthy to understand the business of the organisation. The information given in the report is really important for the consumers and the readers. The main outcome of this report is in the recession the governmental help and loss of business in the America by RBS. As well as the interruption to decrease the interest rates in the side of government really impacts the business policy. RBS have challenges to cope up with the technological change and fierce competition. Hence this report study have its value. 2. Introduction:Introduction:Every business does run their business in particular surrounding which is call business environment. In their daily activities the business environment plays vital role In the existing business. Generally, the business environment divided in two parts the micro and macro in macro environment political, economical, environmental, technological competitors are come under this in micro environment company administration, workers owner of the company are the main component. For the any business for making their strategy or any kind of business decision they need to analyse the external factors of macro environment. The analytical tool PESTEL is used for the analysis of external environment. In the business as explained about the business working macro and micro environment to analyse together these environment this SWOT analysis is utilised. SWOT analysis stand for strength, weakness, opportunit y and threats (Kew (Kew and Stredwick, 2005) .
In company perspective the micro environment is controllable but the macro environment would not be controllable so that company always considers the PESTEL factors because these factors are fluctuating in market. Suppose the changes in government, ups and down in economy or value in currency, the ever changing social factors such as change in style habits etc., and technological factors come up with new techniques and innovation. Therefore the PESTEL is very much important for the business who are going to implement new strategy strategy or decision in regards of business (Kew and Stredwick, 2005) . This report going to illustrate the changing business environment RBS ( Royal Bank Of Scotland ), UKs national bank and they ever changing concept of financial services. The duty of this report is that analyse the last five years changing business environment of RBS. To analyse the challenging
business environment of last five year this report would have used the tools PESTEL and SWOT. The PESTEL and SWOT analysis will give clear-cut picture of RBS for last five years Organisational
Background
The royal bank of Scotland is the first bank who introduces mobile banking service in the world in Second World War the origin if mobile banking could be found. The national bank of Scotland which founded in 1825 got an idea of travelling bank in 1946 . In 1953 RBS introduced new mobile bank service with new lavish travling bank. Today only RBS providing mobile bank service as well as it is the bank which provides its service in rural area in UK, (rbs.co.uk, n.d). In the UK Now a day RBS is the most renowned financial entity cooperating with almost 36 million people, with a bulk of employees which serves p eoples. This bank has its branches globall y in several region of the world providing its services (thetimes100.co.uk, n.d). 3.MAIN BODY:In the UK the RBS is the leading bank, in the recent recession bank got many problems in the financial world. According to given title this report need to explain the for five years business of the Royal Bank of Scotland. To fulfil the demand of this report subject, it is necessary to utilise the PESTEL tool to analyse the external environment of the business along with that. In the recession many worlds bank faced the financial problems but the business of Royal Bank of Scotland was good in comparison with other banks in UK or outside the UK. In the recession the royal Bank of Scotland got some funds from Bank of London to come out from the economical threats in the business. Now the business of Royal Bank of Scotland is very sound in the financial service sector. In the five years Royal Bank of Scotland confronted many problems in the last five years, before the shadow of recession the business of Royal Bank of Scotland was at its apex in comparison with other banks. ROYAL BANK OF SCOTLAND AND CHALLENGES :-
To understand the factors affecting on the business of RBS; it is imperative to overview those factors such as political concerns, economical fluctuations, technological changes, and the demand of society, and the environmental concerns if any. Political Factors:The bank is trying to achieve the opportunities in the overseas, and enhance tire business in the global market but, but the attachment with the UK government the company is not doing so. This causes increase of business became slow and the development turn out to be stuck. This kind of disturbance from government to be a patriotic is really throat cutting for the business of this financial entity. According to report of RBS in 2009, business has got the proposal from the G-20 summit about to reduction in interest rates. Along with that from the UK government business got some suggestion about the reduction in the interest rates, rearrangement in the banker¶s payment issues. This kind of political interruption leads company to change the strategic planning and changing in strategy it would not be helpful for any kind of business; because it takes too much time to recover (RBS Report 2009). Economic Factors:As the financial business th e economical factor more exploit the business than any other factors. Because the ups and downs in the economic position of country the bank businesses mostly do affect. After the revolution of globalisation or internationalisation any consequences in the world
must affect the bank business. The financial occupations are becoming more and more risky in the movement of globalisation. The Royal Bank of Scotland is facing the same problems and risky in the trend of globalisation such as instability in foreign currency, market risk, variation in interest rates, credit crunch problem, etc. The risk of recession was the greatest consequences for the financial zone as well as banks. This credit crunch gave the Royal Bank of Scotland the problems like pending loans, recovery of issued loans, credit rating, so that it was like a tug-of ±war to cope up with the disaster of credit crunch as a bank for RBS (Smithson, 1998). If it is considered about the credit risk of the RBS according to the years, the credit risk asset plays the dynamic role in the bank business. To support the discussion in 2005 & 2006 the risk asset of RBS was 708.78 billion pounds a nd 854.87 respectively. Contrarily, the credit risk decreased in 2008 which was 539.2 billion pounds and in 2009 it appeared 498.2 billion pounds. Means; the risk of the business was increased in the 2006 in comparison with 2005. This is very interesting the importance of the credit risk because the Dutch firm ABN Amro failed because of this problem. This example can direct the readers to reveal the vital role of the credit risk and its challenge to the business. The Royal bank of Scotland also affected by the inconsistent policy of The Bank of England, government aslo expecting the RBS should stay on the nationalism p erspective. In recent recession; the Bank was affected by the cha nged nature of government. S ocial Factors:-
The Royal Bank of Scotland is the giant bank in the UK, we can say that it is a legendary bank in the UK when we understand the history of the bank. Therefore, the social responsibility of the RBS becomes spirited in the society. So that every time it is trying to pay for society, in the year of 2009 it is seen the bank has donated almost £7 bn., to the society in various activities. Near about three percentage of its income the bank donate to the society in a year. These kinds of social curriculum play an important role in the so ciety to understand the nat ure of business. In 2010 RBS disbursed £3.6 bn. for to distribute the pa y for bankers, in this year the company was really under-position to pay that much amount but then also they have disbursed that much money for the sake of bankers. This might the part of strategy of business but they behaved like a social responsible financial entity (BBC News, 2010). Technological Factors:In the modern era is so much competitive, new technologies are coming like flood so that the problem for the business to adapt those technological changes in the existing business. Especially, in the banking sectors revolution of the internet banking is proved itself as a milestone innovation. Because of this invention gave the gift of swift banking. On account of that; RBS was first bank which connect it¶s all five branches in the London to its main branch. In 70¶s the Scottish bank connected all branches to the main branch, this increased the speed of bank in the processing of the business. To develop the cross banking in western region RBS launched online bank system, at the end of 1997 Royal Bank of Scotland covered total online service. The milestone achievement of RBS was the take-over of the Nat West bank, this is the bank which brought the use of IT in the broader sense and made the history. So that the challenges in the technological sectors are very competitive, that¶s why RBS need to update their technology, and new innovation to be competitive in the market place (BBC News ,2010)
ANALYSE OF RBS BUSINESS :-
It is very much important to analyse the business of the Royal Bank of Scotland in the sense of to understand the position of the RBS in the market. Hence, for this analyse the report use the SWOT analysis which can show the competitive position of the RBS. In this analysis strength, weaknesses, threats and the opportunities could be understood. Generally, SWOT analysis is done for the external threats and opportunities, along with internal strength and weaknesses. For any kind of business every business use SWOT analysis to search its p osition in the market. S - S trength:-
For the implementation of the any kind of the strategy organisation need to understand their power points because on the basis of that they can decide the further activities for the business. Likewise; this report will light on the strength of t he RBS.
The company is a oldest one which having the experience in the business of the banking with the excellent staff. The skilful employees and the trust in the eye of the customers, the conveniences provided by the company are well-intentioned and this is responsible for good revenue earning. The organisation having real trust in customers and the services offer by the Royal Bank of Scotland are really appreciable. The traders of the company have the excellent skill of market, and these skills are useful to enhance the revenue of the firm. Bank is running the regional centres in globally which is useful to resist the impact of the other competitors (RBS, n.d)
W- Weaknesses:After analysis of weaknesses organisation can transfer it in to opportunity or can eliminate those weakness for the welfare of th e firm.
The main issue faced by the RBS is money laundering, because of this problem the RBS was fined by the authority of FSA which controls the banking sectors under the rules and regulation. So that, the money laundering issue would be harmful for the business of RBS (FSA , 2002).
O- Opportunity:-
Every business looks for the growth and for that they need to crack the opportunities available in the market. Likewise; the RBS seeking the opportuniti es present in the market.
Due to recession the manufacturing organisations are in the trouble if the RBS persue these customers they can make the good business from them. As a planning they are baring the one billion pounds funds for these kind of manufacturer who got impact of recession on the business. In UK there are 168,ooo manufacturing organisations. So this is really good opportunity for the RBS. RBS is looking hopefully towards the strategy of flexible loan plan, the interest rates of this loan is very less and competitive price. New banking investment provision is a healthy planning for the flow of current cash and it is also useful to generate the revenue for the organisation. This could be the respectable opportunity for RBS if they implement it properly (Marketing Teacher , n.d).
T-Threats:The threats are really harmful the business so that organisation must overcome the threats for the existence. As well as to face the threats organisation need counter strategy to beat them.
The interruption of government side is not good for the business. Many obligations about the interest rates, many external factors are pressuring RBS to reduce the interest rates. In the recession many investors are withdrawing their mone y. The throat cutting competition and the new technological innovations in the baking sectors e.g- mobile banking, internet baking etc.
These kinds of threats are going to impa ct the business of Royal Bank of Scotland, so they need to aware of these threats and should try to ov ercome these threats (RBS Report , 2008). CRITICAL ANALYSIS:-
In recently the RBS is facing the penalties of the Brussels issue and it is on the verge of the vending the direct line and Churchill insurance along with 300 branches. This happened only because of recession. In this period the American insolvent was asking for the mortgage payment and the money of tax giver. These consequences really affected on the Royal Bank of Scotland in vast extend. In the global credit crunch the world¶s biggest bank on the door of great collapse. RBS is looking for the help of government. The bank is still facing the problems of tax payments. The Kores is blaming for the industrial fall to the RBS and claims for the penalty on RBS. This all problems created in investment of American market. The government paid money to the RBS for sake of recovery but then also the bank in the trouble due to tax payment, so that they are requesting for almost £325 billion to save the bank. At the end of 2009 the bank went from serious problem even their balance sheet was not good in this period after governmental support. They traded the Citizen Banks business in the America because they really were in the bad domain in this period, but now they are recovering from this disaster (the Sunday times, 20 09). In the 2008, the bank faced the problems of shareholders, and the consequences ABN Amro. In this period the ABN proposed the offer of 47 billon pond offer to shut the consequences. In this time the shares of the RBS was performed badly. In the current horrible recession the RBS lost 25 pence in their shares this down fall of the RBS not really avoidable. So far the business is worried about the performance of their business. Hence, RBC needs to overcome all these problems and come back to the sound track by using appropriate strategy (Telegraph.co.uk, 2008). Hence the above discussed challenges and the problems with RBS are very much severe, they need to understand the economical consequences present in the market. The rival of competitors are very much concern about the RBS, because with new morning every financial entity come with new ideas to attract the customers. The RBS should concentrate on the demand of the customers and the market need. 4.CONCLUSI ON:-
In this way this report is follow the empirical study of the business challenges of the RBS in the financial sector. The RBS is the giant bank in the global market place as well as the in domestic market. The customers of bank are very loyal with bank; Bank also provides the various facilities to retain the customers. The credit risk of the business is decreasing in the recent time of period, which
good sign for the business. This report is well-meaning for understanding the challenges in the market. The SWOT analysis gives the picture of the business in the broader perspective. So that; the business need to understand the Challenges and, RBS must formulate the strategy for the sound business. The problem of money laundering held with the business show the weak point in the business this kind of problems effect on the brand name of the business. So that RBS must learn from these types of consequences in the market. So that according to discussion in the report the RBS should update the technological changes and the relationship with governmental authority possessions on their business policy are not good for the business. After overcoming the challenges the business need to enhance their growth in the market. The loss of the business in the recession, the down fall in the business, so that they need appropriate strategy for their business. 5.REFERENCE y
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