Faculty of Business, Environment and Society

Trade is defined as exchanging goods and services between two entities. Similarly, international
trade is the exchanging of goods and services between two people living in different countries. In
international trade, many theories have been proposed and practiced. With this simple
explanation of trade, environmentalists and economists have given numerous theories to analyze
the factors that affect the impact of trade. During the evolution of trade, they have interpreted
various trends responsible to explain the effect of trade.
International Trade Business Theories:
Here, I would analyze and go through the theory of international trade and also observe the
structure of international trade and business with respect to the policies applied by Barclays Bank
on account of Barclay Card.
Its important to understand how international trade took place historically (Friedman 2005).
Version

Era

Globalization 1.0

1492-1800

Globalization 2.0

1800-2000

Globalization 3.0

2000-Present

In the era of version 1.0, nations dominated global expansion; in version 2.0 multinational
companies inclined towards global development & in version 3.0, technology is driving
globalization. There exist two main categories of international trade, classical country-based and
modern-firm based.
The question that comes in mind that Barclays bank has followed which theory of globalization.
In reference with the case study, I came to know that Barclays bank was the first bank moved

towards globalization 3.0 (Friedman 2005). But the company started to get in the era of
information right in the era of 1980s-1990s. They were known as the first movers in banking
business in regard of Barclay card. This includes:

The issuance of first credit card in the country (UK)

They were the first in making possible to enable credit card payments thru internet

They were the first credit card holding bank who also had institutional access on the
internet

They initiated the first loyalty scheme

In the emerging trend of trade, globalization has changed many aspects of human life. One
concerning factor, that globalization has changed is consumers concern. If we take the clock
behind to 1800s, we see that is history, the international trading prospects were different. People
werent concerned that how their trading will be impacting the environmental and social aspects.
But in the current era, businesses are concerned about social and economic factors. These
concerns have made the emergence of ethical markets possible. The ethical markets are growing
faster as compared to the regular markets
PESTLE Analysis:
There is another framework, which relates to the social, political, economic and legal factors. We
have chosen a framework called PESTLE analysis. In this framework, we along with the
coverage of the four factors we will also look upon the environmental and technological factors
as well.

Environmental
Analysis

Political
Analysis

Social
Analysis

PESTLE
Analysis
Technological
Analysis

Economic
Analysis

Legal Analysis

Political Analysis:
With the launch of Barclay Card, we read about various impacts the launch brought. When credit
cards originated then customers used to pay full payment on monthly basis on the required date,
while Barclay Card was launched and it changes the whole idea. They made many customers on
account of cash back and nectar policies. Later on, ATMs came into being. The bank charged
extra if the card belonged to some other bank. Government imposed tax charges on the bank and
made a regulation on the fixed amount of credit card usage and also made trading agreements
with the bank.

Economic Analysis:
The success of the Barclay card opened new opportunities of employment and economic growth
was observed. Below an exhibit is shown, depicting amazing growth of transactions in the UK
card market from year 1991-2001.

Social Analysis:
Barclay card catered all sorts of people. They also coved the European, Northern and African
states as well in order to make their consumer access vast on the global channel.

Technological Analysis:
Barclays made a good a step towards adopting technology. They were considered as the first
movers in the history of businesses. They adopted different technologies in order to make their
systems updated and also to incline their growth scale.
Legal Analysis:
During the usage of the cards, customers used to pay interest on it, the government felt that the
interest charges imposed upon the customers are little higher than expected rate. For solving this
issue, so-called Honesty-Tables were made to make the process of charging interest more
transparent.
Environmental Analysis:
The use of plastic cards has been made so extensively that the business does not realize what
harm this development is making towards the world. The process of making plastic cards is
harming nature. The waste is deposited into the oceans and rivers which is affecting the marine
life severely.

FDI (Greenfield, JVs, Franchising)

Next we will analyze another frame work known as Foreign Direct Investment (FDI). Three
modes of FDI shall be explained.
Barclay card was a step towards development and it was done when the bank decided to go for
further market research, planning strategies and market expansion. Thats where FDI was
applied.
Greenfield: In the case study, Barclays Greenfield investments are also highlighted. Barclay
card was an initiation towards technology. The bank had technological and market concerns.
JVs: Barclaycard ventured with Natural Gas, Eastern Electricity & Cellnet when gold cards
emerged & it collected popularity in UK. This caused rapid growth of the customer base.
Franchising: Barclay Card began its franchising in year 1965 with the Bank of America with a
low investment franchise. Before year 200, the company franchised with VISA Network and the
franchise was exclusively enjoyed by Barclay Card.

Strategy:
For every business it is important to design and plan a strategy for making its business to live
long term. Here, we would analyze the strategies being applied by Barclay Card

Risk Management Framework:

Barclay card was launched when credits cards were already in the market. The company
is using framework to manage the risks linked with the trading business.

The risk management features consists of certain factors:

Before implementation of a certain strategy or any process or investment identify

associated risks.

Assess the risk factors and share the assessments with the seniors.

Monitor the risk assessments

Control the risk environments through adjusting tools

Evaluate the effectiveness of the results

Learn & adapt the approaches for risk minimization

Organization Structure Framework:

The companys organizational framework is designed in order to achieve better efficiency
and effectiveness of processes. Looking at the Barclay Card, the company decided to change
its paper environment with IT infrastructure. That meant to fully automate all processes in
terms of computer based transactions. The IT infrastructure was developed by Master Card
and VISA.

Porters Five Forces:

It is a framework which is planned to evaluate level of competition within a business market
and to develop business strategy accordingly for inclining companys growth.

a. Threat of New Entrants: Barclay Card has an edge in barriers to new entries
because they have excelled in maintaining a high market share. Their brand name,
retaining of customers, economies of scale, government policy has created edge
for the Barclay Card for restricting new entrants.
b. Threat of Substitute Products: There is always a room of substitute products
being launched by other bank. But, if some bank will launch a substitute card then
the business needs a lot of investment and research for taking a major jump.
c. Bargaining Power of Buyers: By looking at the strategies, Barclay Card took
interest in providing services to its customers. The inflation rate and customer
switch to other similar products forced them to launch different cards at particular
rates & lowering their prices. This helped the customer for choosing an
appropriate card fitting its cost.
d. Bargaining Power of Suppliers: Barclays purchased cards from business
organizations (Suppliers). This helped them going paperless. In order to avoid
threats from suppliers, Barclays gave purchase warranties and discounts to
suppliers.

e. Competitive Rivalry: They had competitive advantage when ATMs were

introduced. The advantage that was added was the early entry technological
advancements and retaining as a market leader in many phases of card business

Michael Porters Value Chain Framework:

Porters value chain framework is a model that helps a business to evaluate and analyze
its business in such a way to create business value and a specific competitive advantage.
The framework is as follows:

It is divided in two processes; Support Process & Core Process.

Support process includes:

Firm Infrastructure: Barclay card made the firm infrastructure to go paperless. They
utilized the technology and managed the firm by authorization of computer based
systems.

Human Resource Management: By making the processes organized and managing the
human resources efficiently, Barclays was able to focus on other areas of interest.

Technology Development: This is a very important step which adds towards the
development in the card business. Barclays made sure to make of the technological
aspects because they knew that this is chief point where they can earn a unique
competitive advantage.

Procurement: This included the supplying of cards from the suppliers. Barclays made a
strategy for giving warranties and discounts on cards to suppliers in order to run the
procurement process smoothly.

Core process includes:

Inbound Logistics: The inbound logistics includes the storing of Barclay cards and
scheduling transportation of cards obtained by suppliers.

Operations: The operations include all the processes which are responsible in the
production to the usage of the Barclay Cards.

Outbound Logistics: These activities include the transportation of finished product to

the customer, transportation of cards, and the distribution of management processes.

Marketing & Sales: Marketing is a process where Barclay Card invested a huge amount.
They have always tried to sustain a good market position and they have been investing
huge amounts on their promotional campaigns.

Service: They developed their customer base in terms of providing good customer
support services by giving organic growth & alliances. They established Nectar with
Debenhams, BP & Sainsbury serving as oil, clothes and food retailers respectively.

Ansoff Framework:
This framework helps the marketing advisers to develop business strategies in order to achieve
high growth opportunities for the company. This includes four growth strategies:

Market Penetration: Barclays Card has quite efficiently penetrated in market. They
made their low price offerings and offered zero interest rate to new customers. They are
trying to make their current offerings better in the existing market. Their market share
although lowered to 18% in 2001.

Market Development: The firm has also tried to enter in new markets. We can take the
example that Barclay Card was introduced in European, Northern &African countries.

Product Development: When Barclays launched their gold card this pushed to market
share of 30% (total of new cards issued) in accordance with case study.

Diversification: Barclay Cards have been with alliance with Debenhams, BP &
Sainsbury serving as oil, clothes and food retailers respectively to contribute with Nectar.

In summary, growths in the 40 years that trailed the unveiling of credit cards in the UK by
Barclaycard were excelled by the continuation of improvement of business standards,
interoperating & interrelating processes, and meeting contracts of two technology stages for
payment methods (i.e. MasterCard & Visa). Barclaycards accomplishment over this time was
that it sustained a competitive advantage that was achieved by entering at early stage and be a
market leader in many phases of card trade industry.
From the beginning, Barclaycard was the largest credit card business in the country (UK), with
an existence in Northern, European & in some places of African countries.

References
Ansoff Matrix, Available from: http://en.wikipedia.org/wiki/Ansoff_Matrix [27 June 2014]
Challenges

and

Opportunities

in

International

Business,

Available

from:

http://2012books.lardbucket.org/books/challenges-and-opportunities-in-internationalbusiness/s06-01-what-is-international-trade-th.html
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file:///C:/Users/Noman%20Ahmed/Downloads/Consumer_Conscience.pdf , Geneva 10,
Switzerland
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https://c1.staticflickr.com/3/2617/3716609920_8688a42fb8.jpg
Diagram, Risk Management Framework, Available from:
http://www.sra.org.uk/uploadedImages/Solicitors_Regulation_Authority/Media/Images/S
RA/risk-management-process-overview.jpg
Friedman(2005) The World Is Flat (disambiguation), Farrar, Straus and Giroux, America 2005
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PESTLE

Macro

Environmental

Analysis,

Available

from:

http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-EnvironmentalAnalysis_11_31
Porter five forces analysis, Available from:
http://en.wikipedia.org/wiki/Porter_five_forces_analysis [23 November 2014]
Porter, M.E. (1980) Competitive Strategy, Free Press, New York, 1980.