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Barclays Bank was established in 1965 in California, San Francisco. However, the bank’s operations dates back to as far as 1690 when it started trading in London (Gamble, 2004). The use of the name Barclays began in 1736 when the organization was named after one of the business associates, James Barclay (Ackrill and Hannah, 2001).
Barclays Bank is a universal bank. Its operations are organized into two business branches; corporate & investment banking and wealth management and global retail banking (Barclays, 2012). Corporate & investment banking is made up of three units; Barclays capital, Barclays corporate and Barclays wealth management (Barclays, 2012).Barclays has a market capitalization of approximately 27.1 billion pounds as of January 2012 (Stockchallenge, 2011). The bank is considered as the eighth largest bank in the United States of America. Its major competitors include The Bank of America, Citigroup, Wells Fargo and Company and Morgan Stanley (All Banks, 2011). The competitors were determined on the basis of the total revenue earned by each financial institution in a single financial year. In 2010, Barclays Bank total revenue was estimated at a figure slightly over four hundred million dollars (All Banks, 2011). The use of revenue earned by a financial institution is a useful method of comparing and evaluating their performance. It is thus a widely accepted method since it ensures that the comparison among institutions is accurate. With the help of the information btained from Federal Reserve, economists are able to provide important information to the bankers. For example, the Business Insight report of 2009 asserts that banks in the United States are losing their dominance in the retail-banking sector whereas the European banks are gaining and growing in stature in the retail sector due to government intervention (p. 6).
Banking, like any other business activity, is governed by a set of policies and procedures. Barclays Bank is similarly bound this statute in order to ensure a smooth and a safe working environment. the purpose of the policies, there maybe to ensure that giving employment is on basis of merit and opportunities are be afforded to everyone with the knowledge and skills he or she possesses. The policies also provide guidance that is followed by the bank in procedures involving lending and decision making in the bank by management. Bank policy implementation is a dynamic process that changes with the prevailing market conditions and government legislation.
Barclays Bank, like every other financial entity, is faced with a number of problems. These problems are associated with policy implementation, drastic changes in market conditions and problems associated with information gathering, information sharing and transmission of information. To ensure that all these challenges are properly addressed, the management must have an efficient team that is made up of employees from different sectors of the organization. This team assists the management in the gathering of information that is unilaterally used in management accounting to address specific challenges in the bank. Therefore, information generated by management accounting is for internal use only and is not guided by standards or legal requirements. This information is usually proactive (it is future oriented). Furthermore, this information is used in the decision-making process. This includes processes like budgeting, planning, cost classification, estimation and cost accounting.
Review of Management accounting
The banking industry has experienced a slump in the past few years. This slump has been associated with the depression and the high debt level in the international front. Another cause of this slump is the poor government policies that govern the banking industry. Unlike in Europe where the government has aggressively taken interest in assisting small banks, the American government has taken an opposite direction. It can therefore be seen that the European banks have improved greatly surpassing the American banks in the process. Barclays Bank experienced a major loss when the projected number of customers they were expecting fell drastically. Multiple banking facilities competing for the same customer base is believed to the major cause for this loss. With many outcropping financial institutions offering better facilities at cheaper rates and more efficiency, Barclays was bound to lose the projected number of customers they expected to recruit.
Barclays Bank like every other financial institution or business entity requires information to ensure proper running of the business. This information usually allows managers in stabilizing and improving the organizational structure. The vitality of this information cannot be overlooked in a businesses trading in the current volatile environment. The bank therefore requires a lot of information to ensure smooth running of the daily business transaction. In the current trading year, the need for information obtained for management accounting was associated with a number of purposes.
First, the information was used for resource allocation. The information provided from the various departments was used to determine the amount of resources to be allocated to the different branches and departments. Resource allocation is usually a key component in decision-making. The manner in which resources are allocated will usually determine the success of a business. In the current banking industry for example, managers have to choose whether they would allocate most of their resources to advertisement, training of staff or expansion of their market base by adding more branches. Only through sufficient information will management be able to allocate resources properly. According to the volatility of the current market the bank is advised allocate its resources to cater for the decreasing customer base. Advertisement should be properly done and therefore majority of the resources should be directed towards marketing and advertising department. Customer numbers are also decreasing. To cater for this problem management should ensure that proper handling of customers is enhanced. Resources should therefore be set aside to ensure proper training of staff on how to handle customers. Other issues on resource allocation can be addressed by checking departments that require those resources the most and allocating them accordingly.
Secondly, the information was used for performance review. Information obtained from different department enabled managers to review and compare performances among departments. Through the information obtained on budgeted and actual performance several department were found to be ineffective. This has been attributed to the vitality of the market conditions. The advertisement department in the bank has been found to ineffective due to the reduction in customer base. To cater for this problem the managing director in charge of advertisement should promote an aggressive advertisement campaign that would ensure proper outreach. Decrease in revenue in the lending department has been attributed to the high interest rates and lack of proper government legislation regarding interest and banking policy. This problem can only be solved with a unified banking industry. Therefore, networking and information sharing should be encouraged. Only through unification can the industry convince the government to provide the necessary legislation that would enhance steady flow in income from lending.
Finally, the information was used for planning and budgeting. Planning and budgeting forms the bases on which resources are allocated in an entity. Information acquired from the various departments and branches can be used in proper forecasting for the next financial period. Having learnt of the problems in advertising the budget allocation for marketing and advertising department should be increased. The customer care department also requires an increase in budgetary allocation to ensure training of individuals in proper handling of customers is duly completed. Through information obtained from the various departments and branches, planning has been made easier. Management can quantify of plans for the future operations and activities undertaken by enterprise; such plans may be for the long term or for a short term. These plans are to be used in assisting managers to allocate the resources available at their disposal properly. In this case, Barclays should use a long-term plan to strategize on methods they can use best to attract customers. After a strategy has been clearly identified, the manager should then allocate the required amount of resources to ensure that the plan succeeds.
Conclusion
From the analysis, it can be deduced that there has been a decrease in the customer base of Barclays Bank. This observation however is not tied to information on why the decrease has been observed. In order to make additional recommendation on this matter, research has to be duly conducted to determine the reason behind this reduction in numbers of customers. This research should encompass matters such as determining branches that have lost the highest number of customers and reasons behind the loss of customers. The bank should also identify methods of cutting costs during planning. Therefore, managers from each department should be able to provide a comprehensive report on how they can best minimize the organizational costs. Each branch manager should also provide a proper plan that outlines the operations of the business. This would ensure that all the managers to whom the report has been provided to choose the most viable plan to be used in the organization.
References
Ackrill,L. and Hannah, M.(2001) Barclays: The Business of Banking. Cambridge: Cambridge University Press.
All Banks. (2011).Top Ten Banks In The US. Web.
Barclays (2012) Key Facts. Web.
Business Insight (2009) The Impact of the Financial Crisis on Competitive Positioning and Market Development. London: Global business insight.
Gamble, A. N. (2004) A History of the Bevan Family. London: Headley brothers.
Stockchallenge( 2011). Fste All-share Index Ranking. Web.
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