investment and steeple analysis

The STEEPLE analysis is a tool that can be used by management of companies to develop an understanding of the market environment and industry conditions.

The analysis can provide management with important information of external factors when preparing the marketing strategy. Below I have provided a STEEPLE analysis for the Royal Bank of Scotland and steps that the company can take and are planning in the next 12 months to address theses external factors within the banking industry. Factors Steps that RBS can take to address the factors Social * Changes in lifestyle due to the impact of the financial crisis. Number of educated people available within the industry * People are now living longer * Global mobility of top skilled talent.

| * Change in strategy to offer products that have a more conservative risk profile. ( More calculated risks and less risky investments) * Incentives and training to ensure that skilled talent remains within the company. * Steps taken to ensure that top talent is relocated to other global destinations with RBS. * Increase in the offerings of types of pension products for customers.

Technological * Fast pace of technological change * Cost of technology * Opportunities for innovation| * RBS has incorporated within its long term IT strategy to invest in IT change projects and new IT systems. * The reduction of costs of technology has been achieved by certain outsourcing IT functions to cheaper offshore locations such as India. * The company has reinvented its financial general ledger by incorporating best practice models within its ledger integration project and has upgraded to an Oracle based general ledger. Technology consolidation has taken place between systems used by ABN AMBRO and RBS after their merger.

| Economic factors * Tough economic conditions * Devaluation of the sterling and Euro * Changes in the LIBOR interest rate * Lack of liquidity in the market * Increase in inflation * Increases and changes to tax| * Agreement has been reached with the UK government of the terms of bailout package. Controls are being put into place to put into action the terms of the arrangement. * Business focus has been changed to focus on core business units with noncore businesses being disposed of to raise capital. Changes have been made to traders limit levels and the investment banking businesses are under consolidation and under tighter control.

* Risk management around hedging has been planned to be stepped up. * Transfer pricing policies have been renewed to ensure that income is legally earned in jurisdictions which would result in tax savings. (Certain operations have been relocated to ‘cheaper’ locations)| Environmental * Increased energy costs * Environmental policies| * Improved energy saving lighting is planned to be implemented. * Printers have been changed to double side printing to save on paper.

Electronic format of filing has been planned to be stepped up to save paper. | Political * Government policies and legislation * Regulators like the FSA * Political stability| * A working partnership has been born between the government and RBS as the government is the majority shareholder. * New policies and performance triggers have been modelled by the directors of RBS. * Increase in the skills within the regulatory department of RBS.

* Increase in PR activities to promote the stability of the company in the UK by the CEO Stephen Hester, improving the reputation of RBS. Legal * Risk of legal action from employees, suppliers and previous business partners. | * A transparent policy of communication has been adopted with business partners, employees and suppliers to ensure that relationships are managed correctly and efficiently. * Lawyers have been engaged to advise on all legal matters.

| Ethical * Unethical business practices made be adopted by RBS. | * Policies and procedures within the company have been structured to take into account that business must be conducted on a ethical basis|

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