Royal Bank of Scotland is one of the most successful British banks that has reached a tremendous success in the course of its history. Royal Bank of Scotland has evolved from a regional bank to one of the leading bank in international banking industry. Today, Royal Bank of Scotland faces substantial difficulties caused by the recent economic recession and ongoing turbulence in the international financial system. In this regard, Royal Bank of Scotland needs to carry on implementing its successful marketing strategies and enhance its position in international markets but, on the other hand, the bank has to find new methods and strategies, which can help it to overcome negative effects of the recent economic recession, which has provoked a considerable downturn in the business development of Royal Bank of Scotland. At the same time, Royal Bank of Scotland should take into consideration the impact of external factors, which affect the position and development of the bank consistently, including political and legal issues, economic factors, socio-cultural, environmental and technological factors. In such a way, Royal Bank of Scotland should realize its full potential and to minimize external threats that arise in the contemporary business environment to carry on its successful business development.

On analyzing the development of Royal Bank of Scotland, it is important to place emphasis on the fact that the bank was always focused on the aggressive expansion strategy (Lunt, 1996). What is meant here is the fact that the bank evolved from the small regional bank in the industry leader in global terms. Specialists argue that Royal Bank of Scotland’s aggressive expansion strategy turned the regional Scottish lender into a global bank with a large investment operation. But it backfired (Royal Bank of Scotland Group PLC, 2011). The introduction of the effective, aggressive marketing expansion strategy was essential for the fast, accelerated growth of the bank because Royal Bank of Scotland operated in the highly competitive business environment. In such a situation, the aggressive expansion strategy allowed Royal Bank of Scotland to make a breakthrough not only in the domestic market in the UK but also in international markets.

At this point, it is important to place emphasis on the fact that the strategy of the aggressive market expansion was particularly effective in the late 1990s — early 2000s, when the process of globalization became overwhelming and forced many companies to expand their market internationally to remain successful in their industries. In fact, the emergence of globalization stimulated the fast international market expansion and Royal Bank of Scotland has succeeded in this regard because it has extensive experience in implementing the aggressive expansion strategy. In such a way, Royal Bank of Scotland turned out to be in an advantageous position compared to its rivals, which stayed focused on their traditional markets, instead of fast and aggressive international market expansion.

Another factor that contributed to the business success of Royal Bank of Scotland was the introduction of innovations, such as e-banking. The introduction of innovations accelerated the growth of Royal Bank of Scotland and attracted new customers because they could benefit from using new, convenient services available to them in Royal Bank of Scotland. The introduction of innovations facilitated the development of the bank and increased its market share consistently contributing to the rise of the customer loyalty. In addition, the bank used the strategy of social partnership, which marked the shift from sponsorship to partnership (Seitanidi, 2008), which involved the close cooperation with local communities and conducting socially responsible policies by Royal Bank of Scotland in regard to its employees and community members.

In the time of economic recession, Royal Bank of Scotland benefited from the government support, which allowed the bank to survived the economic recession. In February 2009, RBS became the first bank to sign up for Britain’s asset protection plan after reporting the biggest annual loss in British corporate history. RBS placed £325 billion of leveraged loans, commercial real estate debt and other illiquid assets into a separate unit partly backed by the government (Royal Bank of Scotland Group PLC, 2011).

Today, Royal Bank of Scotland holds its marketing position (See Table 1) but needs consistent improvements to stay in leading positions in the banking industry. At this point, it is important to dwell upon the PESTLE analysis to understand major challenges Royal Bank of Scotland is currently facing.

First, Royal Bank of Scotland should take into consideration political-legal factors. The British government supports the bank but the bank faces substantial problems abroad, for instance in the US, where the local government attempts to maintain local banks. As a result, Royal Bank of Scotland faces substantial problems to maintain its subsidiaries abroad and the bank counts for the ongoing support from the UK’s government (Chari, 2007). However, the latter needs to conduct its economic policies responsible because Royal Bank of Scotland receives money from taxpayers, whereas the government is responsible for using money of taxpayers. The ineffective use of state funds puts under a threat the future of the political part in power. Therefore, if the government support of Royal Bank of Scotland turns out to be ineffective, the government will cease the help and Royal Bank of Scotland will have to cope with its problems alone.

In this regard, economic factors become particularly important for the growth and further development of Royal Bank of Scotland. In fact, the growth of the bank was maintained due to aggressive expansion and entering new markets. Today, Royal Bank of Scotland has slowed down its expansion because of financial problems and economic recession. The bank industry is facing a profound crisis. Therefore, Royal Bank of Scotland has to save costs and optimize its performance to survive through the economic recession and to renew its growth in the nearest future. In such a situation, the bank needs a reliable investor, who can help the bank to tackle its current financial problems.

At the same time, taking into consideration socio-cultural factors, it is important to place emphasis on the fact that the public considers Royal Bank of Scotland to be a reliable bank, especially in the UK. Moreover, the bank is nominally controlled by the government. Therefore, the public has confidence in the bank and its reliability that allows Royal Bank of Scotland to avoid panic among customers and carry on its development steadily, regardless of the economic recession.

On the other hand, Royal Bank of Scotland cannot ignore environmental factors, such as the growing competition in the banking industry, especially at the international level. In the time of economic recession, the competition in the banking industry grows and Royal Bank of Scotland should come prepared to the strong competition. In this regard, the bank has to use its full potential, relying on its aggressive expansion strategy, customer confidence and loyalty, government support and its internal resources to maintain the steady development of its business.

In this respect, technological factors may play a particularly important role. For instance, the development of e-banking makes services of Royal Bank of Scotland available to a larger number of customers compared to pre-e-banking era (Finley, 2007). On the other hand, the bank should deal with such threats as the identity theft and unauthorized access to the private information of its customers.

Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the development of Royal Bank of Scotland depends on multiple external factors. At the same time, the bank should use its internal strengths to accelerate its development to recover after the recent economic recession. Today, the bank is facing numerous problems, such as the crisis in the banking industry, slow marketing expansion, lack of financial resources, need in the government support and others. In such a situation, the bank cannot count on the government support only but it also needs to develop innovations and carry on aggressive expansion strategy.