Business Environment Analysis and HSBC

This assignment requires an in-depth analysis of HSBC's business environment using PESTLE and SWOT frameworks. Students need to examine the various external and internal factors influencing HSBC's operations. Additionally, the assignment prompts a comparison of HSBC's organizational structure with both private and public sector models.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of organisation: Public and Private..........................................1
P2 Size and Scope of operations in HSBC and BBC..................................................................3
P3 The relationship between organisation functions..................................................................6
TASK 2............................................................................................................................................9
P4. Impacts of macro environment on business operations........................................................9
P5. SWOT analysis of HSBC....................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.................12
CONCLUSION..............................................................................................................................12
REFERNCES.................................................................................................................................14

INTRODUCTION
Business environment is a term that states about the sum total of ball internal and external
environmental factors that have their direct and in direct influence over business. Basically these
factors are also known as micro and macro factors that have impact on each other. The inter-
relationship between any changes cause organisation to change its own strategy and plans as to
maintain its level of productivity (Baraya, Budden and Escobar, 2011). So basically, the
variables that are in motion inside and outside an organisation need to be analysed in a proper
manner as to ensure that they are managed with time and effectiveness. The micro environment
is considered to be an controllable factor while macro is known as uncontrollable factor that have
direct impact on organisation. This report is based on the various types of organisations that are
operating in the already saturated business environment. These companies have different size
and scope of operations that needs to be identified after undertaking brief research or analysis.
TASK 1
P1 Different types and purpose of organisation: Public and Private
There are different types of companies that are operating in the market. These are usually
divided on the basis of their legal status, organisation structure and type of industry (Chavis,
Klapper and Love, 2011). Mostly these organisations are privately owned but there are some that
are still completely publicly funded. The image below states about the types of organisations:
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Source 1: Private and Public Sector, 2017

There are many instances where public and private companies work together but that is
for public welfare or to exploit an opportunity (Commander and Svejnar, 2011). These types of
companies are stated below:
Private company:
It is an organisation that is held by a private individual or a group of people as to earn
profits by increasing its size and scope.
Company information (Name, Headquarters):
HSBC is British multinational bank that is based on London, England. It is a world
seventh largest bank in terms of assets and is considered to be largest in Europe with an assets of
US$ 2.375 trillion (Eckardt, 2012). The company have more than 38 million customers who use
its services across globe. It is operating in the banking and financial services.
Legal Status
The bank is a private entity that is the second largest listed company on London Stock
Exchange.
Year established
The bank was established in 1865. but it was established in its present form in 1991 by
The Hong Kong and Shanghai Banking Corporation Ltd.
Name of activities & Products and services offered
There are different activities that are undertaken by bank. The list of activities also the
products and services offered by bank are as follows:
 Wealth management
 Retail banking
 Commercial banking
 Global banking and markets
 Global private banking
Purpose of organisation
The purpose of organisation is to assist people in managing their wealth in a proper
manner and provide tools to invest it in a right place (Eisenberg and Miller, 2012). Even though
the prime goal remains to be earn profits and serve society in a better way.
Industry/Sector
The industry in which the bank is currently is banking and finance.
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Public company:
These companies are formed as to ensure better services to public. They are funded by
public taxes (George and Bock, 2011). These organisation have a prime goals of being a
qualitative service provider at a cost that is reasonable for all.
Company information (Name, Headquarters):
BBC is a publicly owned enterprise that is based in London, United Kingdom. It is the
oldest media house in the world. The revenue of company is 4 billion pounds.
Legal Status
The broadcasting company is a publicly owned organisation which was enacted on royal
charter.
Year established
The company was established in 1922.
Name of activities & Products and services offered
The main activities that are conducted by the BBC are related to media and broadcasting.
It sells its shows worldwide.
Purpose of organisation
The purpose of organisation is very simple and clear, it host various programmes mainly
related with news and other regional issues taking place in the world.
Industry/Sector
It is effectively working in Media and broadcasting industry.
P2 Size and Scope of operations in HSBC and BBC
These days Private organisations have taken over the public companies in terms of size
and scope. The business environment is also becoming very dynamic that is not very favourable
for the business (Hamilton and Webster, 2015). There are different tools and techniques that are
used by managers in organise as to analyse the business environment. Today, both BBC and
HSBC have grown in their size and scope. There are different type of investors who fund these
organisations as to improve their functionality. The size and scope of these organisation is stated
below:
Size and scope of the organisation: HSBC and BBC
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The HSBC bank is Europe largest bank in terms of assets. It is currently serving more
than 38 million customers across globe and is catering to both individual. The bank opened its
first branch in 1865 in London and the company finally was incorporated in 1866.
BBC is the oldest media broadcasting company of the world. It was established in 1922
by the royal charter and is a public funded organisation (Isik, Jones and Sidorova, 2011). The
firm sells its shows in most of the countries in the world and is well known as a qualitative media
distributor.
Number of Employees:
The banking giants is one of the biggest employer in the UK and it has very big man
power working in the company. The number of employees currently working in organisation are
331,458.
BBC is a major employer in the field of media. It has working staff of more than 35000
(Iyer and Henderson, 2012). These employees assist organisation in attaining its goals and
objectives in a set period of time.
Gross annual turnover:
The total revenue of the banking giants is stated to be 47 billion pound and it has a total
assets of more than 2 trillion pound. The profit of bank was more than 2 billion pound which
makes it 7th largest in world.
The Cited media company has a revenue of more than 4 billion pound and an operating
profits of 166 million pound. It is one of most profitable organisation working in field of
broadcasting.
Market share in industry
The reported market share of HSBC bank is stated to be more than 24% globally. It has a
decent 20% market share in UK.
BBC is strong market player and is currently holding more than 33% of market share in
media and broadcasting field.
Scope of organisation:
HSBC is a global player. It ranks 7th in terms of revenue and 2nd in terms assets (Jayeoba,
2012). It is a global player which has a well established presence in all countries in world.
BBC is known as a multinational media giant that has access to every single country in
world. It is a free broadcasting company that is funded by public taxes.
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Product portfolio:
The banking giant is offering different types of products and services to consumers. Such
as wealth management tools, assets management, household banking and other type of industrial
support packages.
BBC has a huge product portfolio where it acts as a master brand and it has many service
brands that are assist in growing its profits (Jehangir, Dominic and Downe, 2011). The main
products of company are related to media, broadcasting, radio and web portals.
Branches/Subsidiaries:
There are numerous branches that are spread across globe. The name of subsidiaries are
as follows: Hong Kong and Shanghai Banking Corporation, HSBC bank plc, HSBC USA,
INDIA, Malaysia, Middle east, HSBC finance , Hang Seng Bank.
There are few branches of Media giant that is operating and increasing level of influence
of company. Such as, BBC one, global news, top gear, BBC radio are some of subsidiaries of
company.
Major competitors:
HSBC bank has many competitors in market. Such as, Barclays, RBS, Lloyds and
standard chartered. They all are followers of HSBC bank but still pose a threat to company
market share.
BBC has many competitors in market, such as, CNN and Al-Jazeera. These two
competitors have funds and standards which pose a threat to BBC market dominance.
Brand positioning/Recognition:
HSBC bank is very well known for its banking services and products across globe. It
assist governments in developing countries in making right economic decisions.
BBC has very good brand positioning and it is considered as a company that offers right
news and stories without any biasness (Klapper, Lewin and Delgado, 2011). It has a very good
history of being a unbiased news as well as story stater.
Financial position:
Banking giant is leading market in terms of profits and revenue. It has a strong monetary
position and even after the recession of 2008, bank has registered higher level of profits.
The financial condition of company is good and it is growing at a very fast pace. It has
came out of years of losses and is on right track to be a financially viable organisation.
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P3 The relationship between organisation functions
It is very important for a business organisation to ensure that all of it objectives are being
achieved it a set manner. If they are not being achieved as per requirement then management will
need to take corrective actions and make sure that all functions within organisation work
together. It is very vital for organisation to ensure that all of its departments are able to co-
ordinate and co-operate at their best level (Krishnan, 2013). It assist company in achieving its
goals and objectives in a more effective and efficient way. There different types of individuals
who are involved in core business process of company:
Managers are one who assist management of organisation in ensuring that all strategies
are implemented in a proper manner. In BBC, they have to ensure that all information is reaching
to end point in minimum time period. In HSBC, managers have to look at various transactions
that are taking place in any of branches.
Operators are required to undertake all basic task which will assist in achievement of
goals in a set period of time. In both of organisation they act as a support staff that enables
organisation in achieving targets.
Senior advisors are required for analysing strategy and giving justified recommendations
which will make end results much better (Love, 2011). They play a very crucial role in bothy
organisation and aids in achieving various goals and objectives in a effective manner.
There are various functions which exist with both BBC and HSBC and these departments
assist them in maintaining quality of products and services that are delivered to end users. The
departments that exist in both of the organisation are as follows:
Finance: This is a department that keeps on analysing the resources as to ensure that all
other functions have desired level of financial resources with them. It documents all the
expenditures and incomes as it tries to reduce any variances which might cause imbalance in
future (Macdonald, 2012). BBC and HSBC both need to maintain a strong finance department as
to survive in long run.
Human resource: It is the most dynamic yet useful resource that has to be managed in a
proper manner so that maximum output can be achieved in a efficient and effective manner. The
BBC and HSBC both understand the value of HR department and they have given it powers to
keep on analysing and recruiting people as per the future requirements.
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Administration: This is a department that is directly engaged in the developing various
polices and procedures that will direct all the efforts towards achievement of goals and
objectives. In HSBC this function ensures that all the activities are taking place as per the
standards and the business process is not hindered by any issues (Madsen, 2016). It does the
same job in BBC with an additional task of managing the programmes broadcasting and satellite
management.
Marketing: This department inter links with other for stating regarding various issues and
problems that needs to be addressed. This function prime goal is to promote products and
services of company in a more effective manner so that consumer is aware and pay attention.
There are various ways in which it aids other functions. Such as it provides information
regarding market trends and consumers requirements.
HSBC is a very well known company in the banking sector and BBC is known in the
media broadcaster field. The stated functions assist in creating a positive environment in the
organisation. The finance department documents all transactions and provides monetary
resources to all the functions as to improve their functioning (McDonald and Wilson, 2011).
Marketing assist in promoting company products and services as well as providing information
regarding various market trends to other department. Human resource function ensures that all
the vacant post are filled and there is no lack of person in organisation. These functions assist in
achieving organisational goals and objectives in a efficient and effective way.
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The HSBC follows a divisional structure that assist it in managing its various subsidiaries
as well as departments in a most effective manner (Mojaveri and Fazlollahtabar, 2012). The
image above states about various departments that exist within organisation. The company is
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Source 2: Organizational Chart, 2017

managed by the CEO and board of directors who act as a final authority. Basically this structure
assist in developing an interrelationship between various departments and ensures that
effectiveness of these functions is used together.
TASK 2
P4. Impacts of macro environment on business operations
External environment has its direct impact on the organisation and its functioning. There
are various factors that keep on changes and these have positive and negative impact on business
activities as well as profitability. Macro environment includes different types of factors such as,
political, economic, social, technological, legal and environment (Myers and Korsmo, 2014).
HSBC can use PESTLE analysis as to find out the issues and changes that are taking place and
their potential impact on the organisation. Managers working in the banking giant have to assess
various issues as to safeguard company interest and take benefits from the potential changes. The
PESTLE analysis is stated below in a brief form:
 Political: This is a factor that can not be controlled by the organisation and it has impact
on other factors of this analysis and whole macro environment. Currently there is heavy
instability that exist within UK political environment that is hindering the productivity
and profitability of organisation operating in the country. The Brexit has its impact on the
banking system of UK which needs to be managed by companies.
◦ Impact: HSBC has to manage as per the polices that will be change after Brexit. Also
new government is trying to find new ways to curb fake accounts and money
laundering which will have impact on company.
 Economical: The economy is still in the recovery mode and due to turbulent political
environment it is not in a good shape (Rankin, Windsor and Wahyuni, 2011). There are
multiple signs of recession that hit the western economies in 2008. also the inflation rate,
income of people, recession rate and deflation in prices have impact on the banking giant
productivity and profitability.
◦ Impact: It has huge Impact on HSBC because they are working in the Banking sector
and GDP and inflation rates makes a direct impact on the company. Inflation rates
creates a compulsion on the banking sector to make changes in their interest rates
according to monetary and fiscal policies to control inflation.
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 Social: Today the social structure is very complex as migration and globalisation has
completely changed the way consumers use to have preferences. The taste and preference
of people is changing at a very fast pace that needs to be managed by organisation.
◦ The impact of this factor on HSBC is that it has a bigger population to cater (Reed,
And et.al., 2013). But the issue is that the needs of each and every individual is very
different from one another.
 Technological: There is rapid changes since the computer has been introduced. The
adaptation process increases cost but it assist in improving the overall efficiency and
effectiveness of organisation.
◦ The impact is usually better, it assisted in reducing the time taken in completing every
single transaction. The only issue that exist is that there is a threat from the cyber the
ifs who can steal data of billion of people easily.
 Legal: There are certain changes that will take place within UK legal system once the
Brexit will be complete also there are certain changes that will be taking place in the
legislations.
◦ The impact is usually is that it increases the expenses incurred by company but it
improves quality of services.
 Environmental: There are certain treaties that are being signed on the environmental
pollution that will impact the overall business activities taking place within UK (Rossi,
Vrontis and Thrassou, 2012). France and Britain both will be banning petrol and diesel
car that will have its impact on banking system as they are the insurer. It will be suffering
as those cars will not have any value after the ban.
P5. SWOT analysis of HSBC
It is very important as it assist in evaluating various organisational capabilities. The micro
environment also gets analysed with the aid of this method.
SWOT of HSBC:
Strengths There are certain strengths that assist organisation in achieving its goals and
objectives in a set period of time:
 The banking giant has a very good brand image in the market
 It has a strong financial strength
 Its product portfolio is very diversified, as it is in commercial
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banking, investment banking, financial services and industrial
support.
 It has a very diverse consumer base that reduces the risk of any
collective loss.
 It has a very massive employee strength that is of 375,000.
 The company has over 7500 offices in more than 87 countries.
Weakness There are certain weakness that exist within organisation:
 Its main market in western countries are seeing a decline due to
multiple reasons
 It still has to establish itself in the retail banking sector.
Opportunities There are certain opportunities that lays in the market which can be used for
enhancing business profitability.
 There are opportunities which can be exploited by organisation by
expanding into developing countries.
 The banking giant needs to expand its product portfolio.
 If it provides lower interest rate then there will be boost in the market
share of company.
Threats There are certain threats that can impact HSBC and its operation capabilities
in a major way (Shumate and Ketel, 2014). These are as follows:
 There is changes in the government regulation that have impact on
organisation capabilities.
 The competition is growing as there more multinational banks
coming up from the developing market.
As stated in the table, the SWOT analysis states that organisation can use its strengt6hs
and opportunities in order to achieve its goals while it focuses on its weakness and make
improvements.
Impact on decision making:
Strengths, weakness, opportunities and threats assist managers in formulating various
strategies that are implemented in a well established manner. Organisation knows where it is
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strong and where it lacks and this enables it in attaining a level where it is able to manage as per
the requirements.
P6 Explain how strengths and weaknesses interrelate with external macro factors
Every organisation has some strengths, weakness, opportunities and threats that enable it
in undertaking various task that are important for its survival. The macro factors have impact on
the organisation strengths and weakness . Sometime changes in these external elements change a
strengths into a weakness and vice versa (Welford, 2013). Everything in business environment is
inter-related and has to be managed by a proper strategic approach. HSBC is able to keep
competitive advantage with itself due to the strategic approach that its utilised and also the way it
was able to inter-relate itself with the macro factors. The strengths and weakness inter-relate in
the following way with macro environment:
 Political: The Bank is directly impacted by the political factors that have to be managed
by the manager in HSBC by adopting various approaches.
 Economic: The banking system is the cause behind the economic instability that exist in
the UK environment currently.
 Social: The company is stronger in its approaching its consumer base which is already
highly diversified in nature.
 Technological: There are various changes that are taking place within technological
environment.
 Legal: HSBC has a weakness against adapting various legal laws that can hurt its
profitability and productivity.
 Environment: There are various treaties that are taking place for protecting environment
(Wheelen and Hunger, 2011). The company has to keep on analysing various treaties and
their potential threats to the future.
CONCLUSION
The business environment is very dynamic and has to managed in a effective way as to
ensure that all the goals of organisation are achieved. These days the size and scope of each and
every organisation is very different and there is different type of structure that is used for keeping
the flow of communication as well as ensuring that all the strategies are implemented in a proper
manner. Today the needs of companies around the world are very different from each other and
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that is why they need to use different methods and techniques for managing their workloads. The
use of SWOT and PESTLE will assist in ensuring that all the issues are identified and addressed
in a proper manner.
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