Business Case Analysis: Deliver Clear Forecast

RUNNING HEAD: BUSINESS CASE ANALYSIS 0
Business case analysis
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BUSINESS CASE ANALYSIS 1
Business Case Analysis of HSBC Bank and Rio Tinto
Analysis of internal and external factors have major impact on the performance and
decision-making activities of the organization (Maillet, Beaty, Kucyi, & Schacter, 2019).
Here, the essay will discuss the contextual internal and external factors that may have impact
on the selected two companies which are from different industries and also from the different
countries. The selected companies are HBBC bank which is investment bank in Britain
(United Kingdom) and another company is Rio Tinto which is Australian mining company.
The essay will highlight the differences and similarities in the structure and governance,
environmental factors, risk associated with the business and three suggestions for both of the
companies for improving the performance and decision-making activities.
The business of HSBC can be explained in a way that it is the world’s largest banking
and financial services company serving more than 40 million customers through the global
businesses (HSBC, 2019). The main aim of the business is to connect with the customers and
tap the financial opportunities and aimed at boosting the economy of the country and
allowing the business to grow through facilitation of the financial opportunities. On the
contrary, Rio Tinto is into the mining industry wherein the company facilitates the customers
with quality metals and mining operations. The business has a purpose to be a part of
people’s modern life and thereby provides an opportunity to the communities to prosper and
grow (Rio Tinto , 2019). Thus, both the companies have the same purpose to uplift the
communities in their own way either by facilitating them with the affordable financial
services or through the materials that are essential for the daily living of the customers.
Governance structure is defined as the framework that clarifies the rules, regulations
and policies that facilitates the company to undertake the business (Dutt & Joseph, 2019).
Moreover, HSBC is a public listing company that is committed towards the maintenance of
the high standards for the corporate governance as the company has well managed set of rules
and policies through the effective monitoring and control. The company’s governance
structure can be understood from the fact that the company has Board of HSBC holdings
that regulates the business to run the sustainable business and deliver long-term success
(Hsbc, 2019). When comparing it with the governance structure of Rio Tinto it can be noted
that the company also has a robust governance structure that has a major role in the business
success and generate the shareholders’ value. The difference is seen from the fact that the
company complies with the UK Corporate Governance Code (2016 version) and also follows

BUSINESS CASE ANALYSIS 2
ASX Corporate Governance Council Principles in order to make sure that the business
follows the set principles of UK and Australia (RT Annual Report, 2018).
Environmental factors such as political, economic, legal, social, environmental and
technological factors that can affect the business decision making and performance. The
political factors such as the government laws in UK for banking sector can affect the banking
sector and thereby affects the decision making in HSBC and the political factors in Australia
such as unstable government and lack of legislations can affect the mining industry of Rio
Tinto. Further, economic factors for both of the industries are similar in the sense that
changes in the economy can drastically affect the business performance of HSBC which can
be seen from the fact that Brexit has affected the UK economy as the total of 12 per cent is
contributed by British economy in total GDP of UK (Clarence-Smith, 2019). Moreover, the
resource rich nation Australia has boosted the mining taxes which can affect the financial
decision making in Rio Tinto (Jamasmie, 2011). Also, legal factors such as legal systems and
legislations majorly influences the decision-making strategy at both of the companies.
Further, the social factors such as customer attitude, purchasing power and the rate of
standard of living can affect the sales of HSBC due to the changing needs of the customers.
Moreover, it is quite different from mining industry which is affected by the changing
lifestyles of customers. Specifically, people use the metals and minerals into the daily use
which creates an opportunity for Rio Tinto to enhance the performance (Lacey & Moffat,
2012). Environmental factors affect both of the industries in the sense that the change in the
climate and the environmental laws can affect operations and thereby affecting the decision-
making activities of both of the companies. Further, technological factors such as rate of
innovation and technology can affect the operations of the companies and the pace of changes
into the technological factors. Particularly, Rio Tinto is affected by the technological
development which has provided opportunity for the company to adopt the new ways of
extracting and transporting the materials.
Risk refers to the potential harm that can affect the decision-making process. It is
identified as the opportunity to get desirable or undesirable outcome from the risk being taken
from the company (Ahmad, 2017). Moreover, HSBC Bank faces several risks into the
financial market. Firstly, the company faces the risks of sustainability in which the company
faces the difficulty in maintaining the economic stability that do not harm the people,
community or the environment. Secondly, there are operational risk associated with the

BUSINESS CASE ANALYSIS 3
investment and lending of money due to the insolvency or the failing to pay the loans by the
people. Finally, the company faces risk in terms of foreign exchange wherein the company
faces the risk due to the changes in the exchange rates (Business Hsbc, 2019). In this case the
company can face the risk when the company makes or receives the overseas payment in the
foreign currency.
On the contrary, there are differences in the risk associated with Rio Tinto. Firstly, the
company faces the risk of lack of safety within the workplace which has hampered the culture
of the company. This increases the tendency of increase accidents at the workplace which
increases the injuries at the workplace. Secondly, the company has been suffering from the
risk associated with the rising cost and resource nationalism in the process of ensuring the
quality of materials and energy intensive process (Hume, 2018). Thirdly, the company faces
the risk of government laws and regulations for the carrying out the business. Moreover, the
fluctuations in the exchange rates can affect the overseas business of the company which is
same as the risk faced by HSBC bank. Additionally, Rio Tinto has been facing the risk from
the changes in the policies and laws of the government pertaining to the mining industry that
have major influence on the decision making and the performance that can affect the business
process.
Further, it can be observed that both of the companies have been affected by the
environmental factors which have provided opportunity for the companies to expand and also
provides certain risk factors that can affect the overall business performance. The first
suggestion that could be given to the companies is that the company must make appropriate
strategy for the sustaining in the competitive business environment and also avoid the risk
factors associated with the competitive environment (Salunke, Weerawardena, & McColl-
Kennedy, 2019). The companies strategically make the growth strategy that can be helpful in
extending the overall growth of the companies. The strategy should be used as per the
business situation and as per the analysis made HSBC can make cost leadership strategy by
using the lowest cost in comparison with the competitors in order to provide affordable
financial services from the competitors (D. Banker, Mashruwala, & Tripathy, 2014). Further,
Rio Tinto can make the competitive strategy in terms of the product differentiation that can
be helpful in the development of unique products.
Further, second suggestion that could be given to the both of the companies is to
strengthen their corporate or governance structure that can be helpful in the development of

BUSINESS CASE ANALYSIS 4
the policies and rules that can make a robust corporate structure and also can make the
companies responsible and accountable. Further, the companies can appoint the Board of
Directors that will take care of the interest of the shareholders and the owners (Argenti,
2015). Lastly, both the companies HSBC and Rio Tinto are suggested to make risk
management plan that can help the companies to mitigate the risk identified. Moreover,
HSBC is suggested to manage the risk of financial return through the appropriate risk
management plan. Additionally, Rio Tinto is suggested to make the safety changes into the
risk areas and also make efforts for controlling the potential risk at the workplace through the
safety setting. The company can make the appropriate plan for ensuring the safety of the
employees and reduce the injuries and accidents at the workplace and also reduce the various
kinds of the risk associated with the business (Hopkin, 2018).
To conclude, it can be said that business analysis is concerned with the internal and
external factors that have effect on the overall business. Here, the essay has discussed the
business case of HSBC Bank and Rio Tinto who are dealing in different industries and in
different countries. Further, the essay has highlighted the governance structure of both of the
companies in order to determine the differences and similarities into the governance
framework. The essay has also discussed the environmental factors that have affect on the
business decision making and performance of both of the companies. Risk factors and the
suggestions are also being analysed for the business case of both of the companies in order to
make improvements into the management and business process in order to improve the
conditions.

BUSINESS CASE ANALYSIS 5
References
Ahmad, S. (2017). Correlation and Relationship Analisys for Business Risk and Company
Assets. Economics (Bijeljina), 5(2), 47-53.
Argenti, P. (2015). Corporate responsibility. Sage Publications.
Business Hsbc. (2019, January 1). Foreign exchange risk explained. Retrieved December 19,
2019, from HSBC:
https://www.business.hsbc.uk/en-gb/payments/global-payables/managing-foreign-
exchange-risk
Clarence-Smith, T. (2019, January 1). The Impact of Brexit on the Financial Services Sector.
Retrieved December 19, 2019, from Toptal: https://www.toptal.com/finance/market-
research-analysts/brexit-and-its-effect-on-the-uk-european-and-global-financial-sector
D. Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to
more sustainable financial performance than a cost leadership strategy? Management
Decision, 52(5), 872-896.
Dutt, N., & Joseph, J. (2019). REGULATORY UNCERTAINTY, CORPORATE
STRUCTURE, AND STRATEGIC AGENDAS: EVIDENCE FROM THE U.S.
RENEWABLE ELECTRICITY INDUSTRY.(Report). Academy of Management
Journal, 62(3).
Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
HSBC. (2019, January 1). About HSBC. Retrieved December 19, 2019, from HSBC:
https://www.about.hsbc.co.uk/
Hsbc. (2019, August 1). Our Governance Framework. Retrieved December 19, 2019, from
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august-2019.pdf
Hume, N. (2018, May 15). Rio Tinto warns of threat from rising costs and resource
nationalism. Retrieved December 19, 2019, from Financial Times:
https://www.ft.com/content/8991ce20-5845-11e8-bdb7-f6677d2e1ce8

BUSINESS CASE ANALYSIS 6
Jamasmie, C. (2011, November 28). Mining industry affected by escalating social, economic
and political issues: Deloitte. Retrieved December 19, 2019, from Mining dot com:
https://www.mining.com/mining-industry-affected-by-escalating-social-economic-
and-political-issues-deloitte/
Lacey, J., & Moffat, K. (2012, June 1). The Social Implications of Mining in Australia.
Retrieved December 19, 2019, from Issues Magzine:
http://www.issuesmagazine.com.au/article/issue-june-2012/social-implications-
mining-australia.html
Maillet, D., Beaty, R., Kucyi, A., & Schacter, D. (2019). Large-scale network interactions
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https://www.riotinto.com/aboutus/about-rio-tinto-5004.aspx
RT Annual Report. (2018, January 1). Directors’ report. Retrieved December 19, 2019, from
Rio Tinto :
http://www.riotinto.com/documents/RT_2018_annual_report_directors.pdf
Salunke, S., Weerawardena, J., & McColl-Kennedy, J. (2019). The central role of knowledge
integration capability in service innovation-based competitive strategy. Industrial
Marketing Management, 76, 144-156.