HSBC Business Environment Analysis: PESTLE Framework Application

This report provides a comprehensive analysis of the business environment, focusing on HSBC. It begins by classifying different types of business organizations, including public, private, voluntary, and charity sectors, highlighting their purposes and objectives with examples like the National Probation Service, Sainsbury, NHS, and British Heart Foundation. The report then delves into stakeholder and shareholder analysis, differentiating between stakeholders and shareholders and presenting a stakeholder analysis matrix for Sainsbury. The core of the analysis involves applying the PESTLE framework to HSBC, examining political, economic, social, technological, and legal factors impacting the organization, such as the effects of COVID-19, Brexit, and technological advancements. Finally, the report refers to Key Performance Indicators (KPIs) in HSBC's annual report, discussing how these indicators reflect the organization's performance and strategic objectives, providing a holistic view of HSBC's business environment. This student contributed the document and it is available on Desklib, a platform providing study tools and resources for students.

Understanding
the Business
Environment

Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTON............................................................................................................................4
TASK 1............................................................................................................................................4
Business organisations can be classified according to many types of criteria............................4
TASK 2............................................................................................................................................6
Stakeholder, shareholder analysis................................................................................................6
TASK 3............................................................................................................................................8
This Task requires you to research the organisation highlighted (HSBC) and then undertake a
business environment analysis using appropriate business analysis tools...................................8
TASK 4..........................................................................................................................................11
Referring to the Key Performance Indicators in the annual report of the organisation.............11
CONCUSION................................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTON
Business environment is the sum and collection of internal and external factors such as
employees, customers, political stability, supply and demand, management, and suppliers that are
important part of business organization. In other words, business environment determines
longevity, profitability, and growth by managing and operating the organizational functions. This
is important for management to analysis the environment that which factor might be affected the
organizational performance and productivity (Adamseged and Grundmann, 2020). The report is
based on Sainsbury that is larger supermarket in UK, providing different types of products and
services at the workplace. The management of such organization is playing the important role as
it analysis the environment and identify which factor can impacts on their performance. The
report covers types of organization, key shareholders, nature of the environment, national and
international working environment, and range of economic tools used to determining business
decision and economic tools that used to state business decision.
TASK 1
Business organisations can be classified according to many types of criteria.
Business organizations are of different types which are running by organising and
managing the all functions and activities. This is important for each organization to understand
the requirement and make efforts to provide the optimum solution which can help to develop the
business productivity. In the business environment there are different types of organization
which are running as per their nature such as:
Public Company – This can be explained as an organization whose control and
management is having in the hands of government and it manage the all functions effectively. In
this, shareholders have claim to part of the organization’s profits. This also generate the money
by issuing share in public. For example, National Probation Service (NPS) that provides
statutory criminal justice service to the offenders.
Purpose: The purpose of public company is to fill the customer’s requirement and
managing the all functions. The main purpose of NPS is to provide the justice and reduce the
crime (Al-Matari, Aziz and Amiruddin, 2021).
Objectives: To offers the best possible services and not to generate the profits.

Private Company – This means an organization which is operating its business by
management and owner for the purpose of making profits. For example, Sainsbury is the large
supermarket that sales range of products and services at retail prices for the purpose of increasing
profitability.
Purpose: The main purpose of Private organization is to grow their business and increase
productivity. Sainsbury is operating and managing the all business activities for the purpose of
generating profits and sales (Bhati and Borde, 2021).
Objectives: The aim of private organization is to increase their selling activities and
develop the organizational profits.
Voluntary Company – This can be explained as union in which group of individual
enter in to an agreement for managing business activities. For example, (NHS) National Health
Service that is publically funded health care organization, understanding the requirement and
providing the health care services which can help to develop the business performance and
improving the health.
Purpose: The purpose of NHS to running business and satisfying the people who lives in
society by providing them best treatment and good care service.
Objectives: The aim of such organization to understand the problems of people and
provide them possible services. NHS understand the health issue of people and provide them best
treatment for improving their life.
Charity Sector – This means an organization which is operating by using public funds
and managing the higher performance at the workplace. This is establishing for satisfying the
people and provide them good life. For example, British Heart Foundation that is a charity based
organization in the UK. This funds research related to heart and circulatory diseases and their
risk. In this people are funding by their wishes and managing the all functions.
Purpose: The purpose of British heart foundation is to conduct the research for heart
patient and introduce good treatment (Bratianu, Hadad and Bejinaru, 2020).
Objectives: To conduct the research and get the information and treatment of heart
diseases. This can help to make feel good and healthy the people.
Market structure – This means a structure in which organization is operating their
business and managing each functions and activities. The types of market structure are perfect
competition, Monopolistic competition, Oligopoly, and monopoly. Sainsbury is the supermarket

that operates its business in perfect competition market structure as there are many supermarkets
are available that create the higher level of competition. The management introduce new
products and services by using advertisement that impacts positively on organizational behaviour
and helps to achieve the competitive advantages. This is important for each organization to select
the best strategy and implement it effectively which can help to develop the organizational
performance.
TASK 2
Stakeholder, shareholder analysis
In business organization number of employees, management, and shareholders are
working who understand their roles and perform it clearly. Shareholders are those people who
have interest in share and organizational activities as they also have right to vote and participate
in meetings. In other words, shareholder is an individual that legally owns one or more shares by
giving their contribution in each activity. In relation to Sainsbury, shareholders have their
interest in business activities and managing the performance. There are different terms which are
as explained:
Stakeholder – This means a party that having an interest in the company can
either affect or be affected by the business. This type of people having interest in organizational
activities and performance by managing all functions and activities. These people have good
understanding and knowledge about organization and their efforts to complete it properly. In
relation to Sainsbury, stakeholders are investors, employees, suppliers, and customers who are
invited to take part in organizational activities (Dana and Vorobeva, 2021).
Shareholder – A shareholder is defined as those individual who owns part of public
company in the form of shares of stock. These people are not allowed to attend meeting and give
their opinions for the purpose of improving their performance.
Thus, from the above it can be explained that stakeholder and shareholders are different
who have vested interest in organization in the different ways and develop the business
performance. The management of organization should be understanding the requirement of their
stakeholders and managing the all functions and activities.

Stakeholders analysis
LEVEL OF
INTEREST
LEVEL OF
INTEREST
LEVEL OF POWER HIGH LOW
HIGH Management, Owners Government
LOW Staff members Customers
Stakeholder Analysis – This can be explained as process of identifying the people who
are involved in a project and giving their participation in different ways. For organization it is
important to prepare the stakeholder analysis as it determines how best to involve and
communicate each stakeholder that can help to run the business and attaining the higher
performance. This enlist the help of key business players and gain the higher productivity. In
relation to Sainsbury, a stakeholder analysis has been prepared as:
High power, High interest – This involves top authorities of organization who are
involved in the organization and have their interest in each activity and functions. In relation to
Sainsbury, Management and owners are those people who handle and control business as they
have high power and high interest. They invest their money to grow their business and increasing
the profitability percent (Hong and Oh, 2020).
High power, Low interest – This means those people who are high power but does not
have high interest that can are used to developing the business activities. In relation to Sainsbury,
Government is the stakeholder that have high power and low interest which can help to
developing the business activities by giving permission to complete the task and attaining the
productivity (Diderich, 2020).
Low power, high interest – This means people and authority that belongs to business
activities and managing the all functions. In relation to Sainsbury, Staff members are those
people who understand the goals of organization and work accordingly as they have high interest
in business activities. If profit ratio is higher, employees will receive high but these people does
not have power to make any decisions.

Low power, low interest – This means those people or stakeholder that have low interest
and low power. This type of people is not authorised to take part in organizational activities and
give their votes. In relation to Sainsbury, employees have lower interest and low power that as
they do not involve in meeting, and profit sharing ratio.
In relation to Sainsbury it can be explained that, management, owners, and government
are the those stakeholder who have vital interest and power in organization and manage the
business activities effectively.
TASK 3
This Task requires you to research the organisation highlighted (HSBC) and then undertake a
business environment analysis using appropriate business analysis tools
The business environment is changing day by day where it is important to introduce the
products and services according for the purpose of running their business effectively. HSBC is
the British multinational investment bank and financial services holding company that provides
the finance and advise to their clients. The organization is facing the issues due to some reason
such as:
 Impact of Covid-19 on business organization
 Changing in business environment or occurring external factors
 Increasing competition that affected the HSBC sales and productivity.
To analysis the environment and conducting the analysis PESTLE framework is being used that
can help to know how the external factors impacts on organizational performance. The PESTLE
Analysis in relation to HSBC bank is explained below:
PESTLE Analysis
It is a strategic tool that is utilized by business organization for the purpose of gaining
knowledge about factors which impacts on operations and functions of businesses. All business
concern should follow the PESTLE analysis that helps to perform business functions effectively.
Political factor: This factor illustrates taxation, trade agreements, labour regulations,
tariffs etc. that impacts on business and may be an opportunity and threat for organization. As
whole world is struggling from Covid-19 where government has formulated some regulations to
stop their business due to which investment activities of bank has been reduced. This has been

create the challenge for government to contribute a fixed percentage of revenues in public
healthcare that reduced the profitability (Huma, Ahmed and Najmi, 2020).
Economical factor: This factor illustrates interest rates, employment rates, inflation
rates, GDP rates etc. that impacts on business organization whether positively or negatively.
Economic factor is an opportunity for HSBC bank, After Brexit in UK, interest rates has been
reduced which supported the all small businesses and banks to increase their sales and
productivity. This factor also provide an opportunity to get employment and expand their
business in other country.
Social factor: This factor encompasses income level, education level, changes in
lifestyle, fashion, taste etc. that might be impacts businesses. Due to Covid-19, people became
aware about health and fitness so this factor might be impact on HSBC bank negatively as people
are unemployment who are not taking part in investment activities. Thus, it affects the business
organization and its operational activities negatively (Irshad, Ahmad and Malik, 2020).
Technological factor: This factor illustrates technical services like, digital marketing,
internet, advanced technology etc. which impacts on business positively and it may a risky for
organization to adopt such factors. By using the new technology HSBC bank is providing the
online services to their customers and 24/7 hours customers services which can help to managing
the all functions and increase the performance, it affects positively. On the other side, to adopting
new technology and innovation, cost of HSBC bank increases that reduce the organizational
sales and profitability.
Legal factor: Such factor includes some legislations which are enacted by governmental
entities, can impacts on business. HSBC bank is following health and safety act, employment act
under which it provides good health and safety to employees and their family also. It helps to
create retain employees for long term that is an opportunity for organization and it achieve
business objectives efficiently. Thus, it affects the business positively.
Environmental factor: This factors comprises environmental protection laws and
regulation which is need to follow by companies in order to run and expand business. In HSBC
bank, managers are caring about environment so they distribute qualitative products which does
not harm environment. This organization also contribute in CSR activities that can help to
maintain the higher productivity and profitability (Jhunjhunwala, Sharda and Sharma, 2021).

Porter’s 5 forces model – This is an analysis which is used by organization for the
purpose of developing their business and attaining the competitive advantages. In relation to
HSBC Bank, porter’s 5 force model is used by management that is explained below:
Bargaining power of suppliers – This force state how easy suppliers to increase the
prices of their products and services. In relation to HSBC bank, buying power of suppliers is low
as there is direct relation of customers with banker that can help to get advise on time and make
the investment. This create an opportunity for chosen organization to operate their business and
attain the higher productivity.
Bargaining power of buyers – This states an activity in which how easy customers can
reduce or bargain the price of their products. In relation to HSBC bank, buying power of
customers is low as bank has fixed interest rates and investment rates on which customers has to
get the services. This create the challenge for chosen organization to operate its business
regularly (Jumelet, Gorgievski and Bakker, 2020).
Threat of substitution – This means availability of similar products and services at
lower prices. In relation to HSBC Bank, there is high threat of substitution as other bank also
provide the similar and different services to their customers which can help to make feel good
and attractive in the changing environment. This might be affects the organizational performance
and productivity at the workplace.
Threat of new entrance – this means entrance of new organization in the marketplace
and affects the organizational performance. In relation to UK market, there is low threat of new
entrance because to establish a new bank there is need of high investment and resource which is
difficult for organization to arrange. Thus, it might be an opportunity for chosen organization to
operate its business (Lin and Huang, 2020).
Threat of competition – This is another force which is related to competition and
managing the business activities. In relation to HSBC Bank, there are high threat of competition
that affects the business negatively. The main competitors of HSBC bank are Commerzbank,
Lloyds Banking Group, Standard Chartered, Scotiabank, Citi, and Bank of America that create
the challenge for organization.
From the above analysis, it can be evaluated that there are various forces which might be
affect the business or become the opportunity by managing the all functions and activities on
time. This develop the understand how the risk can be measure and overcomes that develop the

organizational productivity that arising from the competitive market environments, both
nationally and internationally.
TASK 4
Referring to the Key Performance Indicators in the annual report of the organisation
To managing and controlling the business performance there is need to analysis the
financial statement that states the position of business and maintain the higher productivity. In
relation to HSBC bank, management is playing the important role who conduct the analysis and
introduce the products and services in the form of investment that can help to developing the
business activities and managing the higher productivity (Tariq and et.al., 2020). The financial
report of HSBC bank is explained below:

Evaluation of business development – for each organization it is important to evaluate
the business performance by identifying performance and bringing the changes. In relation to
HSBC Bank, management analysed the business performance by using KPI tool, that is an
indicator used to know the business and employees performance. This can help to develop the
business activities and attaining the competitive advantages. Key performance indicator states
financial and non-financial indicators that are used to measuring the organizational performance
and controlling the organizational functions. The management is require to bring the changes in
employees performance where it develop the business productivity and attain the higher
performance. The financial indicators tells what are the financial activities and how employees
can be motivated in monetary terms that can help to bring the change and develop the business
activities. On the other side, non-financial indicator is being used to analysis the non finance
activities and managing the all functions as per prepared budget that can help to increase the
organizational productivity (Liu, Tong and Sinfield, 2021).
Recommendation
 From the above evaluation it has recommended to HSBC bank to use the KPI tool
for analysing and measuring the business performance as it helps to know how a
business can be grow in changing environment (Vo and Le, 2021).
 The management should be understanding the requirement of their staff and
provide them benefits that can motivate and increase the organizational
performance.
 There is need to control over all expenses and activities which can help to operate
the day by day functions and supports to develop the business profitability.
CONCUSION
From the above report it can be concluded that business environment is sum of external
factors that affects the business activities and functions. The types of organization are private,
public, voluntary, and charity that are using for running business and filling demand. This is
important for each organization to conduct the environment analysis and managing the all
functions which can help to develop the business productivity and profitability. Porter’s five
force are used to analysis the performance and attaining competitive advantages at the
workplace.

REFERENCES
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