Understanding the Business Environment - BBC and HSBC Holdings Plc

This report discusses the factors affecting the business operations of BBC and HSBC Holdings Plc. It includes stakeholder analysis, PESTLE analysis, Porter's Five Forces Model, and recommendations for short-term and long-term performance.

UNDERSTANDING THE BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK – 1.........................................................................................................................................3
Introduction of BBC....................................................................................................................3
Purpose and objectives of BBC Television.................................................................................4
Market structure in which BBC operates.....................................................................................4
Role of market structure in gaining competitive advantage........................................................4
TASK- 2...........................................................................................................................................4
Definitions...................................................................................................................................4
Stakeholder analysis of BBC.......................................................................................................5
TASK - 3..........................................................................................................................................6
Reasons that state the importance of business environment........................................................6
PESTLE analysis of HSBC Holdings Plc....................................................................................7
Importance of Porter’s Five Forces Model..................................................................................8
Porter’s Five Forces of HSBC Holdings Plc...............................................................................8
Critical influences arising from the competitive market environment........................................9
TASK-4............................................................................................................................................9
Development of the business with reference to short-term and long-term performance............9
Recommendations......................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
1

INTRODUCTION
Business environment can be defined as a sum total of the different types of factors
namely, internal and external factors that affects the business operations of an organization. The
internal and external factors include employees, customers, suppliers, customer preferences,
social factors, economic factors and many more. The present report includes discussion of the
factors affecting the business operations of two reputed organizations i.e., BBC and HSBC
Holdings Plc. The BBC is a national broadcaster company based in London, United Kingdom
and the HSBC Holdings Plc is a financial services company and multinational bank which is also
headquartered in London, United Kingdom.
MAIN BODY
TASK – 1
Introduction of BBC
BBC stands for British Broadcasting Corporation. It is a national broadcasting company
based in London, United Kingdom. BBC television is a service of the BBC company. The BBC
television is a Public Owned company which was founded in the year 1922 i.e., 99 years ago.
The company belongs to public television services and provides and produces several television
programmes from its own studio since the year 1932 (Nguyen, Mohamed, and Panuwatwanich,
2018). The Domestic channels of BBC do not provides the audience with any kind of advertising
that is commercial in nature, however, in the years 2013, the company had recorded a mark of 30
% within United Kingdom with respect to overall viewers among the nation. A public owned
company can be defined as a company where the ownership of the enterprise is with the general
public of the nation in the form of shareholders. Anyone can become a general public
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shareholder of the company by purchasing and selling of shares over the counter within the
market or with the help of stock exchange. The BBC Television is a provider of various services
to the existing audience of the company as it provides them with 10 national TV channels,
regional TV programmes, 10 national radio stations and 40 local radio stations, and an internet
TV service within the nation. It also provides the audiences with these services through out the
world and also offers news by ways of online channels as well as TV channels in 42 languages
and English across the globe.
Purpose and objectives of BBC Television
The major purpose of the BBC television is to provide the audience with content that
helps them in engaging the audience towards the brand and providing them high quality,
effective, and impartial services which helps the company in catering to the needs of the
audience (Sentanu, Galih, and Wismanu, 2021). Also, it aims to inform, entertain and educate
the audience by offering them with high quality content.
Market structure in which BBC operates
Market structure can be described as how diverse industries are categorised and
distinguished on the basis of the nature of the competition with respect to its products and
services. There are mainly four types of market structures namely, perfect competition,
oligopoly, monopoly and lastly, monopolistic competition. However, it has been determined on
the basis of the nature of products and services of the BBC television company that it falls under
the category of monopolistic competition within the market. A monopolistic competition market
can be described as a market structure in which there are a number of companies that are offering
a product that is similar to the products offered by other brands however, it is not exactly the
same or identical in nature (Nataliia, Dmytro, and Igor, 2018). Similarly, there are various other
television companies which offers services that are similar to the services provided by the BBC
television and therefore, falls under the category of monopolistic competition.
Role of market structure in gaining competitive advantage
Each of the market structure has its own set of advantages and disadvantages. The market
structure refers to the competition between different firms within a particular market structure on
the basis of the products and services offered by them. The market structure which allows the
firm to gain competitive advantage includes monopolistic competition, and oligopoly market
structure.
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TASK- 2
Definitions
Stakeholder
A stakeholder can be described as the individual or a group of people of organization
which holds interest within the business operations of the company and has the potential to affect
the company’s operations or be affected by the same. The major stakeholders of an organization
includes employees, customers, suppliers. Shareholders and investors.
Shareholder
The term ‘ shareholder’ can be referred to as an individual, an enterprise or an institution
who owns at least one share of a particular company. Shareholders are considered as owner of
the company as they hold a share in the ownership of the organization by way of holding a
certain amount of shares within a company (Sapapthai, and et.al 2020). Since, the shareholders
are considered as the owners of the company, they are eligible to receive the benefits of the
success of the company. They benefits are provided to the shareholders in the form of increasing
the value stocks and financial profits in the form of dividends.
Stakeholder analysis
A stakeholder analysis can be referred to as a process through which organizations tries
to determine, examine and prioritize the people who has the ability to be affected or affect the
business operations of a company.
Stakeholder analysis of BBC
The stakeholders can be described as the interested parties within the business operations
of an organization who has the potential to affect the business operations of an enterprise or be
affected by the same. The major stakeholders with respect to the business operations of BBC
television has been explained below:
Government and industry regulators
The government and industry regulators helps in protecting the privacy and interest of the
consumers as on the television network, the digital media activities are converted into sale. It
also aims to protect the consumers against fraud which includes fake impressions and content.
Advertisers
The advertisers have an internet within a television channel as they provide
advertisements and aims to market the required message among the right audience at right time
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and right place. It also aims to consider several factors which allows the advertisers to improve
their content in order to boost their return on investment.
Audience
The audience is interested in business operations of BBC television as they desire to
receive premium quality content on the television in exchange of an affordable price. Also, easily
watches the advertisements that captures their interest (Bendtsen, Clausen, and Hansen, 2021).
Programmatic exchange
It provides the data providers with a marketplace where they can easily buy or sell their
products in terms of a television series or a movie or program which helps them in attracting the
audience towards the program and help the programmatic exchanges in earning a high rate of
return and thus, increasing their profitability. They also aim to eradicate the frauds between the
processes of demand and supply within this specific industry.
Data Providers
The data providers pack the data and then sells the data sets in order to generate a great
audience by attracting them through presenting nice and attractive advertisements which helps
them in capturing the interest of the audience. The data provides are also helpful to the television
channels as they them in creating a single source view for all the audience that might help the
company in increasing their profitability and generation of enhanced outcomes.
TASK - 3
Reasons that state the importance of business environment
It is essential for the HSBC Holdings Plc in order to determine their business
environment as it will help the company with a number of factors:
Determining the opportunities
The ability to examine the business environment will help the HSBC Holdings Plc to
identify different opportunities available within the market (González, and et.al 2019). If the
HSBC Holdings Plc. is able determine the opportunities existing within the market and grab the
opportunity will help the company in enhancing the profitability of the company and help them
in gaining competitive advantage within the market.
Identifying the possible threats
If HSBC Holdings Plc keeps a constant check on the business environment and keeps on
examining the factors which might affect the business operations of the organization, it will help
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the company in determining the possible threats which might arise in future and affect the
profitability of the company. The timely identification of the same can help the company in
taking precautionary steps in order to safeguard the interest of the company.
Keeping up with the constant changes
It has been identified that the business environment is quiet dynamic in nature and keeps
on changing constantly. Similarly, the HSBC Holdings Plc also observes changes within their
business environment that includes changes in technology, change in the needs and preferences
of the customers, increase in the competition within the marketplace. Therefore, in order to keep
up with the constant changes takes place within the business environment, it is essential for the
HSBC Holdings Plc to understand the business environment and maintain a leading position
within the market.
PESTLE analysis of HSBC Holdings Plc
A PESTLE analysis is a framework used by several organizations in order to examine the
external environment factors that affects the business operations of an organization (Jarosch,
Nimczik, and Sorkin, 2019). Similarly, a PESTLE analysis with respect to the HSBC Holdings
Plc has been mentioned below:
Political factors
It has been determined that the local government of a nation plays an important role in
making policies and enforcing them within the company as most of the enforcement agencies
reports to the local government with respect to compliance of policies regarding different laws.
This affects the business operations of the HSBC Holdings Plc. Moreover, it has been identified
that there is a need to strengthen the democratic institutions within the country which help the
HSBC Holdings Plc to operate within a more stable, open, and clear business environment.
Economic factors
The Government of the United Kingdom is running deficit budgets within the nation.
This is helping the HSBC Holdings Plc in increasing their sales in the short run, however, will
lead to the risks of depreciation of the currency and medium term Forex for HSBC Holdings Plc.
The increase in the rate of inflation can affect the demand of the products offered by the HSBC
Holdings Plc as an increase in the inflation will lead to an increase in the cost of products offered
by the company but unfortunately, lowers the brand loyalty among the customers of the
organization.
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Social factors
The demographic factors which fall under the category of social factors affects the
business operations of the HSBC Holdings Plc. The company should take into consideration the
type of public which exists within the United Kingdom. It has been determined that the older
generation has huge amounts of disposable income as compared to the people belonging from
younger generation (Hamilton, and Webster, 2018). Therefore, the company should be able to
determine their needs in order to provide them with required products and increase the
profitability of the company.
Technological factors
The use of advanced technology by investing within the research and development can be
helpful for HSBC Holdings Plc to develop a sustainable ecosystem and help the organization in
hiring the best employees within the enterprise.
Legal factors
HSBC Holdings Plc is an international brand and operates within a number of countries
which have different laws and regulation. These laws might affect the business operations of the
company.
Environmental factors
In today’s world, the consumers are well aware of the needs of the environment.
Therefore, it is essential for the company to take a step forward towards developing a healthy
environment.
Importance of Porter’s Five Forces Model
The Porter’s five forces model is an essential framework which helps the companies in
determining the major competitive forces within the industry that affects the business operations
and profitability of the company.
Porter’s Five Forces of HSBC Holdings Plc
Threat of new entrants: The HSBC Holdings Plc. is one of most reputed banks in the Europe. It
holds second position all over the Europe in providing the customers with financial services. The
customers are loyal to this brand and therefore, the HSBC Holdings Plc. does not faces the threat
from the new entrants (Mishra, and et.al 2018). This is so, because developing a financial
institution which can compete with such a reputed bank is difficult as it requires the entrants to
invest huge amount of capital.
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Bargaining power of customers: The bargaining power of customers with respect to HSBC
Holdings Plc is moderate. This is because there are certain old financial service providers which
provide the similar services to the customers at affordable prices.
Bargaining power of suppliers: The major suppliers of the HSBC Holdings Plc. include the
employees of the companies and the depositors. Therefore, the power of suppliers is quiet high
for the HSBC Holdings Plc. This is because the operations of the company is dependent these
two only.
Competition: There are several banks which falls under the same category such as Citi Group,
Standard Chartered, Deutsche Bank and many more. Therefore, it can be said that the
competition is high among the industry (Hans, 2018).
Threat of substitutes: It has been determined that are hardly any substitute the products offered
by the banks. Therefore, the threat of substitutes is low within the industry, however, it has been
observed that various companies are trying enter within this sector by launching their own digital
payment apps.
Critical influences arising from the competitive market environment
 Launching of digital payment apps by several companies.
 The threat of existing competitors also affects the business operations of HSBC Holdings
Plc.
 The ability of suppliers within the industry to bargain for the products offered by the
company.
 The Brexit deal has also affected the operations of the HSBC Holdings Plc.
 The demographics of the company wherever the company has its branches and
subsidiaries.
TASK-4
Development of the business with reference to short-term and long-term performance
On the basis of the annual reports of the HSBC Holdings Plc for the year 2021, it can be
stated that the company has been able to make good amount of profit within the year 2021. From
the annual report, it can be noted that the HSBC holdings Plc. has earned a profit after tax of
about $14,693 million in the year 2021. This was much higher than the profit after tax, it earned
within the year 2020 and the year 2019 (Buye, 2021). The profit after tax in the year 2020 was
only $6099 million and in the year 2019 was about $8708 million. Therefore, it can be stated that
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the HSBC Holdings Plc is been able to make profit in the long run as the profit after tax has been
increased by $8594 million.
On observing the data stated within the annual report of the company, it can be noted that the
company has also improved its cost efficiency ratio which was 68.3 in the year 2020, which then
rose to 69.9 in the year 2021. The EPS of the company within the year 2021 has also increased as
compared to the previous years. The dividend pay out ratio of the HSBC Holdings Plc has also
been enhanced in the year 2021. However, in the previous years, it was quite high which could
not be considered as a healthy dividend pay out ratio.
However, it can be noted that the total assets of the company has been reduced as compared to
the assets of previous years (Shtal, T.V., and et.al 2018). The reasons behind this might include
outflow of cash from the company or decrease in the amount of loans taken by the organization.
It has been determined that the HSBC Holdings Plc makes good use of its current
reporting practice in terms of its financial measures. The company makes use of financial
statements which are prepared quarterly, half yearly and annual. These statement records the
inflow and outflow of cash, profitability of the company, tax paid, expenses incurred and many
more of such important financial aspect of the company which help the analysts and stakeholders
in measuring the performance of the company and determining the areas where there is a need
for improvement within the organization.
The non-financial measures of the HSBC Holdings Plc include customer satisfaction,
market share, brand loyalty among the customers. These factors helps the analysists in
determining and measuring the performance of the organization. The customer satisfaction helps
in understanding the value and goodwill of the organization due to which the customer prefers
the particular organization.
Recommendations
Even though, the performance of the HSBC Holdings Plc. has been great in last year as
compared to the previous years, however, the company can still have a scope to improve their
profitability in the following ways:
 Effective working capital management helps an organization in increasing the
profitability of the company as the ineffective management affects the growth of an
organization negatively (Artman, and Cherniavska, 2020). Inappropriate management of
finances within an organization leads to various types of issues associated with finance
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and profitability of an organization and thus, affects the profitability of the company
negatively.
 Also, in order to enhance the profitability of the HSBC Holdings Plc., it is essential for an
organization to constantly track and monitor the financial performance of the company.
Constantly keeping a track of the expenses of the company helps an organization in
determining the expenses and then analysing the ones which can be reduced by proper
implementation od specific strategies within the organization. The decrease in the
expenses of the company will lead to an increase in the profitability of the HSBC
Holdings Plc.
CONCLUSION
The present report is based on the business environment of the BBC television company
and the HSBC Holdings Plc. The present report discusses about the structure of the BBC
Television and the market structure in which the company operates. It also studies the role of
market structure in gaining a competitive advantage within the market. The present report also
discuss about the financial position of the HSBC Holdings Plc in the last year as compared to its
financial position in previous years. The current report also includes recommendations for the
HSBC Holdings Plc. in order to enhance its current profitability.
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