Competitive Strategy for HSBC Bank: PESTEL, Five Forces, and SWOT Analysis

This essay discusses the competitive strategy of HSBC Bank using PESTEL, Five Forces, and SWOT analysis. It also highlights the company's strengths, weaknesses, opportunities, and threats.

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Competitive Strategy
Essay
4/20/2018
Student Name

1 | P a g e Competitive Strategy
Companies use the strategic approaches of management to remain competitive in the
environment. HSBC is one of the companies which uses the approach to remain competitive
and active in market. HSBC Bank Plc is a British multinational banking and financial
services holding company. HSBC originates from the Hong in Hong Kong. HSBC is the
seventh largest service provider of banking and financial services. HSBC has made its
existence all over the world by providing the quality services to its customers (HSBC, 2018).
To remain competitive in the market, HSBC is doing the scanning of the environment. By
scanning of the environment, the external opportunities and threats is come to know to
managers. The company tries to avail the opportunities at the maximum and try to reduce the
possible threats which can harm the organization. To survive in the competitive and dynamic
environment, business has to perform analysis to know the market conditions and situations.
These analyses include the PESTEL analysis, five forces, and SWOT analysis.
PESTEL Analysis
HSBC has made its existence in many countries and has to follow the rules and regulations of
different governments where they are working. The company tries to agree to terms and
policies of the government (Australian Government, 2018). In Australia, the government
follows the easy and flexible policies for banking and financial sector.
In terms of economic point of view, HSBC has performed extremely well because of its
uniqueness in the product and services. In Australia, HSBC have a good reputation in the
market and has prime and loyal customers. In spite of many dangers that they have
encountered in many countries, the company is able to maintain its stability in the economy
(Smets, 2014). Biggest danger in Australian economy is facing the increase in interest rates.
It will ultimately impact the buyers and investors purchasing power.
HSBC has many competitors like Bank of America, Citi Bank etc. but then also the company
is performing well in the market. The company is using the resources (human, capital) of the
country, so to bestow upon the needs of the society; company is offering employment and
good lending policies in the country. HSBC is also providing the low carbon economy in
which environment financing, is also including. As the use of low carbon technology in the
economy, HSBC is beginning investment in the climate and clean tech results (Jaber,
Elkarmi, Alasis, and Kostas, 2015).
In the purview of legal factors, the rules and regulations followed in Australia seems to be
increased for operating the business in the market. Increased high governmental regulation

2 | P a g e Competitive Strategy
leads to the high capital requirement as well as new anti-money laundering act requirements
which lead to increase in the cost and time of the company (Australian Government, 2018).
HSBC tries to recognize the climate change in Australia and reduce their carbon footprints.
Footprints can be reduced by the recycling the waste, transport emissions etc. (Soliman,
Mourits, Lansink and Van der Werf, 2010).
Michael Porter’s Five Forces Model
Michael Porter's five forces try to determine areas where to develop the business and nature
of the industry. These five forces are analyzed and assess the market position and competitive
strength. The first force talks about the competitor intensity to operate in the market. There
have been many competitors in the banking and financial sector. HSBC is facing high
competition in the market from Barclays, Citi group. Competitors are working in the same
segment in which HSBC is operating (Brunnermeier and Sannikov, 2014). HSBC tries to
develop those strategies and policies in the Australian market that they always remain at the
number one preference in the minds of consumers.
HSBC is aware of the fact that its competitors are offering the new products and services in
future. This will give a chance to the company to work at their highest level and achieve
sustainability in the market (HSBC, 2018). HSBC tries to find out the requirement of the
consumer and then makes the product and service accordingly.
Nowadays, consumer’s wants and needs are increasing day by day. They want to buy the
best products and services available and paying the lowest amount as possible so it becomes
difficult for the company to provide all this. The profitability goes on declining because of
this type of customers.
Similarly, the powerful suppliers are also negotiating the higher prices from the firms. The
overall impact of higher supplier bargaining power is that it lowers the overall profitability of
HSBC. In Australia, buyer and supplier do not have much-negotiating power in their hands,
so it will be easy for HSBC to maintain its profitability standards (The write pass journal,
2018).
SWOT analysis
SWOT analysis is done to know the company’s internal and external strengths, weakness,
opportunities, and threats for the company. HSBC is considered to be the biggest bank in
Europe in terms of lending of assets and market capitalization. The company has

3 | P a g e Competitive Strategy
differentiated its brands from other competitors and have a brand loyal customer. HSBC is to
have a global reach in the market and give finance to the public at large. The company is
listed on the London stock exchange and records the highest amount of profits every year.
The internal strength of the company is that the company’s board of directors and employees
are performing well in the organization.
But there is a poor performance of the company in the personal finance services.
Furthermore, the company is facing the problem of staff retention all over the world. In order
to reduce the cost and expense, the company makes a reduction in its bonus schemes. Due to
the attrition rate of employees, the company has faced high loses and the customer too
(Admati and Hellwig, 2014).
HSBC’s greatest opportunity is that they can expand its business to any place in the world
and can become the world’s local bank. HSBC will try to acquire and merge with the weaker
bank in the country and make its existence easy in the new country. By doing this in the
market, market size for the company will increase rather than just competing for the small
market segment.
A threat for HSBC can be the survival and sustainability in the new country. As in Australia,
there is the implementation of new rules and regulations in the financial sector which makes
the sector more secure, but smoothed the blow with the promise of a rise in dividends. Also,
the revenues will show decreasing trend from the integration of financial markets
(Wonglimpiyarat, 2014).
From the above discussion, we can conclude that the HSBC is performing well in the home
country and can expand more in Australia as it has suitable working environment. HSBC is
leading bank in the banking and financial sector and have used different strategies that are
meeting the market need and requirements. From the analysis done, it is highlighted that
HSBC makes such strategies that have outgrown its competitors and company has made its
positioning in the market. The company has many advantages to work in Australia as the
country has prime and loyal customers with HSBC brand. The top-level management of the
company is performing well but the company is also facing the problem of employee’s
turnover in many places due to a reduction in the bonus schemes by the company. The
company is trying to overcome this problem and making certain strategies for the same. For
having sustainability in its business, HSBC is using the carbon economy to finance the
environment and make a step ahead to protect the nature. So, in the end, we can say that

4 | P a g e Competitive Strategy
HSBC is playing well in the market and can become the global leader in the finance and
banking industry.

5 | P a g e Competitive Strategy
References
Admati, A. and Hellwig, M. (2014) The bankers' new clothes: What's wrong with banking
and what to do about it. New Jersey Show: Princeton University Press.
Australian Government. (2018) Public Safety and Law. Available at:
https://www.australia.gov.au/information-and-services/public-safety-and-law [Accessed
on 20th April 2018]
Australian Government. (2018) Money And Tax. Available at:
https://www.australia.gov.au/information-and-services/money-and-tax [Accessed on 20th
April 2018]
Brunnermeier, M.K. and Sannikov, Y. (2014) A macroeconomic model with a financial
sector. American Economic Review, 104(2), pp.379-421.
HSBC. (2018) About HSBC. Available at: http://www.about.HSBC.co.in/ [Accessed on
20th April 2018]
HSBC. (2018) Banking Services. Available at:
https://www.HSBC.com.au/1/2/personal/services [Accessed on 20th April 2018]
Jaber, J.O., Elkarmi, F., Alasis, E. and Kostas, A. (2015) Employment of renewable
energy in Jordan: Current status, SWOT and problem analysis. Renewable and
Sustainable Energy Reviews, 49, pp.490-499.
Smets, F. (2014) Financial stability and monetary policy: How closely
interlinked?. International Journal of Central Banking, 10(2), pp.263-300.
Soliman, T., Mourits, M.C.M., Lansink, A.O. and Van der Werf, W. (2010) Economic
impact assessment in pest risk analysis. Crop Protection, 29(6), pp.517-524.
The write pass journal. (2018) SWOT, Porter and PESTEL Analysis of HSBC Holding
PLC. Available at: https://writepass.com/journal/2012/11/swot-porter-and-pestel-
analysis-of-HSBC-holdings-plc/ [Accessed on 20th April 2018]
Wonglimpiyarat, J. (2014) Competition, and challenges of mobile banking: A systematic
review of major bank models in the Thai banking industry. The Journal of High
Technology Management Research, 25(2), pp.123-131.