Business Model Innovation and Risks

The assignment delves into the evolving landscape of business risks in 2016. It examines prominent global trends like economic uncertainty, cybersecurity vulnerabilities, and shifting regulations. The analysis draws upon various sources including academic research, reports from institutions like Allianz Risk Barometer, and Forbes insights on CSR trends. The goal is to understand how these risks impact businesses and highlight the importance of adaptive business models.

Contemporary
Developments in Business
and Management

Table of Contents
TASK 1............................................................................................................................................1
Political and Legal Influences.....................................................................................................1
Socio Cultural Impact:-...............................................................................................................3
Econocial Influneces...................................................................................................................4
Technological Influences............................................................................................................4
Economic Influences...................................................................................................................5
TASK 2............................................................................................................................................5
i. Relevance of ethics and CSR of Standard Chartered and its influence on policies and
decision making..........................................................................................................................5
ii. Effectiveness of the organisation's response...........................................................................8
(iii) Areas which can be improved as a response........................................................................9
Conclusion ....................................................................................................................................10
REFERENCES..............................................................................................................................11

TASK 1
Any company operating in the macro environment is susceptible to the effects of external
influences which constantly impact its decision making and their operations. Other then dealing
with the forces unfolding domestically, banks like Standard Chartered which is a multinational
bank are also indudlged with the task of estimating and taking actions against the global
influnece (Anderson and McGreal, 2012). So it would be important to see wether this bank has
ability of framing proper strategy and developing better response to the forces.
Political and Legal Influences
Those companies which are running there business have to follow the local laws but in
the case of international company or any multinational organisation they have to abide all the
laws of the countires where they are operating their business operations. So any such laws briefs
the market accessibility, pricing of the goods and the manufacturing and process costs which
includes labour and any raw materials (Bergek and et. al., 2013). Other than this there is also
workforce management which includes labour, financing which is related to banking laws,
marketing tools which includes advertising, consumer protection laws and technological
development like patent and trade mark laws. So multinational banks like Standard
Chartered affects the environment of the host nation where they run there business. Countries
like UK have an open economy which permits foreign direct investments because they have free
market economy which has less control of the government. Government paritaly influence the
businesses but they more act as a facilitator (Bjorklund, 2013). To bring more companies to the
consumer so that they can get quality products and get products at better prices. So it can be said
that the government supports both the organisation and competitors. Various companies can
easily invest here because there is a political stability as same in Hong Kong. Standard Chartered
has expanded into the Asian markets which has lead them to growth and also helped them in
beating their competitors (Boccardi and et. al., 2014). For instance the Standard Chartered bank
in Hong Kong was critised for increasing their interest rates and it was also the same case in
other three Asian countries so it brought uproar in the people and their market share went
drastically down. To act for such activity the government of China can brough various rules thus
giving them direction from the Central Bank of China which they have to obey else they will be
thrown out of the business. It may also happen that the country where they are running their
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activties may pass the laws with the aim of attracting foreign investment (Christensen and et. al.,
2011).
Political instablity and various other political risk promentitaly impact the MNC and their
business actions. Like, if any country where there is leftist governmnet so according to their
agenda they can try to capture the property of bank through giving the explanation of
nationalisation which they will do through transfering the ownership of resources from private to
public sector (Collins, Gensch and Glorius, 2014). This was experienced by Standard Chartered
bank where in Brazil the government ask them to stop certain services as they want to increase
the market of the local banks thus giving them priority.
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Illustration 1: Top Business Risks 2016 Around the World

Types Influence on Organisations
Any campaigns against the foreign products Decrease in the sales
Criminal activities and any kind of violence Disturbance in the production
Any new legislation regarding labour benefits Increase in the operating costs
Increase in the security costs
Wars Destruction of property
Inflation Higher operating costs
Increased taxation Lower after tax profits
Socio Cultural Impact:-
Any MNC are surrounded by various socio cultural features and structures which changes
drastically wehn analysed between various communities and societies. Standard Chartered bank
has analysed that the living standards of people has changed from due to increase in the
population (Duffield, 2010). Due to increase in standard life and various other demographic
factors puts lots of impacts on the products which are produced and modified through operations.
Standard Chartered bank is well aware of the fact that whereever they are operating the business
have to look at the culture and according to it should set the prices and should be updated so that
it can adpat in the environment (Ellison and Boyd, 2013). For example; if they are running there
business in Asian countries where people are not that rich and many people have the aim of
doing small business so for that they should they should bring loans for them on less interest rate.
This will help them in increasing their market share thus beating their competitors in the market.
They are focused on increasing the economic activity and if the lifestyle of people will be
good then this will impact their business in positive way as through it there business actovities
will increase and more people will like to avail their services. To live a luxury life they will
borrow loans from banks and which bring positive aspects (Eskerod and Huemann, 2013). They
have faced various issues where they had to face losses as for example in the countries like India
where people don't have that luxurious life and Standard Chartered bank as being the multi
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national bank they will loose the customers (Faille, 2011). As most of the people in India are
taking the service of the local banks so Standard Chartered bank has to analyse the market
scenario and know the preferences of the people according to it they should bring banking
products. It is seen that in India most of people are vary much concerned about the savings and
insurance for their valuable assests (Fischer, 2010). So they should give them certain options
which can act as investments in there insurance scheme. They should give loans on gold and
other valueable things.
Econocial Influneces
Standard Chartered in their report the bank shown their interest in “nature capital
management”. The aim of this program is to safeguard the future supply of the “natural capital”
like different raw materials required for manufacturing. As for the documentation this sector
requires a lot of papers so for that they have to cut trees as this is the only way they can get
papers (Freund, 2016). This had a negative impact on the environment so if there will be less
trees this will decrease the rainfall rate and thus bringing threat to Standard Chartered bank
(Garrigos-Simon, Lapiedra Alcami and Barbera Ribera, 2012). They also address climate change
and global effects on Standard Chartered bank supply chain which agin hampers their longevity
and aggravates water scarcity through droughts.
Technological Influences
Banking is the sector which has lots of players so those who are part of this has to face
lots of competiton. So in order to reach new heights and gain competitive advantage the banks
needs to bring innovative and uniqueness in their services. They can change the way through
which they deliver their services and products in the market (Gong and Janssen, 2012). Standard
Chartered bank is pretty well aware that technolofical advancement of the bank can bring new
opportunities like development of the new improved products which will provide them more
access to more markets or will increase their market share (Gustafson, 2012). In their R&D
report they have stated that their technological innovation is led by the clients and driven by
science so that they can deliver shared value which make sure that they have protectable
differentiation in their services. Standard Chartered bank are allocating a huge budget to their
research and development so that they can bring ways to improve technology at the bank (Green
and Bandyopadhyay, 2013). They wants to become global leader in the banking sector so they
have made things simple so that each and ever person could easily connect with them. They have
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to make sure that they reduce the paper work through upgrading that thing with the technology.
All the documentation should be done in computer so that they could get more space in the bank
and through it they will easily search lots of data or important information in less period of time.
Through this the documents can be available to the clients and other that they should also works
on brining there all banking services online. In the rush life people don't wants to give more time
to any single activity so by looking at this they can it can be analysed that they should make an
online platforms like an anorid app and website which they already at some places so they should
encourage cash less banking or paper free banking (Habtay, 2012). With the technological
update they can easily cater to the needs of people in present and future. This will reduce their
work load and they will find it easier to deliver their products and services to more number of
customer thus increasing their market share.
Economic Influences
Economic growth is the factor which impacts the decisions and activities of a business.
Rate of economic growth can be considered as indicative of customer purchasing power and can
be a tool to determine the level of demand in a particular country's economy (Hansen and
Lyytinen, 2010). In the financial report Standard Chartered bank stated that the economic crisis
has hit the banks high and the list of loan defautler increased drastically thus the share of the
bank also went down experencing decrease in their market share. It was analysed that the
economic crisis has reduced the Standard Chartered bank growth pace in the developing
countries. To to increase in the purchasing power of the middle class people in Asia they are
facing new results in the Asian market (Hughes and et. al., 2011). With increase in the income
level people wants to spend more so it is opporunity for them to provide loan or any financial
service. It is evualted that economic conditions are the indicators of the corporate growth
opportunities. Standard Chartered has developed a strategy to invest more in the emerging
economies through opening new branches there.
TASK 2
i. Relevance of ethics and CSR of Standard Chartered and its influence on policies and decision
making.
Standard Chartered also listed as Standard Chartered PLC in stock market is a British
multinational banking and financial services company which has a headquarter in London. It
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operates more than 1200 branches and it is present in more than 70 countries which is handled by
87000 employees.
Ethics plays a very crucial role in success of any banking industry. As this path
sometimes increases the expenses and cost, that's why operation department generally tries to
avoid ethical path. Some of the ways by which standard chartered can practice ethical path are: Transparency: As these days there are no banking or financial companies which are
giving transparency to its customer's. Which causes them in loosing the faith of the
customer's on them. Customer's thinks hundreds of time before choosing any service,
which decreases the rate of inconsistency in sales and revenues (Jeston and Nelis, 2014).
Because of the gap between offering of service and sales, whether to buy or not also
increases the chances of customer mind change. But transparency also declined the sales
as if banks lets the customer know every hidden point of service than the customer's will
not avail the service. But if the interested customer found the relevant and authentic
service, they will make a unbreakable repo with bank and will also benefit bank by
recommending the same to their friends and families. Fair trade practices: Trade practises means transactions between banks and their clients,
for genuine clients banks need to sale their products or services to interested clients only
which help them to increase their repo with them (Koen, Bertels and Elsum, 2011). For
example, if bank manager will try to sale loan to a person who don't requires, just to
increase the sales can effect the repo between them. On the other hand if he approach the
person who eagerly needs it will help the bank to make a relation like of a family
member.
 Relation with employees: Employees are the pillars or backbone of the banking industry
as they gives end to end solutions to their clients. Thus clients satisfaction level is
dependent on employees. Every banking needs to be ethical with their employee by
giving them on time salary, listening to their problem, be casual with them when requires
and organizing fun activities and give healthy reward on their achievement, so that they
will be highly motivated.
As Standard Chartered Bank has good repo, and got the appreciation by awarding it best
bank playing ethical role in Ethisphere Institute's annual report. But still there's some issues
happened in Asian countries, which listed it under the unethical banks. These issues are:
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 Credit card complains: It has been facing extensive fraudulent disputes in asian
countries. The reason was it doesn't followed appropriate trade practises which is made
by government. Not only SBC but various other bank also felled under this category like
HSBC which is top ranked banks. Due to this, customer's are now loosed their faith in
banking sectors, here employees play a major role, as they are the role model to take right
decisions in right situations. But standard chartered overcomes this situations by
awareness in customer's about the right use of credit cards and how to close this cards
online. Stock Market Scandals: A financial scandal during 1991 & 1992, in which foreign banks
were accused for transacting dummy deals to cover their losses. SCB violated its
guidelines by financing stock market operations and it also tries to increase unaccounted
deals through fictitious transactions (Lantolf, Thorne and Poehner, 2015).
 Acquisitions and outsourcing threat: In Malaysia, SCB use rationalization because of
outsourcing to give an excuse to close branches and scale down others. It closed 15
branches nationwide, which reduces career promotion and results many job losses
because it outsources its sales and marketing jobs.
Overall ethics are the major support for Standard Chartered Bank, but sometimes it gone
unethical to reduce its cost, but that unethical move increases its profit. Now it has made its own
Code of ethics which helps it in making quick decisions by following it.
Social Corporate Responsibility application and uses: Social Banks: These are those banks which helps SME's small medium enterprises to
start-up their business by availing loan to them. This can help SCB by increasing tie ups
with these businesses, as they will create more business for Standard Chartered by
opening their employees account in it. Rural Banks: It should open its branches in rural areas, as these people should also get
opportunity to use SCB's services, this will help bank again by increasing its customer's
base. And its reputation will also increase and it can also get business from them by
giving loan on agriculture, house, vehicles, etc. With the rural bank they can empower
people to become self depended on each other and they will able to fulfil their basic
needs like house and etc.
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 Opening schools : It can open schools for the children who are not able to get good
education. This step can help the bank in saving a tax and good repo with public and
government (Lawless and Findlay, 2015). Education is the solution for any problem so
through opening schools the local children who cannot afford education can get free
education.
 Donations: It can also fulfil the corporate responsibility by donating fund which will help
it in saving tax and sound relation with governments. And employees will be motivated
as they will feel proud to work with the company who is following ethical guidelines as
well as fulfilling corporate responsibilities. With the donations they can donate it to the
local communities so that they can make their life easier and can increase there
livelihood.
 Opening community centers:- To bring harmony in the society they have to unite people
and create a sense of responsiblity towards the organisation which they can do through
opening community center and organises various events through enaging people in that.
At the same time they can open training sessions for the locals giving skills so that they
can easily able to find any employment and become self dependent.
ii. Effectiveness of the organisation's response.
One of the key aspect of Standard Chartered bank's business is to create shared value. It
understands that if they have to increase their market it is necessary that those communities
where they are performing their business activities should also be developed. Through investing
into the foreign countries they are creating a shared value in the host nations. They are bringing
out products and services to meet the demands of the society in the developed and developing
countries. They are also ensuring that they take steps in boosting local economic and bring social
development (Meredith Belbin, 2011). To does not harm the environment they are properly
utilising the resources. They should ensure that they should take perform CSR almost
everywhere because they are well aware of the fact that social progress is directly linked with the
business so they should not take it as a philanthrophy but rather as activity which adds value for
all the people who are part of the bank directly or indirectly.
It is the business policies which is the base for CSR activties thus creating a culture in the
business to cater the needs of the human nature. They have certain policies based on the fact that
they have to continue their success and expand their market by following all the legal
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requirements and international norms in mind (Osiyevskyy and Dewald, 2015). They have
adopted various environment related policies like on Environmental Sustainability and
Commitments on the use of paper.
After adopting various CSR activites they have gained lots advantages and the
effectivness of their response can also be found through the SWOT analysis.
Strengths:-
 Through it they are getting success in increasing their brand awarness.
 They are bank which is know as a strong competitors in the banking sector providing
various services to their customers.
 They are well aware of the fact that to achive new heights and bring innovtaion they
spent a lot of budget to the R&D department.
 They have a strong global presence through delivering services in 80 countries.
Weaknesses:-
 Their growth has reduced to the economic crisis of 2007.
 They are getting complaints regarding the customer service.
Opportunities:-
 Due to their active CSR stratgiess they can look to invest into the small countries which
has strong economy.
 They have serives which gives customer full access to the internet banking through their
smart phone.
 Standard Chartered bank has scope of brining new services in the current market which
will bring more customers towards them.
Threats:-
 Standard Chartered bank is facing tough comopetiton from their opponents in the same
market.
 Due to shortage of labout they are experencing high staff cost and process cost.
With the shared stratgey of creating shared value they are trying to remove the threats
and the weaknesses they have in their business they have adopted. They are brining new
opportunities for the R&D so that they are able to create innovative products that could benifit
the people who wants the loan for opening new business. They are trying to make banking easier
so they have introduced smart phone app which is effective and reduce the time of the people.
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This is directly link to the socio cultural factors and various opportunities attached to it. The
outcome of the successful CSV are directly linked with the growth strategies which is achived
through the continously brining new opportunities for the local community (Lu, 2012). To achive
the fact that the places where they are running their services the nearby communities and the
members of those should get certain benifits so those people who are well educated and holds
certain skills are employed in the bank. This is helping people in increasing there life style and at
the same time Standard Chartered bank is also organising certain educational awarness
programess and the training sessions for the local people so that those individuals can be
interdependent (Morgan, 2013). Those areas where they can find the raw materials are given the
international exposure as they know this can bring a lots of profits to them.
(iii) Areas which can be improved as a response.
Through investing into the foreign countries and adopting CSR can help them in
contributing in reducing the poverty rate in those areas. Both the market development and
practising CSR model will bring economic success to the company. But they need to know that
how they can use this to bring more benefits as they lack in the marketing of their banking
services. It is the golden opportunities for them to use their CSR practices to use it for the
marketing purpose (Michalopoulos and Papaioannou, 2013). They can explore more from this
and use this as an PR activity. While involving them in any CSR activity they should call the
media should tell them the improvement and developments which has came from their activities.
This will increase their brand image and will help them to increase the market share. It is the
marketing of the responses which they are taking for implementation of the CSR model. With the
help of media they can aware all their users, clients and other stakeholders about the good efforts
they are making to bring change in the society. They should take part in the international
convention and events related to environment and climate change which will give them a
international identity. They have made a promise that they will be practising 100% paper-free
banking which assist them in improving their brand image in the brand. With proper PR they
build better understanding with the stakeholders who are working for the environment
conservation. They should try to open schools, training centres and other medical facilities for
the local communities where they are giving their services.
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Conclusion
From the above it has been analysed that external factors widely impact multinational
companies as it can be both opportunities and challenges for them related to the corporate goals.
If Standard Chartered bank wants to achive their goals and objectives they need to coordinate
and set relation with the internal strengths and skills with the opportunities and threats. With the
CSR activties they wants to give equal importance to the social development with the economic
development. Through it there image will be imporved in the market and they will get more
customers. If they have to beat their competitors they need to ensure that their business stratgey
is made buy looking at the external factors.
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