1ENTRY STRATEGY FOR HSBC COMPANY Table of Contents Introduction................................................................................................................................2 Company Background................................................................................................................2 Expansion Strategy of HSBC.....................................................................................................3 Foreign market entry strategy of HSBC.....................................................................................4 Factors motivating entry strategy...............................................................................................5 Conclusion..................................................................................................................................6 References..................................................................................................................................8
2ENTRY STRATEGY FOR HSBC COMPANY Introduction Market entry strategy refers to planned distribution of the goods or the services to the new target market. It is indicative of import along with export of the services that can help a company in building its presence in the foreign country. The business can get the increased salesintheeventofenteringanewmarket.HSBCisthelargestbankingservices organisation within the world which have the operations within 64 countries along with the territories (Hsbc.com 2020).It helps the business in thriving and it ensures the prosperity of economy that can help the people in fulfilling the hopes. This report elaborates on the activities of HSBC and the expansion strategy of the company that have helped the company in establishing its presence in the international arena. This report evaluates the foreign market entry strategy of the company and the factors that have motivated the company to take recourse to the strategies. Company Background HSBC is the British multinational investment bank which is the seventh largest bank in the world. It is the largest bank within Europe that have assets amounting to US $ 2558 trillion that have established its reputation in the world. The company traces the origin to the hong within Hong Kong and the present form had been established within London by Hong Kong and Shanghai Banking Corporation. HSBC helps the customers in taking care of the everyday finances which can help them in growing their wealth. The company have the international network that have enabled it offering support to the business, owners along with investors across the world. The company provides various kinds of services like Personal Banking, Global Private Banking and Financial Planning that have increased its popularity among the people. The company is instrumental in providing diverse kinds of the personal services like current accounts and
3ENTRY STRATEGY FOR HSBC COMPANY loans to the customers of the target markets. The company provides investment along with the wealth management solutions that have helped it in supporting the clients so that they can achieve the ambitions. The company works with the small enterprises along with the large multi-nationals so that they can function in the effective manner. The company possess financial strength which can help them in supporting the customers with the working capital that can work to the benefit of the customers (Watson et al. 2018). The company have the relationship managers who provide the financing for the buyers along with the suppliers across the course of the trade cycle. It helps in providing the valuable advice to the business that can help them in retaining the greater control over the cash that can help them in managing the liquidity in the effective manner. Expansion Strategy of HSBC HSBC have depended on the aspect of the concentration that have helped it in maintaining its hold in the market in different countries of the world. The company have undertaken the cross-asset collateral management solution that have helped it in expanding the presence in various countries of the world. It have improved the visibility of the bank that have helped it in earning the profit margins in the market. It have been successful in bringing the inventory in different business together that have helped the company in managing the aspect of funding (Globalinvestorgroup.com 2020). The company have acted in the dynamic manner pertaining to the business model that have helped it in implementing the changes for satisfying the demands of the customer. The company have provided the international network that have helped in connecting the developed markets. The company have developed the retail banking business within the markets where it can achieve the profitable scale. The company have the unrivalled global presence that have helped it in offering the help to the clients so that they can take the part in the global growth opportunities. The company have adopted the universal banking model that have helped it in meeting the diverse functional
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4ENTRY STRATEGY FOR HSBC COMPANY needs of the clients. The company have strengthened the business in Mexico along with US that have helped in rebuilding the profitability of the firm (Eiu.com 2020). The company have grown the revenue with the help of transaction banking products which includes the 9 % increase in the Global Trade and Receivables Finance. The company have increased number of the clients who carry out business in NAFTA area. The company have increased the productivity in the UK branches with the help of online customer support along with the appointment banking. The company is in the leading position for capturing the growth within Asia. The company have accelerated the business growth within China’s Pearl River Delta and developed the asset management so that it can reap the benefits from the growing middle-class of Asia (Scmp.com 2020). It have helped the company in the area of market penetration that have helped it in attracting the new customers. The expansion of HSBC have helped the company in getting the frontal competitive advantage that have helped the company in getting ahead of the competitors. The company have strengthened the financial crime detection along with the investigation abilities that have helped it in providing the superior service to the customers. The company have implemented the robust anti-money laundering compliance programme that have helped it in gaining the competitive advantage (Chinadaily.com.cn 2020). Foreign market entry strategy of HSBC The foreign market entry strategy that have been adopted by HSBC is joint ventures that have strengthened its position in the foreign soil. The company have operated the securities joint venture with that of Qianhai Financial Holdings Co Limited which is a financial services form within China. It have helped the company in augmenting the strategic focus in China that offers diverse kinds of services like equity research, debt underwriting along with the brokerage solutions (Marques, Lupina-Wegener and Schneider 2017). The company offers the structured financing along with the asset backed securities that have
5ENTRY STRATEGY FOR HSBC COMPANY helped the company in bringing various kinds of services within China. The advantage of HSBC exists on account of the fact that it owns the banking subsidiary based in Hong Kong called The Hong Kong and Shanghai Banking Corp Ltd. HSBC Qianhai Securities Limited would engage in the aspect of equity research and provide the valuable advice on the aspect of corporate mergers. The establishing of the joint venture would help the company in delivering the strategic commitment to grow the business within the framework of mainland China (Tomy 2019). The 51 % ownership of HSBC have been found to be the maximum percentage of the aggregate shareholding for the Hong Kong funded institution within the framework of joint venture securities company. The company have also made use of acquisitions that have helped in the arena of expansion of company in the world. The company have acquired Royal Bank of Scotland’s select operations within India that have helped in expanding scale of operations of the company. It have acquired the retail banking business of Royal Bank of Scotland that have increased the scope of the company (Chen and Yao 2017). The merger and the acquisition have helped the company in the implementation of the corporate strategy that have increased the value of the company. The company have experienced Merger & Acquisition (M & A) banker in the main markets of the world that have aided to a great extent in the expansion of the company. The company have on-the-ground M & A bankers in various countries like Argentina, Indonesia, Japan, South Africa and Spain that have increased the reach of the company in various parts of the world. The Doha Bank QSC which is based in Qatar have merged the Indian business with that of HSBC Bank Oman SAOG that have further strengthened the position of the bank among the other rivals present in the modern age (Trudeau and McLarney 2017). Board of Directors of the Doha Bank have approved Scheme of Amalgamation that have enabled the company in taking over and combining banking business of HSBC Bank Oman with that of Doha Bank.
6ENTRY STRATEGY FOR HSBC COMPANY Factors motivating entry strategy There are various kinds of factors that have motivated the entry strategy of HSBC that have helped it in engaging with the various kinds of markets in the world. It can help the companies in the combination of the resources that can help them in gaining a strategic edge within the market. The contractual agreement taking place in between the parties can help the companies in sharing the profit and the loss that can help the company in the area of getting security. The parties who are involved in the venture contributes certain part of the initial capital to the project that aids in furthering the interest of the companies in the present age. It can help in the alleviation of the financial burden for the banks that can help them in getting the success on the world stage (Lasserre 2017). The external factor that have compelled HSBC to take recourse to joint ventures is that it faces the increasing amount of competition in relation to the traditional product markets that have made it to adopt the foreign entry strategies. The competitors have made the in-roads in the traditional base of the banks of deposit that have made HSBC to take recourse to the joint ventures. The emergence of the new kind of technology have stiffened the competition for the banks which have compelled the banks to make use of the strategy of the joint ventures (Lopes, Hoffmann and Amal 2017). The internal factor that have made HSBC take recourse to acquisitions is for filling the business gap that can help in improving the performance of the company. The banking operations is an important aspect that made HSBC make use of acquisitions that can help in increasing the efficiency of the firm. It can help in consolidating and administering the operational infrastructure that can reduce the institutional risk on the part of the company. Conclusion HSBC have made use of the expansion strategy of concentration which have enabled the company in maintaining the grasp within the framework of the global market. HSBC have made use of cross-asset collateral management which have expanded presence of company in
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7ENTRY STRATEGY FOR HSBC COMPANY different parts the world. It have been instrumental in improving visibility of bank which have enabled the company in earning profits in the market. The business have strengthened business within Mexico and US that have rebuilt profitability margin of company. HSBC have conducted securities joint venture with Qianhai Financial Holdings that have helped the company in increasing the business in China. It have helped the company in providing various kinds of services like brokerage solutions along with equity research that have helped in providing the benefits to the company.
8ENTRY STRATEGY FOR HSBC COMPANY References Chen,X.andYao,L.,2017.ForeignBanks’EntryandLocalBanks’Strategiesin China.Asia‐Pacific Journal of Financial Studies,46(4), pp.635-660. Chinadaily.com.cn,2020.HSBCPlansJVWithShenzhenQianhai-Business- Chinadaily.Com.Cn.[online]Chinadaily.com.cn.Availableat: <http://www.chinadaily.com.cn/business/2015-11/03/content_22354818.htm> [Accessed 13 April 2020]. Eiu.com, 2020.HSBC Receives Approval For Securities Joint Venture In China. [online] Eiu.com.Availableat:<https://www.eiu.com/industry/article/1775643961/hsbc-receives- approval-for-securities-joint-venture-in-china/2017-07-03> [Accessed 13 April 2020]. Globalinvestorgroup.com,2020.[online]Globalinvestorgroup.com.Availableat: <https://www.globalinvestorgroup.com/articles/3691979/hsbc-collateral-concentration> [Accessed 13 April 2020]. Hsbc.com, 2020.Global Banking And Markets | HSBC Holdings Plc. [online] HSBC. Availableat:<https://www.hsbc.com/who-we-are/our-businesses-and-customers/global- banking-and-markets> [Accessed 13 April 2020]. Lasserre, P., 2017.Global strategic management. Macmillan International Higher Education. Lopes,A.L.A.,Hoffmann,V.E.andAmal,M.,2017.InternationalizationStrategies Underlying the Performance of Foreign Banks in Latin American Markets.Latin American Business Review,18(2), pp.91-120. Marques, J.C., Lupina-Wegener, A. and Schneider, S., 2017. Internationalization strategies of emerging market banks: Challenges and opportunities.Business horizons,60(5), pp.715-723.
9ENTRY STRATEGY FOR HSBC COMPANY Scmp.com, 2020.HSBC China Securities Joint Venture To Quadruple China Research Coverage.[online]SouthChinaMorningPost.Availableat: <https://www.scmp.com/business/companies/article/2176428/hsbc-china-securities-joint- venture-quadruple-china-research> [Accessed 13 April 2020]. Tomy,R.E.,2019.Threatofentryandtheuseofdiscretioninbanks’financial reporting.Journal of Accounting and Economics,67(1), pp.1-35. Trudeau, C. and McLarney, C., 2017. How can banks enhance international connectivity with business customers?: a study of HSBC.IUP Journal of Business Strategy,14(2). WatsonIV,G.F.,Weaven,S.,Perkins,H.,Sardana,D.andPalmatier,R.W.,2018. International market entry strategies: Relational, digital, and hybrid approaches.Journal of International Marketing,26(1), pp.30-60.