Understanding the Business Environment - HSBC Bank Case Study

This report analyzes the business environment of HSBC bank, including its legal and market structure, stakeholder analysis, PESTLE analysis, and Porter's Five Forces analysis. It also provides recommendations for improvement. The report is relevant for students studying business, finance, and banking courses.

UNDERSTANDING THE
BUSINESS ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK ONE .....................................................................................................................................3
Introduction, legal structure with defining the operations and purpose of HSBC.......................3
Explaining the market structure in which the organization operates and its affects the
behaviour of the organization in looking to achieve competitive advantage...............................4
TASK TWO.....................................................................................................................................5
Defining the stakeholder, shareholders and stakeholder analysis................................................5
Applying the stakeholder analysis for identifying the companies stakeholder with evaluating
their needs and influences............................................................................................................6
TASK THREE ................................................................................................................................8
Using PESTLE analysis for identifying the macro factors impacting the HSBC bank...............8
Explaining the importance of Porter’s Five analysing the porter five forces of the HSBC
company and its influences on the competitive environment....................................................10
TASK FOUR.................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Understanding the business environment is mainly defining about the companies internal
and external forces impacting its operation as for achieving the business objectives.
Understanding the environment of business mainly helps in achieving and determining the forces
impacting the business operations in achieving the ultimate objectives. HSBC the banking
company providing various financial services. The company is mainly using various Commerical
banking systems and innovative campaigns for reaching to the large number of consumers. This
report provide detail about the HSBC bank, with identifying the market and legal structure. Also,
analysing the affects of market structure on the behaviour of organization in achieving the
competitive advantage. Further, defining the stakeholder analysis of the company for identifying
the stakeholder group of individual with evaluating needs and influence. Further, analysing
pestle analysis and explaining importance of porter five forces. Lastly, with using the KPI
defining the current growth and providing recommendations for improvements.
MAIN BODY
TASK ONE
Introduction, legal structure with defining the operations and purpose of HSBC
HSBC is the banking operational, recognized as the worlds largest banking and providing
financial services to large level of individuals. The banking services are mainly organized with

the three different grouping mainly under the commercial bankings, personal banking services,
and global banking systems. It is mainly providing the Commerical and retail banking service.
The legal structure of the HSBC is the public limited company, providing the financial and
different range of banking services. Which is mainly incorporated under the laws of the country
which is mainly incorporated to the whales and England (HSBC HOLDINGS, 2022). The HSBC
is mainly operating and providing various services as of financial and banking services to large
number of individuals. Various service of the company including the managing the cash
solutions, opening of various business accounts and providing various range of borrowing the
cash with established as global liquidity and trade services. The min purpose of the company is
for serving and bringing all the individual together, as for nurturing and growing the process and
mainly helping and supporting for creating the better world. The company is making efforts for
by taking smart risks and improving various leaning areas.
Explaining the market structure in which the organization operates and its affects the behaviour
of the organization in looking to achieve competitive advantage
Market structure is mainly defined about the structure in which the company is operating
as by providing various services. The banking structure is also defined about the system which
aims for providing the financial services as it is mainly established for operating as the payment
systems, providing loan, taking deposits and helping for better investment. The company is
mainly operating in the UK market (Alfaihani, Badunenko and Jaffry, 2021). The banking
sectors of the company is mainly dominated as established the large banks which are few in
number. As the large banks are small in numbers in the UK as for providing various financial
and banking services to the users.
The market structure of the banks mainly impacts its behaviour for operating in the
market as it helps in determining about the competition level. As the company is mainly
operating with the few larger banks in the market and serving with providing large number of
financial services to the consumers. As the market stricture affects the behaviour of banking by,
as operating and competing with few number if banks which are positioned at large level in the
country. For this if one large bank is lending and providing loans to large number at low rate the
company must also operates and establishes the low rates for competing and sustaining its
position. Furthermore, the market structure impacts the company in establishing the corporate
social responsibilities this helps in achieving better competitive advantage. Also, operating in the

oligopolistic market the technical forces impacting the company as for providing all the banking
services with using the latest technological adaptions. Moreover, if the one bank is lending and
providing better interest rate for lending and granting money to the consumers in the market this
impacts the company for this the company must also use and adapt the same lending rate as for
attracting the users for better investments and borrowing money (Webber, 2022). Thus, for
creating and achieving the competitive advantages the market structure as of operating in the
oligopoly market impacts the operations. For this the company must use the latest technical
devices, also establishes the corporate social responsibilities. further using the innovative and
creative marketing technique as for attracting and achieving the competitive advantages for
operating banks in the country.
TASK TWO
Defining the stakeholder, shareholders and stakeholder analysis
Stakeholder are mainly defined as those individual which is invested in the company and
mainly impacts by the various operation's of the company and its performance. The main
stakeholder of the banks include the shareholder, employees working in the company and
banking sectors, the board of directors, financial markets and the governments in operation. The
banking stakeholders are mainly responsible for achieving and fulfilling the financial objectives.
Shareholders in the company is mainly defined as an individual which has invested in the
company or obtained various shares. In banks the shareholders are comprising owners which is
holding various number of shares (Benetton, 2021). As the banks are mainly controlled by the
stockholders which is acquiring the major at of equity, banks mainly pays some part of its
earning and revenues as a part of profit to its shareholder as a part of dividends.
Stakeholder analysis is mainly defined as the process of identifying and assessing
individual which are mainly impacted by the company operations and its earning. By doing this
analysis it helps in gaining more resources and supporting (Balane and et.al., 2020). Banks
constituting of various external stakeholder as of customer , supplier, government, community,
competitors.

Applying the stakeholder analysis for identifying the companies stakeholder with evaluating
their needs and influences
The stakeholder analysis for the banks it mainly helps in defining about the stakeholder
involves for operating the banking system. With using this analysis helps in defining the
stakeholders involved and their interests as for operating with the company, further helps in
analysing about the impacts on the banks with having the particular stakeholder .
STAKEHOLDER ANALYSIS
Stakeholder of banks Their interest Impact on banks Their priority
shareholders
Subjecting for gaining
capital, losses and
profits with earning
profits.
Shareholders mainly
impacts the banks by
the voting rights on
taking various
decisions and the
power of acquiring
shares in the banks.
High priority
Board of directors
For guiding the
company as for
achieving the long
term goals. In banks
responsible for
managing bank
deposits, creditors also
safeguarding the
The BOD impacts in
protecting and
establishing the
policies for operating
banks. Also,
controlling various
tasks and helps in
supporting workings
High priority

interest of the lawful
institution.
by discovering various
risks.
Employees Employees interest as
for achieving the
salary by providing the
services regarding the
deposits, filing all the
paper workings , loan
officer and providing
and handling all
costumer services and
problems.
Impact of employees
as for checking cash.
Handling all the
problems . This mainly
impact the banks
majorly when
employees note
working properly
according to the set
targets.
Low Priority
Costumers Comply with opening
accounts and operating
with the KYC norms,
also following all the
rules and regulations.
As mainly taking the
personal loans, credit a
debit cards. For
fulfilling necessity and
taking loan from banks
and financial
institutions.
Main purchaser are the
customers for taking
loans and various
borrowings from
banks . It mainly helps
in increasing sales of
banks with taking
loans and opening
accounts which
support bank in
achieving interest
amount and more
earnings.
Moderate priority
Government Controlling the
institution as by
observing with
complying all the laws
and regulations
Government rule and
regulations impact the
banking services and
setting interest for
lending money to
Moderate priority

followed. customers. These are
set guidelines for the
financial institution
complying to perform .
With the above stakeholder analysis helped in defining the stakeholder associated with
banks namely government, employees, costumer, shareholder and board of directors. Also it
helps in defining about the impact on banking system of the company and their role for achieving
the company and operating the banks with success.
TASK THREE
Using PESTLE analysis for identifying the macro factors impacting the HSBC bank
Pestle analysis is mainly used as a tool for identifying the macro factors impacting the
organization. As the HSBC recognised as the banking company operating as public limited.
Various factors impacting the operations of banking are as follows:
Political factors
The HSBC banking company is mainly operating into different counties. The government
laws and regulations influence greatly on the company operations. As the governmental
regulation are highly impacting the financial institution as for abiding the savings of the large
amount of individual. Also, with operating as lack of transparency structure of the governance in
the company is increasing corruption, fraudulent activities. Further various uncertainty in the
political environment and change in the frequency level of the country impacting the working if
the banking sector. Therefore, the company must adapt creating change as for operating the
dynamic environment. Also, various pressures form the governmental groups of individual
impacts the operating of the HSBC in the country.
Economic factors
Various economic factors impacting the company as of the inflation rates, exchange rates,
demand and supply of proper labourer for working and serving the company for achieving the
long term goal. As the developing economies and economic uncertainties impacts the
transactions in banking. Further various demand and supply of labour aids in achieving the
competent worker, with the lack of potential workers impact the company operations as the
availability of skilled and potential employees hinders the company as for organizing the

adequate wages and key trends on the economy impacting its operations in operating in dynamic
market conditions.
Social factors
Various preferences of the consumers impacting the financial operation's of the company.
As the millennials with changing preference, lifestyle, taste and changing trends with using the
credit and debit cards for transacting the business (HSBC swot and pestle analysis, 2022). For
this the special financial assistances and guidances is the hindering. The diversity workforce
working in the company impacts the operation of banks. Other factors impacting the company as
of the consumption behaviour of consumers as for lending and borrowing money, the
demographics, various cultural and societal norms as by gaining the local knowledge for
understanding the consumers perceptions and attitude towards borrowing and taking financial
services form the company.
Technological factors
Technical factors involving the online banking systems with the privacy and security
issues impacting the HSBC operations (Eichman, Torrecillas Castelló and Corchero, 2022).
Also, the cyber attacks and the negligences of the company in storing the data as for protecting
thee consumers information impacted with the cyber attack.
Legal factors
Different laws and regulations impacting the companies operations as the various
federal laws, intellectual pro pert laws, protection laws are the main legal factors impacting the
company operations. Various labour laws impacting the operations of the HSBC and the
company must operate by considering consumer protection laws, safety and security laws for
successful operations in the country and dynamic environment. Various legal laws regulation the
banking structure as of the financial conduct(FCA) authority mainly regulating the UK banking
industry in the country.
Environmental factors
As for operating in the dynamic environment various factor impacting the company
operations as of the eco friendly operation and for reserving and conserving the environment,
also operating with using all the sustainable concerns also taking step for operating with inline
systems as of limiting the paper transactions in the businesses. The environmental law impacting

the company a for operating with adopting the recycle and low paper forms for reducing the
impact of the environmental pollution.
Explaining the importance of Porter’s Five analysing the porter five forces of the HSBC
company and its influences on the competitive environment
Porter five forces are defined as a tool which helps in defining the competitive forces . As
it aims in determining about the companies strategy and areas of improvements for sustaining in
the competitive markets and achieving the competitiveness in the dynamic market. With this tool
and approach it helps in understanding the environment and the market conditions.
Bargaining power of buyers : With high bargaining power of the company as with
operating with more number of consumers in the market, suppliers are less for providing same
services to the large number of consumers (Crompton, 2019). Thus, company is sustaining its
position by providing the financial services as operating as the largest banking and financial
institution in the country and establishing the huge consumer base for weakling the bargaining
power and establishing loyal consumers.
Bargaining power of suppliers: with the low bargaining power of supplier, company is
able to provide various financial services to large consumers and attracting the consumers by
holding the services at large scale and boosting the bargaining power. As the company is using
the strategy of charging the different prices form the consumers according the different lending
and borrowing power for attracting more consumers .
Threat of substitutes: with high level of substitutes available in the market as for
providing the financial service to large consumers. As various small banks providing the services
at low prices and rate of interest hinders the company operations thus the consumers are easily
switching from on company to another for obtaining the financial services.
Threat of new entrants: With the low thereat of new entrants company is able to
attaining and establishes the loyal consumer level this is an advantage for the company as for
serving large number of consumers with providing various financial services. With this the
company is using the strategy as for attaining the competitive advantages by focusing on
providing the innovative and differentiating services for attracting large number of buyers and
competing against the small new entrant in the dynamic environment.
Intensity of rivalry: As the company is operating in the dynamic market conditions, with
low level of rivalry in the market helps in providing the competitive advantages for producing

the financial services to large number of consumers (Berdiev, 2021). As adopting the
differentiated strategy helps in minimizing the rivalry for the company and helps in retaining the
loyal consumers for serving's the large consumers market in the country.
TASK FOUR
Key Performance Indicators for HSBC bank are as follows,
KEY PERFORMANCE INDICATORS
Financial Metrics
Revenue 49552 million
Expenses 1.8 billion
Operating profit 14693
Return on equity 8.3%
Customer Metrics
Client Satisfaction score 6/10
New Accounts 9123
Accounts Opened with insufficient information 431
Process Performance
Total accounts 157 million
Operating profit per employee 1.96 million
Sales per Branch 83.42 million
According to the Key performance indicators which are identified that short-term
performance of HSBC can be said to be very consistent as the organization is able to generate
income very efficiently per employee (HSBC Holdings plc Annual Report and Accounts, 2021).
The total number of new accounts in year also suggests the effectiveness of the marketing of this
organization the short-term. The percentage of the accounts with informational issues are only
4.83% which shows the accuracy of this organization yet it can be improved further.

The long term performance of this bank shows that this bank has been able to have a
great combination of debt and money market instruments which is able to provide it's the profit
making variations and maturity levels in the organization (Bhagat. and Bolton, 2019). This is
also the considered to be the factor which helps the bank in staying positive even in the
economic recession times for showing the corporate profitability and also policy that provides
normalization. The income level of this organization also indicates the ways in which it is able to
gain success in the long term.
The current performance level of this bank in the terms of both financial and non
financial terms shows that HSBC is able to gain the competitive advantages that can be
considered to be the key determinant towards the performance of the organization. The
measurement of this organization profitability in the current era shows that the business is able to
generate income even in the difficult times of the economy which indicates the ways in which it
is going to be able to gain effectiveness in the performance (Maqbool and Zameer, 2018).
Number of branches this bank has in the organization also indicates the grasp that this bank has
on the market share of the banking sector of UK. It is the development of key strategies of the
organization which is able to determine the factors that bring growth to the bank, The services
quality of this banking is the key factor that helps it in gaining competitive advantages in the
market.
The justification of the Key performance indicators show how the business is able to gain
the success that it desires for improving the ways in which the business performs. In order to
increase the efficiency of the organization it needs to hire more in order to increase its operations
and gain success. It is also very important for this bank to be more effective in the documentation
and also following all the legal formalities for avoiding future issues. This is a way in which the
business will be able to increase the performance of its operations. This will enhance the brand
image of this organization providing the business with success that it requires.
CONCLUSION
From the above report it can be concluded that, HSBC public company, the banking
financial institution. It is mainly recognized as the largest among all for providing various
financial services as of personal banking, global operations. Further it is managing cash, with
trade services and providing different ranges of borrowing and lending solutions. The company

is operating in the oligopolistic market structure of the country with few large organization
serving the financial services. Further, with the stakeholder analysis helped in defining the
company different stakeholder a of consumer, employees, government, shareholders, BOD. Also
with the macro pestle analysis helped in defining the issues associated with operating the
company.

REFERENCES
Books and Journals
Alfaihani, S., Badunenko, O. and Jaffry, S., 2021. Market size and market structure in
banking. Journal of International Financial Markets, Institutions and Money. 72.
p.101342.
Balane, M.A and et.al., 2020. Enhancing the use of stakeholder analysis for policy
implementation research: towards a novel framing and operationalised measures. BMJ
global health. 5(11). p.e002661.
Benetton, M., 2021. Leverage regulation and market structure: A structural model of the UK
mortgage market. The Journal of Finance. 76(6). pp.2997-3053.
Berdiev, T.B., 2021. THE STATE OF CORPORATE GOVERNANCE IN BANKS BASED ON
THE ANGLO-AMERICAN MODEL (based on the example of HSBC Holdings Public
Limited Company). Экономика: анализы и прогнозы (1). pp.37-42.
Bhagat, S. and Bolton, B., 2019. Corporate governance and firm performance: The sequel.
Journal of Corporate Finance. 58. pp.142-168.
Crompton, A., 2019. Inside co‐production: Stakeholder meaning and situated practice. Social
Policy & Administration. 53(2). pp.219-232.
Eichman, J., Torrecillas Castelló, M. and Corchero, C., 2022. Reviewing and Exploring the
Qualitative Impacts That Different Market and Regulatory Measures Can Have on
Encouraging Energy Communities Based on Their Organizational
Structure. Energies. 15(6). p.2016.
Maqbool, S. and Zameer, M. N., 2018. Corporate social responsibility and financial
performance: An empirical analysis of Indian banks. Future Business Journal. 4(1).
pp.84-93.
Webber, A., 2020. Translating awareness into action. Occupational Health & Wellbeing. 72(1).
pp.16-19.
Online
HSBC Holdings plc Annual Report and Accounts, 2021[Online]. Available through:
<file:///home/user/Downloads/220222-annual-report-and-accounts-2021.pdf>
HSBC HOLDINGS. 2022. [Online]. Available through: <https://casesteam.com/ivey/hsbc-
holdings/porters-analysis.php>
HSBC swot and pestle analysis. 2022. [Online]. Available through:
<https://www.swotandpestle.com/hsbc/>