HSBC Bank Business Strategy Analysis: PESTEL, SWOT, and Porter's Five Forces

This report analyses the business strategy of HSBC bank using PESTEL, SWOT, and Porter's Five Forces models. It covers the impact of macro environment, internal capabilities, and competition in the market. The report also suggests strategic management plans for the bank.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. ANALYSIS OF MACRO ENVIRONMENT .........................................................................3
2. SWOT analysis .......................................................................................................................5
3.HSBC porters five forces..........................................................................................................8
4.Strategic management plans...................................................................................................10
5.Interpret information and data................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
The report of business strategy will comprehensively analyse the business strategy of
HSBC bank in order to know the current status and to improve the profitability and brand image
in the future. For this purpose various theories models and frameworks will be used to elaborate
each aspect of the bank. A critical analysis of macro environment using PESTEL analysis will be
done to the micro environment's impact on strategies of the organization. Further, a detailed
SWOT analysis of the organization highlighting set of skills, structure and capabilities for
knowing the weaknesses, strengths and threats, opportunities of the bank. Also, porter's 5 forces
will be applied to evaluate the competition in the market, so that an improved strategy can be
formed (Naheem, 2018). A strategic management plan will be formed which has tangible and
tactical priorities for the organization.
The organization taken for this purpose is HSBC bank, it stands for Hongkong and
shanghai banking corporation, it is one of the largest banking organization in the world. It
established in 1865 and currently has the banking operations in more than 64 countries. The
report will look in to the ins and outs of the bank in order to form a strategic business strategy.
MAIN BODY
1. ANALYSIS OF MACRO ENVIRONMENT:
To deeply analyse the macro environment of the bank, PESTEL analysis will be used to
understand each important element such as political, economical, social, technological,
environmental and legal of the macro environment. Let's discuss each element in detail.
particulars
Political: As HSBC has global operations, it has to comply with various rules
and regulations implemented by the government of different countries.
Taxation policies of different countries also needs to be followed.
While making expansion decisions the bank should consider taxation
policy or fiscal norms of the regions which affects the viability of the
operations. As counties having free or flexible trade norms are more
business friendly and generating profits becomes easy in such
countries (Çelik, 2022).
Currently HSBC is facing backlash and issues with

government due to corruption charges and lack of transparency in its
operations. Recently, the US government made HSBC accountable for
the money laundering from criminal activities like drugs etc.
amounting to $2.6bn. Which resulted in a huge financial loss and loss
to the brand image. Therefore, bank needs to Strengthen and look after
the risk management and compliance infrastructure according to the
requirement of different countries to have smooth business operations.
Economical: This includes various factors like Covid-19, inflation, exchange rates
etc. that affects the working of the bank. Many banking institutions
still feels the effect of 2008 financial crisis and 2019 Covid-19
pandemic which led to huge liquidity crisis for the company, but
HSBC managed to survive these problems as it is universal with
offering of products all over the globe. The chairman of HSBC said
that the business is doing well because of the underlying revenue
development, which is driven by commercial banking and global
market, banking, especially in faster growing countries like America
and Asia pacific region (Eierle and et.al., 2021).
Currently with high inflation rates in the world it makes huge
impact on the operations of the bank as it reduces the purchasing
power of the currency. This has created uncertainty in interest rates of
the bank services which affects the loaning and overseas operations of
the business. Therefore, company should review the economic growth
rate of various nations while making expansion decisions.
Social: These factors represents the vital demographic characteristics such as
norms, social values and the society in which business operates.
HSBC must carefully deal with the social factors as inability to do so
makes business difficult in foreign lands. Rise in population and high
proportion of younger generation are two very favourable factors for
the bank. As, developing new products according to the need and
preference of the county is vital for the profitability. Further,

having more people onboard representing the culture and background
of the nation is important for maintaining diversity in the business
which brings more productivity to the operations. Marketing strategies
adopted by the bank should be more focussed on the country of
operations as it makes a huge difference when cultural and social
norms are adopted by the company and showcased in the marketing
measures (Anand and Mantovani, 2021).
Technological: Technological automation has revolutionized the banking industry. By
studying and understanding the emerging technological trend and
innovations, company can focus on the product development, life
cycle of products etc. Banking has become more on fingers than going
to the premises of banks. Such extreme innovation and development
can be a market leadership strategy for the bank. At the same time
spending huge time and resources towards building a strong cyber
security so that in times of risk and cyber attacks company do not have
to jeopardize the trust of its customers (Gall, 2019).
Cyber crimes and attacks have been the biggest threat to the
company in technological terms and company must take strong
measures to deal with it. Maintaining huge database of the customers
to serve the customers in a better way and fulfilling their satisfaction is
important for company to retain the customers in the long run.
Environmental: It has gained significant importance under the context of
contemporary business environment as stakeholders of the business
has become more vigilant towards the sustainability and
environmental friendly approach. Stakeholders like government and
authorities demand reduction in carbon footprints (Hettiarachchige
and Jahankhani, 2021).
HSBC has made its commitment towards taking strong
measures for reducing carbon footprints by recycling, reusing,
reducing the waste and improving energy efficiency in the offices of

the banks. Such measures will improve the brand image of the
company and attract more customers for banking. HSBC needs to
have full compliance with the respective rules of the nations of
operations as this develops a corporate friendly environment.
Legal: These factors includes various law regulation related requirement of
the company. Intellectual property law allows the business
environment to have safer aura for HSBC as no one can imitate the
products as they are patent and this leads to competitive advantage for
the company. Banking remains one of the most important sectors of
every economy therefore each economy tries to have strict norms for
the banking operations to keep the authenticity of the financial
segment.
Increased governmental regulations from England and EU,
such as higher capital requirement and anti money laundering
requirements needs to be met by the HSBC else it can create a huge
compliance issue for the company. In case of having online
transactions, the bank needs to abide by the data protection regulation
as data mining on consumers banking information is not allowed in
UK (Barber, 2021).
Therefore, the pestle analysis of HSBC brings forward many
important elements which affects and needs to be taken care of by the
bank to have smooth operations.
2. SWOT analysis
For analysing the internal environment of HSBC in order to know the internal
capabilities, skill set and structure, SWOT analysis is an appropriate measure.
particulars
Strengths: The resources and capabilities the company has which can be used to

achieve the goals and objectives of the company are known as strengths.
HSBC bank has a diversified yet universal business model, it consists of
four global businesses that are wealth management, commercial banking,
global markets & banking, and global private banking. One of the
biggest strengths is having a detailed geographical diversity in business
lines that derives huge revenue generation tools for the company (Nurmi
and Niemelä, 2018).
HSBC's simple working idea of “the world's local bank” explains
its international presence and such wide presence ensures huge profits
for the company. Another strength of the company is having good
dividend record, as it has distributed huge part of its profits in paying
dividends, which provides strong stakeholder support across the globe.
HSBC has over the years proved itself as a highly capitalized company,
there standing strong in times of crisis and risk is easy for it.
Professionalism and highly skilled or trained workforce, diverse
perspectives, people, ideas helps HSBC in building dedicated and strong
workforce, company invest huge resources in developing employees
which contributes to the ultimate success of the bank. HSBC's highly eco
friendly and climate strategy has helped it to gain customer loyalty and
retention over the years, and such aspects further strengthens the brand
image.
Weaknesses: Characteristics of the company which gives disadvantage to the
company are the weakness in the organization. Few of the weaknesses
that HSBC has, are the weak financial stand as company has high debt
ratio which increases the debt burden of the company hence slowing
down the expansion rate of the business. For HSBC expansion is market
leadership technique and can be said as a competitive edge but large debt
creation over the years slows down the pace of growth for the company.
Involvement of bank in various controversies like corruption case and
money laundering has brought many financial losses and caused damage

to the brand image in some countries like USA (Akter, 2019).
Company has been fined a huge amount recently by the UK
government for failing of anti money laundering system. It impacts the
authenticity of business operations and lacks the trust of customers.
HSBC lacks quality customer satisfaction as the front team which
directly deals with end customers is lacking the ability to provide
services up to the expectations of the customers, this has cost company
lose a nice share in market. Banks are basically providing services to the
customers and deriving customer satisfaction is of utmost importance.
Opportunities: These can be defined as the favourable chances or external factors which
could give the company a competitive advantage. The Biggest
opportunity that lies in front of HSBC is the advanced digitalization,
which could be used to gain huge market share. As there still are some
unexplored markets or market shares which can be gained by using
various sales channels and data analytics tools which can help in
knowing preferences, trends, consumer needs and expectations (Lakatos
and Arsenopoulos, 2019).
Working on making strong market position, this can be used to
beat the competitors in the market. Providing better services or
personalized and customized services to the customers can be a great
tactic. Shifting towards the rural regions, HSBC has for long served the
urban areas of the world but there lies a huge unexplored market in rural
areas which can be served by the bank. As rural regions can provide
large number of customers to the bank and having strong brand name
makes it easy to bring more customers onboard, this can be a game
changer for the company as huge revenues and profits can be derived
from this segment.
Customization of services, millennials are seeking more than just
an app from the banks, they need more customized approach of services
where they can have personal banking approach (Venizelou, 2018).
Services like banking from home, products built as per the needs, easy

loans for youngsters, EMI facilities for buying luxury, digital money etc.
are the products which HSBC can come up with.
Threats: Any external factor which can negatively impact the business of the
organization is a threat. High competition in the banking and finance
industry is a big threat for the bank. HSBC faces two types of
competition, competition with domestic banks and international banks,
domestic is where it has to deal with the domestic banks of the nation
where it operates and international is where different foreign banks are
providing services. People tend to have more belief for domestic banks
than foreign ones. Therefore, company needs to work harder or change
the business strategy to survive such competition (Fletcher and et.al.,
2020).
New entrants are coming in the market having more customer
centric approach of working, which attracts customers and it can break
the market share of the HSBC in long term. Therefore, adaptation of
customer centric approach is needed. Fast pace technological change,
keeping up with such fast changes is difficult but is necessary to meet the
market trends and serve the customer in a more efficient way, as legging
behind may have negative impacts. Cyber threat, entire operations of the
business at HSBC are software based, starting from business
communication to database, everything is stored online and any attack
may cause a huge loss to the bank hence, business is vulnerable to cyber
threats.
3.HSBC porters five forces
Porters five forces covers the company competitions and factors affecting its industry. It
helps in measure the company position which are based on the threat of substitutes, threats of
new entrant, bargaining power of suppliers, bargaining powers of buyer and competitive rivalry.
This helps in analysis the current position of company competitive marketplace as well as
analysis the financial strength of company. this analysis helps in develop the new strategies
which are adopted by banks to enhance their competition and market position.

 Threats of new entrants: This is the risk of new competitors in marketplace for
company in the banking industries as well as the new business sell the same products and
services as an existing business and it is the threats of new entrants. HSBC company is
financial services and multinational company. It is the worlds sixth largest bank by
market capitalization and total assets. The bank ventured in the three main business such
as wealth and personal banking, global banking and markets and commercial banking
(Satutikirono and Sunitiyoso, 2021). There is the low threat of new entrants because it
would not be replicated with the new entrants effectively for the long periods of time. For
the new entrants requires the huge capitals and investments. The products and services
offered should also be differentiated form others then the customers will attract with the
products and services, and they will choose the new entrants products rather than existing
ones. In further illustration, there is the lot of rules and regulations to be followed in
opening the bank and new business. If it comes to the operations of HSBC then the
threats of new entrant is moderate. The bank have opportunities because of the low
threats of entrants to provide the best products and services to customers and gain the
competitive advantages which are most essential for gain market position.
 Threats of substitutes: The bank have fewer possibilities of substitutes because the
products provided by bank like investments advices, financial services, etc. so, it's
difficult for replicated. There are the treats of substitutes is very low. It difficult to
provide the financial services to customers but some provide the financial services to
customers outside the sectors and trying to venture in banking space. In other words, it
called a third party inventions where citizens can lend their relatives and friends who are
need. There is the digital wallet service providers competitive for the space mostly held
by large financial institutions. This can increase the threats of substitutes. While the
threat of substitutes is medium affecting the trading operations of HSBC company (Afsin,
2022). The threats of substitutes is moderate so, the company can offer the low cost
products and more attractive products as well as provide the switching factors to
customers and that helps in sustain the low threats of substitutions.
 Competitive rivalry: In the context of competition, there is the large numbers of
competitors of HSBC such as Bank of America, Deutsche Bank, Citi group, national
Australian bank, china construction bank corporation, Standard chartered Bank, etc. in

terms of offer products and services the companies are less and more (Prisgunanto,
2018). Competition of companies attract the attentions of customers because it not
accomplishes for the companies to have a clear lead and result in any aspects. The
companies try to differentiate the products and services from the competitors in the
competitive market for become successful and gain competitive advantages which is
difficult to success. In the less relatively cost and therefore the customers choose the best
offer provided. It difficult for the competitors to gain sustainability and profitability in the
competitive, marketplace. The products and services differentiate is moderate and hence
there is no clear achiever over the other.
 Bargaining power of buyers: The customers are easily defected from a bank to another
one and the bank is not going the suffer more. In others aspects, due to the controversies,
trust issues there is created the mass defection and its occurs the problems and company
is going to lose the consideration amounts of revenues of company. The bargaining
power of customer's is moderated forces for company because the customers are attracted
according to the best offer provided and but HSBC company is the goodwill associated
firms which can hold the customers back as well as increase the customer's retention rate.
HSBC is high net worth company and individual whose partners bank is established bank
so, the bargaining power of customers increase because the investments form a leading
chunk of the company revenues. The bank companies face the aggravated competition
from the other companies and offer the best services to customers. Thy are compete in
various financial plan and interest rates, etc.
 Bargaining power of suppliers: The suppliers of the company is employees of firms and
depositors and investors of banking. The suppliers of company are provide services and
capital to firms for the growth and developments and the big assist in the profitability and
productivity of organization. The bargaining power of suppliers is high because the banks
operations managements are depends on the investments and revenue streams. The
companies who invest in the bank in the bulk then they have the high bargaining power
rather than who invests the smaller amounts (Flanding, Grabman and Cox, 2018).
Company strategic the values to attract the more suppliers towards the company.
Company take care about the employees with the benefits and attractive salaries, it helps
in increased the retention rate of employees and attract the more employees. They also

provide the gift and rewards for the employees which helps in improve the performance
of employees as helps in enhance productivity. The HSBC company have the goodwill
association so the suppliers wants to associate with company for the growth and
developments. In other words, the bargaining power of suppliers is also moderate when
ever it comes to the dealing of HSBC.
4.Strategic management plans
Aim
To provide the capabilities, expertise and perspectives for opening a with the new kinds
of opportunities for customers and world.
Objectives
The main goals of company is bring together the capital, ideas and people that assist in
growth and create a better world for the investor's, people, customers, planet and communities.
Vision of company
The vision of company is leading the first international bank.
Mission of company
HSBC is the largest financial and banking services organization and company services
the 18 million of customers with the helps of global businesses.
Tagline
Company Tagline is the world local bank.
Overview of company
The HSBC company is the best banking and financial services industries in the global
market and environments (Agačević, Ming and Ali, 2018). Company operate in London with
10,000 more offices and more than 82 states. This provides a various financial services like a
loans. Money transfer, credit cards and mobile app and internet banking. They offer the various
services such as financial products and services, commercial banking, personal financial
services, investment services, etc.
Strategies use by the company
HSBC company will use the different strategies to reach competitive advantages and
become successful to lead international bank. The first strategy will be used by company is
customers expectation because the customers are most essential for the business to become
success and lead the international level so, the company will develop the customer's relationship

management to know the expectation and perceptions of customers so, they can fill the needs
with customers and satisfied them. It will help in the revenues growth and profitability of
organization (Kumar, 2021). CRM helps in maintain the good relations among their customers
targets all over the world. The company will must ensure that they fill the needs and demands of
customers and reach the customers at the global level as well as provide the satisfactory and
quality of products and services.
The strategic managements plan help in achieve the competitive advantages which will
use by the company to meet the national and international global market. The company will also
use the strategies among the employees for provide the comprehensive and intensive values
among the workers. This strategy helps in enhance the employees and organization productivity
as well as motivated employees helps in assist the organization to reach the goals and objectives.
Concept of strategic management plan.
The concept of strategic managements is consisted the continuous process of plan,
monitor, analyse and assess that are most important for achieve the goals of business
organization (Rezazadeh and Mirsanjari, 2020). The HSBC company will use the concept of
strategic management plan to achieve the target of business with the helps of plan about the goals
then monitoring the work, analyse with the actual plans and then assessing the work to achieve
goals.
Theories of strategic management plan
 Contingency theory: This theory will apply by HSBC company because this is the
organizational theory that assertion there is no best possible ways to lead a company,
organize a corporation and to make a decision (Csaszar and Ostler, 2020).
 Survival theory: This theory helps in centre the concepts of business and require to
adopt the competitive environments in order to survive. This theory is important in the
process of strategic growth and developments of organization (Ngcezu and Rabus, 2021).
The survival based theory in the strategic management plan emphatic on the business
expect that in order to survive, these strategies will focus on the running operations very
efficiently and act rapidly to dynamic of competitive environments of business.
Models of strategic managements

 value chain analysis: This models helps in evaluating the every activity of business and
helps in understand that where are opportunities to improve the activities and plan. It
helps in analysis the internal firm activities that helps in achieve the recognize goals to
lead the first international bank. These helps in analyse the products differentiation and
reduce the cost of operation in company.
 Blue ocean strategy: the company will build the blue ocean strategy for create the new
demand ans differentiate the products in the context of price, cost, buyer utility and
adoption. This strategy is referred as the market where there is no competition and less
competition to achieve the goals of business organization because this models helps in
make the irrelevant competition for company (Leavy, 2018). His strategy also helps in
innovation and provide opportunities to business to gain the new market space with the
low cost. This model is more theoretical, and company have the framework to test ideas
with the helps of blue ocean strategy.The blue ocean strategy helps business to create the
new strategy with the different products with price and adoption of others strategy for
achive the goals and objectives of business organization.
5.Interpret information and devise strategic plan
It evaluates the environmental analysis with the macro and micro level which are applied
by the organization to determine the position of business with the helps of swot and pestle
analysis (Akhtar and Sushil, 2018). it also evaluates the competitive analysis with the helps of
porter five forces and the business run smoothly to gain the business advantages and meet the
goals of business with the objectives to create a better world for the customers, supplier,
investors, people, etc. the strategic direction are also valid to achieve the goals of business to
lead the first international bank.
The business will interpret the information with the helps of swot and pestle
analysis because it helps in evaluate the competitive analysis of business. The company will gain
the competitive advantages with the helps of strategic plan to achieve the goals and objectives of
business. This Strategic plan devise with the business competitive advantages, focus on the
systematic growth, focus on the true vision. The devise strategic plan helps in bring the sense of
focus and helps in establish the direction for business to achieve the right goals and targets with
strategic models.

CONCLUSION
As the conclusion, the business strategy is referred as a clear set of plan, actions and
goals that helps in outlines that how business will accomplish the objectives. The business
strategy helps in define that what the business require to do to achieve its goals and what helps in
the decision-making process. The business require to attract the more customers' attention to
achieve. There are various business strategies such as cost strategy, differentiate strategy and
focus strategy. The HSBC bank is the financial service's organization who serves the best
services to customers with the helps of its global business. Company offer the various services
and products such as private banking, commercial banking, and retail banking, etc.
In the conclusion, this report elaborated the internal and external environmental factors of
business while macro and macro environments that include the SWOT and PESTLE analysis and
evaluated the competitive market model such as porter five forces that helps business to develop
the new strategies and increase the market position as well as enhance the competitive edge. This
report also discussed the strategic management plan with the theories, concepts, models such as
contingency theory and survival based theory. The strategic management plan consist the aims,
objectives and tactical and tangible priorities.

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