HSBC: Business and Business Environment Analysis

This assignment delves into the intricate world of business and its environment, using HSBC as a case study. It explores the relationship between organizational functions, their link to objectives and structure, and the impact of macro-environmental factors. The analysis utilizes PESTEL and SWOT frameworks to assess HSBC's strengths, weaknesses, opportunities, and threats, highlighting how these factors influence decision-making. The report concludes by examining the interrelationship between internal strengths and weaknesses with external macro-environmental factors, providing a comprehensive understanding of HSBC's business environment.

[BUSINESS AND BUSINES ENVIRONMENT]
HSBC

CONTENTS
INTRODUCTION.....................................................................................................................................2
ABOUT HSBC..........................................................................................................................................3
TASK 1....................................................................................................................................................4
P3 ANALYSIS OF THE RELATIONSHIP BETWEEN THE DIFFERENT ORGANIZATIONAL FUNCTIONS AND
HOW THEY LINK TO ORGANIZATIONAL OBJECTIVES AND STRUCTURE OF HSBC (ORGANIZATION
CHART)...............................................................................................................................................4
M2 ANALYSIS OF THE ADVANTAGES AND DISADVANTAGES OF THE INTERRELATIONSHIPS
BETWEEN ORGANISATIONAL FUNCTIONS AND ITS IMPACT ON THE ORGANISATIONAL STRUCTURE
OF HSBC.............................................................................................................................................7
TASK 2....................................................................................................................................................9
P4 & M3 APPLICATION OF PESTEL ANALYSIS MODEL FOR IDENTIFYING THE POSITIVE AND
NEGATIVE IMPACTS OF THE MACRO ENVIRONMENT ON THE BUSINESS OPERATIONS OF HSBC......9
P5 & M4 APPLICATION OF SWOT ANALYSIS FOR CONDUCTING INTERNAL AND EXTERNAL ANALYSIS
OF THE SPECIFIC ORGANISATIONS FOR IDENTIFYING THE STRENGTHS AND WEAKNESSES AND
THEIR INFLUENCE ON DECISION MAKING FOR THE HSBC................................................................12
P6 HOW STRENGTH AND WEAKNESSES INTERRELATE WITH EXTERNAL MACRO FACTORS OF THE
HSBC................................................................................................................................................15
CONCLUSION.......................................................................................................................................17
REFERENCES........................................................................................................................................18
1

INTRODUCTION
In the present business scenario, every business organization confronts with the wide range
of issues and challenges. All of these challenges are the result of the changes in the overall
business environment of a business organization. The term business environment refers to
all the internal and external environmental factors of the environment that affects the
functions, management, demand & supply and all the stakeholders of the business
organization (Armstrong et al., 2015). For surviving in this competitive business era every
business organization is required to have a proper understanding of all the internal and
external factors of the business environment. Here, in this assignment, every aspect of
business organizations such as types, sizes, structure and scope will be investigated with an
example of a multinational business organization HSBC. As a business analyst of the
organization, the analysis of the environmental factors and its impact on the organization
will be reported in this assignment.
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ABOUT HSBC
HSBC (the Hongkong and Shanghai bank) is the multinational business organization. It is one
of the largest banking and financial services organization of the world based in the UK with
headquarters in London. It is established in the year 1865 by Sir Thomas Sutherland. The
organization serves around 38 million customers all around the world through its four global
businesses viz. global private banking, commercial banking, retail banking and wealth
management and global banking and markets. Through these businesses, it covers around
67 countries and territories in Asia, Europe, Africa, Latin America, North America and the
Middle East with total 3900 offices. The main aim of the organization is to achieve growth
through the prospering economy and connecting customers to wider opportunities. The
latest revenue of the bank for the year ending 2017 was approximately £13billion with a
profit of approximately £1.8billion. It is the fast growing bank in the UK that serves more
than half of the population of the country (About HSBC, 2018).
[Source: http://www.getbankcode.com/banks/hsbc-bank]
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TASK 1
P3 ANALYSIS OF THE RELATIONSHIP BETWEEN THE DIFFERENT
ORGANIZATIONAL FUNCTIONS AND HOW THEY LINK TO ORGANIZATIONAL
OBJECTIVES AND STRUCTURE OF HSBC (ORGANIZATION CHART)
RELATIONSHIP BETWEEN DIFFERENT FUNCTIONS OF ORGANISATION
Every business organization has to perform varieties of activities and operations to achieve
an overall objective of the business organization. In order to effectively perform several
tasks and activities of the organization, these tasks and activities are divided into different
functional areas. These functional groups are responsible for creating an overall
organizational structure to deliver better performance and products to the customers for
growth and success of the business organization (Dijkman et al., 2016). Usually, every
business organization has five major functional groups i.e. finance, human resource,
marketing, production and research & development. In the case of HSBC, it is banking and
financial service organization which requires different functional areas. There are six major
functional groups of HSBC organization they are:
 Finance
 Human resource
 Marketing
 Personal banking
 Corporate banking
 Services
All of these organizational functions are interrelated or interdependent with each other for
their effective performance and achievement of functional objectives of the organization.
For instance, the personal banking function is dependent upon the human resource function
for acquiring talented and skilful employees to provide better personal banking services to
the customers. On the other hand, human resource function is dependent upon the finance
function to acquire suitable employee of the company through effective recruitment and
selection procedure funded and budgeted by the finance function of the organization
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(Dijkman et al., 2016). Similarly, each and every functional department of the HSBC is
dependent upon other functional departments for its activities and operations and as a
whole, they support the achievement of the ultimate goals and objectives of the
organization.
LINK BETWEEN ORGANISATIONAL FUNCTIONS AND OBJECTIVES & STRUCTURE
The organization structure of an organization serves as the basis for the management of all
the organizational activities and tasks to effectively achieving the predetermined goals and
objectives of the organization. The structure of any business organization is influenced by
several factors such as size, type, scope, objectives, environment and location etc (Johns
and Conroy, 2017).
The organizational structure of HSBC is designed by splitting up the work and activities
among the members of the organization to handle the complete management effectively.
The below organizational chart will show the exact structure of the HSBC.
Figure 1 organisational structure of HSBC
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[Source: https://khusanraymjonov.files.wordpress.com/2014/11/structure-hsbc.png]
Organizational functions are the part of the whole organizational structure. Each and every
function within an organizational structure is responsible for carrying their own tasks and
activities effectively through proper coordinating with other functional groups of the
organization (Harper, 2015).
There is a significant relationship between the organizational functions, structure and
objectives of the HSBC. The organizational functions help in the division of responsibilities
and objectives among the members of the organization to provide sufficient importance and
carrying effective operations in each functional area for the achievement of the sub-goals
and small objectives that will further help in accomplishing the ultimate aim of the
organization.
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M2 ANALYSIS OF THE ADVANTAGES AND DISADVANTAGES OF THE
INTERRELATIONSHIPS BETWEEN ORGANISATIONAL FUNCTIONS AND ITS
IMPACT ON THE ORGANISATIONAL STRUCTURE OF HSBC
The interrelationship among the organizational functions may have some advantages or
some disadvantages which could affect the organizational development in both positive and
negative way.
ADVANTAGES
 Increase in Efficiency: the interrelation among the organizational functions helps in
increasing the efficiency of the activities through proper information and
communication.
 Division of responsibility: it also helps in dividing responsibilities appropriately
according to the requirements of the tasks and activities (Drucker, 2017).
 Specialization and expertise: the interrelationship between organizational functions
helps in standard and quality performance of the organizational operations due to
expert knowledge and information.
 Increase in productivity and profitability: it also helps in avoiding unnecessary cost
and wastage of time and results in increased profitability.
 Requires less time: it also helps in creating better understanding among the
functional departments and helps in saving quality time in the organization.
DISADVANTAGES
 Confusion: it creates confusion of works and activities among the functional
departments.
 Duplication of work: interrelationship also causes duplication of work by the
functional units of the organization.
 Conflicts: due to miscommunication or any other issues the situation of conflict may
arise among the interdependent functional units of the organization (Rahim, 2017).
 Lack of coordination: the lack of coordination among the functional departments
may give rise to uncertain conditions and risks in the organization.
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 Dependency: it involves a high level of dependency which hinders the efficiency of
work of the separate functional unit.
In order to ensure the better performance of the business organization, it is important to
have an effective organizational structure that will help in managing all the functions and
tasks effectively by ensuring a better relationship among the functions of the organization
(Cavusgil et al., 2014).
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TASK 2
P4 & M3 APPLICATION OF PESTEL ANALYSIS MODEL FOR IDENTIFYING THE
POSITIVE AND NEGATIVE IMPACTS OF THE MACRO ENVIRONMENT ON THE
BUSINESS OPERATIONS OF HSBC
The macro environment of a business organization is consists of several external factors that
are uncontrollable and has an influence on the organisational strategies, performance and
decision making. The examples of macro environment factors are competitors, changes in
climate and weather, cultural tastes and government rules and regulations. The macro
environment affects the economy or the industry as a whole rather than a specific
organization or a region. It could have both a positive and a negative impact on the
organizational goal, growth and development (Shenkar et al., 2014). Therefore, it is
important to analyze these factors before making any decision in an organization. In order
to perform an effective macro environmental analyze, a tool of PESTEL analysis will be
utilized.
A PESTEL analysis is a tool used by the business organizations to analyze and monitor the
several macro-environmental factors that could have a positive or negative impact on the
business organization. These macro environmental factors are political, economic, social,
technological, environmental and legal (Burke, 2014). The positive and negative impact of
macro environment factors on the HSBC will be analysed below:
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FIGURE 2 ELEMENTS OF PESTEL ANALYSIS
[Source: https://www.pinterest.com/pin/537406168019625205/]
POLITICAL: HSBC operates in more than 67 countries all around the world. It is majorly
affected by the political environment of the several countries due to the continuous changes
in political policies, rules and regulations of the countries. Some political factors have a
negative whereas some have a positive impact on the organisational growth for e.g. to start
a new business in a new country HSBC is strictly required to comply with the government
laws and regulations. HSBC also considers the political stability of the country in which it
operates. The political decision of Brexit has also affected the growth of the company in the
country (Anonymous, 2014).
ECONOMIC: As being one of the world’s largest banking and financial group HSBC inherent
several economic threats and uncertainties. The economic factors such as unpredictable
fluctuations in the stock market and foreign exchange rate, recession, interest rates etc.
have a vast impact on the decisions and performances of the organisation. The Brexit policy
has affected the economy of the whole country and all the business sectors as well.
SOCIAL: The social factors of the macro environment involve the social responsibilities of
the organisation. The social circumstances around the organisational environment also
affect the business. Thus, HSBC formulates policies for contributing to the development of
the society of the country in which it operates. To fulfil its social responsibilities HSBC makes
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a partnership with charitable organisations by providing funds and support for the
development of the society in the world (Anonymous, 2014).
TECHNOLOGICAL: Now a day’s technology plays an important role in the growth and
development of any business organisation. The increasing developments in technology have
facilitated the operation of HSBC. But the dependency on the technology could lead to the
drastic loss due to increasing frauds and technological malfunction. HSBC has also been a
victim of several technological frauds since; technology is widely used in the banking and
financial service organisation. For e.g. the risk of sensitive customer data is always
presented in banking and financial services.
ENVIRONMENTAL: The changes in environmental factors such as weather and climate
change could also affect the organisation. The current trends in climate change and
increasing carbon footprint in the atmosphere has resulted in governmental regulation for
reducing its impact on the environment. HSBC is committed towards the protection of the
environment and makes efforts for reducing the carbon footprint through recycling and
using energy efficient products in the organisation.
LEGAL: The legal factors in the macro environment are all those laws and legislation which
could affect the organisational growth and development. As being a multinational
organisation HSBC has to comply with the governmental laws and legislation of the several
countries. The trade policy, export-import policy and licencing etc. are the legal
requirements for operating a business at multinational level for e.g. These legal procedures
help an organisation to build a solid base of operations and on the other hand, these are
also responsible for consuming higher cost and time of the HSBC (Business teacher, 2018).
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P5 & M4 APPLICATION OF SWOT ANALYSIS FOR CONDUCTING INTERNAL
AND EXTERNAL ANALYSIS OF THE SPECIFIC ORGANISATIONS FOR
IDENTIFYING THE STRENGTHS AND WEAKNESSES AND THEIR INFLUENCE
ON DECISION MAKING FOR THE HSBC
The HSBC has now become the biggest banking organization with the largest branch
network in the UK. It uses the variety of innovative approaches and technology to establish
a strong international network in the world. It provides a comprehensive range of banking
and financial services such as personal services, private banking services, corporate banking
services and other banking and financial services to its customers worldwide. In order to
maintain the pace of growth and development of the organization, it is important to
conduct a time to time analysis of its internal and external environment (Burke, 2014).
For gaining information and analyzing the influence of all the internal and external factors
on the organization’s decisions and performance an effective tool of SWOT analysis could be
utilized. The SWOT analysis is an effective tool for analyzing all the microenvironmental
factors of the business organization. It provides a framework for analyzing all the internal
and external factors that may have a positive or negative impact on all the functions and
operations of the organization (Burke, 2014). In SWOT analysis the internal strengths and
weaknesses and the external opportunities and threats of the HSBC will be analyzed.
SWOT ANALYSIS OF HSBC
STRENGTHS:
The major strengths of HSBC are its best banking and financial services that help the
organization to gain and retain a large number of customers in several nations and
territories of the world. The international network of the country covers around 90% of
global trade. It’s a multinational organization that delivers its services through 3900 offices
in more than 67 countries and territories which makes a global brand image and recognition
for the company in the whole world. It offers a diverse range of services to its customers
such as financial services, private banking, corporate banking, commercial banking,
investment banking, insurance and personal finance services etc. it has distinctive brand
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image among the customers and competitors as the world’s local bank is one of its biggest
asset (HSBC UK, 2018).
The strength of the company is that it is one of the oldest organizations which have a vast
experience in the field. The HSBC has been listed on several stock exchanges. During the
current economic recession, while many other banks and financial services organizations
collapsed, HSBC remained at the higher position. The company also adores brand loyalty
among its customers.
WEAKNESSES:
The application and higher dependency on technology have caused several problems of data
theft and manipulation within the organization. In the year 2010, the company has faced a
situation of data theft as about 1500 private banking account was compromised. This causes
the destruction of the customer loyalty in the organization. The corruption in the
management and higher employee turnover are the major weaknesses of the HSBC bank.
Besides this, the bank also had been a part of several issues and scandals in the countries
(HSBC UK, 2018).
OPPORTUNITIES:
The ability to expand further in other countries and regions in the world is the greatest
opportunity for the company. The expansion in the BRIC economy could be the best options
as these are the growing economies and are less affected by the financial crisis as compared
to the developed economies of the UK which are experiencing serious financial and
economic issues present days. It could also invest through the project financing in the
rapidly developing countries that requires finance for big and expensive projects such as
solar energy projects and infrastructural projects etc. through this opportunity HSBC could
increase its revenue and image globally (Business teacher, 2018).
THREATS:
The threats are the external factors that hinder the operations and growth of the
organization. The major threat is the technological fraud, security issues and hacking of data
that affects the bank's image and loyalty among its customers. The economic conditions and
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changes in the several countries of the world are also affected the organizational operations
and efficiency. The conflict between the management and the employees regarding the pay
of the workers affects the quality of services of the organization.
The SWOT analysis has been provided with the useful information about the internal
strengths and weaknesses and external opportunities and threats of the organization. This
will help in making further decisions regarding the management, operations, strategies and
policies of the HSBC. By identifying the strengths and weaknesses HSBC could formulate
effective strategies for achieving the goals and objectives of the business through avoiding
or reducing the weaknesses of the organization. The decisions could be effectively made
with the proper knowledge of the threats and future opportunities. The HSBC is required to
make decisions to reduce the weakness of employee turnover and security issues within the
company for reducing the overall organizational performance (HSBC UK, 2018).
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P6 HOW STRENGTH AND WEAKNESSES INTERRELATE WITH EXTERNAL
MACRO FACTORS OF THE HSBC
The internal strengths and weakness of any business organization could be directly or
indirectly affected by the external macro environmental factors. There is numerous banking
and financial service and other organizations are presented globally that are responsible for
affecting and get affected by the macro environmental factors of the industry as a whole.
The macro-environmental factors such as political, legal, economic, social, technological and
environmental have a vast impact on the operations and performance of the organization.
All these factors are responsible for influencing the internal strengths and weaknesses of
the HSBC. The interrelationships of the strengths and weaknesses of each macro
environmental factors of HSBC are:
Political and Legal Factors: The political and legal rules and regulations raise the need for
the specialized staff and expertise to handle such issues and challenges to avoid any future
threat of illegal activity or misconducting of rules and laws of the several countries during
the business operations (Knoke, 2018).
Economic Factors: In order to comply with the economic factors such fluctuations in interest
rate, exchange rates and inflation or recession etc. requires the sufficient amount of funds,
financial resources and good financial stability of the company.
Social Factors: In order to maintain a better customer relationship in the market business
organizations are required to adapt better CSR policies to perform its social responsibilities
for increasing the strength of the organization.
Technological Factors: The weak technology and increasing security issues in the country
require adapting modern and better technology within the organization (Fleisher and
Bensoussan, 2015).
Environmental Factors: HSBC organization is required use batter technology and
equipment’s that will help in reducing the carbon footprint in the environment. Therefore,
HSBC must adopt environmental friendly machines and equipment's in its business
operations.
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Through this discussion is has been clear that strengths and weaknesses and the macro
environmental factors are interrelated with other.
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CONCLUSION
This assignment has provided the useful information about the business structure and environment.
It has helped in examining different types of the organization according to the needs and objectives
of the business. It will be helpful in learning different types of the organization according to size,
scope and objectives. With the help of the multinational business organization HSBC the various
aspects of the business environment are discussed in this assignment report. The impact of macro
and microenvironment has been analyzed with the help of the effective tools of PESTEL and SWOT
analysis that has provided overall information about importance and impact of external and internal
factors of environment on the operations of the business organization for making effective decisions
in the favor of the business organization for successfully achieving the goals and objectives of the
company.
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