Analyzing Business Strategy of HSBC Holdings Plc

This report analyzes the business strategy of HSBC Holdings Plc using various frameworks like PESTLE, VRIO, McKinsey 7's model, and Porter's Five Forces. It evaluates the impact of macro and internal environment on the organization and its competitive forces in the market sector. The report also includes a detailed analysis of the strengths, weaknesses, opportunities, and threats of the organization. The subject of the report is business strategy, and the course code, name, and college/university are not mentioned.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Applying the appropriate frameworks and analysing the impact and influence of the macro
environment on a given organisation and its strategies..........................................................3
P2 Analysing the internal environment and capabilities of a given organisation with the use of
appropriate frameworks..........................................................................................................5
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.......................................................................................................8
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation........................................................................................................10
CONCLUSION..............................................................................................................................12
References:.....................................................................................................................................13

INTRODUCTION
The strategies are developed in an organisation which results in the success and growth
of the business. It plays an important role in the management of a business organisation, as it
emphasize on the factors which helps to develop the strategies for a business organisation. The
human resource management of a firm develops the rough working plan in order to attain the
goals of the firm, is defined as a Business Strategy. HSBC holdings plc is a chosen organisation
for this report. The HSBC is a British multinational financial holding company and universal
bank. The head-quarter's of this company is situated in London, England UK. This written report
considers the theory of macro environment, internal environment with the capabilities of firm.
Additionally, it also incudes the porters five forces along with its concept, model and theory in
context with strategic planning(Trzaska, Sulich, Organa and et. al, 2021).
MAIN BODY
P1 Applying the appropriate frameworks and analysing the impact and influence of the
macro environment on a given organisation and its strategies.
PESTLE Analysis
A PESTLE analysis is an a tool which is used in the management of an organisation to
evaluate the factors of macro environment which promotes the strategies. This analysis
determines the political, economical, social, technological, legal and environmental factors. This
factors are discussed below: Political Factors: This factor determines the tax regimes, policies and regulations which
are formed by the government and other authorities. In regards with HSBC, the
company performs their work in diversify location which includes Australia, Europe and
many more. An unsure decisions made by the government of several countries, in order
to develop the challenges towards the management of a particular region. The system of
a governance has focus on the influences of free trade and entrepreneurship which has a
benefit of economic freedom. Economic Factors: The economical factor determines the inflation, interest rates,
business cycles and many more. In regards with HSBC holdings, the revenue growth of
the company goes in negative way due to the rise in inflation rate. An organisation also

have the possibilities of higher opportunities in case the economic growth of a country is
enhanced and it helps to achieve the long term goals. Social Factors: This factor involves the certain components such as values and norms,
with the social characteristics of a consumers. The HSBC company has the chance to
take the higher opportunities due to the disposable earnings of a consumers and as a
result it aid in the enhancement of the lifestyle(Bocken, Morales and Lehner, 2020).
 Technological Factors: This factor is related with the modification or adoption of new
technologies. It has consequences on the business organisation due to the alteration in
technology. The HSBC plc prioritise the regions or countries which have an advance
technology as this will assists in the reduction of cost along with delivering the
innovation and also adding the valuers in an organisation. It is necessary for an
organisation top emphasis on the development of new product and also with the
attributes which the customers wants and liked.
SWOT Analysis
 Strength: The strength of a company depicts the positive point of a company which
influence the image of company. The HSBC holdings plc has a strong financial position
which operates in the 64 countries and has a well known brand globally. This company
serves more than 40 million customers with the help of 275000 people globally. HSBC is
a UK based, biggest lender of mortgages and a financial businesses. The HSBC
company's another strength is their corporate social responsibility. This company is
diversify into various sectors like private banking, financial services and commercial
banking.
 Weakness: The weaknesses depicts the negative impact of a company. The negative
consequences for HSBC company is reduction in the share prices and fluctuations in
income due to which this affects the confidence of long term investors. The HSBC is
facing issues in the ineffective way of product promotion through social media
advertising. While comparing with the rivals the firm has weak retail banking. Due to this
the clients are not satisfied with the customer services therefore the ratings of customer
satisfaction not high.
 Opportunities: The company grabs the opportunities in order to grow the firm. So the
HSBC company got a chance to expand the company into several countries such as china,

India and other countries or regions which promotes the future development. Along with
this there is an opportunity in British mortgage sector for growth. The low rate of interest
increases the market share and earnings of HSBC. This allows the customer as a chances
for diversifying their holdings(Sestino, Prete, Piper and et. al, 2020).
 Threats: The HSBC is threatened by the numerous competitors due to their activities in
certain regions and nations. The main competitors of the company is bank of America,
Barclays bank, wells Fargo and others. The threat to the HSBC functioning is due to the
alteration in financial issues and the rules of government such as credit problems and
recession. The harmful impact on the financial health of HSBC is due to the declining in
the capital flows and rise in the risk of credit.
Thus, the PESTLE analysis shows the technological factor which will be helpful for the
company in order for innovation and upgraded technology. As this will influence the profit and
sales of a company by furnishing the wide range of commodities and services. Additionally, in
accordance with SWOT analysis the HSBC company has strength which helps to gain a
competitive advantages.
P2 Analysing the internal environment and capabilities of a given organisation with the use
of appropriate frameworks.
An internal analysis is necessary to analyze the intrinsic capabilities as it evaluates the
companies competencies, cost positioning and the market place. The resources are involved to
make the internal environment of a firm. This includes the current personnel, management, and
corporate culture and it also has a consequences on the organization. An organization's ability to
successfully implement competitive strategies to maintain and enhance its value is called
strategic capability. In relation to HSBC the framework is mentioned below:
VRIO Analysis
This model is adopted by the businesses in order to examine the internal data and to
identify the resources along with this it provides an advantages to a competitive edge. It is a
strategic tool which focuses on the resources. An acronym for VRIO is Value, rarity, imitable,
and organization. The HSBC company used this model to form a long-lasting competitive
advantages(Purba, Fransisca and Joshi, 2021).

Resources Valuable Rare Imitable Organised
Financial resources Financial
resources
Financial
resources
Financial
resources
*
Human resource Human resource Human resource * Human resource
Brand image Brand image * * *
Distribution
network
Distribution
network
Distribution
network
Distribution
network
*
 Valuable: Resources are evaluated in this context as they are a necessary part of taking
advantage of opportunities and avoiding risks in the workplace. As for HSBC, financial
resources are considered very useful as they allow the organization to attract significant
external investment. Human resources are considered a critical resource as they enable
organizations to perform more productively thanks to a highly skilled workforce. By
providing high-quality products and services to its customers, HSBC Bank can use its
brand image as a valuable resource. The distribution network is a key resource that
enables HSBC to reach more and more customers and generate significant profits. Rare: This includes all the resources that is utilized by the competitors. The strong
financial resources which are possessed by the HSBC company is unique in comparison
with other competitors. It is challenging task for the rivals to get a qualified and skilled
human resources at the work places. The rivals are required to invest in the establishment
for the better distribution network and HSBC rarely has that one. Imitable: This includes those stuff which are copied or duplicate and difficult to
maintain. This also provides the short term competitive advantages to the organization. In
this it is difficult to copied the financial resources because this is attained by the company
and the rivals, and the new comers required to compare the profitability. The HSBC
distribution network is expensive to copy because of the competition, and copying a
similar distribution system would require a large investment from competitors(Cullen,
2019).

 Organisation: This refers to the assets which helps the organization to increases the
market value in certain situation. In the HSBC, the human resource department has
effective establishment in order to extract the values which is offered through training to
the members of staff. As this provides the job design and job position which helps in
proceeding the job task. This provides long lasting competitive advantages.
McKinsey 7's model
This framework is used to evaluate the organizational structure or design. This
determines the seven components of a company which is strong and aligned to be a successful.
In relation with HSBC, the aim of this model is to present the effectiveness of an organization
with the help of this seven components: Structure:This is a chain like an organizational structure of the firm. The HSBC
company follows the flat organizational hierarchy structure which encourages the
security and confidence in the employees. This allows the company to quickly make the
decision. This company possess a well organized collaboration between the departments
and also maintain the efficient functioning. Strategy: The strategy is made by the company with a well defined business plan in order
to gain the competitive advantages. The business plan of the HSBC company is defined
and communicated with all the stakeholders and workers which supports in the directing
actions and managing the workers( Majid, Yasir, Yasir and et. al, 2020). Skill: The skilled employees can easily achieve the company's goals due to their strength
and the competencies. In regards with HSBC, the management of skill enhances the
employees skill by planning the routine of internal and external workshops, and training.
In this the employees get hired on the basis of their qualification and merit. System: This refers to the organizations technological infrastructure and businesses
which helps in the establishment process and the decision-making process. HSBC has
recognized structures that ensure the successful and conflict-free management of its
business activities. It makes sure that all organizational departments and systems are
coordinated and cooperatively working toward corporate objectives. This ensures that
the coordinated systems, organizational department and cooperative working to attain the
company's goal.

 Shared values: In order to maintain the effective organizational structure it is important
for the organization to form the mission, vision, goals and values. The main principle of
the HSBC company is to provide the influencing and innovative organizational structure
which allows the people to furnish the quality performances. The HSBC company
influences the inclusive culture to promote the diversity. Style: The top level of management carry off the activities through the adoption of code
of conduct. The HSBC company follows the participatory leadership, it means that every
employee can participate in the decision making process. This aid the business to raise
the employees motivation. Thus, the HSBC also collaborates with the effective functional
team internally in order to achieve the objectives(Habib and Hasan,2020).
 Staff: This includes the overall talent management and the human resources, which is
linked with the business activities that is training and hiring. To enhance the
organization's performance and to raise the productivity of staff, the HSBC develops an
amount of employees focused place of action at the organization.
In accordance with the VRIO analysis the , HSBC company has a skilled, qualified and
valuable human resources which helps in achieving the organization goals. In context with the
McKinsey 7's model, the HSBC company has a effective strategy and employees which assist in
attaining the firm goals by developing the effective policies.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.
This concept provide guidance in observing and analyzing the dynamics of competition in order
to detect the weaknesses and strength of a sector. An applicability of this model is easy in order
to get the snapshots of the degree of an industries competitiveness and also enhances the long
term profitability of an organization. In abstraction with HSBC this model includes the five
forces which has been explained below: Threat of new entrant: In this sector the threat of new entrant is limited because of the
trouble in the banking sector which includes the set up of scale of economies. In the
context of cost benefit, those companies who have the high amount of manufacturing are
provided this benefit. In the banking sector the security and the brand equity has given
the extreme priorities. There are the numerous market participants who have gain the
trust of clients. In order to launch the new activities in a firm it is required to have a

sizable capital expenditure for the competitors. The consumers who select the new items
of HSBC's, it required for the company to have their product different and unique. Threat of substitutes: The functioning of a company is being affected by the risk of
substitutes as banks render a range of products and services which is slightly difficult to
copy. This includes the investment suggestions and the financial services. Due to the
internet facility, it has increases the company's dependence on itself as this permits the
firms to furnish the same services at low prices. The numerous large financial institutions
has provided the market of digital wallet services(Mehrandish and Golzar, 2022). Bargaining power of customer: In the HSBC sector there are more suppliers, and other
businesses producing goods and services. Therefore, the consumers has less option for
purchasing and has no control on the prices. Low income levels in the industry force
buyers to buy goods at low prices, making customers price sensitive. HSBC uses
economies of scale to gain cost advantages and profit by offering lower prices to its
customers. The bank should claim with the ferocious competition from their rivals in
order to give the great services to their customers. The negotiating power of consumers is
now an average force. Bargaining power of supplier: The main suppliers of an organization is the employees
and their depositors as they contribute in their capital and services. In some cases the
power of suppliers is weak as, the product such as “the supplier of bank capital” are
those who are the depositors, they compare their financial product with the other financial
service providing customer, to decide about the capital. A couple of credit card suppliers
have strong bargaining power, so they tend to plead high fees from HSBC. In connection
with HSBC, the bank is committed to nourish their employees well by offering
competitive salaries and benefits.
 Competitive Rivalry: The main rivals of HSBC's are- The Citigroup, Bank of America,
and other big players. Customers are attracted towards the companies who have fierce
competition because they offers the identical goods and services. The rivals used to
compete with each other on order to form a control over their particular market. This
results in the strong force of competition. In context with the HSBC, it emphasis on the
plan of action and unique products to reduce the impact of competitors actions and it
assist in maintaining the customer base and the market position(Long and Young, 2022).

P4 Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given organisation.
In the strategic planning the concept and theories has been used in context to HSBC
holdings . The framework which will help I the strategic planning is explained below:
Porter's generic strategy
The porters generic strategy will provide assistance to the firm in order to understand
the strategies(Lopes, Gomes, Pacheco and Santos,2022). With the consideration of HSBC, the
techniques of the strategy are discussed below:
 Cost leadership- This techniques main focus is on the cost, that is reduction of cost of
product. To generate the higher revenue an organization has to reduce their expenses. The
HSBC's employees adopted this plan of action which resulted in the low prices due to rise
in the market share. As the sales of products and services increase it leads to rise in the
income. The competition is based on the prices of goods and services therefore due to
this, the HSBC catch up the competition in the industry of this sector.
 Differentiation strategy- The creative strategies lead to the differentiation of the
products which leads to remain stable in the competitive market. Thus, an organization
has enhanced the products and services of their firms in order to attract the client. The
firm HSBC should run the activities like research, development and innovation to execute
the strategy of differentiation. The firm provides unique and different commodities to
their customers in order to render the more value to their customers.
 Focus strategy- This strategy focuses on the knowledge of market dynamics and the
customers preferences which support in the research of a respective market. The HSBC
firm opt the market sector and adopt those strategy which fulfills the needs. In the
differentiation strategy the company used to differentiate their product and services in
their financial sector whereas in the cost focus the firm focuses on the cost benefit in their
financial sector(Su, 2021).
Bowman's strategy clock
The bowman's strategy clock helps the organization to create the relevant strategies in
relation with a respective market. This theory has the eight factors which focuses on the
techniques of market that the HSBC firm utilized in order to get success. The eight factors are
discussed below:

 Low price and low value added: This strategy offers the product and services at low
prices. Therefore, the HSBC company supplies the commodities at minimal value and
low prices by creating the combo package . Low price: In the industry, this is the majorly opted option for the consumer. This
strategy determines to create the poor margin because the management has focuses on the
reducing the price of products an services. Hybrid: In this strategy the consumer has to choose among the specialization and cheap
cost. Through the execution of this strategy and to supply the commodities at lower
prices by comparing with the competitors of marketplace. HSBC holdings has emphasis
on their competitive prices. Differentiation: In this strategy the company focuses on the differentiation of their goods
and services from their rivals while furnishing the high value of additions. The HSBC
company also concentrate on this. While using a differentiation, the firm may adopt the
ans-offs matrix and four P's of innovation(Baryshnikova,Kiriliuk and Klimecka-Tatar,
2021). Focused differentiation: This strategy aims to provide better values at more cost. By
adopting this technique the HSBC company has earned high profits but it is a challenging
task for the company to keep growing their profits. Risky high margins: This strategy allows the company to generate higher profit but
without providing the valuable or worth products. The main objectives of an organization
is to mark up the high prices but does not provides the improved value of it commodities.
Therefore, the customer has to pay more prices for the reputed brands due to the HSBC's
product doesn't considers the added values(Katimertzopoulos, Vlados and Koutroukis,
2021). Monopoly pricing: Under this strategy the single firm in this market undertakes the
control of product and pricing. In the high competitive businesses, the top level
authorities at the HSBC company should be cognizant about the external factors which
can affect the prices of products and services.
 Loss of market shares: This strategy shows the pitiful condition of a companies
existence at marketplace or the declining growth of a company is indicated. This includes

the products which has hapless detected valued, not worth it but they have involved the
high prices. This is an opportunity for the HSBC to enter into anew market.
In accordance with this the HSBC company will derive the advantages from the cost
leadership theory which supports in the growth of market share. In contrary with bowman plan,
the differentiation strategy will allows the company to set their commodities separate from their
competitors(Abduh, Wello and Asnur, 2021).
CONCLUSION
Thus, it is concluded from the above report that the business strategy bis used in the
development of a business, in order to overcome the hurdles. The various strategies are made to
develop the employees and the working of an organisation. This report includes the PESTLE
analysis and the SWOT analysis which influences the macro environment and the strategies of an
organisation. The theories, models and concepts used to analyse the strategic planning along with
this the porters five forces is also used to examine the competitive forces of a sector.

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