Critical Analysis of Business Strategy of HSBC Holdings PLC

This report provides a critical analysis of the business strategy of HSBC Holdings PLC, including PESTLE analysis, SWOT analysis, Ansoff Growth Matrix, and VRIO framework. It covers the impacts of macro-environment on the organisation, internal capabilities of the organisation, and competitive market analysis using Porter five force model. The report also discusses the range of theories, concepts, and models for strategic planning and interpretation of information.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Analysing the impacts of the macro-environment on the organisation-.................................3
P2 Analysing the internal capabilities of the organisation-.........................................................6
P3. Presenting the Porter five forces model to evaluate the competitive forces..........................9
P4. Applying a range of theories, concepts and models for devising the strategic planning.....11
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
INTRODUCTION
Business strategy refer to the complete plan which outlines the clear instructions and set of
actions which states how particular business operates in a market. It is the set of actions which
the organisation takes in order to achieve their key objectives and to maintain the competitive
edge within their business. Current innovation concentrated industry are creating opportunities
for the business to adapt the change and streamline their business functionalities in order to
incorporate with the dynamic market. major change is around the technological advancement
where the companies are adapting the range of technical solution to predict their sales and
revenues (Kong, Jiang and Zhu, 2022). Thus effective business strategies make the businesses to
improvise their overall business structure and come up with the new approaches in the market
that helps in acquiring the largest market share. HSBC Plc an British Multinational Universal
bank providing the better financial services across the world. Headquarter of the firm is present
in London, England, UK they deal in asset management, banking commodities and other
services. Currently company is facing the problems which need to be overcome in order to
improve brand image.
Following report will cover the critical analysis of the macro environment for
determining the informed strategic management decisions which highlights the suitable
frameworks. It also covers the critical analysis of internal environment and also discuss the
analysis of competitive market by using porter five force model. It also illustrates the range of
theories, concepts and models for strategic plan and also covers the critique and interpretation of
information.
MAIN BODY
P1 Analysing the impacts of the macro-environment on the organisation-
Macro-environment can be defined as the general environment which has the ability of affecting
the operations of the organisation. This is the environment which is set of the external forces and
the factors which cannot be controlled by the organisation as well as this has the impacts on the
organisation's development. HSBC Holdings PLC company's macro-environment analysis can be
done by using the framework of PESTLE analysis. This model will help in analysing the external
factors which mat affect the organisation.

PESTLE Analysis is the strategic tool which helps the company in the easy and the simple
scanning of the environment as well as facilitates the broader understanding of the business
environment. This tool is mainly used by the companies to deeply understand the external
macro-environment impacts on the organisation. This is basically the tool which provides the
macro picture of the environment of the industry. There are six elements of this analysis such as
the political, economic, social, technological,m environmental as well as legal. This analysis is
very important for the business as it helps them in establishing the external forces which has the
ability of affecting the decisions which are made within the organisation.
PESTLE Analysis of HSBS Holdings Plc is as follows:
Political Factors: These are the factors which has the strong impacts on the organisation as well
as it plays the important role in determination of the long term sustainability of the business.
Some of the examples of these factors are such as the taxation policies, trade regulations and
many more. The HSBS company has the strong presence at international level as this increases
vulnerability of the organisation with the variety of the risk as political, structural as well as
systematic risks. The political stability of the country has the large impacts on the businesses as
the HSBC holdings company's locations are facing some of the political instability. The current
governance system of the country is highly based on the democracy (Kaiser, 2021). Due to this,
the HSBC Holdings company has much benefits of the economic freedom by the government.
Economic Factors: These are the factors comprising the variables which has the direct influence
on the businesses for achieving the economic objectives. The efficiency of the financial markets
has the very strong and the positive relationship of the overall growth of the company. So it is
very necessary for the HSBC company to select the countries which are having the efficient
financial markets as this will help in easily accumulating the financial as well as human capital.
The rising of the inflation rate has very large negative impacts on the growth of the revenue.
Social Factors: These are the factors which has the impact on the working of the organisation as
this factor represents the key characteristics such as the social values, norms as well as the
customs of the society. The consumption behaviour has very strong connection with the
economic factors. In the present times, the modern consumers are consistently becoming much
demanding and due to this, it has become very important for the HSBC Company to deeply
analyse the spending patterns of the consumers (Jahan, 2019). This will help in adopting the
effective marketing strategies. Each and every country has the different and unique norms, value

as well as the traditions which has the significant impacts on the behaviour of the consumers. It
is very necessary for the HSBC company to conduct the research to gain the local knowledge of
the consumers.
Technological Factors: This is the most important factors by the present point of view due to
the emergence of the advanced technology. The development of the technology is growing very
rapidly and so it is very important for each and every company to adopt this change. The HSBC
Holdings company must prefer that company which is having the well developed infrastructure.
When there is supportive infrastructure, it helps the company to achieve the cost reduction, value
creation as well as the innovation. It is very necessary for the HSBC Company to invest in the
research and development department or the activities as this will help them in creating the
values for the customers. The company must ensure in investing the long term perspective and
not for the short term returns.
Environmental Factors: These are the factors which has the large impacts on the businesses as
the consumers trends has been shifting towards the sustainability as well as the environment
protection. It is very important for the HSBC Company to analyse the deep understanding of the
environmental regulations so that any kind of the reputational harm can be avoided. In many of
the countries, the strong rules and regulations of the environment are providing much pressure on
the businesses to reduce the environmental harm by them (Hamilton and Webster, 2018). The
growing use of the renewable energy has been emerged for reducing the dependency of the
natural resources. The HSBC Company must ensure about taking the advantage of this
opportunity as they can invest in the renewable energy for achieving the sustainable development
of the businesses objectives. The another benefit which the HSBC company can take is from the
trends of the sustainability as the can use this as the tool for achieving the economic objectives
for reducing the production costs.
Legal Factors: These factors has the broader view for providing the more detailed as well as the
particular information which is related to the laws and the regulations which are made for the
health and safety and many more. The compliance with the laws related to the employment can
benefit the HSBC company by strengthening the brand image of the employer.
Ansoff Growth Matrix-

This is the tool which is used by the companies at the strategy stage for the marketing planning
process for identifying the suitable and appropriate strategy the company should use. The
different growth strategy for HSBC Holdings are-
Market Penetration:
 The increased production capacity will enable the HSBC company to reach large number
of customers. The HSBC Holdings company can go for exploring the innovative channels of
distribution.
Market Development:
 The HSBC Company must go for investing in the research and development for
identifying the new markets as well as the customer segments This company can expand regionally
Product Development:
 The company must go for modifying and improving the existing products for the
customers. They can go for introducing different quality products for the consumers of the similar
market.
Diversification:
 The vertical diversification of the company means going towards the growth as well as
business development by introduction of new products.
 The HSBC Holdings can go for partnership and acquiring the companies which has the
interest for diversifying in new markets.
P2 Analysing the internal capabilities of the organisation-
The capabilities of the company can be defined as the ability of the business for doing
something effectively. This is the basically the completion of the tasks or the process which the
internal team are able to accomplish by the given resources. The internal capabilities of the
HSBC Company can be described by using the SWOT Analysis frameworks.
SWOT Analysis is the tool which is used by the company to assess the internal
capabilities of the organisation (Puyt and et.al., 2020). The SWOT stands for the strengths,
weaknesses, opportunities as well as the threats. It is very important for the companies as this

helps them in getting the visibility on the current position of the company and the overall
performance of the organisation.
SWOT Analysis of the HSBC company is as follows:
Strengths: The strengths can be defined as the area in which the organisation is very excellent
and what all qualities or the uniqueness separates the company with its competitors. This is the
element which states all the positivity of the company as these has the ability of the growing the
company. The HSBC bank is considered as the world's largest bank as well as well capitalised
bank. This means that the company has the ability of facing economic volatility as well as any
credit crisis on the organisation (Henry,2021). As this bank is well capitalised, the bank does not
have to depend on the government's assistance if any crisis rises in the future.
The international presence of the company and its products means that the company can
easily dilute the risk as compared to the other banks. The company is growing much as they have
started entering the new financial markets with the new products as this has ultimately increased
the revenue streams of the company. The HSBC company is having very diversified and very
highly talented and skilled labours which makes the strong brand image of the company and
shows that the bank is investing in the resources for the development of the employees.
Weaknesses: These are the elements which has the negative impacts on the performance of the
overall organisation. This stops the organisation for performing effectively or at the optimum
level. These are the areas which requires the improvements by the company so that they can be
successful in the coming years. The HSBC is seeing much debt proportion as it loan stock
portfolio is increasing and due to this reason, the financial position of the company is getting
weak. There are consistently new entrants into the market and because of this the company is
facing number of the challenges. The HSBC Holdings is not able to handle this situation as well
as has lost the market share in many locations.
The HSBC company was earlier named as the Hong Kong Bank of Canada as well as
British Bank of Middle East around 100 years. And now the name has been changed and due to
this, brand recognition of the HSBC Holdings has been weakened. This bank is also actively
involving in number of frauds, controversies which is highly affecting the reliability of the
organisation. And the customers are not able to trust the company as it is has high involvement in
the controversies.

Opportunities: This element can be defined as the external factors which can give the
competitive advantages to the organisations. HSBC company is regularly investing large amount
of money from many years for building the effective online platform and this has enabled the
company to increase the sales channels (Quezada and et.al., 2019). The changing trends of the
consumers has forced to open the new markets and this has very big advantage for the HSBC
company to grow its market share. The HSBC Holdings company must ensure to work on
building very strong position as this will help the company to perform better even in the
economic downturn situation.
Threats: These are the factors which have very potential impacts on the organisation. The
introduction of the new or the advanced technology has made it very necessary for the
companies to adopt the technology for becoming successful. The new technology when
developed and adopted by the competitors become very big threat for the HSBC Holdings for the
future (Phadermrod, Crowder and Wills, 2019). The local distributors has been increasing which
is also a threat for the company as the competitors are paying very high margins to these local
distributors. The HSBC Holdings company has borne much loss and this has resulted to less
credit availability at the global scale. The changes in the rules and the regulations has threaten
the profitability of the HSBC Holdings company as they have to follow all the rules and
regulations.
VRIO Framework-
The VRIO framework can be defined as the tool which is used by the companies for the internal
analysis which helps the businesses for identifying the advantages as well as the resources which
provides the company competitive edge. The VRIO tool stands for the value, rarity, Imitability
as well as the organisation. This will help the HSBC Holdings company to analyse the internal
capabilities as well as the resources of the company such as-
Valuable: The competencies which are valuable helps the HSBC Holdings company for
exploitation to the opportunities which are available as well as helps in neutralising the internal
and external environment threats to the company. The HSBC company has defined corporate
social responsibility function as well as has the unique brand image with the higher integrity of
brand.
Rare: The HSBC company is having the global presence as well as operates in the different
countries. This enables the company to build the large pool of the customers.

Inimitable: The HSBC Holdings company is offering the products which are of very high quality
and uses very large marketing communications for inducing the higher level of consumption.
Organisation: This company enjoys the higher level of financial strengths as this supports the
company for exploring the opportunities and developments for the new products of company.
P3. Presenting the Porter five forces model to evaluate the competitive forces
A model which help sin identifying the competitive forces which supports to shape the
industry in every manner and helps to determine an industry's weakness and strengths. It is a
kind of structure to determine the corporate strategy and applied in such a segment of the
economy to grab the knowledge regarding the level of competition and can be able to enhances
the long term profitability of the organization respectively (Elmaleh-Sachs, Balte, Oelsner, and
et.al., 2022). However, this porter fives forces model is required to be adopted by the HSBC
organization from where they can be able to identify the organization strengthening and weak
areas.
Competitive Rivalry: The first factor of the porter model reflects the competition rivalry area
where the industry is required to obtain the effective planning and strategies in regard to
undercut the competition in the market field respectively. The HSBC organization has many and
different competitors in the particular market where it includes Citi group, Standard chartered
bank, Bank of America and such more. The main purpose of the HSBC should be to attract the
consumers in wider manner from where they can be able to differentiate from the existing
competitor and can obtain the successful results and outcome (Muhammad, Khurram and
Muhammad, 2018). Thus, the HSBC organization is required to implement the effective and
strategic planning and implications from where the consumer can be able to get attracted towards
the company services and can become the customer of the company for regular manner. As, it
has been known that for any banking industry the main aim and goal of the company is to
increase their customer scale and can be able to enhance their productivity effectively.
Supplier power: The term bargaining reflects the actual meaning and definition of the second
factor of the porter model where it includes the bargaining power of the supplier. There are many
companies and organization who deliver and offers the different kinds of products and services
and can obtain the revenue effectively. However, the mentioned sector HSBC which is a banking
organization also requires to understand this subject in definite manner as bargaining of the
suppliers can be strategic from where the company can be able to increase their sale of the

services in wider manner (Gorynia, 2019). Bargaining power of supplier simply defines where
the company can keep the prices of the products and services in highly manner because the
particular product and service is not providing by any of the company then the consumers have
no choice and option to but the particular needed products from somewhere else.
Buyer power: This buyer supplier is alternative of the supplier power where in this factor the
buyer is more dominant upon the supplier and can benefit themselves in definite manner. The
main purpose and stakeholder of the company is customer where if the customer will buy the
products and services then only the organization can be able to run effectively. However, the
buyer power refers as where the consumer can bargain the prices of the services and products
where if the company do not agree to lower down the prices then the customer are able to
purchase that particular good and services from the another organization (Charro and Schaefer,
2018). Customers always looks for the products which are lower in prices but should have the
best quality material whereas the bargaining power of the buyer is more dominant upon the
supplier where the buyer has no choice and option.
Threat of substitution: The fourth factor refers to threat of being substituted. There are many
companies of have this threat where today there are many organizations who are giving the tough
competition to the banking sector where it becomes quite difficult for the HSBC banking sector
to acquire the definite amount of results and outcome respectively. For maintaining and handling
the client or customer the HSBC is required to provide the appropriate prices and cost of the
services from where they can be able to get the successful result and outcome (Cescon,
Costantini and Grassetti, 2019). Let's understand with this an example, if the company HSBC is
providing the services in highly manner then the competitive company will provide the services
lower than the HSBC where they will be able to attract the consumer more widely and it will
substitute the HSBC services and people will consider the organization who are proing the same
service sin lower cost. This process is all about the market analysis and costing area where the
HSBC is required to keep the eye on the market prices and should provide the services and prices
affordable.
Threat of New Entrance: A company power gets impacted when the new entrance of the
similar working organization establishes. Today, the competition is increasing in daily lifestyle
and creating a difficulties in providing the services and making the company grow and develop
effectively. Whenever, a new company launches it becomes harder for the existing organization

to differentiate from the new company and increase the risk and threat of new entrance which
will impact the organizational productivity (Rentes, de Pádua, Coelho and et.al., 2018).
However, the HSBC company should understand this subject in definite manner from where the
company should pre plan the strategies to face the new entrance organization.
P4. Applying a range of theories, concepts and models for devising the strategic planning
Bowman’s strategy clock: It is a tool used by the companies to provides the options for
positioning within the market where these kinds of tools normally used for the success strategy.
This model is consisted of nine different categories where the company HSBC is also required to
use this model for the better success growth of the company. HSBC can be able to grow and
develop their organisation and brand at successful position which can deliver the appropriate
amount of results and outcome in definite manner and can drives the organisational performance
at effective level. However, the company HSBC can increase their performance in definite
manner by using the Bowman’s strategy clock and can position their services and brand in the
market at definite level.
Hybrid strategy: It express how the firm creates a value compared to the competitors which is
based on lower costs and increased differentiation Most of the companies uses this kind of
hybrid strategy at their firm which helps them to give a competitive advantage through a cost
leadership strategy and can focus on reducing the internal procedures in respective manner.
However, it helps to reduce the costs and delivers the coverage and benefits the company which
enables the firm to customize its marketing system to meet the needs of specific customers and
segments. HSBC also can use this kind of strategy at their workplace which can overall maintain
the greater agility and flexibility in offering the products which can easily focuses on both costs
and specific product features.
However, to run any kind of business, it is important to create a well-structure plan and
procedure where it also required to include the goal, objectives, setting of priorities,
strengthening operations and such more where the stakeholder can be able to put the efforts in
making the company grow and develop effectively. Here, performing some strategic
management plan steps in regard to the organization success.

Vision: The term vision explains that the organization has to choose the clear guide for
implementation of the actions which can help them to achieve a successful results and outcome.
A company should set a clear vision and believe of performing the actions from where they can
be able to obtain the definite and successful results. Accordingly, the company HSBC also
required to firstly create a vision from where they can easily keep a focus on the particular area
and can develop the organizational growth effectively (Sanchez, and Zuntini, 2018).
Mission: Now, the second step is to determine and identify the mission from where the company
can be able to achieve the vision which has been planned previously. When the goal or vision is
clear then only the organization can take the actions towards accomplishing the mission of the
HSBC and can relate the company vision to provide the better outcome to the customer and
client and in return they can be able to acquire the success growth. To achieve the vision, the
company is required to take some actions and implication from where they can easily grab the
opportunities to acquire the definite outcome respectively.
Objectives: The term objectives simply refers as where the individual organization is required to
obtain the specific results with regard to considering the aim to achieve that within a particular
set time frame. The objectives which has been made by the company should be measurable and
supported by the strategic initiatives across the organization from where the company can be able
to implement the strategic actions in definite way (Rosenbaum, More and Steane, 2018). To
create an objective, the HSBC company should consider the vision and mission of the company
which they had created previously which will help them to create a perfect planning for the
implications of the strategies.
Strategy: Now, it is a time to create a strategy from where the company can be able to achieve
the set goal and targets efficiently. An effective strategy brings the mission and vision together
which helps and supports to implement the execution. The HSBC organization has required to
implement the strategies of the long term plan that enables the company to achieve the
organizational objectives (Adler, 2018). However, adopting and performing the strategies will
allow the company to enhance their productivity level by attracting the maximum number of
consumer efficiently. The main factor and activity the HSBC consider approaching the customer
in wider manner to get the beneficial result and outcome.
Approach: The company only can be able to run perfectly and successfully when they are able
to approach the customer needs and requirement and can fulfil them accordingly. The HSBC

organization is required to understand this step and process where they can execute the plan and
can do a definite analysis of the strategies where they have to implement at the business function
or not. The HSBC company is required to execute plan in definite manner from where they can
easily approach the tactics and planning and can take decisions accordingly.
Tactics: The term tactics simply defines as where the company is required to keep their focus on
the initiatives, projects and its functions which allow and enable the company to execute the
strategic plan in definite manner and can be able to obtain the appropriate and effective outcome
(Coccia, 2020). To run a business, it is quite hard to create a definite plan and then execution
process from here following these above mentioned steps will allow the HSBC sector to
understand the value and importance of each step and can create a definite strategic planning and
execution of the plan.
CONCLUSION
The above mentioned report has summarized the importance of the business strategies
where it is important to consider and grab the enough education in regard to this particular
subject. To run any kind of business, they are required to keep their focus on the strategic
planning areas from where the company can be able to grow and develop effectively. The report
has concluded the different types of models and frameworks in the context of the strategic
planning and process where to analyse the macro environment the pestle analysis model has been
mentioned and utilized above. However, for the micro analysis of the environment the swot
analysis framework is utilized from where the company can identify the internal strengths and
weak area of the company. Along with this, the company has mentioned the porter five force
model for clarifying and identify the competition forces. At last of the report, it strategic
management planning has been conducted which will benefits the company in successful
manner.

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