Analysis of HSBC Holdings: Legal Structure, Market Structure, Stakeholder Analysis, and Macro Environmental Factors

This report provides an analysis of HSBC Holdings, including its legal structure, market structure, stakeholder analysis, and macro environmental factors. It covers the importance of PESTLE analysis, stakeholder and shareholder definitions, and the impact of market structure on organizational behavior.

Report

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Introduction of organisation, legal structure, market structure and how the marketing structure
affects the behaviour of organisation.....................................................................................1
TASK 2............................................................................................................................................3
Define term stakeholder, shareholder and stakeholder analysis.............................................3
TASK 3............................................................................................................................................5
a) Explain macro environmental factors along with its importance.......................................5
b) Explain Porter’s Five Forces model along with its importance.........................................8
TASK 4............................................................................................................................................9
Evaluation of development of business and recommendation...............................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The term "business" refers to the activities that are involved in the process of carrying out
any professional occupation or engaging in any trade. It primarily contributes to earning money
by performing tasks such as manufacturing or trading goods and services. Business entails a
variety of activities in the business environment that have an impact on the business's
functioning, working, or decision making. The business environment is influenced by two
factors: internal and external. Internal business environment factors include workforce, mission,
resources, and many others, whereas external factors include political, economic, social,
technological, economic, and so on (Akgül and Tunca, 2019). It has been determined that
business organisations have no control over external factors. The chosen business organisation
for this report is HSBC Holdings which is a British multinational universal bank and financial
services holding company. Its headquarter is located in London, England, United Kingdom. This
report cover the legal status of business organisation, concept of shareholders and stakeholders
along with the importance of macro environmental factors and Porte’s Five forces. In addition to
this, it also deals with the development of business by maintaining financial and non financial
resources.
TASK 1
Introduction of organisation, legal structure, market structure and how the marketing structure
affects the behaviour of organisation.
HSBC holding PLC is a multinational British universal bank which is operating business
operations by providing financial services. It is found as the largest bank in the Europe as it has
the highest value of total assets i.e. US $2.953 trillion. The respective business organisation is a
multinational organisation which means that they are performing business operations in several
countries which include Africa, Oceania, North America, Europe, South America, Asia and
many other countries. This organisation has a develop and affective relationship with more than
40 million customers. Majorly this organisation is divided in three groups of business which
include commercial banking, global banking and markets along with the wealth and personal
banking (Chun, 2019). Under the commercial, the respective bank is providing financial services
to small medium and middle market enterprises. Global banking and markets are working as the
arms of HSBC Bank as they are providing the services related to the investment and financial
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products to the corporate and institutional clients. The global banking and markets involve
several services and products which include corporate banking, capital markets, cash
management, investment banking and many more. Wealth and personal banking of HSBC
Holding plc aids the consumers for taking care of their day today finances along with the
managing and protecting the growth of their wealth.
There are several legal structures of a business organisation which include public company,
voluntary, private company, charity and many more. These structures have been developed on
the basis of characteristics and operations of business organisations. HSBC Holding plc is a
private limited company which is privately held for small businesses. Under this business
organisation the liability of all the members of bank is limited to the value of their shares. The
share of this business organisation cannot be traded publicly. There are several features of
private limited company as well which include limited liability, perpetual succession and many
more.
The major aim of HSBC is branding itself as The World's Local Bank. Throw adopting the
core business principles, the HSBC operating its functions for the purpose of accomplishing the
objectives. Along with this they are also stresses that commitment with their employees by
helping them to create long term customer relationships.
HSBC holding PLC is performing its business operations in all over the world through the
several number of legal entities and branches. It is necessary for them to use affective market
structure in order to reach at the customers in an effective and efficient manner. The management
of HSBC is using the matrixed management structure (Tsai, 2017). It is defined as the
organisational structure under which some individuals and employees report to more than one
supervisor or leader. It is necessary for the organisation because it helps them in managing all the
tasks in an effective and efficient manner. It is found as insential for the HSBC holdings PLC to
follow the respective organisation structure because of its several advantages which include
collaboration among several departments, combine of projects and functional management
structure, permission of interdependent communication, development of new skill sets in
employees and many more. Majorly it perform the function of bringing all the similar skilled
employees and team members in the same department and allow the organisation for capitalising
on the resources.
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Market segment helps the management of business organisation in analysing the markets
which they can access at the low cost and which are the customers who are really interested in
the products. It also helps the management of HSBC holdings in saving the money through
analysing and focusing on the accessible markets as well. It has been analysed that the market
structure also affect the behaviour of the organisation because of several reasons. Some of them
are explain below in detail:
Perfect competition: Perfect opposition is a scenario winning in a marketplace wherein shoppers
and dealers are so severla and nicely knowledgeable that every one factors of monopoly are
absent and the marketplace fee of a commodity is past the manipulate of person shoppers and
dealers. With many companies and a homogeneous product beneathneath ideal opposition no
person organization is in a role to steer the fee of the product which means fee elasticity of call
for for a unmarried organization may be infinite (Staszewska, 2017).
Pricing Decision: Market fee is decided via way of means of the equilibrium among call for and
deliver in a marketplace length or very quick run. The marketplace length is a length wherein the
most that may be furnished is restrained via way of means of the prevailing stock. The
marketplace length is so quick that extra can't be produced in reaction to accelerated call for. The
companies can promote most effective what they've already produced. This marketplace length
can be an hour, an afternoon or some days or maybe some weeks relying upon the character of
the product.
TASK 2
Define term stakeholder, shareholder and stakeholder analysis
A stakeholder is characterized as a party that has an intrigued in an organisation and can
either influence or be influenced by the trade. The essential stakeholders in HSBC Holdings
Plc are its speculators, representatives, clients, and suppliers. A stakeholder has a vested interest
in a business organisation and can influence or be influenced by its operations and execution.
The stakeholders of an entity can be both internal and external to the organization. Internal
partners are people who are interested in a company because of a coordinated relationship, such
as work, ownership, or venture (Smith, 2017). Outside partners are those who do not directly
work with a company but are influenced in some way by the activities and outcomes of the
business. External stakeholders include providers, leasers, and open bunches.
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A stockholder, also known as a shareholder who is a person, company or institution who
possesses at least a little bit of a company's stock, which is referred to as a stock. Shareholders
are essentially owners of the company and thus benefit from its success. These benefits come in
the form of increased stock valuations or increased monetary gains paid out as dividends. A
shareholder is a person, corporation, or institution who owns stock in a company. The controlling
shareholder is the single shareholder who owns and controls more than half of the company's
outstanding shares. Minority shareholders, on the other hand, are those who own less than 50%
of a company's stock.
Stakeholders and shareholders are not the same thing. Stakeholders are individuals who are
influenced by or invested in the project. A stakeholder, for example, can be an owner or even a
shareholder. Employees, bondholders, customers, suppliers, and vendors are all examples of
stakeholders.
Shareholders may have an interest. A shareholder, on the other hand, is someone who has
made an investment in a company. Because the company is also a shareholder, it can initiate
projects involving shareholders, but shareholders are not always shareholders. This is due to the
fact that shareholders purchase shares and thus own a portion of a public company. Stakeholders
are concerned with the performance of the company, not the stock.
This method entails providing clarity and ranking all stakeholders based on their power and
interest in the company. This is part of stakeholder management, and the primary goal is to
identify those stakeholders who are directly or indirectly involved in the business.
 High power, highly interested people: Stakeholders at HSBC actively participate in
company activities by wielding great power and influence over others. The CEO and top
management are viewed as responsible stakeholder for decision-making and strategy-
making procedures in the organisation.
 High power, less interested people: HSBC Holdings plc has the authority to rule over
stakeholders, but it is uninterested in business activities where it has little influence, such
as suppliers and investors. The organization's goals are met by providing the necessary
supplies.
 Low power, high interested people: Employees and leaders at HSBC Holdings have little
stakeholder power but a lot of influence and interest in the company's operations. The
effective use of resources contributes to the accomplishment of organizational objectives.
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 Low power, less interested people: This category's stakeholders have been found to have
almost no authority and interest in labour-intensive company practices.
TASK 3
a) Explain macro environmental factors along with its importance
The acronym PESTLE stands for Political, Economic, Social, Technological, Legal, and
Environmental analysis. It is a critical system used by businesses to assess the impact of external
variables on their operations. Also known as a PESTEL analysis, it makes a significant
difference in understanding the key forces that influence a business's environment and execution.
As such, it can be used during strategic planning to assess potential opportunities or threats in the
current macro-environment. Below mentioned points are describing the importance of PESTLE
analysis in the context of HSBC Holdings:
 Workforce planning: Creating the workforce requires
the arrangement of trade and individual objectives. PESTLE examination makes a
difference recognize the key issues that avoid it and makes a difference make a long-
term committed workforce.
 Strategic business planning: The valuable insights gained from PESTLE analysis
can be very helpful in business planning. They set priorities and set courses for future
actions of top management (Saenz, 2019). It helps you address your weaknesses and
systematically leverage your company's strengths.
 Marketing groundwork: Knowing about the several external factors of business
organization also help in understanding the current and essential market trends as
well. As a result, the key marketing objectives of company can be attained.
 Product
development: PESTLE examination implies superior mindfulness approximately the
item through buyer inputs (Pöhler, Brettel and Schroiff, 2019). This reaction makes a
difference the firm
in creating the item through steady enhancements and progressions.
PESTLE analysis of HSBC Holdings
Political Factors:
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 Government System: The existing governance system is based on the democracy and the
business surroundings is good for HSBC Holdings plc. HSBC Holdings plc can benefit
from the financial freedom provided by entrepreneurship and a democratic governance
system that promotes free trade. Fiscal Policy: HSBC Holdings plc needs to carefully consider the industry's tax system
when deciding to expand. .. The tax system is more favorable to industry, which is one of
the government's top priorities. Currently, many developing country governments are
interested in lowering corporate taxes to attract foreign direct investment. HSBC
Holdings plc needs to consider these countries. Low tax rates make it easier to generate
profits and invest in innovation, new products and R & D activities.
Economic Factors:
 Exchange and Interest Rate: Fluctuations withinside the alternate charge can have an
effect on commercial enterprise profitability. HSBC Holdings have to take a look at the
alternate charge fluctuations to make correct anticipations in order that the undesired
alternate and commercial enterprise overall performance outcomes might be avoided.
High-hobby charge manner HSBC Holdings % will make high-hobby payments, and
brought loans will fee greater withinside the lengthy run (Silpcharu and Noongam, 2020). Demand and supply of labour: HSBC Holdings plc's performance depends heavily on
the skills and abilities of its employees. In order for HSBC Holdings plc to stay ahead of
the competition, it is important to have a timely availability of a skilled workforce. HSBC
Holdings plc needs to analyze labor supply and demand trends to understand how to
successfully hire workers with the necessary skills. A strict labor market with strong
unions can cause various problems for HSBC Holdings plc. For example, you can
pressure HSBC Holdings to allow unreasonable wage increases or call for strikes to stop
the production process. Therefore, it is important to analyze labor market dynamics,
anticipate key trends, and adjust talent management strategies accordingly.
Social Factors: Social Equality: Social stratification and respect for stratification are several important
social factors that can influence HSBC Holdings plc's business, marketing, and HR
management strategies. The hierarchical structure with a formal working culture is
suitable for HSBC Holdings plc when entering high power distance countries. Similarly,
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HSBC Holdings plc shows that higher social classes need to adopt effective market
segmentation strategies as they cannot target multiple segments of different social classes
with the same marketing mix. I am. Cultural and societal norms: Each country has its own cultural norms, values and
traditions that reflect consumer behavior (Romero-Hernandez, O. and et. al., 2018).
Failure to adapt product / service offerings to local cultural traditions can cause serious
damage to the company. HSBC Holdings plc needs to carry out extensive research to
gain the knowledge of local consumers. As an international company with a culturally
distant domestic market, HSBC Holdings plc management may find it difficult to
understand the subtle cultural nuances. To this end, HSBC Holdings plc has the potential
to develop business partnerships with local market participants who can provide detailed
information on cultural norms and values that influence consumer perceptions and
attitudes towards brands. there is.
Technological Factors: Research and Development: The R & D trends of the selected industry / region reflect
the company's unique initiative to introduce innovative solutions to consumer needs.
However, HSBC Holdings plc needs to not only create value for its customers, but also
gain a better understanding of how new innovations can help their business. Markets
characterized by disruptive technology require large investments in R & D activities.
However, it is important that HSBC Holdings plc has a long-term perspective and does
not expect short-term benefits from R & D efforts. Technological Infrastructure: HSBC Holdings plc needs to support a country with a
well-developed technological infrastructure. This is because supporting the technology
infrastructure helps companies reach their cost-cutting, innovation, and value-creating
goals. The well-developed technology infrastructure also reflects how HSBC Holdings
plc will find it more difficult to derive a sustainable competitive advantage from
technologies that competitors can easily imitate.
Legal Factors: Environmental Regulations: Strict environmental regulations in many countries are
putting pressure on corporate organizations to reduce environmental damage.
Accordingly, HSBC Holdings plc adopts responsible production practices, promotes
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responsible consumer practices among targeted customers, enhances brand image for
sustainability reasons and does not have the potential to seriously damage its reputation.
You need to ensure full compliance with international and regional environmental
regulations. Criticism of related stakeholders. Weather: Finally, weather conditions need to be considered as operating costs, and
employee efficiency and productivity can have a significant impact on local weather
conditions. Weather conditions also shape consumer behavior, and HSBC Holdings plc
needs to incorporate flexibility into its supply chain operations.
b) Explain Porter’s Five Forces model along with its importance.
Porter's Five Forces Analysis was developed in 1979 by Michael E. Porter of Harvard
Business School as a simple framework for assessing and assessing the competitiveness and
position of a corporate organization. This theory is based on the notion that there are five powers
that determine the competitiveness and attractiveness of the market. Porter's five powers help
identify where in a business situation it is. This helps to understand both the organization's
current competitiveness and the strength of the position it may be aiming for.
Five Forces Analysis helps companies understand the factors that influence the profitability
of a particular industry and helps them make informed decisions about: Whether to increase
capacity in a particular industry. Development of competitive strategy. Below mentioned is the
application of Porter’s Five forces in the context of HSBC Holdings plc:
 Threat of New Enterant: New entrants to Foreign Money Center Bank will bring
innovation, new ways and pressure to HSBC Holdings by pursuing lower pricing
strategies, reducing costs and offering new value propositions to customers. .. HSBC
Holdings plc needs to overcome all these challenges and set effective barriers to maintain
a competitive advantage.
 Bargaining power of suppliers: Foreign Money Centers Almost every company in the
banking industry buys goods from a large number of suppliers. The dominant supplier
may reduce the margin that HSBC Holdings plc can obtain in the market. Strong players
in the financial sector use their bargaining power to force higher prices from foreign
money center banking companies. The overall effect of improving supplier bargaining
power is to reduce the overall profitability of foreign currency center banks.
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 Bargaining power of buyers: Buyers are often demanding lots. They want to buy the
best deal available by paying the lowest possible price. This put long-term pressure on
the profitability of HSBC Holdings plc. The smaller and stronger the HSBC Holdings plc
customer base, the more bargaining power customers have and the more they are able to
seek discounts and offers.
 Threat of substitute: When new products and services meet the needs of similar
customers in different ways, the profitability of the industry is reduced. For example,
services such as Dropbox and Google Drive are replacing storage hardware drives. The
threat of alternative products or services is high if you offer a value proposition that is
clearly different from what is offered in the current industry.
 Rivalry: If there is fierce competition among existing players in the industry, prices will
fall and the profitability of the industry as a whole will decline. HSBC Holdings plc
operates in the highly competitive foreign money center banking industry. This
competition will hurt the organization's overall long-term profitability.
TASK 4
Evaluation of development of business and recommendation
Through the use of PESTLE analysis, the management of business organization get to know
about the several external environment factors which affect the business operations. It help them
in understanding the current trends of market as well and developing the several effective
strategies as well which result in the enhancement of growth and success of business
organization as well. Along with this, the framework of Porter’s Five Forces help the
management in analysing the industry. It has been also found as essential for the business
organization to analyse the trends in industry.
It is recommended to the management of HSBC Holdings plc to develop the marketing and
operational activities on the basis of several framework as it can bring the effectiveness in the
strategies as well.
CONCLUSION
From the above report, it has been concluded that the HSBC Holdings plc is a multinational
private limited company. The business operations of the respective business organisations are
effected because of several internal and external factors and these factors can be analysed
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through the application of different frameworks such as SWOT analysis, PESTLE analysis and
many more. Porter’s Five Force model also helps the ,management in analysing the several
competitive factors of competitive environment of industry. Through the use of stakeholder
analysis, the stakeholders power and responsibilities have been analysed.
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