HSBC’s Challenges and Strategies: A Comprehensive Case Study Review

The case study review on HSBC examines the contemporary challenges and further evaluation of the bank. HSBC holds a prominent global position as the eighth-largest bank in terms of revenue, with a significant portion of its revenue (42%) generated from the Asian region. However, the organization faces various hurdles, including senior management changes and losses in both the European and Asian markets. To overcome these challenges, HSBC undertakes evaluations and implements strategies such as restructuring management, developing a leadership model, and adopting a hybrid work model. Recommendations focus on sustaining market share by increasing short-term revenue in the Asian region and pursuing long-term growth in other regions. Additionally, HSBC should prioritize operational management practices and corporate governance improvements to meet customer expectations and ensure business continuity.

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Executive Summary
This case study review consists of HSBC's contemporary challenges and further evaluation.
The report consists of four major sections. Initial HSBC was introduced with facts and
figures. According to the revenue, HSBC is a global bank that takes eighth place from the
globe, and 42% of the total revenue was generated from the Asian region. Further, HSBC is
the largest bank in the European region. Later the challenges faced by the organization are
discussed. HSBC is currently facing senior management change, and in the current practice,
HSBC gain loss in Europe and Asian markets. Therefore, evaluations are conducted to
identify the company strategies to mitigate such challenges. Therefore, HSBC involves
restructuring its management and developing a leadership model. Further, HSBC is adopting
a hybrid work model to reduce costs and increase profitability. Finally, recommendations
are provided to sustain the market share of HSBC. HSBC should consider Asian region
revenue increment as a short-term business strategy considering the current situation.
Organizations should increase their market share in other regions as a long-term strategy.
Therefore, HSBC must develop its operational management practices and corporate
governance to meet customer expectations and gain market share to sustain the business.
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Table of Contents
Executive Summary....................................................................................................................2
List of figures..............................................................................................................................4
Introduction...............................................................................................................................5
Analysis of HSBC's main challenges...........................................................................................7
Top leadership shake-up........................................................................................................7
Asia market share depend on the company's profit generation...........................................8
Hierarchical and complicated corporate governance............................................................8
Evaluation of improving the operation management and enhance productivity and
performance...............................................................................................................................8
Hierarchical culture and top management leadership..........................................................8
Hybrid working mode.............................................................................................................9
Management function optimization....................................................................................10
Recommendations...................................................................................................................11
Conclusions ..........................................................................................................................13
References................................................................................................................................13
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List of figures
Figure 1 - Regional distribution according to the revenue by HSBC Holdings plc Worldwide
2019............................................................................................................................................5
Figure 2 - Largest banks globally as of December 2020, by assets............................................6
Figure 3 - Profits of HSBC...........................................................................................................7
Figure 4 - Two ways of quality improvemnts...........................................................................11
Figure 5 - PDCA Cycle...............................................................................................................12
Introduction
The Hong Kong and Shanghai Banking Corporation Limited, or HSBC, was founded in 1865 to
help finance the booming commerce between China and the United Kingdom. The bank has
pioneered several contemporary banking techniques in many nations. HSBC provided major
loans to numerous state governments, notably China, in the early twentieth century, which
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helped finance initiatives like creating its railway system (Chegg, 2022). The bank was also
instrumental in rebuilding Hong Kong's economy following WWII. It had bought multiple
firms towards the end of the twentieth century in the aspirations of executing a "three-
legged stool" concept, with the three legs representing a foundation in the United Kingdom,
the United States, and Asia (Chegg, 2022).
Source - (Statista, 2021)
In the current environment, HSBC's reported revenue increased by 4% from 2018 to 2019,
accumulating more than 56 billion dollars. The Asia area generates most of the bank's
income and accounts for nearly half of the total income recorded in 2019 (Norrestad, 2021).
HSBC is a British bank and financial services firm that is a key participant in the worldwide
banking industry. HSBC is the largest bank in Europe regarding total assets and one of the
top worldwide banks in terms of market capitalization. According to the Statista data, in
2020, HSBC has become the eighth largest bank globally by assets, including 2.98 trillion
USD (Statista, 2021).
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Source - (Statista, 2021)
HSBC services are segmented into three pillars: wealth and personal banking, global banking
and markets, and commercial banking. From these three pillars, wealth and personal
banking generate the highest revenue. In 2020 nearly half of the revenue was generated
from the above-market segment. Furthermore, Asia and Europe are the two largest
markets, accounting for over 80% of the company's global revenues in 2020 (Norrestad,
2021).
According to the HSBC annual report, it has been observed that the company profit
generation reduced a significant way due to the covid pandemic situation. Total profit was
reduced from 15.03 billion USD to 6.1 billion USD from 2018 to 2020 (HSBC, 2021).
Therefore, the company is facing several challenges in gaining the required level of financial
performance. As a result, the company is establishing new strategies to maintain its
operations with minimum cost. They have made changes in their leadership and introduced
a hybrid approach that allows workers to work from home and their offices (Wee, 2021).
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Figure 2 - Largest banks globally as of December 2020, by assets

Therefore, this study is focused on the HSBC's contemporary challenges and their mitigation
strategies.
Source – (Statista, 2021)
Analysis of HSBC's main challenges
Top leadership shake-up
HSBC European management is struggling with changes that occurred in the leadership.
Stephen Moss, who is presently group head of strategy and chief of staff and overseen
North Africa and Turkey, was promoted to oversee Europe, Middle East, Latin America, and
Canada, which increases the workload for a single person. Such initiatives will reduce
company efficiency and productivity (Wilson, 2020).
Furthermore, the CEO of HSBC Europe, James Emmett, has been resigned and replaced by
Nuno Matos, a close known person of acting CEO Noel Quinn (Wilson, 2020). Such
leadership changes occurred weeks after announcing senior changes, including changing the
top investment banker. Therefore, such changes will impact the goals of the organization
(Brooks, 2017). Moreover, leadership changes would create conflicts and productivity lacks
since employees are required to adjust to the changes and new policies for the new
leadership (Wilson, 2020).
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Figure 3 - Profits of HSBC

Asia market share depend on the company's profit generation
HSBC is highly dependent on the Asian market share. Almost 50% of revenue is generated
from the Asian market and any changes in the Asian market affect the total business
(Statista, 2021). Due to the trade war between China and U.S, prolonged protests in Hong
Kong and the corona virus outbreak created a crucial time period for the Asian market
(Wilson, 2020). Therefore, HSBC's profit generation lost 9% in 2019 (Battistella, 2020).
Further, due to the leadership changes in the European region, the losses resulted in losses,
and the overall company ended up with lesser revenue generation. Therefore, it can be
identified that HSBC is required to increase its market share in other regions because it is a
challenge to the company to handle revenue generation when the Asian market struggles
with political and environmental issues (Wilson, 2020).
Hierarchical and complicated corporate governance
HSBC is a global bank that expands in various regions in the world. Therefore, the company
consists of a large number of managers and executive members to lead employees to
achieve corporate goals. Therefore, different leadership styles govern the organizational
functions with different leaders in the organization (Wee, 2021). Hence, conflicts and
complexity in management can be seen through corporate functions. Each manager follows
their strategies to accomplish corporate objectives, and employees will be in a stressful
environment since they have to adjust to differently with each manager. Hence hierarchical
culture has been identified as a challenge to the organization (Wee, 2021).
Evaluation of improving the operation management and enhance productivity and
performance
Hierarchical culture and top management leadership
HSBC, in recent history, faced sudden changes in its senior management. Therefore, the
organization had passed a difficult time, and due to that organization lost 12% pre-tax profit
in 2019 (HSBC, 2021). Therefore, the company develops strategies to establish the
organization's market value. HSBC is a multination organization that expands over 60
countries with a 23700 workforce (Wilson, 2020). Therefore, leadership is a key necessity in
operational management practices. The present practices are more complex because
managers are following different strategies. Therefore, HSBC developed a simpler leadership
framework of clarity and responsibility for achieving corporate goals (Wilson, 2020). As a
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sustainable Leadership approach, HSBC has implemented certain strategies, because
leadership had observed significant loss in the market. In 2019 42% drop of profit after tax
compared to the previous years has been observed (Battistella, 2020). Because of that
restructuring the organization's management positions allows organization save
restructuring cost of 6 billion USD and asset disposal costs of nearly 1.2 billion USD to the
organization (Battistella, 2020). Such initiative eliminates many jobs to sustain in the Asian
region after achieving such loss in the sector (Wee, 2021).
Therefore, such initiatives should be taken strategically to meet the corporate goals. HSBC's
modern approach required to consider the four areas which are affected by corporate
politics. Since they are considering restoring, it should be done by selecting the right
persons for the right places (Heizer, n.d.). Further, such leaders should be required to
interact with negotiations and decision-making activities to achieve a power position.
Therefore, managers will make correct decisions and maintain the second factor, inter-
departmental coordination. HSBC is a widely spread organization that requires effective
inter-department coordination (Heizer, n.d.).
Moreover, HSBC should be focused on resource allocation during their management pollical
environment changes because the company has taken certain initiatives such as
restructuring the management positions (Brooks, 2017). Therefore, resource allocation
should minimize the cost and reduce unnecessary labor. Providing responsibilities and
managing workforce effectivity would result in skill resource management. At the final
stage, the organization would have to focus on management succession, which includes
developing employees while developing the organization (Wee, 2021). Organization
maintaining simpler leadership framework to maintain the clear process in all operations.
Such initiatives will reduce organizational conflicts and develop good politics inside the
organization (Wilson, 2020).
Hybrid working mode
In recent history, HSBC has lost money considerably, and HSBC leadership focus on cost
reduction approaches to recover company losses. During the pandemic period 90% of the
staff has worked at their houses and results reduction in operation costs during this time
period (Wee, 2021). Therefore, HSBC leadership has expanded its strategies to develop a
hybrid work model that allows employees to work from home and offices (Wee, 2021). Such
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initiatives reduce 40% of property footprint where the organization can reduce operational
costs (Wee, 2021). Further, the model provides policies to office staff allocation, and as a
result, two employees are allowed per desk. Further, this hybrid work model is beneficial for
the organization to carry out its operations during this pandemic. Even though working from
home practices reduce the employee, employer relationship, and mental satisfaction of the
workplace (Wee, 2021). Therefore, HSBC would require initiating monitoring practices of
employees and allocating their facilities to work from home. Further, since they are at their
house, the organization should provide them flexible hours to work and avoid stressful
situations from work.
Management function optimization
HSBC was once in a better position in the market than now. Therefore, the organization is
required to amend certain management practices to raise again in the market.
Organizational culture is an essential part of operational management practices (Sebastian
Niedlich, 2019). HSBC Argentina has identified and conducted a 100-day plan to transform
their culture. During this program, management has developed coaching opportunities from
the senior managers and developed better working culture (Antonio Losada, 2009).
Furthermore, managing quality is an essential requirement in operational management. As
for HSBC, they are required to focus on the key concept of quality management to generate
adequate revenue (Heizer, n.d.). HSBC is required to focus on sale generation and cost
reduction. After the Asian market loss, HSBC took certain initiatives in the above two
categories. HSBC is a commercial bank and a globe bank that provides different services to
the contemporary needs of its customers (Norrestad, 2021). Therefore, on the sales side,
they are strong. Hence company develops strategies to minimize the associated cost to
maintain profitability. The development of a simplified leadership framework provides clear
paths to having goals and reduces the cost of failures (Wee, 2021).
Further, the development of the restructuring process would identify the skilled employees
for the suitable positions and reduce unnecessary labor costs. Moreover, the adaptation of
the hybrid strategy reduces 40% of the property footprint (Wee, 2021). Hence, such
initiatives increase the organization's quality, which leads to market development and long-
term success.
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Source – (Author made)
Recommendations
HSBC is a worldwide organization suffocating from a financial crisis due to modern political
and environmental impacts. Therefore, strategic management approaches are essential to
survive in the long run and the short run of the company's operation management (Brooks,
2017). Hence, it is clear that the organization took some initiatives to mitigate current risk
and sustain the market once.
In the short run, HSBC required identifying unnecessary costs and finding strategies to
reduce them. Hybrid work strategies are an excellent approach to cut costs. Further, the
company is required to implement strategies to increase revenue in the Asian market. Since
it is the largest revenue-generating sector (Wee, 2021).
To achieve the Asian market share, HSBC must implement financial solutions that are
suitable for the present scenario. The company is required to design its services to meet
customer expectations, which is required to be up to the required quality (Heizer, n.d.).
Therefore, managing the quality of company offerings is an essential requirement. Cost of
quality is the ideal strategy to mitigate any defects of the company processes and increase
the service quality. Cost of quality involves four associated costs (Heizer, n.d.). Prevention
costs will reduce the failures in future service from HSBC, and this can be achieved through
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Sale
Provide modern financial solutions
Better customer service
Reduce Cost
Hybrid work model
Management restructuring
Simple leadership framework
Improve
Quality Increase
profit
Figure 4 - Two ways of quality improvements

employee training and other quality improvement programs. Appraisal cost is a quality-
related cost required to audit HSBC service to meet the customer expectation (Heizer, n.d.).
Through such costs, the organization would be able to identify internal failure costs, which
are the cost of governance failures in HSBC service before reaching its customers.
Furthermore, in the cost of quality concept, the related cost is external failure cost, which
are the costs identified by the customers of the company offered services. Therefore, HSBC
should invest in prevention cost and appraisal costs to streamline the process to eliminate
errors in their services; the company would be able to sustain and achieve Asian market
share again (Heizer, n.d.).
HSBC revenue generation depends on the Asian market, and almost 50% of the revenue is
generated from there (Norrestad, 2021). Therefore, in the company's long run, HSBC should
focus on increasing the market share other than Asian regions. Because if any political and
environmental issues affected to any region company would be able to sustain from other
regions (Brooks, 2017). Therefore, HSBC should focus on total quality management practices
that involve all the organization, including suppliers to customers. Hence, the PDCA
approach is a strategy that HSBC would use to conquer new markets (Heizer, n.d.). PDCA
involves four steps: plan, do, check, and act. Initial HSBC required identifying problems and
making necessary arrangements to enter into the new market. Then they have the test their
current plant before initiation. After that, they have to check for any required alterations,
and finally, they can initiate the finalized plan to achieve the market (Heizer, n.d.).
Source - (Heizer, n.d.)
Furthermore, the Golden Circle model from Simon Sinek's theory of value proposition is the
ideal approach to developing HSBC value (Chaffey, 2022). HSBC should focus on why their
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Figure 5 - PDCA Cycle

services are required for their customers and base on developing their services. Such
approaches would attract many customers, and HSBC would gain market share apart from
the Asian region (Pilot, 2011).
Conclusions
HSBC is one of the largest financial institutes globally and is currently struggling due to the
political and environmental impacts. HSBC is highly dependent on the Asian market share,
and they gain loss from the Asian region. Further, they have been in a crisis since their
leadership changes. Therefore, the company identified their strength and weakness and
developed strategies accordingly to sustain its operations.
Development of leadership framework, management restructuring, and hybrid working
approaches are initiatives taken by the organization. Therefore, it can be concluded that
HSBC is required to focus on short-term sustainability by getting the Asian market back on
track. Later, they have to increase their market share other than the Asian region to avoid
similar issues.
References
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