Strategic Management Analysis and Formulation

This assignment delves into the realm of strategic management, encompassing both analysis and formulation. It necessitates a thorough understanding of various strategic analysis models and frameworks to effectively evaluate a business's internal and external environments. Students are tasked with applying these models to develop actionable business strategies, highlighting the practical implications of strategic thinking.

STRATEGIC
ANALYSIS
PORTFOLIO

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
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INTRODUCTION
Strategic management refers to the continuous process of planning, analyzing, monitoring
and assessing all the task which are necessary for an organization in order to meet their goals and
objectives (Cinquini and Tenucci, 2010). In other words, this involves the formulation and
implementation of the main goals and objectives which are initiated by the top management of
the company. This portfolio describes the strategic management of HSBC and Royal Bank of
Scotland Group. Moreover, this report describes the comparison of the strategic choices of each
selected organization. Further, this also gives explanation about the implication of the strategic
decision on the competitive advantage of both the firm (Allio, 2006).
MAIN BODY
Strategy can be defined as the plan or action which are designed by the firm in order to
achieve a long-term goals or the overall aim of the organization. Further, strategic decision is not
an easy decisions to be taken by the enterprise, however, this involves range of decisions to be
taken and by taking due care (Marren, 2012). It is not always necessary that strategies made by
the corporate always excel, sometimes it also leads to the failure. This is done when the firm
does not assess the environment in an appropriate manner and also the analytical tools have not
applied in a clear manner. This might impact the firm in an adverse manner and the decline stage
of the company may get start if the strategic decisions are not made in an appropriate manner.
Thus, for the success of the organization, senior management must do the proper strategic
management so that failure of any strategy does not impact the organization's success and growth
(Parnell, 2010). Thus, for this context HSBC UK and Royal Bank of Scotland Group have been
taken in order compare their strategic management.
HSBC is a British multinational banking and financial services company and it is
headquartered in London, UK. It is the third largest bank in the world by total assets of £1.87
trillion. The strategy has been taken by the company's top management for increasing the
customer base and also to increase the turnover of the bank (Ireland, Hoskisson and Hitt, 2011).
The firm decided to advice their clients by giving several alternatives for hiding their savings in
order to prevent themselves from paying the taxes and eventually firm will also be saved from
saving the tax. Thus, this will help in raising the customer’s loyalty as the clients will get
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attracted towards this company and will invest as per the bank's instruction. This have created a
win-win situation where company and their clients both have got benefited from this task. This
strategy of hiding the customer's savings got failed as the government recognized this practice of
HSBC (Sekhar, 2009).
On the other hand, Royal Bank of Scotland Group is a British banking and insurance
holding company. It is based in Edinburgh, Scotland. This bank is operating its services in a
wide variety of banking brands and it offers personal and business banking through its offices
which is located in Europe, North America and Asia (Ulwick, 2005). Further, this bank also
made the strategy of taking over of ABN-Amro. However, this strategy of RBS got failed
because they adopted the hostile takeover approach. Due to this, they had to face a lot of issues
in the industry. Thus, these failures had a great impact on the organization and on its
profitability.
There are several reasons due to which strategic failure happens and this impact the
company in an adverse manner. Some of the reasons of strategic failure are listed below: Lack of Communications: When the organization does not communicate internally in an
appropriate manner while doing the strategic planning then the strategies get fail. Further,
it can be understood from the examples that the banks who failed in implementing the
strategy (Venter and et.al., 2009). In HSBC, employees do not have clear information
about the unethical practice going in the company. This strategy was planned by the top
management and they did not communicate the aim behind this planning to their
employees. This is how, the information about such practice got revealed in front of the
government. On the other hand, RBS also failed while taking over the ABN-Amro due to
the lack of communication among the staff members. Poor Leadership Style: If the leaders does not apply the proper style of leadership than
also the company can face the strategic failure (Raynor and Allen, 2005). Thus, in case of
HSBC, leaders were not efficient enough to carry out this strategy in an effective manner.
Further, the company had to face unfortunate event. Thus, leaders could not identify the
potentials of their team members and this lead to the occurrence of event. While, the poor
leadership as not an issue in case of RBS. The leaders were effective in this firm but the
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style adopted by them was not hard-hitting. This is why the strategy failed. It is because,
they adopted the hostile approach of takeover (Moon, 2010). Lack of Coordination: This is also one of the main factor which lead to the strategic
failure. Thus, it is highly required by the management to maintain coordination among
different department. In the case of HSBC, senior management did not create the
coordination in all the departments, thus it lead to the failure of strategic plan made by
them. In this, management failed in coordinating all the activities of whole banking sector
(Zott and Amit, 2013). Further, there was a contradict in the activities of all department
and this revealed the truth of the company in front of the market. On the contrary, RBS
also failed in coordinating the departmental activities and the conflicts between the
departments have resulted in the unsuccessful takeover. Already they have adopted the
hostile approach while takeover of the ABN-Amro and due to this they could not
maintain the coordination among both the firms and their departments which have lead to
the failure of take over. Failed to Understand the customers: Whilst implementing new strategy in the market, it
is highly important for the company to understand their customer's needs and preferences.
Further, by assessing the customer's demand, company can plan its strategy. If the
company fails in understanding their customers than it cannot succeed in implementing
new strategy (McAfee, Mialon and Mialon, 2008). Thus, in the case of HSBC, a firm
fails to understand their customer's need as they did not wanted this unethical practice to
be adopted by them. Without knowing their intention, company implements their plans
which lead to the failure.
These were some of the reasons due to which HSBC and Royal Bank of Scotland failed.
This failure have impacted both the firms in an adverse manner. Some of the impacts which two
banks faces are as follows:
Impacts on HSBC
After getting failure in strategy implementation, company have faced many
complications. Thus, when the strategy of the firm that is to hide the savings of the clients in
order to get relieve in the tax will lead to the increase of customer's base and growth and
profitability (Rothkopf, 2007). This unethical practice of the company get revealed in front of
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government and due to which company has to face several complications. Their reputation got
affected and this reduces the customer base. In a financial or banking industry, HSBC's name got
devalued and this reduces its customer's satisfaction level. Further, the firm has to pay large
amount of penalty for adopting such unethical practice against government. This had impact their
profitability because people started withdrawing their money and closed their accounts in the
company (Lambert-Mogiliansky, Majumdar and Radner, 2007). Further, the turnover of the firm
got reduced which directly affected its profitability. On the other hand, the staff members of the
company also got demotivated and due to this performance of the enterprise got reduced. In a
similar aspect, company has to start up its business in UK from scratch. Moreover, the cost have
to be incurred in order to motivate their employees by giving rewards and recognition. Due to
this reason over expenditure occurred and this reduces the profits of the company. Moreover,
company also got impacted that they were unable to build the trust in the minds of consumers
and this reduces the customer's base. Further, the HSBC bank has to feel ashamed in front of the
government officials due to which the stakeholders got disappointed. Along with that, it will take
too long to build the same goodwill which it had prior to the tax scandal (Strategic Analysis
Model, 2001).
Impacts on RBS
When the RBS acquired the ABN-Amro that time hostile approach of takeover was
adopted. That time company was running out of money and this decision was taken in order to
overcome this issue. Thus, in hurry the company took the wrong decision and it becomes the
worst takeover (Allio, 2006). Further, the company had to face large amount of impacts in the
banking industry. Moreover, the RBS bank were unable to manage the human resource of both
the firm as it was a sudden takeover. Due to this, company's performance got down. As both the
firms were rival and this was the main reason of failure of strategic implementation. Thus, the
profitability reduced and further, the company collapsed. The British government bought the
shares of the collapsed bank by 58%. However, the company got impacted as the government
took over this bank (Marren, 2012). On the contrary, the management was unable to deal with
the technologies and also the share price of the firm started decreasing due to the reason of
reducing growth of the bank. Along with that, company also faces the problems of getting more
prospective customers as after hearing the mismanagement of the company's personnel, market
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share of the RBS started declining. Moreover, company also got affected as the cost of
operations exceeded the budgeted cost. This lead to the decrease in profits of the firm (Parnell,
2010).
These were the impacts which have been faced by both the firms after the failure of the
strategic planning. Further, the competitive position of the HSBC and RBS got disturbed and the
top position held by the firm started declining (Sekhar, 2009). Thus, both the firms can be
compared by their failure in implementation of strategic plan. Comparison can be made by
analyzing the SWOT of both the company.
SWOT Analysis of HSBC
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Strengths Weaknesses
 There is a positive cash flow in the
organization.
 Financial management is skilled and
credit control by the management is
quite good (Rothkopf, 2007).
 The brand name is strong which help in
creating competitive advantage.
 Sales force and other employees of the
worker is highly skilled.
 After sales services are effectively
provided by the company.
 Management makes the quick decision.
 Employees are skilled and effective
training and development is provided
to them (Marren, 2012).
 Sufficient fund is not available for the
investment purpose.
 Unethical practices is followed by the
firm which has reduces the goodwill of
the company.
 Poor credit control leads to the
unpredictable cash flows.
 Company over-relies few of its
customers (Moon, 2010).
 Innovation is limited in HSBC.
 The firm fails in delegating and training
the successors.
 There are limited and out dates product
range which makes the company
uninterested to the customers.
 Inefficient process is followed by the
company.
Opportunities Threats
 The company can insolvent the
competitors.
 The firm can improve the access
towards the potential customers and
potential market (Zott and Amit,
2013).
 Company can develop new
distribution channels.
 Further, the firm can focus on the
social changes such as demographics
 Emergence of new competitors with the
improved products can threaten the
company.
 Due to the tax scandal, significant
customers may get lost.
 Suppliers my not supply the quality
requirements which may leads to the
failure of the company.
 Price rise from the suppliers (Cinquini
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change, change in customer's
preference, etc.
 The bank can enter into new
technological world so that innovations
can be introduced.
 Political and economic changes should
be brought in so that trends can be met
out (Raynor and Allen, 2005).
and Tenucci, 2010).
 Political, legal and regulatory change
may affect the company's growth
negatively.
SWOT Analysis of RBS
Strengths Weaknesses
 UK government have provided the
support to the bank which ensures
adequate ratings.
 RBS owns a range of global franchises
and this makes the company globally
leading financial group.
 This firm leads in the domestic market
for having highest franchises (Zott and
Amit, 2013).
 The company has an integrated
approach towards the wealth
management and banking.
 Technological advancement have been
adopted by the firm in order to have
excellent infrastructure.
 The employment base is highest as it
have more than 140,000 employees.
 The failure of ABN-Amro has reduced
the reputation of the company because
the company got collapsed.
 There is a less penetration of the market
(Sekhar, 2009).
 Declining operational efficiency have
impacted the margins.
Opportunities Threats
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 If the firm trades in a commodity than
it is expected to be profitable in the
long run.
 Restructuring of the company may re-
position the RBS as a strong financial
service provider (Strategic Analysis
Model, 2001).
 The bank can go for rural and social
banking.
 It can merge with smaller institution in
order to stay safe.
 The environment of the banking is
highly competitive which can create
threat to the company.
 Government policies are changing due
to unstable government.
 Global financial crisis have imposed a
major threat on the company (Venter
and et.al., 2009).
Thus, after assessing the internal strength and weaknesses of both the company it can be
interpreted that HSBC is more better in doing the strategic management than RBS. Although,
HSBC has adopted unethical practice, however after that firm has reached to the top position
again (Ulwick, 2005). Whereas, the strategy made by the RBS was vulnerable and it completely
collapsed the firm and government has to buy the shares in order to maintain the reputation of
the enterprise. On the other hand, after the tax scandal by the HSBC, company has learned to
unfollow such practice and further, they have gained the trust of the customers up to certain
extent (Marren, 2012). While the RBS has learned not to adopt the hostile approach while taking
over the rival firm.
CONCLUSION
After conducting an study over the strategic analysis of the HSBC and RBS, it has been
concluded that it is highly important for the company to do strategic management in a proper
manner. It is because the failure of it cannot affect the company in an adverse manner. Further,
the HSBC has failed in making the strategy which reduces its reputation in the market. The
company is still doing better in the industry and has gained the competitive advantage after the
strategic failure. On the contrary, RBS took over the ABN-Amro by adopting hostile approach
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which became the biggest reason for the failure of strategic planning by the company.
Furthermore, this firm totally collapsed and British government has to purchase 58% of its stocks
in order to maintain its reputations. Thus, the HSBC is more better as compared to the RBS.
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REFERENCES
Journals and Books
Allio, M., 2006. Practical strategy development: a wise investment for middle market businesses.
Journal of Business Strategy. 27(2). pp.31–42.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?. Journal of Accounting & Organizational Change. 6(2). pp.228–259.
Ireland, D. R., Hoskisson, R. and Hitt, M., 2011. Understanding Business Strategy Concepts
Plus. Cengage Learning.
Lambert-Mogiliansky, A., Majumdar, M. and Radner, R., 2007. Strategic analysis of petty
corruption: Entrepreneurs and bureaucrats. Journal of Development Economics. 83(2),
pp.351-367.
Marren, P., 2012. The devil's dictionary of business strategy. Journal of Business Strategy. 33(4).
pp.58-60.
McAfee, R.P., Mialon, H.M. and Mialon, S.H., 2008. Private v. public antitrust enforcement: A
strategic analysis. Journal of Public Economics, 92(10), pp.1863-1875.
Moon, H., 2010. Global Business Strategy: Asian Perspective, World Scientific.
Parnell, A. J., 2010. Strategic clarity, business strategy and performance. Journal of Strategy and
Management. 3(4). pp.304–324.
Raynor, E. M and Allen, D. 2005. Preparing for a new global business environment: divided and
disorderly or integrated and harmonious?.Journal of Business Strategy.25(5).pp.16 – 25.
Rothkopf, G., 2007. A blueprint for green energy in the Americas: strategic analysis of
opportunities for Brazil and the Hemisphere. Inter-American Development Bank.
Sekhar, S. V. G., 2009. Business Policy and Strategic Management. I. K. International Pvt Ltd.
Ulwick, W. A., 2005. Business Strategy Formulation: Theory,Process and the Intellectual
Revolution. IAP.
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