Strategic Analysis of HSBC Bank

This assignment content is related to the analysis of HSBC Bank. It includes various figures and tables that provide an overview of the bank's market structure, SWOT analysis, internal analysis, stakeholder analysis, strategic approach, and industry attractiveness. The content also includes competitor analysis and market analysis. The main points discussed are the bank's strengths, weaknesses, opportunities, and threats, as well as its financial position, brand image, and diversification of services. The assignment aims to provide a comprehensive understanding of HSBC Bank's performance gap and progress against strategic actions.

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Strategy for Sustainablity

Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................2
Main Analysis..................................................................................................................................2
3.1 Question 1 .............................................................................................................................2
External Analysis of HSBC Bank............................................................................................2
Internal Analysis of HSBC Bank.............................................................................................4
Identification of Performance Gaps.........................................................................................4
3.2 Question 2..............................................................................................................................4
3.3 Question 3..............................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
Appendices......................................................................................................................................7
1

Executive Summary
HSBC Bank is known as the largest American bank which provides different facilities and
services to its existing customers. The organization operates in different business segments. It
provides its customers with all facilities of commercial banks and an insurance organization.
This report mainly focuses on the feasibility of strategies of HSBC bank. Internal and external
analysis of the organization is performed to understand the different internal and external factors
which influence the success of the organization in high context. Analysis of internal or external
business factors of HSBC Bank helpful in developing and implementing the successful
strategies. In addition, different steps are described with which HSBC can develop the
sustainable strategies and also identify some challenges which the organization faced during the
implementation and development of a sustainable business strategy. Development and
implementation of business strategy efficiently bring various success opportunities to the
organization which it can use to gain confidence and loyalty of the people toward its products
and services.
2

Introduction
HSBC Holdings plc. considered as a British-based multinational financial services and banking
organization whose headquarter is situated in London, United Kingdom. In this report, we will
study about the HSBC strategies and its internal and external environment. On the basis of the
study, we develop a sustainability strategy which can grow the organization further and also
suggest ways implement the strategies. Internal and external environment analysis provides a
significant glimpse about the core competencies, opportunities, and external factors of the
organization (Cutter, 2015). It is known as the fourth largest bank in the world as per its number
of assets. The total assets of the HSBC holding are $2.65 trillion. It was established by the
Shanghai and Hong Kong Banking Corporation in 1991. It is mainly established to provide
sustained and long-term financial services to a large number of customers. It named on the basis
of its co-founders. The organization was incorporated during 1866. Both the United Kingdom
and Hong Kong considered the home market of the organization. It is working more than 70
countries with more than 6,000 offices in different branches such as Asia, Europe, South
America, and Africa. The organization served approximate 70 million customers globally. To
study the external factors of the organization we utilize PESTEL analysis in this document. It is
because, PESTEL is considered an efficient tool it gives us significant understanding about the
all external environment factors such as political, environmental, social, technological,
economical and legal. All these factors have a significant influence on the working of HSBC
bank. Porter five forces model is only a tool which gives understanding only about the potential
strategies of the competitors not the other factors. But, competitors also have a significant role so
we also used porter five forces model to understand the competitive environment of the HSBC
Bank. The service quality of the organization makes it important in the eyes of customers
3

(Wilson, 2012). It is known for the quality of its service. It has a market capitalization of
approximate $200 billion and 2, 00,000 stakeholders in different countries. The strategy direction
of the organization represents its market position.
Main Analysis
In this section, we will study about the internal and external environment of the organization and
on the basis of outcome we measure the sustainability of its existing strategies and challenges
faced by the organization in developing and implementing its sustainability strategies
(Binswanger, 2016). In order to identify the market value and global position of the HSBC Bank,
we focused in external or internal analysis. To measure the internal and external environment of
the organization we utilize different tools such as porter model and PESTEL analysis for
measuring the external environment and SWOT analysis or core competency, or product and
service analysis for internal environment (Chang, 2016).
3.1 Question 1
External Analysis of HSBC Bank
PESTEL Analysis
This tool is utilized to understand the macroeconomic factors of the organization which can be
helpful in measuring the external opportunities and threats (Longoni, 2014). Its components are
following (Figure 1.2):
Generally, it is considered that banking services of HSBC are highly covered by the policies and
regulations formulated by the different types of government in different countries where they are
4

operating (Almeida, 2015). The organization has the ability to follow all the rules and regulations
and accomplish its different business operations under the boundaries fixed by the government.
Furthermore, the organization also formulates its own defense strategies besides any
governmental limitations and restrictions (Dooly, 2015).
Being one of the leading and competitive business organizations, HSBC bank should have a
successful and strong economic strength. The organization is operating in an efficient manner
despite presence of different problems (Wolmarans, 2014). The management of the organization
enables it to deal efficiently with its economic factors. This will enable the organization to
maintain a healthy economic condition as well as develop a shield against unemployment.
Working of HSBC is highly influenced due to the circumstances of the society in which it is
operating (Clune, 2014). Side by side, the management of the organization also ensure that each
society gave the similar options to take the benefits from the offered resources and facilities
provided by the HSBC Bank.
The important thing regarding information technology is to improve the internet technology
influence the working conditions of HSBC Bank. The organization utilizes internet technology to
identify its global customers and also help them in providing the enough knowledge about the
recent banking trends which can provide lots of benefits to them (Liedtke, 2013).
Porter’s Five Forces Analysis
It is considered that the organization has large rivals in the financial and banking sectors. Thus,
the degree of competition forces the organization to develop efficient strategies to maintain its
leadership position in its existing market (Barnett, 2015). In addition, because of the abilities of
the high level competitive organization, HSBC formulated different strategic plans to make sure
5

that they are able to maintain its competitive position in its existing market by being the number
one choice of customers.
HSBC is also aware of the fact that their competitor organization will offer new services and
products in the near future (Gilinsky, 2015). Availability of these substitute products enforces the
organization to work hard to maintain its position.
There is a large potential for profits in the finance and banking industry. Due to this, HSBC
needs to face more market entry threats (Giannetti 2013). All these threats play an efficient role
in making or breaking the organization. In this regard, the organization is able to create some
entry barriers to maintaining its competitive position in the market.
It is considered that power of supplier represents the power of buyers. This force of external
analysis is mainly focusing on significant concentration and size of suppliers which is also
related to the different competitors (Egilmiz, 2012). Supplier power force also concentrates on
differentiation level in the materials being supplied by different suppliers.
Buyer power is considered the most important factor of the micro economic environment. It
influences the occupation of value formulated by the organization at its marketplace. The main
determinants of this force are customer concentration and size of operations. The organization
has the capability to manage its customers efficiently which permits the organization to gain
customer satisfaction and loyalty.
Apart of Porter five forces model and PESTEL analysis we will also studied the different tools
such as competitor analysis, market analysis in the Appendices section of the document.
6

Internal Analysis of HSBC Bank
Internal analysis of HSBC Bank is done to understand the strengths and Weaknesses of the
organization. To analyze the internal environment of the HSBC Bank SWOT analysis of HSBC
can understand by following the figure: 4 mentioned in appendices section of the paper.
Identification of Performance Gaps
Yes, there is a performance gap between the current outcomes and expected outcomes of the
HSBC Bank. The performance gap is known as the difference between the actual performance
and future performance of the organization (Egilmez, 2012). There is a huge performance gap
between the strategic actions of the organization and its achievement such as the organization
want to deliver growth above GDP from the international network, but it is unable to do so. It is
because the Average PCM deposits are enhanced by 8%. The performance gap of the HSBC
Bank can understand from the figure: 6 mentioned in appendices section of the paper.
3.2 Question 2
Development of effective sustainability strategy is required for the success of the organization.
The management of the HSBC bank should develop the strategy by following different steps
which are mentioned below:
Understanding the context of sustainability: If the organization wants to understand the
sustainability context of environmental, social and economic terms the team of the organization
should come together with an external specialized consultancy management (Wolmarans, 2014).
The management of the organization can understand the sustainability context by focusing on its
past activities of CSR, agenda of government policy, and different globally recognized
guidelines. This stage is the core function because the efficiency of next stages based on the
outcome of this stage. Consolidating and Reviewing initial research and discussions: It is the
7

responsibility of the organization to conduct initial discussions to mapping the sustainability
context (Bai, 2014). It should review and consolidate all its discussions and research outcomes
under the supervisory of external specialized consultancy management.
Engage with stakeholders: Stakeholders influence the position of the HSBC Bank in an efficient
manner (Ortega, 2014). Generally, the organization is engaged with the different influential
groups. The developed strategies of the organization should be sustainable as per expectations of
the different stakeholders (Al-Kandi, 2013). Enforcing measure and objectives: Once the HSBC
Bank has identified available issues, engagement method for every stakeholder have been
determined, large level efforts should perform to reduce the available risk in adopting different
opportunities related to identified issues. Goals and commitment should determine by the
organization to utilize the available resources and opportunities efficiently. Establish processes
and systems: Once the organization has developed the objectives, detailed processes and specific
systems are required to implement every initiative (Wonglimpiyarat, 2014). For this purpose, the
organization needs to develop policies, design and processes. These processes help the
organization in attaining its predetermined objective in an efficient manner.Evaluate progress,
communicate different actions and fulfil expectations: At last, for developing sustainable
strategy, it is necessary for the management of the organization to enforce a system that
evaluates the performance of the strategy towards every goal of the organization.
Challenges in developing sustainable strategy
Sustainable strategy planning is considered the one important area of the organization. Nature
and type of developing strategy influence the working of HSBC organization in high context
(Warth, 2014). The below mentioned are some challenges that are faced by the organization
during formulation of sustainable strategy:
8

The main important challenge faced by organization while developing strategy is the engagement
of stakeholders in an appropriate manner (Ortega, 2014). The word ‘sustainable strategic
planning' can arise fear in the mind of strategic planning team of the organization. It is necessary
for the organization to primarily focus on those activities which generate high success for the
business. Engagement of stakeholder is a primary requirement of the organization which should
do by organization efficiently.
One of the important, challenging aspects of sustainable strategy development is people. The
management of the organization needs to collaborate the different cultural peoples efficiently
(Rothaermel, 2015). Achieving consensus can be critical for the organization. But this can do
efficiently through adopting mind mapping and brainstorming processes.
3.3 Question 3
Implementation of the sustainable strategy is a process through which the organization transfers
the selected strategy into action (Ciocoiu, 2013). The following steps should follow by HSBC
bank to implement its strategy in the desired manner:
Institutionalization of strategy: Effective implementation of the strategy requires that the strategy
formulator team should act like as defender or promoter. In the absence of institutionalization of
strategy, it does not provide the desired outcome (Doski, 2013). Thus, it is the responsibility of
strategists of the organization to represent the strategy in front of employees in such a way that
appeals to them and brings their support in performing its activities.
Establishment of suitable business climate: Formulation of relevant organizational climate is
necessary for the implementation of the sustainable business strategy (Igliński, 2016). The
organization which implementing their strategies with more conductive and participatives
9

climate are more effective than others. So, the top manager of the organization should shape the
climate of HSBC bank by formulating different standards.
Development of suitable operating plan: Operating plans are considered the action plans and
decisions that take place in different parts of the organization (Alagoa, 2015). If the organization
developed operating plans to represent the desired strategic results, then the organization need to
focus on different factors which are important for implementation of selected business strategy.
Periodic measurement of strategy: The organization should conduct periodic review of strategy
and should make sure that the strategy is implemented in the desired direction (Leung, 2014).
This can measure the success and achievement of the organization after implementing the
required strategy.
Challenges in implementation of sustainable business Strategy:
The following challenges are faced by the organization in the implementation of sustainable
business strategy:
Large time is required by the organization to implement the selected business strategy
successfully. Furthermore, the organization requires huge people to implement the strategy
successfully. Inadequate or poor sharing of information (Jinlan, 2015) will influence the
organization in high context. Inability of manage cultural change bring and Restriction from
employees for adopting required technology.
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Conclusion
After studying all this, it can be concluded that the organization need to pay huge attention to the
development of its necessary business strategies because the success of the organization highly
depends on its strategies (Al-Kandi, 2013). Furthermore, sustainability in business operations can
maintain by the organization through following the proper development and implementation
process of strategy (Jayaram, 2014). Through this, the organization is able to attract a large
number of customers towards the services offered by it. It ensures the long time success of
HSBC bank in a global market.
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Appendices
Figure 1.1: Global Businesses of HSBC holdings
(Annual Report, 2014)
Figure 1.2: Pestle Analysis Table
Factor Nature of
Change
Likely
impact
Opportunity/Threat
Political  Generally,
government has
the responsibility
of protecting the
different interests
of public (Al-
Zoubi,2013).
 Political stability
influences the
Continuous High Opportunity
17

different decisions
of business
(Solaiman, 2016).
 Protection of
consumers
 Continuous
regulation of
different business
activities.
Flexible
Flexible
Continuous
High
Moderate
High
Threat
Threat
Threat
Economic  Activity of
competitors
 Competition for
getting required
resources.
 Unemployment
numbers
 Savings
Continuous
Flexible
Flexible
Continuous
Moderate
Low
Low
Opportunity
Opportunity
Threat
Threat
Social  Balancing work life.
 Presence of consumer
behavior trends
(Popkova, 2013)
 Lifestyle
 Leisure
Continuous
Flexible
Flexible
Flexible
Moderate
Low
High
Moderate
Threat
Opportunity
Threat
Threat
Technological  Technological
arrangement is
growing
 Technology
formulates new
products and services
(Khan, 2012)
 Internet businesses
 Better communication
Continuous
Flexible
Continuous
Flexible
High
Moderate
Low
High
Opportunity
Threat
Threat
Opportunity
Legal  Increased
governmental
Flexible Moderate Threat
18

regulation
 Large capital
requirements
 Anti-money
laundering
requirements
Flexible
Continuous
Low
Low
Threat
Opportunity
Environmental  Sustainability
Engagement
 Supply Chain
collaboration
 Waste Reduction
 Paperless Banking
Flexible
Continuous
Continuous
Flexible
High
Moderate
Low
Low
Opportunity
Threat
Threat
Threat
(https://www.hsbc.co.in/1/PA_ES_Content_Mgmt/content/website/pdf/about/csr/
hsbc_sus_report_07.pdf)
Figure: 3 Market structure of HSBC
Figure: 4 SWOT Analysis of HSBC Bank
Strengths Weaknesses
19

 Excellent financial position and good
brand image in market
(Wonglimpiyarat, 2014).
 Dealing in diverse business groups
such as financial services, investment
banking, private banking, and
commercial banking (Şeker, 2012).
 Competitive base of customers reduce
level of available risk (Bai, 2014).
 Weak in competing in retail market as
compared to competitors.
 It strongly associate itself in the small
business sector, but the existing
economic position has led to growth in
risks (Wu, 2014).
 Involvement in sub-prime markets of
US lent to high-risk borrowers
Opportunities Threats
 Possibility of expansion in another
countries
 Lower rate of interest will bring
growth in market share (Singh, 2013)
 Diversifying portfolio for different
customers.
 Hard competition from worldwide
banking services leaders
 Financial crisis such as recessions
 Changing rules and regulations of
government (Whittington, 2015).
20

Figure: 5 Performance gap (Safa, 2015)
Figure: 6 Progress against strategic actions of HSBC Bank: (Annual Report, 2015)
21

22

Internal Analysis
Figure: 7 Analysis of resources and competencies of HSBC Bank
Threshold Resource Unique Resources
 Human Resources
 Financial Resources
 Intellectual capital
 Physical Resources
 Premier checking
 Premier Deluxe Mortgages
 Premier world MasterCard
 Wealth Management
Threshold Competencies Core Competencies
 Banking regulations
 Banking system
 Bank operations
 Banking service management (Cutter,
2015)
 Account closure
 Currency management
 Capturing value from international
network (Şeker, 2012)
 International trade facilitation
 Easy term loans
Figure:8 Stakeholder Analysis
Figure: 9
How sustainable is a strategic issue and HSBC approach
23
HSBC
BANK
Customers
Suppliers
Competitors
Commmunities
Environment
Media
Distributors
Unions
Creditors

Civil Maximum
opportunity
Strategic
Managerial
Compliance
Defensive Maximum
threat
Latent Emerging Consolidating Institutionalized
Figure: 10f
Industry Attractiveness: Porter Five Forces
Threats of New Entrants
Banking industry has high potential of profits, due
to which HSBC had to face different threats of
market entry. These threats sometime make and
break the organization. HSBC should utilize
efficient strategies to maintain its competitive
advantage in the market.
Likely Impact
High
Bargaining Power of Consumers
It is considered an important force which
influences the occupation of the value created by
HSBC in its existing market. It mainly contains
size as well as concentration of the customer
Low
24

(Wilson, 2012)
Bargaining Power of Suppliers
Power of supplier influence the buyer power in
significant manner. Analysis of this force mainly
concentrates on the size and concentration of
supplier. Apart of it degree of differentiation also
considers here (Al-Kandi 2013).
Low
Threats of Substitutes
HSBC have a great knowledge about that its
competitors will provide new services and
products in the near future. The threat from
substitutes enable the organization to focus more
to sustain in the market (Dooley, 2015).
High
Competitive Rivalry
It can be said that organization has large number
rivals in the financial sectors as well as banking
sector. Degree of rivalries enhances the thinking
power and forces the organization to develop some
attractive strategies to maintain its leadership in
the market (Jayaram, 2014).
High
Overall Industry Attractiveness
Overall it can be said that banking industry is very
attractive. Due to availability of high profit and
long term survival lots of different business firms
High
25

attracted towards it (Grant, 2016).
Figure: 11 Competitor Analysis
Competit
or
Strategy Markets
Served
Sustainabili
ty
Initiatives
Financial
Performan
ce
Strength
s
Weaknesse
s
Standard
Chartered
Bank
Quality
Leadership
Banglades
h
Offered
differentiatio
n services
such as
wholesale
banking,
priority
banking and
consumer
banking.
Strong Largest
network
of
customer
base
Cultural
Flexibility
Citibank Sustaining
brand image
and
Differentiati
on
Dhaka,
Banglades
h,
Chittagon
g
Full banking
service
Strong Utilizatio
n of
modern
technolog
y
Concentrati
on only big
corporate
clients
Figure: 12 Market Analysis
26

Market Scope, Size, Structure
Due to the presence of large population there are huge market scopes for the HSBC Bank.
Market size is broad and wide for its services and its structure are broad in nature (Clune,
2014).
Value requirements of segments in the Market
High
Consumer’s Behavior
Due to the high personality and standards consumer wants more attractive services and
products which gives them long term profitability (Singh, 2013).
Market Dynamics
Due to the change in economic policies and conditions, market for HSBC bank operations
changes continuously (Wonglimpiyarat, 2014).
27