Assignment Strategy for Sustainability - HSBC

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Strategy for Sustainablity

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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
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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 focusing 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. PEST and Porter's five model
study is utilized to understand the different external factors, or SWOT analysis is utilized to
understand the core competencies and opportunities of the organization. Analysis of these factors
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.
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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 provide 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. The
service quality of the organization makes it important in the eyes of customers (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.
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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):
Political Analysis
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
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 formulate its own defence strategies besides any
governmental limitations and restrictions (Dooly, 2015).
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Economic Analysis
Being one of the leading and competitive business organization, 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.
Social Analysis
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.
Technological Analysis
The important thing regarding information technology is to improve the internet technology
influence the working conditions of HSBC Bank. The organization utilize 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
The intensity of rivalry
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
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the high level competitive organization, HSBC formulated different strategic plans to make sure
that they are able to maintain its competitive position in its existing market by being the number
one choice of customers.
The threat of substitutes
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.
The threat of entry
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.
Supplier Power
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
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
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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.
Internal Analysis of HSBC Bank
Internal analysis of HSBC is done to understand the strengths and Weaknesses of the
organization. To analyze the internal environment of the organization 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
organization. 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
organization 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 want to understand the
sustainability context of environmental, social and economic terms the team of the
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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 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 organization 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 organization 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 need to develop policies,
design and processes. These processes help the organization in attaining its
predetermined objective in an efficient manner.
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 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:
 Engagement: 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.
 Consensus: 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.
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3.3 Question 3
Implementation of the sustainable strategy is a process through which the organization transfer
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
participative 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
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(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.
 Organization requires huge people to implement the strategy successfully.
 Inadequate or poor sharing of information (Jinlan, 2015)
 Inability of manage cultural change
 Restriction from employees for adopting required technology.
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).
Continuous High Opportunity
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 Political
stability
influences
the 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 Flexible Moderate Threat
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governmental
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
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 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).
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Figure: 5 Performance gap (Safa, 2015)
Figure: 6 Progress against strategic actions of HSBC Bank: (Annual Report, 2015)
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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
 Account closure
 Currency management
 Capturing value from international
network
 International trade facilitation
 Easy term loans

Figure:8 Stakeholder Analysis
Figure: 9
How sustainable is a strategic issue and HSBC approach
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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 have 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.
Bargaining Power of Consumers
It is considered an important force which influence the occupation of the value created by HSBC in its
existing market. It mainly contain size as well as concentration of the customer.
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
consider here.
Threats of Substitutes
HSBC have a great knowledge about that its competitors will provide new services and products in the
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near future. The threat from substitutes enable the organization to focus more to sustain in the
market.
Competitive Rivalry
It can be said that organization have large number rivals in the financial sectors as well as banking
sector. Degree of rivalries enhance the thinking power and forces the organization to develop some
attractive strategies to maintain its leadership in the market.
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 attracted towards it.
Figure: 11 Competitor Analysis
Competito
r
Strategy Markets
Served
Sustainability
Initiatives
Financial
Performanc
e
Strengths Weaknesses
Standard
Chartered
Bank
Quality
Leadership
Bangladesh Offered
differentiatio
n services
such as
wholesale
banking,
priority
banking and
consumer
Strong Largest
network
of
customer
base
Cultural
Flexibility
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