BUS4001 HSBC Business Environment Report: Arden University Analysis

This report provides a comprehensive analysis of HSBC's business environment, covering organizational structure, stakeholder analysis, and external factors influencing its operations. It discusses HSBC's legal structure as a private limited company, its purpose, and objectives. The report explores market structure, highlighting perfect competition and oligopoly, and examines the impact on supply and pricing. Stakeholder analysis is conducted to identify and prioritize key stakeholders, including customers, employees, investors, and suppliers. The PESTLE framework is applied to assess political, economic, social, technological, legal, and environmental factors affecting HSBC. Porter's Five Forces model is used to evaluate the competitive intensity of the banking industry, considering the threat of new entrants, substitutes, and the bargaining power of suppliers and buyers.

UNDERSTANDING
BUSINESS
ENVIRONMENT

Contents
INTRODUCTION.................................................................................................................................4
TASK ONE...........................................................................................................................................4
Organizational structure and its effect...............................................................................................4
TASK TWO..........................................................................................................................................6
Definitions and shareholders analysis process...................................................................................6
TASK THREE.......................................................................................................................................8
Analysing business environment using environmental tools.............................................................8
TASK FOUR.......................................................................................................................................10
Evaluating the determination of the organization............................................................................10
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................13

INTRODUCTION
Understanding business environment plays a vital role as it is encompasses all those
important factors that may influence the business operations and it involves competitors of
the firm, customers, suppliers, stakeholders, market trends and economic and social factors.
The present report will be based on HSBC which is a financial service bank providing
different types of services such as loans, mobile app, NRI services, credit and debit cards,
savings accounts and money transfers. Furthermore, the study will information about the
organization success and its legal structure and its objectives. Plus, it will give information on
stakeholder analysis and how the market structure affects the organizational behaviour. Also,
it will highlight external factors such as PESTEL and Porter's five forces which can influence
the business operations.
TASK ONE
Organizational structure and its effect
As we all know that business organization can be divided into various categories such
as private, public, public sector and voluntary. On the basis of the type of business the
company owner decides to provide legal structure and provide purpose and objectives of
organization.
HSBC is one of the largest and most popular financial service bank in the world. The
bank serve 40 million customers approximately with global businesses (Nahar and et.al.,
2021). There many types of services they are providing such as global banking, personal
banking, wealth and markets. The company covers almost 64 countries in the world and
territories in Latin America, North America and Europe etc. The legal structure of the
company is Private limited. It means that it is privately held business entity held by private
stakeholders who work effectively for customers. It is one of the best clearing bank in the UK
which is wholly owned subsidiary of HSBC holdings provides varieties of banking services.
Purpose
The major purpose of the company is to provide effective servicing to customers and
open up a world of great opportunity so it will benefit the public. The company aims to be the
preferred international financial partner so that it can provide major benefits to clients.
Objectives
 To help people in knowing why the company exist by using unique expertise, abilities
and capabilities.

 To open up new kinds of opportunities for people so that they can grasp major
benefits related to financial services.
An organization is bringing people together, develop capital and ideas that nurture
successful environment and growth around, helping to create a better world which can
provide benefits to customers, investors and planet. In addition to this, the company is
providing job opportunities to many people. Business operations and work related to financial
services is one of the largest global level functions in HSBC, the company is employing more
than 30,000 people in almost 53 countries and territories which is quite good expansion
(Zouaoui, 2019). In global operation of the company, the departments are working effectively
to run business operations and deliver good financial operations to satisfy the needs of
customers. By doing so, the company is able to manage any change in the bank policy and
serve in a good way. With the help of collaboration method, the company is able to achieve
success by working together, collaborating across boundaries. The firm always value cultural
differences and respect different perspectives this is why it is one of the best bank.
Market structure is all about the characteristics of the market either competitive in
nature or organizational, from which one can know about the nature of competition. By
understanding the market structure of the company one can know about pricing policy
followed in the market. company is having perfect competition as its market structure (Niaz,
Isac and Guthrie, 2020). In a perfectly competitive market, financial services banks are
servicing customers for profit maximization price takers such that prices of services are well
maintained as per the convenience of customers by following some rules and policies.
However, by using this market structure the firm cannot able to affect the products or services
price. In terms of market shares, the company's market is following oligopoly. Hence, it is
said that the company is having matrixed management structure under which it operates
varieties of financial services.
Market structure can impact the supply of various types of products or services in the
market. When there is heavy competition in the market there is a high demand and supply of
particular services or products as all the different types of organization try to attract
customers and dominate the industry markets (Niaz, Isac and Guthrie, 2020). Due to this,
many new players in the market feel pressure as it creates barriers to entry for the firms that
intend to expand its business and join emerging market of banking field.

TASK TWO
Definitions and shareholders analysis process
shareholders- stockholders is a company, any institution, an individual that owns at
least one share of the stock of the firm, which is also known as equity share. The major role
of shareholder is to provide financial backing in return for potential dividends and major
benefits which support over the firm's lifetime (Choudhury and Pattnaik, 2020). Shareholders
can participate in annul general meetings of the company and access the financial reports
which is related to information of firm.
Stakeholders- stakeholders are very essential for a different reasons such as internal
stakeholders are very important for the company as all the activities and functions rely on
their ability to work together and perform effectively in order to achieve goals and objectives.
There are various stakeholders such as customers who are purchasing from company,
employees of the firm who are working effectively to achieve goals, investors who make
decisions whether or not to make investments, suppliers (Derakhshan, Turner and Mancini,
2019). For example- employees are those people who work effectively as a team towards the
business goals which helps the company to perform better in the competitive market and gain
competitive advantages. Stakeholders are those people, an individual or group of people that
has an interest in any kind of decisions made by the company or any activity done. While on
the other side, other stakeholders such as customer who can change their buying behaviour
and decisions if satisfied with the services provided by the company. Suppliers are those
people who can change their practices related to manufacturing process and distribution.
Also, government can also make modification related to rules, policies, laws and regulations.
So, by managing strong relationship with stakeholders the company is able to achieve long
term success.
Stakeholders analysis- this is a systematic process used by many companies in order
to prioritize, identify, and assess the people who will be affected by the operations of
business or any project carried out by company van (Bruggen, Nikolic and Kwakkel, 2019).
With the help of stakeholders analysis the company is able to divide into groups according to
their perceptions, levels of participation and their interest level. By using stakeholders
analysis, HSBC can easily find out people who will be impacted by business just by
following major steps.

Source: (Afridi, 2018)
Identification of stakeholders- In the first step the company can research on
individual and third party companies that may be relevant. For this they may use methods like
conducting an audit of the online conversations which can provide details about groups that
are directly affected by business initiative.
Do study on stakeholders- after identification, another step is to do study on
stakeholders this can be done through online research to identify mission of the company, the
reputation of the stakeholders, their level of activities, and lastly public profile (Afridi, 2018).
It is essential to make network with other people via phone calls and in person meetings in
order to gain insights.
Prioritize and contact- after that the company needs to understand the needs of the
stakeholders by prioritize them and make connections with them (stakeholder analysis,
2022). On the basis of groupings like credibility, relevance and visibility they can contact
with people and explore their interest in a potential collaboration.

TASK THREE
Analysing business environment using environmental tools
PESTLE Analysis of the organization
Political factors: This factor used to play a crucial role in the market and have great
impact on the banking sector. HSBC must focus and follow the political changes in the
market which will not impact its long term profitability. As the company is operating in many
countries so the political environment is the great risk which have impact on profits. In order
to achieve success in dynamic market the company must follow the rules that are changed by
the government.
Environmental factors: AS the company is operating in the different market and
every market have different environmental standards. The HSBC must focus on the different
environment of different countries which helps them to earn profits (PESTLE ANALYSIS OF
HSBC ,2022). Before entering into the new market the company must check the environment
which helps them to operate them successfully in the market. There are many changes in the
market so HSBC must consider those changes which make them to gain profits.
Social Factors: The society’s culture have the great impact on the culture of the
organization working in the different environment. The shared beliefs and attitudes of the
people in the market in the market has the great role in the HSBC Plc. this helps them to
understand the customers and make them to provide the best services which helps them to
gain profits in the market. The company having its operations in different market so it must
manage and work according to the needs and wants of the society.
Technological factors: This is one of the most disruptive factor which used to have
great impact on the cited organization. As there is fast changing in the use of technology
which the company has to manage in order to operate in the different sectors of market.
HSBC must consider such technological changes which will helps them to operate
successfully in the market and have good revenue. They must also check the technology
adopted by their competitors which helps them to work successfully in the market.

Legal factors: There are number of countries and every country has its own legal
rules and regulations. The cited organization must follow the rule and regulations of the
different countries where they are operating. By evaluating the market helps them to have the
competitive advantage in the market. They must follow the data protection act, employment
laws, consumer protection laws, etc. which are required in order to operate in the different
market. By knowing about the market legal rules and policies helps them to operate
successfully in the market and helps the company to earn good profitability.
These are the most common five factors of PESTLE analysis which used to have great
impact on the decision-making and profitability of the organization. the company must
consider such changes in order to have competitive advantage in the international market.
Porters five forces model
Threat of new entrants: The threat of new entrants in this industry is weak as
because of economies of scale. If the new entrants want to enter they must have high
economies of scale in order to achieve success in the banking sector. This used to provide the
large advantage to the company to operate successfully in the market by having large
customer base. HSBC must always provide the differentiated products and services which
makes the customers to attract towards them. By this the company will be having less threat
of new entrants by having the large customer’s base in the market.
Threat of Substitutes: The internet has made the firm more dependent on themselves
which has affected the market of banking industry. As nowadays everything is done on the
internet without going to the bank which makes the firm to have less customers. This used to
have great impact on the company and thus it will lead to have large threat of substitute’s
products in the market. As there are many banking industry which used to provide the good
facilities which may switch the customers to use their services.
Bargaining power of suppliers: The bargaining power of suppliers is basically low
as there are less suppliers working for the banking industry. Further the supplier of the
computer equipment is many in the market which used to make the company to buy best
technology for their company (HSBC Holding Plc. Porters Five Forces Analysis, 2022). The
company must have the good supplier which helps them to provide the bets commodities and
technology in order to operate in the competitive market. Before entering in the new market
the company must also check the suppliers which used to have great impact on the revenue

earning. The level of income in this banking industry is low, so the company must buy at the
lower rate and make the customers to have low prices of the services.
Bargaining power of customers: As there are many suppliers in the same industry so
the bargaining power of the customers is very high. If the company does not work according
to the customers in the market it will affect the profitability. HSBC must make sure that they
have large number of customer’s base which helps them to gain the loyalty in the market.
Furthermore this will also makes the company to have the advantage of economies of scale
and have cost advantage by selling at the low process. This will make the customers attract
and helps them to have good profitability.
Competitive rivalry: There is the great cause of happening of the rivalry among the
existing companies in the market. The number of rivals firms in this industry is less as the
company has expanded its business in national and international market. As there are very
competitors who used to have such large market share and compete with HSBC. This used to
provide the advantage to the company in order to have better operations in the market and
have good profitability. The cited organization is having the strong competitive force in the
market and they must focus on the different strategies to attract the customers.
From the above porter analysis of the company it is seen that by the using of large
internet the company has thereat of substitutes products. This may have impact on the
profitability and sales of the company. By using the new technology the cited organization
must focus on providing the best services to the customers. This will helps the company to
have good competition in the market and operate nationally and internationally.
TASK FOUR
Evaluating the determination of the organization
Key performance indicators are the most important factors which used to have great
impact on the annual report of the company. These are the quantifiable measures that help
the company to know about its performance that are set against the goals. The annual report
of the company is having the positive results that help the company to operate in the national
and international market. There is growth in the revenues of the company which shows that
the company is having good profits in the market (Möller, Nenonen and Storbacka, 2020).
The net profit of the company is also increasing which shows that the company is having
positive operating cash flows in the competitive market. The company is having less

borrowings from the market that makes the company to have more profits as they have to pay
less interest on the taken loans. The financial and non- financials of the company includes the
revenues, profits and the cash flows which helps the company to know about its performance
in the market. The company is having positive cash flows and profits that show the company
is operating well in the national and international market.
Yes the company is having balanced in the financial and non-financial terms which
help the company to have positive performance in the market. The company must check its
performance on the monthly basis that helps them to track where they are going well and
where they are lacking. As it is very important for the company to check its financial
performance which helps them to know about its economic health and job opportunities for
the people in the market. This helps them to have good performance in the market. The cited
organization is operating well in both qualitative and quantitative terms that make them to
have good profits and revenue in the market. There are some recommendations to the
company that helps them to grow and improve which are as described below:
1. The company must provide the best services to their customers as the company is
declining in the retail market (Stadler, 2018). By providing the best services to the
customers helps them to have the good market share and earn profitability in the
market.
2. By providing the fast services on the websites by using the internet will help them
to have the large number of target market. This will attract the customers to use
the websites in order to have the transactions related to the bank. By this the
company will be having great competitive advantage in the market.
3. They must use the new and innovative technology that helps them to have
increase in the bank accounts of the people (Molyneux, 2021). By having the new
and innovative technology it helps the company to attract the customers in order ti
avail the services in the market.
CONCLUSION
From the above report it is concluded about the market structure of the organization in
which it used to operate in the competitive market. It also includes the market structure that
used to affect the behaviour of the organization in order to achieve competitive advantage.
Further this report has concluded about the meaning of stakeholders, shareholders and

stakeholders analysis. This has also included about the stakeholders analysis process to
identify the company’s stakeholders group. Further in another task it has evaluated about the
external environment for the business. This includes the analysis of PESTLE and porter’s five
forces that helps the company to operate successfully in the market. At last this report has
concluded about the determination of the annual report of the company and recommendations
to the company.