Strategic Management Report: Analysis of HSBC Bank's Strategies

This report offers a strategic analysis of HSBC, a leading UK bank, examining its performance within the financial services industry. The analysis encompasses environmental factors using PESTLE analysis, assessing political, social, economic, technological, environmental, and legal influences. It also includes a resource and competency analysis, employing value chain analysis to identify core competencies and competitive advantages. The report provides recommendations for future development, focusing on cost reduction, improved employee engagement, and strategic market positioning. Ansoff Matrix is used to evaluate growth opportunities. This report provides a comprehensive overview of HSBC's strategic challenges and opportunities.

Strategic Management

Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
STRATEGIC ANALYSIS...............................................................................................................4
Environmental analysis................................................................................................................4
Resource and competency analysis.............................................................................................5
Recommendations for future development..................................................................................6
Ansoff Matrix..............................................................................................................................7
Recommendations........................................................................................................................7
Review of the options (Suitability, Feasibility, Acceptability)...................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
HSBC is the leading bank of United Kingdom providing financial services to the
customers. The company is known for its premium products and services all around the world. It
provides personal banking, insurance, investments, loans, debit card services and various others.
HSBC have increased its business strengths over the time and have raised its market position.
This is due to the fact that company is striking to overgrow its competitors in the international as
well as home market. HSBC is Britain’s greatest banks and have always satisfied both customers
and stakeholders. HSBC has emerged as one of the strongest banker of the country. As it has
evacuated customers needs and assess services to achieve customer satisfaction.
Although, HSBC bank have done exponentially well in banking industry. It is criticized
for its poor strategic decision making as it is not able to curb heavy losses due to low and
dissatisfied earnings. The bank is forced to write off its assets and have closed many business
units in order to get back on profitability. In order to achieve competitive advantage and to
recover its lost business image bank have formulated various strategies. For better opportunities
it is required to grow in international market and to improve global links with new markets.
Development in existing products helps gain customer satisfaction. As customization on services
enable them to purchase more products. Thus it is important to analyze strategic decision and
regular review as to be done to generate effectiveness of these decisions. Moreover bank has
developed its human resource personnel’s by recruiting talented individuals.

INTRODUCTION
Strategic management is the process of formulation and implementation of goals and
objectives created by the top management of the company. It requires a plan which has to be
monitored, analyzed and assessed in order to achieve the set objectives or goals. Management of
strategies consists of assessment of the internal and external environment as well as the resources
available to the company (Schuler, Jackson and Tarique, 2011). HSBC is principal bank of
HSBC holding plc. The bank deals in retail, commercial, global and wealth management. The
company has faced many crises and has proved its strength by evolving itself with strategic
management. In order to tackle different challenges and issues of the company, the management
has formulated various strategies which have been discussed in the research.
STRATEGIC ANALYSIS
HSBC is an established organization but still is facing cute problem of low earnings and
high rate of competition. Other then this losing customer base and retention of employees have
created great challenges for the company (Lasserre, 2012). Recently the management of HSBC
criticized with the rising amount if disappointment it was receiving for low earnings. In order to
do so the management decided to conduct a strategic analysis, in order to generate better
strategies to achieve growth and increase earnings. The analysis consists of a study of the
environment, resources and competition. Strategic analysis on HSBC is conducted after research
on the challenges and issues faced by the company, and then recommended strategies are
developed in order to improve the brand image of the company (Gakovic and Yardley, 2007).
Environmental analysis
Environmental analysis is a tool to identify the fundamentals of the external and the
internal environment affecting a company (Pestle Analysis of HSBC, 2014). The assessment of
the factors of the internal and external environment is done with the help of Pestle analysis.
 Political factors- HSBC has to follow the mandatory regulations to save the interest of
the consumers and society as a whole. The politic parties have levied many rules and
regulation for the banking industry (Gakovic and Yardley, 2007). This affects the
company’s business activity. As HSBC has to make sure no illegal activities like money

laundering or criminal activities are been performed through the bank. The political
factors have affected business in a way that is necessary to abide by these rules in order
effective perform its business prospects in the banking industry.
 Social factors- In order to achieve stability in the market, HSBC have to raise satisfaction
among its consumers. Social trends like consumers taste, their social status, and their
lifestyle are affecting the policies and strategies of the company (Kapferer, 2012). HSBC
have to formulate that its financial and wealth product help improving the standard of
living of the consumers.
 Economic factors- The raising numbers of unemployment and economic fluctuation in
the country have affected the financial stability of the company. Financial crisis have
hampered the revenue and growth of the company (Hill, Jones and Schilling, 2014). The
company is forced to perform business in these fluctuation conditions of the economy.
Factors like interest rate of the central bank, inflation and exchange rates directly affects
the pricing strategies of the company.
 Technological factors- The low rate of technological advances also affects HSBC as it
has to import technology from international countries. Cyber attacks and online frauds
are the major factors that are imposing threat on the consumers as well as the bank (Hitt,
Ireland and Hoskisson, 2012). Protection of consumer data is another major risk issue
that has to take care of by the bank in order to safeguard security interest of the
customers.
 Environmental factors- Company has to make sure that is follows sustainable
development into company’s environment. In order to this HSBC have employed energy
efficient machines into the system and is taking care of the waste management. The
banks have also initiated low carbon energy programs that promote building green
environment for the future generation (Amit and Schoemaker, 2012). In compliance to
follow this, the cost and expenses of the company have increased which further creates
problem for the financial stability of the company.
 Legal factors- HSBC are governed by many legal rules and law. The raising PPI- claims
and protection of payment to the insurer is posing great threat to the brand image of the
company. In order to tackle anti money laundering policies of the legal structure, bank is

forced to employ its time and cost which creates burden for the organization (Swayne,
Duncan and Ginter, 2012). As it is time consuming and costly process for HSBC.
Resource and competency analysis
Value chain analysis is a tool to identify core competencies of the organization and the
activities that can help the company in earning advantages over the competitors. This analysis
also helps in identifying the primary resources required by a company in order to add value to
the services and products to increase customer satisfaction (Eden and Ackermann, 2013). In
order to perform this analysis on HSBC firstly resources are identified which are delivered to the
customers and then strategies are identified which can add value to the services. And then
evaluation is done to understand the right suitable technique for the bank. The analysis is done in
two ways to identify both resources and competitiveness for the company.
Cost Advantage (For analyzing resources) Differentiation Advantage (For competition
analysis)
Step 1: Identification
Business activities of marketing, selling and
providing support to the customers are the primary
activity of HSBC bank (Slack, 2015).
Step 1: Identifying activities that will add value to
customer satisfaction
This is done after identifying and analyzing
resources and activities of the business. In this
HSBC’s management focuses on identifying those
specific activities that are contributing to adding
value (Mellahi and Frynas, 2015). For example, not
only selling insurance policies to the customers will
increase revenue but also marketing them in the
market will increase sales.
Step 2 : Generating importance of each activity
The aim is to identify the total cost of all the
business activity. Cost is calculated based on each
activity to identify the advantages of resources
allocated to each department.
Step 2: Evaluating strategies
In this step, management tries to evaluate strategies
that will improve services and benefits customers
are receiving from the services. For example,
adding features to the products of the bank,
increasing customer support services or
customizing products for premium customers.
Step 3: Identify the cost drivers Step 3: Finding best alternative

Bank also identifies the drivers or factors that
affecting or increasing cost for the company (Stead
and Stead, 2013). For example cost of human
resource personnel will be calculated on the basis
of work hours and etc.
This stage helps the company to identify the
competitive differentiation with its competitor’s
product (Gitsham, 2012). The management can
identify and formulate strategies which will
increase company’s strength in the market .
Step 4: Recognizing links
In this step company tries to link the factors that are
increasing subsequent cot in particular business
activity of the company (Yost, Pylan, Gordon and
Chan, 2012). For instance, increasing work hour of
employees may generate earning but may also
reduce employee’s motivation and that may not be
an ideal situation for the company.
Step 5: Generating opportunities
After final assessment of resources and factors that
are depleting the capabilities of the resources, an
analysis is done to generate opportunities that will
increase the business potential of the company.
This analysis helps the company to review its complete business activity in order to give
a increased level of value t the customer. This value will be more than the total cost of the
service the company has formulated. By calculating cost advantage HSBC eliminates the factors
that may increase the cost of its services (Rushe, 2012). It s also useful in allocating resources for
the firm like appointing human resource personnel to their best capabilities. And by
differentiating company tries to focus on adding value to the specific service that will generate
maximum customer satisfaction. This helps the company to evaluate its capabilities and allow
the bank to achieve competitive advantage over its competitors.
Recommendations for future development
In regard to increase earnings and revenue for the company, bank decided to sell off and
cut back cost from various activities. As per the above analysis, HSBC can reduce the cost of
business activities which is interfering in the revenue aspect of the company. It is necessary to
identify as to what particular resource or activity is affecting the business (Ge, Celikin, Isac and

Guthrie, 2015). As a part of service industry bank needs to control few elements that are
increasing the cost for the company. For example learning and training activities of employees
may be reduced instead of selling off entire value chain activity. Company will have to reframe
its business policies like scaling of business activities. Company can increase scaling in
production of services but will also have to pay attention on the services provided to the quality
of each service (Salazar, Barbosa and Rocha, 2014). This will help the company in gaining
market share from its competitors.
HSBC should try to recruit talented personnel’s who are having great experience in sales.
They will be able to attract customer’s interest in purchasing products of the company. It is
important to hire excellent and talented work force as they represent company’s image in front f
the customers. Another issue was the disengaged communication between departments and
personnel’s. HSBC will have to focus n integrating communication among all its employees.
This will increase employee participation and will motivate to work bette (Kroszner and
Strahan, 2013)r. Employees will also be able to talk freely about the problems and issues they are
facing. Management will be able to understand the loopholes that are disrupting the growth its
personnel’s. And thus measures can be developed in order to increase the output of the company.
HSBC will be able to eliminate all the factors only by analyzing the resources and competitors
strategies and thus will be able to generate competitive advantage among the competitors.
Ansoff Matrix
Ansoff matrix focuses on the present and possible customers and market share. This
further helps in creating growth enabled strategies that will help the company to develop it
business potentials (Cohn, Fehr and Maréchal, 2014). This analysis has four parts which are
described as below-
 Market Penetration- In this case HSBC tries to increase growth in market share with the
help of existing products and services. By concentrating n the current business the
company will be able to increase output and will achieve greater market share.
 Market Development- IN this HSBC tried to increase growth by introducing existing
products in new potential market of international borders (Bushman, 2014). Both home
and international front were in target when expanding business activity.

 Product Development- In this strategy bank tried to develop new products by targeting
existing customers. The company presented developed products and services by
marketing them to the existing customers.
 Diversification- In this strategy company tries to diversify its old business into new
business unit (Gakovic and Yardley, 2007). HSBC have not experimented in
diversification into new business unit instead it has sold off much business division due
to low earnings.
This analysis has helped company to identifying new business strategies to expand and
grow in home and international market as well. It is necessary for the company to grow its
market share in international market in order to gain growth.
Recommendations
In order to achieve competitive advantage and to earn the market share, HSBC must
assess these recommendations into its framework. Thus it is recommended to-
 The company should try to make clients in product which can help the customers
to connect to the company (Our Strategy, 2016). Customization in services will
attract potential consumers and will help the company in improving its network
worldwide.
 Company can try to enter new market of Asia. The bank has great scope in
products like asset management and insurance. By entering into market company
will be able to increase customer traffic.
 Cost saving must be done on areas and activities that do not require expenses.
This will help the company to over its expenses and cater resources towards
building better future and growth (Kapferer, 2012).
 HSBC must try to build its international network and try to position itself in
international trade. This will help the company to grow in revenue and will
market the company to various new markets.
 Marketing is also important for the products to create position in customers.
HSBC has to enhance its marketing activities in order to gain more customer
support (Swayne, Duncan and Ginter, 2012). Marketing will advertise company’s
product thus heavy marketing can be done to gather new customers.

Review of the options (Suitability, Feasibility, Acceptability)
It is necessary to review the strategic options chosen by the company as this will help the
company to ascertain its feasibility, suitability and acceptability in the market. By applying these
recommendation company will able to cut back cost and will increase performance its potential
business unit (Schuler, Jackson and Tarique, 2011). HSBC will be able to achieve its objectives
to attain customer satisfaction. These strategies are suitable as they will let the bank reach greater
economies of scale. These strategies will have the company in achieving competitive advantages
which will improve company’s strategic position.
HSBC is in the position to achieve these targets and strategies. These policies are feasible
to the bank’s business prospects and growth. Company has greater potentials in terms of trained
staff, time and money to implement these decisions into its business. Furthermore these
resources can e developed and altered as per the demand of time and environment. The strategy
will be fruitful and acceptable to the various stakeholders (Mellahi and Frynas, 2015). As it will
gain good return on the investments and the risk factors in implementing these strategies is low
thus it will be achievable as well. By applying these strategies to the business, company will
achieve growth and market share as well new potential customers. Thus it can be said that these
strategies are feasible, suitable and acceptable to the business activity.

CONCLUSION
From the above research it can be said that it is important for the bank to formulate new
strategies to curb the issues and challenges faced by the firm. HSBC have evolved over the
period of time and have gained brand image among the customers. It was also identified from the
research that HSBC is facing many issues which is affecting its brand image in the market.
Strategic management allows the company to formulate new decision in order to gain
competitive advantage and market share. From the above analysis it can be said that company
must understand to use these into strategic decision in order to identify the effectiveness of the
strategies. It can be said that strategic management plays a vital role in achieving targets and
objectives for the bank.

REFERENCES
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Online
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