Comprehensive Analysis of HSBC's Business Environment & KPIs

This report provides a comprehensive analysis of HSBC's business environment, examining its market structure, stakeholder relationships, and the various factors influencing its operations. The report identifies HSBC's market structure, highlighting its advantages, and defines stakeholders, shareholders, and stakeholder analysis, evaluating their needs and influence. It undertakes a business environment analysis using tools like PESTLE and Porter’s Five Forces to identify critical issues facing HSBC in both domestic and international markets. Furthermore, the report evaluates the development of the business through key performance indicators, offering recommendations for improvements in short-term and long-term performance. The analysis considers political, economic, social, technological, environmental, and legal factors affecting HSBC's operations, along with competitive forces, to provide a holistic understanding of the challenges and opportunities the company faces.

UNDERSTANDING THE
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1.......................................................................................................................................3
Market structure of HSBC...........................................................................................................3
Advantages of Market structure of HSBC...................................................................................4
TASK 2.......................................................................................................................................5
Defining the stakeholder, shareholder and stakeholder analysis.................................................5
TASK 3.......................................................................................................................................6
Business environment analysis of HSBC in domestic and international market.........................6
HSBC using tools and models for identifying all the factors affecting the business
environment.................................................................................................................................7
TASK 4.......................................................................................................................................9
Evaluating development of the business through key performance indicators...........................9
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
All the internal and external factors that affecting the company’s environment directly or
indirectly are factors of business environment (Nashiruddin, M.I., 2018). The affect of the factors
decides the successfull operation of the company because business environment factors controls
all the functioning of the company. Business environment is includes all the competitors,
stakeholders, suppliers, social, cultural and other economic factors that affects the company’s
environment. HSBC is personal and online banking company and providing its financial services
internationally with worldwide branches. This report will include identification of market
structure under which the organisation operates and affects the behaviour of an organisation.
Furthermore, discussion on stakeholder, shareholder and stakeholder analysis and evaluate their
needs and influence. Undertaking a business environment analysis with use of PESTLE and
Porter’s five forces and identify critical issues facing the organisation both in domestic and
international market environment. Evaluate the development of the business with reference to
short term and long term performances and recommendations for improvements.
MAIN BODY
TASK 1
Market structure of HSBC
HSBC is a British multinational universal bank and financial service holding company and
is the second largest bank in Europe. The majority of banks revenue comes from the Asia region
and most of its profits comes from the units which are credit and lending, global trade,
receivables finance, insurance and investments. This company is facing a lot of legal factors that
are affecting its This company provides global banking and markets worldwide and providing
financial services and products to the Government and various financial institutions
internationally (Cepel, M., 2019). The market structure of this company use various marketing
strategies to increase its profits in the target market because presently it has approx 40 million
customers worldwide and its market share is increasing from past years due systematic use of
market structures. HSBC is providing various carrier opportunity to every area of its operation
due to more customers and marketing the products and services worldwide. It is the largest bank
in the world and has complete monopoly on its services and the products and its market structure

depends upon the objectives and procedures for doing the work (Maghfuriyah, 2019). Due its
developed and professional market structure it gaining a lot of importance of the customers and
increasing its productivity every year. This company is following the structure which is:
Matrix organisational structure
This is the structure that is followed by the HSBC because in this structure one team or
employee has multiple leaders and one leader can handle any department or can encourage any
team of his choice for making efficiency and productivity in the performances (Auchter, 2018).
In this structure the decisions are taken in front of everyone so that more innovative ideas and
thoughts can be developed and make its employees to feel motivated and confident in doing the
work with full efforts. In this structure there are two types of manager functional managers and
project manager and they both can perform their functions on more than one team. This structure
helps HSBC to develop its employees skill so that they can perform any work when there is a
need by involving them in al type of discussion. The manager of the team has the most authority
and create great clarity in the works for efficiency in the work.
Advantages of Market structure of HSBC
 This structure helps in clear objectives with clarity in works so that every team member
works with full efforts.
 This structure involves open communication so that every employee feel motivated while
doing the work with full efforts and with full confidence (Hodaei, 2020).
 Increase the efficiency of the use of resources because if the goals are clear and the duties
are clear then there will be no wastages of any resources.
 It develops coordination and collaborations in the team due to free flow of thoughts and
ideas and one team is free to communicate with other departments.
 Employee develops new skills due to interdepartmental communication and giving
trainings to all the employees in the departments to get experts in every field of the
business (Leonidou and et.al., 2020).
 HSBC has skilled and experienced team leaders and managers or they putting right kind
of peoples at the right place in an organisations for more productivity in the work.
 Due to free flow of work and thoughts or ideas the work can be done smoothly without
any conflicts in the team and increase the flexibility of the work.

TASK 2
Defining the stakeholder, shareholder and stakeholder analysis
Stakeholders are the person who are interested in the company decision making and profits
they are suppliers, customers, investors, financial institution etc. Some stakeholders have large
affects on the decision making of the company and some have little depends upon the position of
the stakeholders (Serravalle, and et.al., 2019). The stakeholders are interested in company’s
working and operation because they have some stake in the company stakeholders can be
internal or external persons of the company like owner, employees, directors etc are the internal
stakeholders and creditors, Government, customers and suppliers are the external stakeholders.
On the other hand Shareholders are different from stakeholders because they are the owner of
the shares they have invested in the company (Tang, 2020). The shareholders can be stakeholders
but the stakeholders cannot be shareholders, shareholders are who invest his money in the
company and bear the loss if any and also gain profits if any their decision can also affects the
company’s operations.
Stakeholder analysis is done by HSBC whenever a new projects comes those people who
are involve or affected by this project are the stakeholders and the company identifies these
stakeholders (Pan, 2019). This company group this stakeholders on the category of how their
decision can affect the projects for example the if the stakeholders has great level of participation
and influence on the project the team of HSBC identifies the stakeholders and group them
according to their need and importance in the projects.

The team of HSBC do the stakeholder analysis with help of a graph in which on the Y-axis
the power of stakeholder is determined and the X-axis interest of the stakeholder is determined
which are as follow:
 Keep satisfied: In this group the they are the people who need to be satisfied for earning
good revenue and their decisions can affect the revenue of the HSBC. They are basically
the owner, director or promoters of the company who is controlling all the activities and
providing a lot of services to the company (Friedler, 2021). So the HSBC need to
satisfied them and give the authority to the correct people so that the right decisions can
be taken for earning more revenue. Managed closely: They are the creditors or investors of the company who invest in the
company and the company need to inform them correct information about the companies
working so at the times of need they can help the company by investing their money
(Veer, and et.al., 2021). Monitor: They are the low interest and low power people who have little affect on the
working of the company. They are the investors and concerned about the return on the
investment they have in the company (Qiu, 2020). HSBC is providing minimum
information that is needed related to the policies and working of the business. Keep informed: They are the group of customers have interest in the company progress
and HSBC is keep informing them about the working and progress of the company (Irfan,
and et.al., 2019).
Thus, Grouping the stakeholders according to the interest and power in the company the
company decides its strategies or plans with communicating effectively with various
stakeholders for more productivity in the decisions or projects. With the help of various
stakeholders the company can take effective decisions in the guidance of this stakeholders for
efficiency in decision making process.
TASK 3
Business environment analysis of HSBC in domestic and international market
Business environment analysis are done by the company for analysing all the factors like
political, social , economical, cultural, rivalry that affects the company’s operations both
internally and externally (Malak-Rawlikowska, 2019) . The HSBC is using various tools or

models for analysing the factors that are becoming obstacle and hurdles in the successful
performances of the company. HSBC has worldwide operation and the business environment is
affecting its domestic as well as international market. Every activity of the company or little
change in any legal or economic law will affects the performances of the company’s. HSBC is
using the business environment analysis for forecasting or gathering various information from
the market and factors that can harm the revenue of the company in advance and finding
solutions for protecting its profits and company’s environment. Any technological change or
competition in the market will affect the performances of the company because they will attract
more customers.
HSBC using tools and models for identifying all the factors affecting the business environment
PESTEL analysis
This analysis is used by the HSBC for identifying all the macro environmental factors
that are affecting the company’s performances by expert or research and development team of
the company. The macro environment affects the company environment on large rates and have
more impact that is why this company is using this tool for analysing all the factors which are:
 Political factors: They are the Government intervenes in the economy because anay
change in the policy by the government like increasing the import and export taxes,
excise duties etc or various labour law may affect the company’s environment both
domestic and international because HSBC is dealing in services and products worldwide
it has follow all the regulation of different government of each target markets for
successful operation.
 Economic factors: Any changes in the wages or employment policy by the Government
or inflation or deflation in the market affects the company because if the customers are
having low salaries will not buy those products and services which are beyond their limits
(Gago-Rodríguez, 2021). So the company has to plan all the strategies according to
different areas about their services and products.
 Social factors: They are the cultural factors or individual behaviours that can affect the
purchasing and sells of the company. The buying of the customers totally depend upon its
family size, religion, habits of the consumers. So the company has to advertised its
products to attract more number of customers.

 Legal factors: The government levy many laws like trade policy , public transportations
and any illegal activity by the company are all Governed by the central authority and
effects the company because the company has to give higher taxes on higher profits
according to the profit margin law. The company need to check all the pros and cons that
can happen in the future for safeguard its business environment.
 Technological factors: Due to new technologies or increasing use of e-commerce the
company which are having low budget and using old fashion machines and methods of
marketing and producing products are facing huge difficulties. So this company need to
remain updated when every new technology comes the research and development of this
company is forecasting all the ways and methods that will help the company to reduce its
cost with increase productivity and profits.
 Environmental factors: The environmental like pollution, natural calamities,
earthquakes, droughts which are uncertain and completely destroy the company’s
operation due its worldwide branches. The company need to take of its environment and
indulge in those activities which protects the environment like using biodegradable
products etc. HSBC due to big brand and reputation is involving those activities like
planting trees, reducing the pollution by using non pollutant machines and protecting the
customers morale by fulfilling all the social responsibility.
Porter’s Five Forces
This model is used by the HSBC to know its market conditions like all the rivalry,
competition, new entry or substitutions which are affecting the company’s business environment
and finding ways to overcome from this factors. The factors are: Threat of new entry: Every new entry in the market of new entity with advance products
and low cost or low prices will attract more customers. This new entity affects the
working of HSBC because every new entity will come up with new ideas of producing
the product with low cost technologies and creates problems for the other company’ s
with old fashion tools (Bortoluzzi, 2021). Threat of substitution: Available of more substitutes creates more problems because if
the same products with similar features and taste and low price are offered by different
company’s create threat because customers will buy those products which has same

features with low cost. The HSBC need to maintain its features in a way that there are no
substitutes available to others.
 Bargaining power of suppliers: If the suppliers increase the price and reduce the quality
of the products then the supplier has more power due large number of customers and less
substitutes and it is beneficial for the company to increase or decrease its price according
to the profit margins (Das Nair, 2018). If the supplier power is less then the company
need to change its product quality and decrease its price to attract the customers. Bargaining power of buyers: If the company has limited number of buyer due to more
substitutes of products and services available in the market the it become difficult for the
company to increase the prices and the company has to adjust according to its customers
demand. If the company has high buyer power the it directly affects the revenue of the
company due to loose of its customers.
 Competitive rivalries: This factor need to be consider by every company because due to
increasing demand and growth of customers the competition also increasing on vast rates.
So HSBC need to evaluate its target markets domestically or internationally so that it can
get to know its prevailing market and find strategies to cope up with the rivals (Keeler,
and et.al., 2019). The company should observe all the methods and strategies that the
rivals are using and should adopt those for attracting more number of customers.
TASK 4
Evaluating development of the business through key performance indicators
KEY PERFORMANCE INDICATORS
Financial Metrics
Cash balance 403018 million
Market share 6.75%
Reported revenue 6,484
Net interest margin 2.05
Return on equity 8.3%
Customer Metrics
Client Satisfaction score 7/10
Cost efficiency ratio 56.5

Loans and advances 1045814 million
Process Performance
Total assets 252,275
Total capital ratio 21.3
Sales per Branch 83.42 million
Thus from the above metrics it can be said that HSBC is reported revenue for year 2019
to 2020 is good and the net margin also increasing with the increasing cash balance. HSBC is
performing well from the past years and achieving its short term and long term goals. From the
above metrics it also clear that with the increase in the cash balance that means more number of
customers are attracted towards the services of this bank and still increasing on rapid rate. The
total assets also increasing that means the company is investing well enough in its resources with
low cost due to less depreciation cost from the last 2 years. From the process performances the
sales per branch is also increasing that means the each branch is regulating good organisational
structure in which the employees are working with good efforts and highly motivated. The
organisational structure has great power in deciding the success of the company’s short term and
long term goals and HSBC is maintain its place in the market at all branches with good
organisational structure.
Furthermore, the capital ratio of the company is also increased which is needed for
achieving the long term goals of the company in the future and HSBC is successful in achieving
it and Growth of the business. It is clearly shown from the customer metrics that increase in
loans and advances means people are interested in the services of the bank and taking loans at
huge rate and the rate of loans also increasing from the past five years. However Increase in cash
balance means the company has to pay more tax and profit margins to the Government which
leads to decrease in the Profits of the firm. Also the increase in loans and advances has
decreased the cash availability of the firm and reduced savings of the firm which will lead to less
loans in the future. The Metrics of this company is good for the present situation but for the
future growth it has to plan various strategies to stabilize its positions in the market with future
plans and strategies.
Recommendations for the improvements in future

From the above metrics it is clear that the bank is achieving all its Short term goals
presently but it is recommend that in the future it has to improve its long term goals to remain
competitive in the present world like increasing rate of interest to earn higher returns for savings
in the future. The HSBC need to expand its business like opening new branches where there is no
banking services are available like the rural areas of the world. Improving various services like
customer care services to build the customers confidence towards the bank. Further, it is also
recommend that the team of HSBC need to monitor all the marketing or advertising of the firm
and provide true and valid online platforms for the customers. This company should invest more
in the research and development techniques so that the proper forecasting of the market
conditions and the factors can be studies and various strategies are taken to protect the long term
goals.

CONCLUSION
From the above report it has been concluded that understanding the business environment is
important because all the factors can affects the company’s operations. HSBC is successful in
achieving the business goals by using the best market structure for its company and its affects in
the long run. Furthermore, it has been concluded that stakeholder and shareholder affects the
decisions of the company and has influence in the business operation of the company’s working.
HSBC is carefully giving importance to the shareholders and stakeholders by proper
investigating the interest and power of them. It also has been concluded that HSBC is using
various business environmental tools and methods like PESTEL or Porter’s analysis to know its
macro and micro environmental factors and their affects on the working of this factors. Lastly, it
is concluded from the report that key performance indicators shows all the factors which
influence the performances of the business in the short and long term goals and various
suggestions are being discussed for the improvements of performances in the future.