Comprehensive Analysis of HSBC's Business Environment & Performance

This report provides a comprehensive analysis of HSBC's business environment, encompassing its market structure, stakeholder relationships, and the impact of various internal and external factors. It identifies HSBC as a capital market public limited company operating under a matrix organizational structure, highlighting the advantages of this structure in fostering open communication and efficiency. The report defines stakeholders and shareholders, conducting a stakeholder analysis to prioritize key groups and their influence. Furthermore, it undertakes a business environment analysis using PESTEL and Porter's Five Forces models to identify critical issues facing HSBC in both domestic and international markets, examining political, economic, social, technological, environmental, and legal factors. Finally, the report evaluates HSBC's development through key performance indicators, offering recommendations for improvements in short-term and long-term performance. Desklib offers similar solved assignments for students.

Understanding the Business
Environment

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Market structure of HSBC...........................................................................................................4
Advantages of Market structure of HSBC...................................................................................5
TASK 2............................................................................................................................................6
Defining the stakeholder, shareholder and stakeholder analysis.................................................6
Business environment analysis of HSBC in domestic and international market.........................7
HSBC using tools and models for identifying all the factors affecting the business
environment
TASK 3
Business environment analysis of HSBC in domestic and international market
HSBC using tools and models for identifying all the factors affecting the business environment
.........................................................................................................................................................8
TASK 4.........................................................................................................................................10
Evaluating development of the business through key performance indicators.........................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is sum of all the factors that affecting the company’s environment
internally and externally. The business environment of the company decides the ability of the
firm to be successful in the future because it directly affects the company’s internal and external
environment (Möller, 2020). HSBC is an international financial service company of United
Kingdom dealing its services worldwide. This report will include identification of the market
structure under which the organisation operates and how it affects the behaviour of the
organisation. Furthermore, stakeholder analysis and their need and influence on the chosen
organisation. Moreover, undertaking of business environment analysis using appropriate
business analysis tools/frameworks to identify critical issues facing the organisation both in the
domestic and international market. Identification and explanation of PESTEL and PORTER five
forces and their affect on business micro and macro environment. Lastly, evaluating the
development of the business with short-term and long-term performances and recommendations
for improvements.
MAIN BODY
TASK 1
Market structure of HSBC
HSBC is a capital market public limited company offering service in investment banking,
infrastructure and real estate etc. This company is providing its services like personal banking,
global banking, commercial banking with 40 million customers through global businesses
(Maghfuriyah, 2019). The market structure of this company oversee all the market operations in
the target market for attracting more number of customers and developing many strategies to
increase the productivity of work through this structures. The market structure of this company
defines the organisational objective and procedures for doing the work for organisational
success. This company is providing financial services and products to corporate, Governments
and institutional worldwide. This company is offering various types of career opportunities in
areas including banking and market operations etc. It also has increased its market share from
past two years. This company is following the structure which is:
Matrix organizational structure

This structure is followed by HSBC in which teams of the company report to multiple
leaders this structure provides open communication between the team members and the leaders
for more innovative ideas and thoughts. This structure is the combination of product based and
functional structure and each employee is assigned clear roles and duties according to their
capability (Anning-Dorson, 2018). This structure is also called grid structure in which each
employee will have to report more than one leader and this structure has multiple chain of
demand. This structure is followed where the company is dealing in large operation with limited
resources and want to increase the productivity or efficiency of the company. The employees of
the company are more crystal clear about the thoughts and work with no complexity in task due
to guidance of more than one leader. The leaders of this company are encouraging and giving
proper command for clarity in works and leads to more efficiency in their work.
Advantages of Market structure of HSBC
 HSBC leaders and managers are using both the formal channels or vertical or horizontal
channel of control or command for ensuring the work is done smoothly.
 The team members answer to the leaders and the leader then answer to the immediate
manager and so on to maintain the complete chain of control and command (Syazali,
2019).
 The leaders sometimes manage the other departments of an organisation to give them the
knowledge of different fields or working for effectiveness in the work.
 Sometimes the team members also share their ideas to other departments due to open
communication and discussion in the company for more innovative solutions and ideas
for creativity in the services or products.
 The Managers and leaders are putting right kind of peoples at right place for more efforts
and accuracy in the work.
 Due to open discussion and involving the employees in decision making the employees
are working with full motivation and full efforts (Pan, 2019).
 This helps the company to collaborate the different departments for more efficiency in
work and reducing the complexity of work.

 For shifting the employees from one departments and following both vertical and
horizontal channels the employees can learn new skills and knowledge for future
advancements.
TASK 2
Defining the stakeholder, shareholder and stakeholder analysis
Stakeholder in any company is one that is interested within the company working and its
operations. Also, the opinions of the stakeholders in any organization might affect the decisions
of the company on the large level (Hamilton and Webster, 2018). Furthermore, stakeholders
comprises the customers, employers and suppliers and much more that have different expectation
for the organization. On the other hand the shareholders are considered the owners of certain
shares of company that are expected to have some part of share on returns based on the profit
that is earned by the company.
Stakeholder analysis is one that is undertaken by the top management of the company to
identify, assess and prioritize people that would affect the business or project of the firm.
Moreover, it is very important to analyse such stakeholders before only so that according to it
various decisions with the workplace might be taken in best of manner (You and et.al., 2019).
Also, It is process where the appointed team in HSBC would identify certain key stakeholders,
prioritize them on the importance and analyse the needs of such groups associated with the
organization. Moreover, Stakeholder analysis is basically one that is depicts power on the y-axis
and the interest on the x-axis where each stakeholder is grouped based on four categories which
are as follows:
Keep satisfied: These are the group of people need to be keep satisfied with working of
the business and comprises mainly promoters or owners of HSBC that are providing variety of

services to the organization (Flew and et.al., 2021.). Also, these are the ones that affects the
revenues of the business and hence HSBC need to make sure that owners of the company make
the right decision that will generate revenues in the future.
Managed closely: These are creditors of HSBC in the market and hence these need to be
managed in most effective manner through providing the relevant information relating to the
business. Moreover, these help the business to grow in most efficient manner and allow firm to
earn profits in systematic manner.
Monitor: These are the group of people that have low interest and low power within the
business and consist of the investors that are only concern with having the best returns on the
amount that is invested in the business (Cyphert and et.al., 2019). Moreover, minimum efforts
need to be put in so that basic knowledge relating HSBC working and policies might be
provided.
Keep informed: This part in stakeholder analysis consists of group of people that need
be kept informed for longer time period and are very interest in knowing about the progress of
the business. It is HSBC customers where the needs to them have to identified fully.
Thus, through categorizing the people that are associated with HSBC bank the firm
would be able to gain competitive advantage and remain in top position while operating in
various regions (Cugova and Cug, 2020.). Moreover, through such analysis HSBC would be able
to make strategic plans and develop policies through establishing effective communication with
various stakeholders. However, this analysis might not be proved effective to HSBC when other
external and internal factors that are affecting the business are not taken into consideration in
long run.
TASK 3
Business environment analysis of HSBC in domestic and international market
Business environment analysis are done by the company for analysing the factors, trends,
issues that are not under the control of the company hand. This are the internal and external
factors that affects the company environment like legal, political, environmental etc and it has to
be forecast early to find out various ways for solving this issues (Tsindeliani, 2021). HSBC is
dealing its business worldwide and all the areas legal , political or social environment are not the
same or any change in any factors will affects the company’s operation like if there is a change

in the economic conditions of UK like change in employment rate, change in taxes or any
inflation or deflation will directly affects the revenue of the company. This company is providing
loans in many areas and if this company charge high interest then it will loose its customers etc.
HSBC using tools and models for identifying all the factors affecting the business environment
PESTEL Analysis
This analysis the HSBC is using for determining its macro environments factors that
affecting the company ability of performances. The marketers and the manger or specialist of
this company is analysing or monitoring all the outside factors that are affecting the company’s
performances. The external factors which are affecting the HSBC environment are: Political factors: They are the factors which are affecting the company’s performances
due to any changes in government policies, any increase in foreign trade policies, labour
law, trading activities etc change in any of the policies will directly affects the company’s
environment (Kravtsov, 2020). If the employment in any country or area decreases or
increase it has direct impact on the working of the company. Economic factors: This are the factors like any change in the interest rates, wages, tax
rates etc affects the company’s profit like if the company charges high interest rates on
loans then it will loose its customers (Yang, 2019). If the wages or salaries of the
consumer decreases then the consumer will pay less and it directly affects the company’s
profits.
 Social factors: Various social factors like affecting the HSBC consumers educational
level, their behaviours, habits, family size, cultural differences affects the business
environment of the company. If the person is educated then they will be having no doubt
in understanding the company’s law and procedures and company need not advertise its
services and products more. If the consumers are using their old habits of adopting
services then they will not allow themselves for using the new schemes and products due
to old habits this creates problem in launching new services and products. Technological factors: They are the factors like using new methods and tools for earning
more profits with less cost. The competitors are using new technologies or innovative
style of doing the work with gaining importance of customers. The rival company’s are

using various technical methods and investing in research and developments for
attracting more number of customers and creates threat to the other companies. Environmental factors: They are the factors which are not the control of any one they
produced naturally and like climate changes, floods, pollution by the companies, are
affecting directly health of all the consumers. They are uncertain in nature and a=can
destroy the business environment with huge losses. Legal factors: They are laws which every company need to obey dealing in business
globally like consumer protection laws, equality law, remuneration laws etc which ahve
to be followed imposed by The Government any change in any of the policy or law have
directly affect on the working of the business.
The company need to monitor all this external factors for efficiency and effectiveness in
the performances and need to do deep research in the target market for planning strategies for the
future.
Porter’s Five Forces Model
This analysis used by the HSBC to identify the competitive forces prevailing in the
market like rivals, new market entry, threat of substitutions and huge competition in the market
globally. The five forces that affect the business environment of the company are: Threat of new entry: The new entry of rivals with new technologies with similar services
with low cost then the HSBC will be affected due to the customers will attract to those
products and services which have same advantages with low prices. The company need to
protect its services by providing all the customer care services for stability of it
customers. Threat of substitution: More the substitutes available to the customers more will be the
danger for the company because customer will buy those services and products which has
low cost with same features and affects the profits of the HSBC. This company has to
maintain its business by using more advance and unique features in its services so that the
customers can enjoy the services and does not switch to other services. Bargaining power of suppliers: This is the same as of buyer power like if supplier of the
company HSBC is less than the customers have no alternative options for switching to
cheap products and if the suppliers are more than the customers will go to those area
where they get the services which are cheap (Bruijl, 2018). The company need to

manage its suppliers for maintaining its customers. If the bargaining power of the
company is strong then the company can adjust its price or quality according to its need
because it has sole power or monopolistic market for its services and products. Bargaining power of buyers: If the number of buyer is low then the supplier or if the
company has limited buyer due to its brand then the buyer can change the company’s
operation because if the buyer switch to the competitors then it will create huge lose to
HSBC. So this company need to increase its number of buyer by developing various
strategies and plans to attract more number of customers and need to increase its business
in vast areas to increase its number of customers.
 Competitive rivalries: This is the most important factor that is affecting every company’s
operations like if the HSBC has more number of customers then it will become difficult
to operate in an environment due to high competitions. The company need to do a deep
research and domestically and internationally the competitors prices, products, services
and methods of producing etc (Khurram, 2020) so that it can plan strategies for producing
its products or services by reducing the cost of interest, advertising more, or giving
various discounts etc. to attract more number of customers.
TASK 4
Evaluating development of the business through key performance indicators
KEY PERFORMANCE INDICATORS
Financial Metrics
Cash balance 403018 million
Shareholder equity 198250
Operating profit 14693
Return on equity 8.3%
Customer Metrics
Client Satisfaction score 6/10
Customer accounts 1710574

Loans and advances 1045814 million
Process Performance
Deposits in bank 101152 million
Operating profit per employee 1.96 million
Sales per Branch 83.42 million
Thus from the above metrics it can be said that HSBC has performed well over the years
and it is still aiming to have better result in achieving certain short and long term objectives.
Furthermore, through the above metrics it can be clearly seen that HSBC cash balance had been
increased by 32% from 2020 which means that more people are interested in the services of the
HSBC and the firm is able to achieved certain short term objectives (HSBC annual reports and
accounts, 2022). Also, there is vast change in the net operating profits and shareholders equity
that clearly proofs that more people have seen that bank future bright and is ready to remain
associated with HSBC for the prolonged period. Moreover, increased in customer accounts by
4% and the deposits by 23% from year 2020 to 2021 shows that cited bank is on the path of
achieving certain long term objectives and is interested in expanding into newer regions through
diversifying it services and is successful in attracting more number of customers for the business
than the rest competitors that are operating within the market.
Also, the annual report of HSBC had clearly shown that loans and advances to people by
the bank have also increased which means that people are interested in consuming the services of
the bank (Shukla and Pattnaik, 2019). However, such increase in loans and advances means that
economy have fewer savings which in turn would decrease the returns to the bank in the future.
Moreover, key performance indicators of any business is the total amount of liabilities and in
current case of the HSBC it can be said that liabilities have been decreased by 2% in year 2021.
Also, this means that current growth of the company is good and balanced as it is able to have
enough funds that might be used in other investment activities but such growth need to be
maintained by bank so that maximum returns are derived. Furthermore, in spite of current growth
there are certain recommendation that need to be followed by HSBC so that long term
performance in operations might be improved.

Hence, it is recommanded to HSBC to introduce various new services within the bank
so that additional benefits might be provided to the existing and new bank customers (Flodén,
and Woxenius, 2021). Also, it is suggested to the quoted firm to open new branches in the rural
areas so that people who do not have bank facility might be easily able to open up new accounts
within that areas and avail various services. Furthermore, it is recommanded to the firm that it
should closely monitor the online bank app services and make certain changes whenever
required on timely manner so that customers do not find difficulties in inquiring about any bank
details or are have queries relating to not being able to operate their respective bank accounts.