HSBC Strategy: External Analysis, Internal Factors & Management Plan

This report provides a comprehensive analysis of HSBC's business strategy, focusing on the impact of external and internal factors. It utilizes the PESTLE framework to assess political, economic, social, technological, legal, and environmental influences on HSBC's strategies. The report critically evaluates internal factors using the VRIO framework to determine the value, rareness, imitability, and organization of HSBC's resources. Porter's Five Forces model is applied to evaluate the competitive forces within the banking industry. The analysis culminates in the production of a strategic management plan, outlining recommendations for HSBC to enhance its competitive position and address challenges such as money laundering and the impact of COVID-19. The report emphasizes the importance of adapting to changing market conditions and leveraging internal strengths to achieve organizational goals.

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
PESTLE analyses( Impact of external factors on strategies of organisation).............................3
Critical evaluation related to the impact of internal factors .......................................................6
Application of porter's five force model to evaluate competitive force......................................9
Application of range of theories, concepts and models............................................................11
Producing strategic management plan......................................................................................13
Conclusion.....................................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
Business strategy refers to the set of actions, plans and goals which reflects that how the
management of the organisation deal in market with their products and services. Business
strategy provides direction to the employees and also to the managers towards the achievement
of organisational goals and objectives in the organisation. It is very important for the
management of the organisation that they develop effective strategies for their business so that
the number of threats can be minimised from the organisation. The development of strategy is
one of the important and critical function of the organisation which the managers need to have
number of capabilities to develop the same. Effective strategies of business increases the chances
of success in the market which provides extensive motivation to the management. The
communication of business strategy to all the employees and the organisation are very important
because if the employees are not aware about the strategies, then the possibility of their
performance are not possible. This report is based on HSBC which is one of banking
multinational organisation. This report reflects different aspect which is required for strategic
change in the organisation. The management of HSBC faced number of problems in relation to
money laundering and many more. This report provides brief discussion related to impact of
external factors on development of new strategy by management of HSBC. It also reflects
number of frameworks which provides impacts of internal weaknesses and capabilities on the
management of the organisation. This report reflects description related to porter five forces to
determine competitive advantage for the organisation. In last it provides description related to
strategic management plan which enables the organisation to operate their business in effective
and valuable manner.
TASK
PESTLE analyses( Impact of external factors on strategies of organisation)
It is related to those strategic framework which reflects the impact of different external factors on
the business of the organisation. It is one of the valuable framework which helps the organisation
to develop effective strategies in the organisation (HSBC PESTEL & Environment analysis,
2021). The management of HSBC faced different types of problems which disables the
organisation to conduct their business in effective manner. It is very important for management
of HSBC to change the strategies of their business which enables them to solve these problems

in effective manner. The analyses of impact of external factors are very important for the
management because it protects the organisation from negative impacts of strategy failure.
Illustration 1: Pestle analyses
Political It is related to those factor of PESTLE analyses which reflects the impact of
government measures and olicies of the organisation. One of the biggest factor which is required
to be examined for the development of strategy is political uncertainty (Aldea, Iacob and Quartel,
2018). The government of United Kingdom to take exit from European Union Under Brexit. The
business organisations of United kingdom faced number of problems to operate their business in
different nations of Europe. It is very important for the managers of HSBC to analyse the
impacts of Brexit because it helps them to establish effective business strategy for European
Union.
Economical
There are different types of economic factors are present in the market such as inflation,
deflation, unemployment, growth rate and many more (Anderson, 2019). These factors are
present outside the organisation but are having extensive impact on the business of organisation.
The economic factor is one of the most important factor for banking industry. All the economic
factors such as gross domestic product, inflation and unemployment reflects negative growth in
the market due to COVID-19 pandemic. There are many companies are present in the market
under which all their business structure becomes collapse due to COVID-19. The management of

HSBC need to determine this factor because the rate of GDP and economic growth seriously
impacts bank rates.
Social
The concerned factor of PESTLE analyses deals with the impact of social values and belief on
the business of the organisation. Consumer behaviour is one of the valuable aspect of social
factor which is required to be examined by the company (Bıçakcıoğlu-Peynirci and Tanyeri
2020). Consumer behaviour reflects the needs and desire of consumer from the products and
services. It is very important for the management of HSBC to evaluate the behaviour of their
customers. It is important for HSBC to evaluate the behaviour of customers which helps them to
develop new strategies for business.
Technological
This factor of the PESTLE analyses deals with the impacts of technological advancement
on the business of the organisation. As new and advance technology are developed in market on
regular basis which simplified the organisation's work and functions. The problems faced by
management of HSBC required modern technological support which enables them to solve in
effective manner. It is important for the managers of HSBC to employed effective strategies in
their organisation which helps them to operate their business in effective manner.
Legal
The government of United Kingdom are very productive and aware towards the business
sector of the country. There are number of rules and regulations are developed by judiciary of
respected state so that all the businesses can be run smoothly without any disputes. These laws
are intellectual property laws, employment laws and many more (Braun, M., Latham and
Cannatelli, 2019). It is very important for the management of HSBC to follow these rules so that
the development of strategy can be made effectively in the organisation. The management of
organisation need to analyse the laws of different countries because of multiple place of
business.
Environmental
As the world is facing number of issues and pandemics which ruined the life style of public. One
of the important reasons for these problems is the negative approach of people towards the
nature. The government of respected states developed number of laws and rules for the
protection of environment from malpractices of business organisations. It is very important for

the management of HSBC bank that they develop different types of environment activities which
makes the organisation environment friendly
SWOT analyses of HSBC
Strength Weakness
 The financial position of HSBC is one
of the important strength of company.
 The dividend record of company are
very positive which attracts the
customers towards the company.
 The management of company acquire
number of firms which makes them
more competitive in the market.
 The customer experience of company
are not up to the mark which disables
the organisation to develop new
strategies for business.
 The management of HSBC faced
number of legal suits due to money
laundering obligations.
Opportunity Threats
 The government of China opened their
capital market which opens many
opportunities in the market.
 The management of company changes
their senior leadership which becomes
favourable for the company.
 There are number of financial crimes
are present in the market which
becomes great threat for the company.
 The negative outcomes of covid
pandemic becomes threats for business
organisation (SWOT Analysis, 2022).
Critical evaluation related to the impact of internal factors
The analyses of internal capabilities and skills are very important for the organisation if they
wanted to develop effective strategies for their business. The problems faced by HSBC in their
business required strategic changes so the analyses of internal factors helps the company to
operate their business in effective manner (Galletta, Mazzù and Naciti, 2021).
VRIO analyses of HSBC
It is related to those strategic framework under which different resources of the company are
examined to make considerable justification whether they are helpful for competitive advantage
or not. Under this analyses of the organisation resources are examined on the basis of four
factors such as valuable rare imitable and organisation. The management of HSBC operates their

business in banking sector under which the analyses of resources are very important because it
enables the management to develop effective strategies in the organisation.
Valuable
 The management of HSBC operates their business in many countries since many years. It
helps the organisation to earns huge revenue which strengthen their financial resources.
The present discussion reflects that the financial resources of the company are highly
valuable (Hsu, Moore and Neubaum, 2018).
 The human resource department of the company uses effective approach for the selection
and training of employees. This approach of the organisation helps the employees to
develop number of skills and capabilities which makes them valuable for the company.
 The marketing channels of HSBC are developed in such a way that the information about
the services of the company reached large number of customers. It helps the organisation
to gain competitive advantage over the others which makes them valuable for the
company.
 The research and development department of the organisation are valuable for the
company as the cost incurred by the company are more than the returns provided by the
department in term of innovation and research.
Rare
 The financial position of HSBC are positive and strong which enables the organisation to
operate their business in effective manner. The financial position of company are very
rare because not all the companies have the same.
 The effective employees working for the organisation are not rare because any
organisation can develop effective employees in their organisation by providing them
proper training (Kong, Yang, Liu and Yang, 2020).
 The marketing channels of the company are rare as not all the companies are able to
develop them. This require strong financial position which is not possible all the
companies of the market.
 The research and development department of company are rare as it provides number of
new and advance technology to the organisation.
Imitable

 The strong financial position of HSBC are very costly to be imitate by other companies
of the market because it is developed due to prolong profits over the years (Kong, Jiang
and Zhu, 2022).
 The effective employees of the organisation are not costly to be imitate as it required
moral support and motivation from their managers.
 The marketing channels used by the company are very costly to be imitate because it
required huge amount of money.
 The research and development department of organisation are not costly to be imitate by
other companies of the market.
Organisation
 The financial resources of company are well organised which is used by the company to
invest in their number of business functions of the organisation.
 The employees of the organisation are not organised as the number of employees are
present which provides negative returns (Kurtz, Hanelt and Firk, 2021).
 The marketing channels of the organisation are not organised as there is no framework
are present in the organisation for the measurement of success.
 The human resource management of HSBC are not organised as the leadership aspect are
not present in the organisation.
Illustration 2: VRIO analyses

Parameters Value Rareness Imitability Organisation
Financial resources Yes Yes Yes Yes
Employees Yes Yes Yes No
Marketing channels Yes Yes No No
Human resource
management
Yes No No No
McKinsey 7's model
This strategic framework provides the number of tools to the organisation which helps to analyse
the design of the organisation. This framework of the strategic framework contains seven factors
which is required to be aligned for the success of the organisation in the market (Lavery, 2019).
 Structure- This factor of the model is related to the chain of command and heirarchy
followed in the organisation. The management of HSBC followed flat organisational
structure under which all the employees of the organisation enjoys motivation and
security. One of the important strength of this hierarchy is that it promotes effective
decision making in the organisation. This hierarchy enables the managers of the
organisation to develop coordination between different department of the organisation.
 Strategy- Strategy defines as the set of plans and actions which is formulated by the
management for the achievement of organisational goals and objectives. The
management of HSBC communicates their business strategies to all the employees and
personnels of the organisation.
 Skill- It refers to the competencies and capabilities of the employees which is used by
them to conduct their business functions. The management of HSBC need to develop
effective skills development framework in their organisation which helps to provide
proper training to their employees (Munoz and Naqvi, 201). It is very important for the
management to recruit talented employees in the organisation which increase the skills set
in the organisation.
 System- It is related to the daily procedures and activities which the employees of the
organisation follow to get their work done in the organisation. The management of HSBC

is one of the most biggest banking organisation of the market. It uses technological and
sophisticated system in their organisation which helps to achieve effectiveness in the
organisation. The system of the company are developed in such a way to establish
competitiveness in the market.
 Shared values- It is related to the values, mission and objectives of the organisation
which enables the management to develop effective strategies and design for the
organisation (Pang, Wang and Duan, 2019). The management of HSBC develops their
core values in such a way to provide effective support to their employees and other
stakeholders of the company.
 Style- This factor of the model reflects the style of leadership in the organisation which
are very helpful for the organisation to operate their business in effective manner. The
management of HSBC uses participative style of leadership under which employees of
the organisation are allowed to take part in decision making of the organisation. One of
the important advantage of this style of leadership is that it helps the organisation to
operate to increase the motivation of the employees.
 Staff- It is related to the human resource and the talent management which plays effective
role for the training and recruitment of the employees of the organisation. The
management of the organisation has developed number of strategies which helps to
improve the engagement of the employees in the organisation (Peng, 2020).

Illustration 3: McKinsey Model
Application of porter's five force model to evaluate competitive force
It refers to those strategic model which is used by the company to evaluate and five type of
forces which impacts the competitive position of the company (Salehi and Arianpoor, 2021). It
is one of those model of the business which helps the company to analyse the level of
competition in the market and also enables them to deal with them in effective manner. The brief
discussion related to the factors of this model are given below:
 Threat of new entrant- The threat of new entrant always be important threat which
negatively impacts the business of the organisation. New entrant entered in the market
along with innovative and new product which increases the chances of brand switch. It
can reduces the number of customers of company which is not positive for the growth
and development. The banking sector is one of those sector of market under which the
trust plays important factor for the success of company. People generally does not trust
because of financial aspect. The threat of new entrant becomes low on HSBC because of
trust issues with new player in the market.
 Threat of substitutes- There are many products and services are present in the market
which are having similar appearance and use in comparison to base product. The
producer of these products try to sell them at lower prices to ruin the market of original

products. In banking industry, the new services offered by other companies is regarded as
substitute which negatively impacts the business of HSBC. There are many companies
are present in the market which has provided the facilities of digital wallet and other
financial services which impacts the business of HSBC.
 Bargaining power of customer- The bargaining power of the customers are always
high as it demand new and advance services at continuous basis (Teirlinck, 2020). It is
very important for the company to make timely innovation in their services according to
the needs and desires of employees. It helps the company to retain their customers in the
market. The bargaining power of the suppliers are depend upon the number of companies
present in the market, the United kingdom market contains number of banking
organisations. The management of HSBC achieve economies of scale which helps them
to deal with the situation so the force of customer becomes moderate.
 Bargaining power of supplier- Supplier refers to those stakeholders of the organisation
which has provided raw material to the organisation for the production of goods and
services in the organisation (Vardarlier and Zafer, 2020). The bargaining power of
suppliers depend upon their number. If the number of suppliers are low then their
bargaining power becomes high and if the number of suppliers are high with the company
then their bargaining power becomes low. The power of suppliers are very weak in case
of HSBC because of large number of suppliers.
 Competitive Rivalry- There are many competitors are present in the market which can
impacts the business of HSBC which is Bank of America, Citi bank and many more. The
level of competition are very high between these rivals of the market which is not
positive for the business of HSBC. The rivals of the company develops number of
technological services which helps them to attracts the customers towards term. The
differences in interest rates plays important role to attracts the customers in the market.
The management of HSBC faced extensive competition in the market due to the
availability of number of rivals. It is very important for them to use effective strategies which
helps them to deal with the competition and also provides direction of growth. Ansoff growth
strategy is one of those strategy which helps the management of HSBC to deal with competition
and also makes them able to achieve growth in the market.