Contemporary Developments in Business and Management: HSBC Bank Report

This report provides a detailed analysis of HSBC Bank, examining the impact of external influences, particularly political and economic factors, on its business operations. The report delves into the relevance and influence of Corporate Social Responsibility (CSR) on the company, evaluating the effectiveness of its CSR activities and identifying areas for improvement. The study explores the effects of globalization, political instability, and economic fluctuations, including Brexit, on HSBC's performance. The report also considers various economic factors such as interest rates, inflation, and competitive environments, while also touching upon technological, social, and cultural influences. The report highlights the importance of CSR in the current business environment and its role in shaping the company's strategic decisions and overall success, concluding with recommendations for enhancing the bank's CSR initiatives.

Contemporary Developments
in Business and Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 External influences of organisations and their impact.....................................................1
TASK 2............................................................................................................................................6
2.1 Relevance and influence of CSR on the company...........................................................6
2.2 Evaluating effectiveness of organization’s response towards CSR activities..................9
2.3 Demonstrating some areas for improvement..................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment plays an eminent role in growth and development of a commercial
entity. In other words, it can affect working activities and operation in positive as well as
negative manner. Business environment is an intermixture of internal and external factors, in
internal factors are - customers, employees, management, organisational cultural, supply,
demand, laws and regulations. Beside this, external factors are also comprises with political,
economic, social and technological forces that has potential effect on the growth and success of
business entity (Hammer, 2015). The present report is based upon HSBC bank; it was created to
provide finance trade among Asia and West. It is one of the largest bank which renders financial
services and currently operates in 30 countries. HSBC bank has employed 331458 employees
and all are expected to serve customers in well being manner. The report will describe about the
impact of political and environmental factors upon financial growth of company. The main
objective of the assignment is to determine the role of corporate social responsibilities within
business environment.
TASK 1
1.1 External influences of organisations and their impact
Due to globalization, several business entities are moved to international market. In
addition, globalization refers to interdependence and growth of transactions in between nations.
Along with this, globalisation is helpful for managers as they as easily interact with more people
at global environment in order to increasing sales and make higher profits. But sometimes
globalization put a negative as well as positive impact on business functions (Smit and et. al.,
2011). HSBC bank always tries to get strategic alliance so as to gain high competitive advantage
from target market. On the other hand, globalization leads HSBC bank so that the firm can
compete with other international financial institutes. . Therefore, it can be said that external
environment has put a major effect on the expansion of business operations. For instance-
alteration in political and economic factors in other countries will bear on working activities of
HSBC bank, UK. If the government of different nations might reduce tax and interest rates. In
2002, there was faced the situation of fallen in its profits due to changes in business

environment, i.e. customer’s preferences (The Marketing Environment, 2017). The economic
downturns that had led to reduce the need to investments and bank loans because customers were
not able to pay high taxes. Further, political instability also has put a negative impact on working
activities of HSBC bank. Modification in external environment will also influence growth and
productivity of domestic as well as foreign businesses (Srivastava, Franklin and Martinette,
2013). So that, it is essential for managers to analyse these factors in effective and efficient
manner; that will be help them to take better decisions for company's progress. Hence, there are
two factors which have affected growth and success of business organisations which are defined
as below: -
(Source: The Marketing Environment, 2017)
Illustration 1: External factors

Political environment – Several political influences have their own importance; various aspects
of government policies affects working activities in direct and indirect manner. However, all
firms has to follow up certain laws and legislations that are made by legal authorities of UK.
Along with this, managers of HSBC bank also need to identify how future acts will increase or
decrease firm's market growth and performance. The political instability has put an impact on
growth and diversity of the referred firm in certain ways; it might be lead to big loss and act as a
risk factor (Sturdy, 2011). It has power of overall verification in future outcomes. Laws and
regulations of government has affected company's functions from local to federal level. In order
to cope up with these challenges, business owners are required to make some effective
conclusions for achieving business goals and objectives. In order to develop a political
environment in markets, politicians have to win elections on every next years. There are given
some political factors, such as- bureaucracy, tariffs, corruption, freedom of the press, corruption
level, trade control, education law, anti-trust laws, discrimination law, data protection law, tax
policy, regulation or deregulation, government stability etc. In UK, both sides of the
referendum campaign foresaw a diverse version of UK’s economy during the post-Brexit era.
Brexit means the EU sheds one of its largest annual contributors — the UK contributes around
US$19.3 billion (€18.2bn) — leaving Germany and France far and away the largest donors,
at US$25.8 billion (€24.3bn) and US$20.1 billion (€19bn) respectively. It put a huge impact on
market position of HSBC bank in effective and efficient bank; at the time of Brexit UK’s
economic condition is not so good; it was affected people income level.
Increase or decrease in interest rates and tax rates is an appropriate example of political
environment. If UK's government might take decisions towards increasing in tax rates for
financial institutes. It can directly effect on HSBC bank because after that the company will not
able to perform in international market. Recently, UK's government has increased interest rates
upon bank loans and credits, therefore the referred bank was lose many of its customers
(Tavitiyaman, Qu and Zhang, 2011). It also affect annual sales of HSBC bank. Managers of
these business organisations has to always up to date with political laws and rules. Apart from
this, government interventions can also bear on customers demand patter. Below mentioned
some examples of political factors, such as -

 Government decisions are affected sociocultural environment of all overall nation.
 Many politicians could also brunt on the acceptance and rate of emergence of new
innovations and technologies. It also bear on economic environment of the firm.
Importance of political environment
 Multinational business entities have to track political factors because, changes in
government laws also brunt company's strategy and decision making process. Political
stability is helpful in appealing and performing to a business in specific target market.
 Government develop certain legislations for social reformation of business entities as
they can fulfil corporate social responsibilities in an adequate manner (Zadek, Evans and
Pruzan, 2013).
 Such laws are able to maintain friendly relationship of company with its customers and
suppliers. Government plays a vital role; it forces to commercial entities as they can produce
healthy and qualitative products for its potential and target customers. Its actions also
affect economic environment.
Effect of political factors on commercial entities: - Impact on economy – In UK, political condition impact on financial setting. There is a
lot differences in labour and conservative policies. It involves – tax rates and government
funding. Political stability – Government instability also affects working activities of a business
organisation, especially for those companies which are operated in global environment,
i.e. HSBC bank. In addition, several riots, general disorders and looting can disrupt firm's
operations. Mitigation of risk – It is the common way to manage political risk. Multinational
companies are now buying a risk insurance in order to cut its exposer (Rothaermel,
2015). Changes in rules and regulations - Every new government is come up with new laws
and legislations that must followed by al business which are operating in that country .

Impact of political faction on HSBC bank: -
Research shows that HSBC bank is continuously gaining high profit margins by adopting
growth oriented strategies of UK government; such policies are having low rate of interest. It
involves global competitive tax arrangements and currency exchange stability. Due to its
transparency in value chain, HSBC bank also get profited from government actions. The firm has
a membership of Clinton administration, 1997; with this assistance the bank enjoyed variations
of political parties (Rothaermel, 2015.). Furthermore, political instability had also put an adverse
impact on market growth and expansion of HSBC bank by diminishing its sales and profits.
Economic environment -
After analysing political factors, readers need to study about certain economic factors that
has a greater impact on growth and business organisation. Economic environment consists with
the nature of economic system of a nation, the framework of anatomy of economic policies,
factor endowment, infrastructure and business cycles etc. However, it is necessary for business
entities to examine external economic factors that can brunt upon business operations and
anticipate its prospective market; it will be aids them to make appropriate decision in order to get
better outcomes by minimising costs. In global environment, changes in economy will also affect
growth and vitality of commercial entities ( Rosemann and vom Brocke, 2015). UK's economy
involve a series of fluctuations which is associated with common booms or slumps. On the other
hand, other economic factors are – wages rates, rate of inflation, unemployment and interest rates
etc. For example- if prices will be increased then banking would tries to take more risks in order
to expand itself in target market. Beside this, UK.’s interest rate is lower since 2008 and still it is
not increased. The current interest rate in United Kingdom is 0.25%; this might affects profits
and sales of banking sectors as they cannot gain higher returns on their loans.
In last years, HSBC bank has taken decision to sell out its 30% share to other holdings in
order to make precious and effective functions and get extra funding benefits from competitive
market. Regardless, the country where a bank is located there is many economic factors which
will influence its performance and other functions in direct as well as indirect manner (Myers,
2013).
Below mentioned some crucial economic factors UK: -

 Income level of people
 Inflation rates
 Various economic policies
 Exchange rates
Austerity policy – It is a political-economic concept which is developed in order to slash
government budgets deficits by increasing tax rates, spending cuts or may be both. Certain
austerity aspects are applied when legal authorities are facing some difficulties in its debt
obligations. The prime goal of this policy is to demonstrate the fiscal discipline and extend sales
revenues so as to meet expenditures.
Importance of economic factors – In UK economy, such factors can boost up the
economy by providing some effective facilities or concessions. If the income of people will be
maximised then, they tend to deposit this money into banks. And then such financial institutes
provides them more money. Beside this, every year World Bank declares 6 month policy and
implement certain rates which has a huge impact upon growth and viability of banking sectors
(Moyer and et. al., 2011). It also set FDI limits so as country will get more and more foreign
investments.
 Competitive environment – It contains is an external dynamic system in which a business
is operated and perform its functions. Due to increasing the number of banking
institutions, customers have wide opportunities. It will affect sales and profits of HSBC
bank; its main competitors are- ICICI bank, HDFC bank etc. If rivals will be sold same
type of products and services then it will affect the market position of refereed bank.
 Technological environment – In order to gain high competitive advantages, business
entities are using various tools and techniques. It will be helpful for them to attain and
retain customers for long term period. For example- HSBC bank has attractive production
tools which are assistive in its growth and success in target market.
 Social and cultural environment – Now these days, customers’ needs and demands are
rapidly changing. Therefore, it is tough for companies to recognise their desires and
produce the same in an effective manner. It is essential for managers to respect buyers
values, morals, beliefs and attitudes in order to remain their interest for long term period.

TASK 2
2.1 Relevance and influence of CSR on the company
Corporate social responsibility is term which a firm needs to be concerned rather than its
profits. Environmental protection is the one the major CSR activity for business organisations. It
is also accessible in defining ethical values and standards of a company, how it treats its
employees, customers and further stakeholders. As it is a vast and developed company, it has a
wide range customers, suppliers, creditors; all of them are connected with the firm in direct or
indirect relationship (Jones and George, 2015.). Therefore, it is an ethical responsibility of the
firm to fulfil all needs and wants of such people. CSR refers that business organisations have to
be accountable for its actions or functions that affect its stakeholders. It helps in increasing the
number of loyal customers for a business organisation, so as it gain high competitive advantage.
Below mentioned some important corporate social responsibilities of HSBC bank: -
 To provide healthy and safe working environment to all employees.
 Producing qualitative and value added products for customers to maintain their interest
for long span of time.
 Regulating some social activities in order to improve living standard of lower section
people.
 Increasing profit share of shareholders by managing healthy relations with them.
CSR activities influence all stakeholders of the firm in direct and indirect manner. Its
prime aim is to address financial inclusion in order to render effective financial services in all
over the country (Importance of CSR, 2017). It also involves socio- economic development of
the nation, so that HSBC bank is now focusing on several activities, i.e. evolvement of rural
areas, health and medical care, poverty, self-employment training, eradication, financial or
educational literacy things, improvement of infrastructure, environmental protection,
development of rural area etc. Hence, HSBC has contributed a large amount of its profits towards
reducing social dimensions in UK. Apart from this, in order to meet basic requirements of
people, i.e. food, shelter, clothing etc. It also contributes in several government activities (Jeston
and Nelis, 2014). Apart from this, the main objective of the firm is make the nation free from
hunger, unemployment and a society free from poverty and vices.

Impact of corporate social responsibilities on business growth and decision making: -
(Source: Importance of CSR, 2017)
 Customers' influences – It is essential for every business organisations to involve their
customers' while making important decisions. It involves, managers have to effectively
know their needs and wants and tries to fulfil them in active manner. A firm's sales and
profits are based upon the number of customers it has. While purchasing products, buyers
will consider the quality, prices, brand image etc. so that executive directors of HSBC
must focuses on supplying well qualitative and branded goods to its target as well as
potential buyers. Furthermore, customers are liable to increase or decrease firm's
goodwill in global environment (Hutt and Speh, 2012). An effective or strong brand
image helps in maximising numerous people towards a company. Therefore, it can be
said that, buyers are one of the important aspect who have a significant role in growth and
expansion of a firm. Investor’s influences – Another social responsibilities of a firm is to make healthy and
positive relationship with investors so as to increase venture capital. If a firm has great
financial capital then it can easily take certain risks in order to gain more competitive
benefits. It is also helpful in achieving business goals and objectives in a short span of
Illustration 2: CSR activities

time. HSBC bank assists to its investors so as to influence them for investing. Such
people are very influential for business organisations in order to take effective and
precious decisions (Hodgkinson and Healey, 2011). Managers also have to conduct
certain meetings and group discussions so as to make best investment in their company.
With the assistance of strong venture capital, a firm can easily adopt new and innovative
tools of production. Thus, business entity can make marketing as well as management
strategies so as to expand itself in competitive market. By keeping all plans and policies
in front of investors so as to impressive business decisions.
 Employee’s influences – Staff members have put a large impact on growth and success
of business entity. Any action of employees can affect firm's decision making process.
Therefore, it is very must of HSBC bank to recognise and fulfil all basic requirements of
its staff members. It will help a company to get high production and sales. Variety of
products will contribute in increasing the number of customers towards a firm; through
which it can achieve its financial and sales goals in an adequate manner. Hence,
involvement of workers in creation of marketing and management strategies, plays a
crucial role in market expansion of HSBC.
 Local community influence – The income level of a society also affect savings and
profitability of banking institutes. It is essential for organisations to analyse current
market trends and customers' interest in order to perform effectively in target market. In
order to attain and retain people for long term period; it is essential for HSBC bank to
fulfil its all corporate social responsibilities by providing effective financial services to
people. For example- by reducing interest rates on long term loans banking institutes can
easily attracts numerous customers.
 Suppliers influence – Suppliers are also seemed as mediators who connect customers
towards financial entities. There are various suppliers within a banking sector who are
known as banking agents. Such people provides wide range of policies and current
market trends to managers that is beneficial for both parties, i.e. suppliers and banking
organisations. Apart from this, if these mediators can increase their profit ratio then it
would affect profitability of the company.

 Government influence – In UK's financial market, government also plays in important
role. Due to political instability, certain government laws and regulations are
continuously changed which can hamper working activities of banking sector. For
example- if government would increases repo rate then it can affect flow of currency
among public and customers do not prefer to take loans and credits.
 Public influences – Media is one the vital element that influence any kind of enterprise in
market. Positive or negative news of any business can change its market image in a single
moment. Whenever, HSBC bank done its CSR activities, it is spread like an air and act as
promotional channel for it. It helps in getting many customers as they know more and
more about it.
2.2 Evaluating effectiveness of organization’s response towards CSR activities
Below mentioned the effectiveness of CSR in the refereed bank: - Community development and charity – CSR are able to create healthy and positive
relationship with communities by developing certain programmes for them. It also
promotes charitable contribution of a firm so as to increase goodwill in target market. In
this modern era, business entities are trying to make new products that could enhance
social awareness among public for certain products (Grant, 2016). For this purpose,
business entities can dint many workshops and campaigns on some topics for the growth
and development of society. Promote green business – Now these days, business organisations pay their attention in
order to make green and pollution free industry. As all of us know that, the whole world
is facing the problem of global warming. It occurs cause of air, water and noise pollution.
Some companies are using ineffective machinery that can ruin the environment (Bohari,
Hin and Fuad, 2017). Therefore, it an ethical responsibility of a firm to look towards the
development of impressive market policies which can generate an eco-friendly
environment. HSBC always shows its concern to keep non-polluted society by reducing