Business Strategy Report: Analyzing HSBC's Business Environment

This report presents a detailed business strategy analysis of HSBC, a multinational financial institution. It begins with an introduction to business strategy and HSBC's background, mission, vision, and objectives. The report then delves into the external environment, utilizing PESTLE and Porter's Five Forces analyses to assess political, economic, social, technological, environmental, and legal factors, as well as competitive forces within the banking industry and their impact on HSBC. The internal environment is examined through value chain and VRIO analyses, evaluating HSBC's competencies, capabilities, and resources to determine its competitive advantages. A SWOT analysis synthesizes the findings, identifying HSBC's strengths, weaknesses, opportunities, and threats. The report concludes with a strategic plan and recommendations for HSBC, based on the analyses conducted. The report provides insights into HSBC's competitive position and strategic direction.

BUSINESS
STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
EXTERNAL ENVIRONMENT......................................................................................................3
PESTLE Analysis........................................................................................................................3
Porter’s Five Forces Analysis......................................................................................................5
INTERNAL ENVIRONEMNT.......................................................................................................6
Value Chain Analysis..................................................................................................................6
VRIO Analysis.............................................................................................................................8
SWOT Analysis.........................................................................................................................10
STRATEGIC PLAN......................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy are the set of action which are taken by business organization in order
to increase the efficiency by analysing all the available resources effectively. There are many
factors which are performed in the business organisation which helps to increase the potential in
the market effectively. Increase in the demand of customers due to increases the globalisation is
has also impacted business opportunity. This also helps the business to increase its potential in
the market to compete and attain higher profit margins effectively. This report provides
information on HSBC which is multinational financial bank which it largest financial
organisation in Europe and is established in shanghai and Hongkong at the initial stage. Report
also describes different analytical frameworks which helps to analyse internal and external
business environment factors to increase the potential of the company effectively. This also
provides information about competitiveness of the company as the main aim of HSBC to
increase the environmental, organizational benefits which increased the efficiency of choice of
the bank market. HSBC focuses on increasing customer satisfaction by providing effective
support to them financially. Objectives of the bank is to analyse all the market opportunity to
grow and increase the potential of bank to compete in market effectively.
EXTERNAL ENVIRONMENT
PESTLE Analysis
Pestle is the external analysis framework which helps business to analyse all the external
business environment factors which impact business activities directly or indirectly. It is also
very essential for HSBC to become more effective a and improve the efficiency and also
improve the opportunities in the market effectively. There are many factors which also impact
the profitability of the company in UK market. rapid change in the market due to increased
demand of customers in the market which also increases the efficiency of manufacturing units to
supply more goods. This increases the efficiency of HSBC. This is also very essential to analyse
all the market impact on the company.
Political Factors
This factors helps the business to analyse the interjection of activities of government with
the business activities. Political factors are also very essential to analyse as market changes with
the change in the government. So it is very essential to identify political stability of the market

before investing to reduce failure. Being the financial banking company it is very essential for
HSBC to determine the political stability of UK. Due to Brexit this has impacted the business as
all the trade policies has changed which impacted market opportunities of HSBC to grow. This
also influenced legislation of UK and all the laws related to financial industry negatively.
Economic Factors
Economic factor are the variables which are directly related to economy of nation which
also impact the business operations. Inflation rate, GDP rates, Unemployment rates are
including in economic factors which impact business activities. HSBC is the financial institution
as deals with the monetary considerations. Due to Brexit the foreign exchange rate and GDP of
UK decreased which also impacted the profit margins of the organisation. Increased inflation and
unemployment in the country also reduces the sales of the company due to lack of high economic
activity in the country and high prices good and services.
Social Factors
Every market is made of community which consists of particular beliefs, culture and
tradition which help them to make decisions for products and services effectively. Lifestyle,
income level of customer are the factors which impact the sales of HSBC and reduces the
opportunity to gain higher profit margins (Armstrong and Taylor, 2020). Lack of proper
education level of the population also impacted the sales of HSBC as customers are not aware of
the product of company.
Technological Factors
Technological factors are those which changes with the change of time to provide
efficiency to business. As with the implementation of effective technology company has
increased its market share due to increase usage of digital tools on the internet platform. This
influences the customers to increase the profit margins of HSBC and help to attain core
competency effectively. This also reduced the cost of operation of company to make decisions in
bank industry effectively.
Environmental Factors
Environmental factors environmental concerns of the market which impact the business
activities and growth of business in the market. Due to increase the concern of global warming
UK government has started to change addition environmental tax to preserve the environment.
This impacted the profit margins of HSBC. However, company adopted CSR which increases

the brand value of the company to attain better customer base to improve the competitive
advantage effectively.
Legal Factors
Legal and political factors are the same however legal factor focuses on the specific
industry by imposing rules and relation by the government. HSBC has to adopt data protection,
implement law, equality act this all rules and regulation impacted the operation of company to
achieve its objectives in the lawful manner. This reduced the efficiency of the company by
implementation of the rules I the internal business environment and protect all the rights of
employees to motivate the and retain them effectively.\
Porter’s Five Forces Analysis
Porter’s five force is the competitive analysis framework which helps business to analyse
all the market threat which van reduce the efficiency of the company to compete in the market
effectively. There are many factors which is required to become competent in banking industry
as HSBC also uses some of them to gain higher profit margins and attain competency effectively.
This model analyses the industry attractiveness and determine all the threats which can impact
the potential growth of HSBC in the market.
Bargaining power of Buyers (Low)
Buyers arte the king of the market and it is very essential to make the satisfied to increase
the customer base of the business organisation effectively (Tanzi, Aruanno and Suardi, 2018).
Bargaining power of buyers in HSBC is low as the company provide various products and s
services which increases the retention power of company and also helps them to gain better
profit margins by reducing the bargaining power of customers effectively.
Bargaining Power of Suppliers (Low)
Suppliers are the key factors which helps business to grow as they provide the raw
material from which business produce their final products as the bargaining power of suppliers
for HSBC is low as there are many suppliers in the industry which automatically reduces the
bargaining power of the suppliers for HSBC. This also increases the efficiency of the company
to develop better opportunity by adopting research and develop to find alternative low cost raw
material which also reduces the cost of products of products and services and increase the profit
margins effectively.

Threat of Substitute Products (High)
Innovation in the market has increased the risk of substitute products which can also
impact the sales and profit margins of HSBC (Young, 2017). This threat is high due to
uncertainty of the efficiency of new substitute products in the future, this also reduces the
productivity of strategies developed by the company. As the substitute products can also reduce
the market share of HSBC gradually and also impact the overall growth of the company in the
market effectively.
Threat of New Entrants (Low)
As the financial organisation needs lot of capital base and better goodwill to increase the
trust of customers to invest in their company. due to higher capital investment the threat of new
entrant is very low and also helps HSBC to become leader of market effectively. high
experiences in the industry helps HSBC to compete in market with innovative new entrants in
long run and encourages them to exit market.
Threat of Existing Competition (Moderate)
There is very less potential competitor in the market which are also in the different
market however they have the potential to compete in the same market and increase the threat of
HSBC to reduce their market share with effective marketing strategies.
INTERNAL ENVIRONEMNT
Value Chain Analysis
Value chain analysis is the strategic tool which helps business to understand the internal
efficiency of all the activities which helps to increase the value of final product to attract more
customer and gain better profit margins effectively (Chaffey, Hemphill and Edmundson-Bird,
2019). This analysis helps HSBC to evaluate effective activities in the business which increases
the opportunity to attain competitive advantage in the market effectively.
Primary Activities
Primary activities are this which helps the business to attain its objectives and increases
the performance of the business organisation effectively (Rahman, 2018). These activities also
help HSBC to develop effective understanding about all the activities and examine the
performance of each activity in the value addition of their products and services effectively.
Inbound Logistics

As suppliers are the key component of a successful organization and it is very essential to
create effective relationship with them. this also helps to reduce the cost of raw material which
are required to perform the further activities. HSBC uses inbound logistics and focuses on the
new product develop with the existing products which increases the value of final products
effectively and gain higher profit margins. Company has also adopted effective information
system which the company to allocated the resources optimally.
Operations
These are activities which uses those resources to convert them, into final products with
the help of proper methods and techniques to reduces cost of producing products (Outram, 2016).
HSBC uses research and development methods to analyse the needs and wants of market
customers to produce their products which also helps to increase the profit margins and improve
the opportunity for company to grow and expand in new market effectively.
Outbound Logistics
Outbound activities help to evaluate the distribution channel which also helps to increases
the efficiency of the company effectively (Sanjeepan, 2017). There are different types marketing
strategies which helps the HSBC to increase the market share by developing better channels
which help to increase the communication in the market. This activity helps to produce better
vision of the company to increase efficiency of the company.
Marketing and sales
Marketing activities of HSBC helps to target on the customer which are more potential
and also have additional income to invest ion banks. Company also provides better benefits to
customers to make the loyal and increase the sales effectively. By reducing he interest rates
company improves the efficiency to become leader in the market effectively.
Service
Services are the activities which helps to increase the customer engagement and increases
the brand value in the market. HSBC uses digital technologies to increase the satisfaction level of
customer and solve their problems effectively (Holdings, 2017). Company needs to increase the
efficiency of its support services to make them loyal and increase the sales effectively.
Support Activities
Support activities helps HSBC to integrate all the primary activities to add value in their
final products and improve their efficiency effectively.

Firm Infrastructure
This activity includes management of resources, organization structure and culture which
helps HSBC to increase their performance to achieve their long term objectives effectively.
Company uses effective cost analysis which helps to increase the potential of the company to
achieve each activity effectively.
Human resource Management
Human resource management helps to manage all the employees in the organisation. HR
managers are responsible to develop and train employees according to required skills and
knowledge which helps them to become effective. This also increases the value of all the primary
activities effectively. Motivating reduces the cost of operation of HSBC and provides better
opportunity for company to attain competency in the market.
Procurement
This activity involves purchasing of inputs which increases the efficiency of business to
reduce the cost and increase profits (Markopoulos, Umar and Vanharanta, 2019). HSBC also
uses the effective supply chain method to purchase effective low cost products from suppliers
and store with effective strategies.
Technology
Technology helps HSBC to integrate all the activities to reduce the issues and achieve
objectives effectively. HSBC uses management information system which increases the
efficiency of company to make decisions to reduce cost and understand market properly.
VRIO Analysis
This is a framework analysis for business which helps to identify resources which
increases the competitiveness in the market. This analytical framework helps to increase the
efficiency of the business to compete by analysing all the key resources which adds values in
final products and increases sales and profit margins of HSBC effectively. This framework
examines the resources on the basis on value, rarity, imitability and organisation to attain
effective market share of HSBC.
Resources V R I O
Human resource Yes Yes No Yes

Capital Yes No Yes No
Technology Yes Yes Yes Yes
Brand Value Yes No Yes No
Valuable
This helps to understand all the resources which increases the value of products to gain
profit margins and higher number of sales (Bottomley, 2016). This also provide effective
understanding about satisfaction level of customer to increase the efficiency of company. HSBC
has effective employees, high capital which increases the size of company and develops trust of
customers to increase brand value in the market effectively. Technology of HSBC also helps to
increase the value of all the activities to attain core competency in market.
Rare
Rarity helps to identify the uniqueness of resources in the market which are not available
in the market. This also increases the competitive advantage of business to attain higher profits.
HSBC has high performance workforce in the market which no other company has which give
competitive advantage to the company. HSBC has rare technology which is designed especially
for the company to increase the cost efficiency of all the operations.
Imitate
These resources have the uniqueness which cannot be imitated due to high cost or legal
rights protection from the company. HSBC has large resource of capital which helps the
company to become the seventh largest financial institution in the world. Company has also
register the technology so that no other competitor can use their technology to compete with
them. Brand value of company is also very effective in market and also cannot be duplicated to
increase their profit margins as it is intact with the company legally.
Organisation
Resources need to be arrangements in such a manner which helps business to optimally
utilise all the resources effectively (Lasserre, 2017). With high performance management team
and effective technology HSBC increases their competitive ness to achieve higher market share
to increase customer satisfaction.

SWOT Analysis
SWOT is an analytical tool which helps business to understand the internal and external
market factors to evaluate strengths weakness, opportunity and threats in the market (Tahri,
2018). This also helps HSBC to formulate effective strategies seeking all the strengths to achieve
opportunity. Similarly, weakness of the company is converted into strengths top reduce the
threats effectively.
Strengths
 HSBC has strong relationship with their suppliers and other stakeholders which increases
the promotional activities of the company to increase market share effectively.
 Innovation is one of the strongest point of HSBC which helps to attract more customers
and make them loyal effectively (Li and Huang, 2017).
 High performance workforce also helps HSBC to increase the performance of company
to compete in market and gain higher profit margins.
Weaknesses
 Due to lack of proper connectivity between all the financial products of HSBC it
increases the gap and opportunity for competitors to increase their product feature to
attract customers from HSBC.
 Lack of resource planning and product forecasting also leads to ineffectiveness in market
to become leader.
Opportunity
 Change in the customer trends due to increase in their disposable income and high
standard living increases the opportunity for HSBC to gain better profit margins
effectively.
 New market expansion also increases the opportunity to increase their customer base and
reduce competition to increase sales and market share effectively.
 Technological development and online market helps HSBC to increase the capital and
attract more customer to gain better profit margins.
Threats
 As the company operating in many countries there is high threats of taxation fluctuations
in the business effectively (Chen and Lai, 2019). This also impact the growth negatively.

 Increase in the employee salary demand is increasing the cost which is also a threat for
the company to survive in the market and compete with high potential player effectively.
 Ineffective supply of innovative products reduces the market penetration efficacy. This
also impact HSBC to increase its profit margins and sales.
STRATEGIC PLAN
Current Situation
From the environmental analysis of it is analysed that HSBC is losing its market share due to
lack of proper innovative products and ineffective customer services. This is also increasing
the transfer of customers to substitute products (Alwan, Jones and Holgate, 2017). This
reduces the efficiency of HSBC to compete in the market and it is also increasing the liability
of company due to high capital borrowing s from the market. Another issue which is faced by
the company is high employee turnover due to increase the demands of better pay scale which
is increasing the cost and also discouraging many employees in the organization.
Objectives
 To increase the sales of company by 20% within one year.
 To Double the number of customers in one year.
 To increase the satisfaction level customers and improve brand value in UK market.
Strategic Options
Here are different options which can help to increase the growth of business and achieve all
the objectives effectively.
Cost Leadership
Cost leader is the types of business strategy which helps to increase the competiveness of
business in market by reducing its overall cost to gain higher profit margins (Abdi, Elliot and
Edalat, 2016). This also helps company to attract more customer by setting lower prices and
high efficient products which also increases the efficacy to become leader in the market
effectively.
Differentiation
Differentiation strategy is used by business organisation to focus in market and by controlling
the cost in that market and gain higher market share and increased efficiency of the company.

In this strategy business develop effective products which is according to needs and wants of
customers to retain them in the company and increase their satisfaction effectively
Focus Strategy
Focus strategy aims on smaller market by adopting any cost ot differentiation strategy to gain
higher profit margins and sales (Brown, Liñares-Zegarra and Wilson, 2018). These are the
marketing strategy and also helps the business to increase the potential of the company to
become leader in the market effectively.
Ansoff matrix
Market penetration
Market development strategy focusses on the existing products in exiting market to increase
the market share with the help of promotional activities. This also helps business to compete in
market and increase profit margins by improving sales effectively.
Market Development
This strategy aims at market expansion with the existing product which also increases the
opportunity of company to become effective in the market. This strategy also helps business to
attain higher market share with less competition due to new market and known product.
Product Development
Product development strategy emphasizes on development of new products I the exiting
market. This helps business to retention exiting customer with higher product range and
different price range according to customer desire (Monteith, 2016). This also increases the
customer satisfaction and rand value ion the market effectively.
Diversification
This stagey helps business to develop new products in new market to increase the market share
and also reduce the risk of loss from one industry. This strategy helps business to invest in
different types of industries or same industry with related products to increase the efficacy of
company to increase profit margins effectively.
Strategic Choice and Justification
HSBC need to adopt focus strategy as this strategy helps to increase the efficiency of each
market according to its market trends and factors (Rothaermel, 2016). This also helps to adopt