Contemporary Developments in Business and Management: HSBC Report

This report provides an analysis of HSBC Bank, examining the external factors that influence its operations, including political, economic, social, technological, legal, and environmental factors. The report delves into the relevance of ethics and corporate social responsibility (CSR) to HSBC, exploring their impact on the bank's policies and decision-making processes. It discusses key ethical considerations such as transparency, fair trade practices, and diversity issues. Furthermore, the report evaluates the effectiveness of HSBC's organizational response to ethical challenges, including areas where improvements could be made. The analysis highlights the significance of adapting to a changing business environment and the importance of ethical conduct in maintaining customer trust and a positive brand image. The report concludes with a synthesis of the key findings and recommendations for HSBC's future strategies.

Contemporary Developments in
Business and Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Political Influence.......................................................................................................................1
Economical influences................................................................................................................2
Social...........................................................................................................................................3
Technological..............................................................................................................................3
Legal influence............................................................................................................................4
Environmental.............................................................................................................................4
TASK 2 ...........................................................................................................................................4
i). Relevance of ethics and CSR to HSBC bank and their impact on policies and decision
making process ..........................................................................................................................5
ii). Effectiveness of organisational response...............................................................................7
(iii) Areas of improvement as a response..................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................14

INTRODUCTION
Business environment is changing rapidly and most of the multi-national companies are
facing different kinds of issues in managing their operations in a correct manner (Naheem,
2015). But, at the same time, they understand that opportunities for their organisation has grown
and they can exploit them if they are focusing on successful execution of strategies. This report
is based on HSBC bank who is running their business in banking and financial service industry.
This assignment will explain external factors which influence the working of HSBC bank.
Importance of these elements will also become part of this file. Ethics and corporate social
responsibility will be the theme of this project. Its impact on decision making process of
company will be analysed in this report. An important part of this assignment will be the
response given by organisation when they face issues relating to ethics. At the end, some
significant areas of improvement will be explained.
TASK 1
HSBC is a leading bank in financial and insurance sector. There was a time when these
organisations have limited reach and their business was not present in many nations but once
most of the underdeveloped and developing countries opened their economy for foreign
investment, many multinational corporations got a chance to attain more profit and rapidly move
forward towards their long term goals (Weil, Nau and Webb, 2011). An enterprise can resolve
most of their internal issues which arise in company but they do not have any control on different
external factors which can make positive or negative impact on the overall performance. These
elements and their importance are mentioned as below:
Political Influence
HSBC bank is present in many continents. They have to make sure that they invest their
money in a country which is not facing issues relating to political instability (Barker and et. al.,
2011). In many nations like India, when government changes, they also introduce major
variations in the policies relating to banking sector like increment in bank rate, procedure of
taking loan, etc. Every organisation like HSBC bank has to make necessary changes in their
strategies so, they can cope up with alteration which has happened because of political
uncertainty.
Example of political influence Impact on organisation
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War Damage to property of corporation
Hard regulations against foreign companies Reduction in sales
Violence and riots in country Hurdle in providing effective services to
customers
Importance
This factor is important to HSBC Corporation because if they will try to focus on
expanding their business in a nation which is not facing any issues relating to political stability
then they do not have many any major changes in their policies and working style. But if
political condition of a country is instability then doing business in that territory is very difficult
because an organisation cannot make long term strategies for achieving their goals.
Economical influences
Attaining growth is a nation who has high growth rate like China and India is very easy
for Multi-national Corporation like HSBC bank. If aggregate demand in an economy will go up
then it will positively influence the business of all companies who are operating in that territory.
Incidents like economic crisis severely impact on the banking sector in a negative way.
Importance
Running business in an economy which is growing at a fast pace of more than 8% assist
an enterprise in earning more profit. HSBC bank earned high revenue when they entered in
India. But, global economic crises like in 2009, reduced the growth of HSBC bank. It is the
prime reason of decrement in market share of this firm and they lost many of their permanent
customers. If they expand their business operations in developing economy then they can easily
earn more revenue and proceed towards their goals. Change in national income can have both
favourable and unfavourable influence on the profit of company (Naheem, 2015). If it will rise
then people would save more money in banks. In order to prevail better service, they would be
ready to pay more amount for getting better facilities which are provided by HSBC bank. This
company is known for providing good services, increment in national income is significant for
them because it purchasing power of public will increase then they will prefer to take better
facilities by paying more money.
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Social
Every organisation has to follow some norms which are present in a society. Money
laundering is one social issue which comes in this sector. HSBC bank is dealing with these social
issues and they influence their performance and goodwill. Culture of saving money in banks is
rising in many developing and underdeveloped nations. People in African and Asian regions
were earlier saving money in their houses but now, thinking has changed and they are preferring
to save own saving in banks. This shifting in culture influence HSBC bank and other players of
same industry.
Importance
Cases relating to money laundering are important for this company because it tainted
their image in society and trust is most important part of banking system. People in developed
nation understand that if they will save their money in banks, not in their house, then it will be
good for society because their saved amount will keeping flowing in economy and assist in
economic growth and welfare of society (Bean, 2012). In developing nations, market trends have
complete changed in last three to four decades and people have started saving money in banks
especially in private companies like HSBC because they offer more interest and better services.
Change in trends is an important factor in the success of this bank especially in Asia-Pacific
reason.
Technological
Technology is a crucial factor which is impacting all the business organisations. New
soft-wares and mobile application brought many changes in this sector. Activities of hacking and
generation of new viruses have created many tension for HSBC bank. Their business operations
are getting influences by swift changes which is happening in banking sector because of rapid
up-gradation in technology.
Importance
If a company will not adopt new techniques of working i.e. money transferring through
internet, making payment in touch through mobile phones, etc., then they cannot survive in the
present business world for more time. HSBC corporation understands the importance of
technological changes and they are up-grading their services accordingly. Significance of this
external factor is high because it has prime role in the recent success of this organisation.
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Legal influence
Regulation made by European union is changing and they are getting tuff. Same thing is
happening in rules relating to money laundering. Most of the government where HSBC bank is
operating has sound customer protection norms. This company has to follow all the acts in order
to save themselves from legal troubles (Gitsham, 2012). Changes and presence of law influence
strategy of this organisation.
Importance
Following rules and different acts is significant for HSBC bank. They have complied all
regulation in past and it assisted them in running their business in a smooth manner and save
millions of their money which they may have to pay for failing to follow various acts. Goodwill
of this enterprise is high because of their seriousness regarding opposing illegal activities. Legal
compliance is expensive and it also consume lot of precious time of top level and management
because they are responsible for making and controlling policies of organisation.
Environmental
Climate change, recycling of waste etc. are some of the environmental issues which
impact business operations of company. HSBC bank is also committed to reduce carbon
emission and they are working on saving energy in their buildings. All these steps are taken
because of the influence of change in environment.
Importance
Taking actions for cleaning atmosphere is important for this organisation because they
have some responsibilities regarding keeping environment free from pollution (MA, LIANG and
GAO, 2011). Reducing use paper is another step which they have taken because they understand
that if they will minimise utilisation of paper and concentrate on recycling wastage then it will be
support them in fulfilling various government regulations and their image in business
environment will also improve.
TASK 2
Ethics and Corporate social responsibility
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i). Relevance of ethics and CSR to HSBC bank and their impact on policies and decision making
process
Their are two terms which often confuses many people. One is legal and other is ethical.
Prior one is related to to law which is present in a territory. All companies have to follow these
regulations and if they will not comply it then they may have to deal with serious legal
obligations (Abuznaid, 2017). Ethics are moral standards, they may not be same for every firm
but they are crucial part of a company because it shows what, according to them, is right and
wrong. An organisation cannot be punished on the basis of ethical ground because they are not
present in law. In banking industry, gaining trust of customers is very important and ethics play
crucial role in achieving this goal. Below are some areas which are covered in relevance of ethics
and it impact on decision making and policies of HSBC bank:
Transparency – It is an important part of ethics. If people feel that bank is hiding
something from them or their are working style and policies is in area of suspicion then it will
reduce faith of customers in this corporation. Transparency is highly relevant for this
organisation because they are known for providing best service to the client which is not possible
without attaining trust of customers. But there is one problems relating to maintaining a high
level of transparency. It reduces profit of organisation which they could have earn by keep some
of their customer in dark. They could have charged more money for opening bank account by
going to home customer (Huimin and Ryan, 2011). They can charge extra sum for this service,
but if they will not tell client that they can do it for free then it will not be good for their revenue.
Decisions taken by manager of company changes because of the policies relating to transparent
operations.
Promotion of fair trade practice – HSBC is has global presence. They known that all
kind of customer will come to their door but they cannot provide services to the one who want to
convert their black money into white or ask for money laundering. Relevance of fair trade
practice is continuously increase for this company because in many nations they are coping up
with this issue and sometime they have to face serious ethical dilemma. They cannot upset their
customer by denying them to help them or by asking them to reveal source of money and at the
same time they have to make sure that they do not do any unethical practice (Groves and
LaRocca, 2011). HSBC follow ethical code and it influences their policies regarding facilities
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which they provide to clients. Stopping cases of money launder is responsibility of whole
banking sector and mentioned company has already changed their policies.
Diversity issue – HSBC bank firmly believe that all the employees in their organisation
should treat everyone in same way. Their are different culture in this world and an enterprise can
learn many things by understanding thinking of people who are various places (Our values.
2017). Equality is crucial part of ethics and HSBC make major modification in their policies
relating to HR for increasing diversity.
Although HSBC corporation is known for good service and better return but they have also faced
charges of unethical activities which is done by them in last several years:
 Money laundering - This organisation has faced issues relating to money laundering.
They were found culprit in this and penalized with an enormous amount of 1.92 billion
dollars (Crane, Matten and Spence, 2013). This incident happen for one time and
ultimately impacted their goodwill in market. Abusive mortgage practices – Because of HSBC, many people lost their home. They
were fined for this unethical practice because they made different rules for rich and poor
people.
Relevance of CSR to HSBC and its influence on organisation
Open banks in rural areas – This enterprise is mainly known for serving to rich customers
they have more contribution in their profit. But, they also understand they have some social
responsibility as they are running their business in society so they have took an important step
they they will open some of their branches in tier 2 cities of countries like India. They made
necessary adjustments in their policies and spend some money on opening banks at the location
which would not generate much profit.
(Source: HSBC SUSTAINABILITY HOMEPAGE. 2017)
Promoting education – This organisation is earning revenue in billions of dollar. They are
working in area of providing education to those people who cannot afford their studies specially
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Illustration 1: HSBC SUSTAINABILITY HOMEPAGE

at primary and secondary level (Sharma, Sharma and Devi, 2011). They are providing vocational
training to so public can get employment. Empowering women is another work which is done by
this organisation. Fulfilling their corporate social responsibility assisted them in raising their
goodwill and earned appreciation from all over the world. It made positive impact on their
revenue.
Freshwater sustainability – This activity of HSBC bank is relating to saving environment.
They are working for sustaining freshwater so because this natural resource in decreasing and it
may create many troubles in across the global in upcoming time. Some people may find this CSR
bit irrelevant to companies work but saving freshwater is very significant topic because of
scarcity of drinkable water (Lawless and Findlay, 2015).
Community investment – All the companies of banking sector are responsible for funding
and developing of different programmes, projects etc. in order to support the community where
there are operating. They may put a little financial burden on them but it is significant part of
their CSR.
ii). Effectiveness of organisational response
HSBC bank faced many allegations relating to unethical adopting unethical practice. This
is not an incident of one country, they was fined with huge amount of fine in different nations. In
some cases, they handled various matter in proper way but in remaining cases they fail to take
appropriate steps. Below are some of issues which they did not response is correct way:
Connection with drug kingpin – This bank did not accept their mistakes that they assist
drug seller and at the end they have to end up by paying around $2 billion as fine. This is not
first time when they have committed same mistakes, earlier they were found guilty in money
laundering case for many times and now they fail to make an image of a bank who do not
promote unethical activities (Hopkins, 2012). They may not helped intentionally but because of
their weak rules and low ethical standards they did not do right thing.
Poor performance – HSBC bank was facing issues of low profit for a long time specially
in 2011 and 2012. Instead of finding a productive and creative solution they decided to fire
25000 employees. This was unethical before these employees were dependant on salaries given
by this bank and they are terminated in order to reduce cost of business. Many financial analysts
think that this was unethical, HSBC bank could have responded in a better way by paying more
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dividend to the investors so more people can become interested in investing them and their issues
relating to high financial burden could have gone done.
Following are ethical issues which HSBC corporation handled in impressive way
Money laundering – This company did not have one or two relating to this issue, in
various part of this world they are and have faced allegation of money laundering. But with time,
they have responded to this problem in an impressive way. In 2005, they made ''anti money
laundering teams''. This division accepted that their bank has transferred lots of amount in tax
heaven and without arguing, they paid fine for their wrongdoing. They also started working on
making a system where monitoring of employees can be done (Banerjee, 2012).
Fair treatment – Many people often blamed this bank that they only focus on their
premium clients and do not care about small customers. This company has learnt from their
mistakes and they started promoting a culture of listening and communicating openly in order to
effectively response these charges (Lantolf, Thorne and Poehner, 2015).
CSR activities
HSBC has deep pockets and they among one of the most successful banks. Normally
government of different nation, where they are operating, expect something more from them
because of their global presence. It is obvious that they have pressure of spending huge some on
social work but not CSR is a big issue and whether a company want to take this responsibility or
not, they have to do something for social where they are running their business. In Asian
countries like India, literacy rate and quality of education is very poor. This organisation took
accountability of providing vocational training to the people who do not have higher education.
They are working in increasing their employability skills so they can earn decent amount of
money by becoming employable. In some rural areas, they have done remarkable work in
empowering women (Ihlen, Bartlett and May, 2011). Normally people think that spending
money is what normally companies do in the name of social responsibility but HSBC bank has
done something different by developing skills in those people who do not even have basic
amenities.
Diversity at workforce in hot topic in today's business era but this enterprise already
standard working on this issues when it was not even considered as an ''issue''. They are always
in favour of equality and they gave employment to people from different culture and without
considered their language, culture, gender etc. HSBC has also set some goals relating to
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environment like they took responsibility of using sustaining freshwater. They are also
committed to save water (Corporate Social Responsibility Policy. 2017). But until now, they
have not done any big work in this area. This shows that they are not too serious in the
responsibility which they have taken. This response towards their accountability is not good and
many time, they fail to make people understand that they have done something for environment
(Crane and Matten, 2016). SWOT analyses can assist in analysing their effective response in a
better way along with the benefits which they have attained in past:
Strength
 After doing lot of work for community, brand name and financial position of this
organisation got more strength. They had an image of a company who is known for doing
some unethical work but they image saw major improvement because of the ethical
practice and social work which they have done in developing nations like India.
 Almost 275000 people are working in HSBC and the best thing is that they are from
different cultures. Their global presence is one of their key strength.
 This organisation provide various kind of services like investment banking, financial
services etc. This is the prime reason that number of their customer is more.
Weaknesses
 Retail business of HSBC bank is weak because they have a image of a company who
does not focus on small customers. Treating every client is a similar way is one area
where they are responding in correct way. This is not ethical and it is hurting their
revenue (Hopkins, 2012).
 A significant part of their revenue is coming from USA but because of their unethical
activities and poor policies they their market in this region is declining.
Opportunities
 They have done impressive CSR work underdeveloped and developing nations. This can
expand their business in more part of developing economy and spend more amount of
social welfare activities.
 Retail business is one area where they can attain huge growth in upcoming time. They
can work on their ethical standards and gain trust on many customer who currently do not
want to use services of this company because they feel that they may fail to manage their
money properly.
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Threats
 Regulations made by government is continuously changing may create many trouble for
this organisation in making long term strategies (Kim and Park, 2011).
 Their competitor are getting strong and this they may steal more market share from this
bank in upcoming time because their goodwill and services are better then HSBC bank.
(iii) Areas of improvement as a response
Every company commit some mistakes and they have some flaws. But they can improve
various areas in order to deliver better results in upcoming time. For earning more profit, HSBC
can do many things but one of the most important thing is that they cannot take all major step in
one shot so should focus on one step at a time (Freeman and Hasnaoui, 2011). Below are some
areas which can be improved by HSBC bank in upcoming time:
Ethics Classes – This enterprise has to make some major changes in their ethical
standards. They should organise regular classes for their senior managers regarding moral
grounds which organisation should follow. If significant people will understand the impact of
fair practice and earning trust of customer then it will be beneficial for business of this firm.
They should increase the number of anti money laundering teams because they have done fine
work in past several years and but because of overloading of work they fail to stop some
unethical incidents.
Increase strength of female employees in growing economies – In countries like US and
UK, diversity is not an issue for this corporation but they in China, India and some African
countries, number of female workers is less in HSBC bank. They should hire more women in
organisation so they can depict this world that they do not discriminate on the basis of gender.
Women in these regions are not much educated so giving them chance to show their talent and
use their skills one thing which they can do for making a different image in society (Jo and
Harjoto, 2012). Although they do not have diversity issues but if they will not recruit more
female in present time then they may fail to find more women at higher position in upcoming
time.
Rewards programme – Employees who have have done extra ordinary ethical work and
motivated other to follow moral standards can be rewarded by this organisation so more workers
get motivation for promoting a health and positive culture develop trust among each other.
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