International Business Analysis of HSBC: Challenges and Strategies

This report provides a comprehensive analysis of HSBC's international business operations. It begins with an introduction to HSBC, detailing its global presence, services, and historical background, including its evolution and key milestones. The report then evaluates HSBC's activities, focusing on the impacts of trade wars and China's financial policies on the bank's performance. It further examines the development of HSBC's international business over time, including its expansion strategies, acquisitions, and adaptation to global market dynamics, such as the Uppsala model. The construction of HSBC's value chain is explored, emphasizing how the bank connects with opportunities in a responsible and sustainable way. The report concludes with recommendations based on the analysis, drawing on the challenges and opportunities faced by HSBC in the international market. The analysis incorporates relevant concepts from international business, highlighting the challenges and strategies of multinational enterprises in a turbulent global environment.

International business

International business 1
Contents
Introduction...........................................................................................................................................2
Evaluation of the activities....................................................................................................................3
Development of IB activities over time.................................................................................................4
Construction of value chain...................................................................................................................6
Recommendations.................................................................................................................................7
References.............................................................................................................................................9

International business 2
Introduction
HSBC is one of the globe’s major banking and financial service administrations. The bank is
serving to more than 40 million customers and it is made possible by its 4 international
businesses such as retail banking and wealth management, international banking and markets,
commercial banking and, global private banking. HSBC is having a business in more than 65
nations and regions in Asia, Europe, North America, Latin America, the Middle East, and
Africa. HSBC is identified to be seventh-largest bank worldwide. The bank is having
headquarter in London. The product offerings of HSBC has been realized in the form of
wealth management services, life insurance, Demat services, fixed deposits, support services,
mortgage, loans and more.
HSBC was entitled after its creation associate, The Hong Kong and Shanghai Banking
Corporation which was formed to back the increasing profession between India, Europe, and
China. Just after the establishment, HSBC began initiating branches in order to enlarge the
services to propose customers. Trade finance is a robust element of both local and global
businesses of the bank. Limited HSBC aims to be where evolution is, linking clienteles to
opportunities, empowering companies to prosper and economies to flourish and eventually
assisting people to fulfill their anticipations and expectations. HSBC is registered on the
Hong Kong, London, Paris, New York, Bermuda, and Paris stock exchanges and the shares
are held by more than 200,000 shareholders in 130 nations and territories. By the end of the
19th century, HSBC was identified to be a leading pecuniary organization in Asia. In the 20th
century, HSBC faced changes and challenges due to the global battles to the excessive
depression of the 1930s. The bank has been converted from an imported provincial bank into
the globe’s foremost financial organizations by the end of the era made possible by
acquirements, growth, and divergence. A fresh holding company, HSBC Holdings Plc was
made by HSBC in 1991. A successful bid was made by the bank to obtain complete
possession of Midland Bank in 1992. 1n 1998, HSBC adopted a combined brand by
exhausting HSBC and hexagon character with the goal of augmenting gratitude of HSBC by
the shareholders, customers, and employees thru the domain (Lai, and Chen, 2019).
HSBC at present is the globe’s number one project consultant and infrastructure finance
house. It is a top advisor in Sub-Saharan Africa. HSBC arranges and finances public and
private sector plans in emerging nations and function with the local and provincial banks on

International business 3
the matters like infrastructure and project sponsoring, partaking its proficiency, experience
and constructing its skills base. The international flow of trade, finance, and data are
anticipated to grow as the globe grows more linked. The international middle classes are set
to magnify further led by Asia. The significant investment is required globally to assist the
evolution to a low carbon economy. These long term trends have strengthened the strategic
advantage as a leading global bank. More than half of the revenue is generated by the bank
through the international clients. HSBC is having accessibility to the extraordinary growth,
emerging markets in Asia, Middle East and Latin America proposing a stage for the long
term evolution. Add on, the balance sheet of the bank is continued to offer an excellent base
for the sustained dividend (Kraus, et al. 2018). On the other side, HSBC bank is having
subsidiaries in the form of HSBC bank Canada, The Hong Kong and Shanghai Banking
Corporation Limited, HSBC Bank Plc, HSBC UK bank Plc, Hang Seng Bank Limited, HSBC
France, HSBC Bank Middle East Limited, Group Financiero HSBC and more.
Evaluation of the activities
The trade war of Trump has hit the US economy more than China’s. HSBC has been
influenced by the trade war initiated by Trump. China has been benefitted from the robust
import demand in most of the trading partners except the US. Both Washington and Beijing
have located tariffs on hundreds of billions of dollars’ worth of each other’s goods. HSBC
faced negative outcomes in the US than in China. On the other side, China was advanced
from robust import demand in most of the trading partners except for the US and Germany.
More pain was felt in the US from Trump’s trade war than Chinese customers and businesses.
The tariff was implied on hundreds of billions of dollars’ value of products between the US
and China (Lee, and Tang, 2017). It indicated to the emergence of the threat of growth across
the global economy. On the other hand, the trade war coupled with the underlying slowdown
of China. It reflects that a significant trade deal will be done over the next few months. One
problem faced by the US is that several large export markets are not growing quickly. These
are not just US products which are imposed retaliatory tariffs by China and as a result, export
growth of China is weakened. But US exports to China have represented some softening
across the board (Kano, 2018).
Another instance which impacted HSBC is changes made by China in the bank loan rates. It
left out to the bank out of rate-setting club. China changed its system for the banks to decide
lending rates in order to the central bank to efficiently influence and control interest rates.it is

International business 4
a quite significant move of China. The long-lasting chase of market based central banking
structure of China led to the economic growth of the economic growth which was losing
steam in the trade war with the US. Beijing made the decision to cut financing costs for the
struggling small companies. Under the new system of China, lenders selected are required to
submit their 1 year and 5-year loan prime rates. It comprises the lowest rate provided to the
best clients. The central bank of the nation will analyze the average of those rates and
announce it at 9:30 am on the 20th of every month, beginning from Tuesday. It will be the
benchmark rate for foreign banks to follow (Naheem, 2018). It has been said that rate-setting
group has been prolonged to 18 to make more representative comprising foreign banks like
Citigroup and Standard Charted. Out for the foreign banks, HSBC is having largest assets
scale and a great number of outlets operating in China (Kalkan, 2018). HSBC was not included
in the rate-setting group. HSBC is the major bank in Hong Kong and should be ranked among
others. It will not have any direct impact on the business of HSBC. It is one of the sixteen
banks and only foreign lender offering price quotations for Shibor, Shanghai Interbank
offered rate for the short term loans. On the other side, the government is constant to try to
lift lending to assist alleviate economic growth but the credit crisis for small moneylenders
has held back growth.
Development of IB activities over time
Any business looking to expand operations into the new market, the international sights
offered by the bank helps to connect with the opportunities. HSBC is one of the main banking
and financing services banks worldwide. The bank proposals a complete choice of financial
services comprising commercial and corporate banking, particular financial services, private
banking, investment banking, and markets and advanced activities. The global network of
HSBC encompassed over 9500 offices in 76 nations and areas in the Asia Pacific region,
Europe, America, Middle East, and Africa. HSBC is an innovator of modern banking
practices in the number of nations (Jaklič, 2016).
HSBC is a growth-oriented organization. The bank focused on the concrete strategies from
the earliest days in 2000 in order to attain market leadership in all the segments it operated.
HSBC was the leading player in the segments like consumer finance, commercial and
corporate banking, and personal financial services along with investment banking, mortgage
insurance, and credit card business. In order to reinforce the product portfolio and geographic
reach, HSBC has boarded a hostile acquisition strategy. HSBC even launched a hostile

International business 5
branding exercise to accompaniment its international growth strategy (Lo, 2018). The
geographical reach of HSBC can be judged by its existence in terms of subsidiaries and
franchises. The bank is having almost 200,000 shareholders in almost 100 nations and
regions. The shares of the HSBC are operated on the New York Stock Exchange. The bank is
also registered in Hong Kong, London, Paris, New York, and Bermuda stock exchanges
(Nithisathian, Wall, Thanitnan, and Ponwiritthon, 2018).
The move of HSBC to attain retail banks in North America and the UK was mainly to expand
from its home in Asia. After the acquisition of Marine Midland Bank and Midland Bank, the
motivation of HSBC changed delicately. The banking was quite concentrated in several
emerged countries. So, the policymakers in these nations imitated to bar the banks from local
mergers and acquirements. The only possibility for the growth was to expand the cross
border. HSBC has another important segment for the wealthy individuals like HSBC premier
which offers cross border advantage for the transfer of a person’s credit rating at the time of
their relocation along with the additional services (Green, and Lampe, 2017).
HSBC is having a robust presence in Mexico and has no agencies in California with the great
populations of Mexico immigrants. HSBC choose to grow in abroad to combine surplus
resources. The bank initiated its progress in North America by obtaining unsuccessful and
weak banks. The shareholders missing a proportional gain concerning to the HSBC, with
admiration to own and governing banks have sold to HSBC (Naheem, 2015). Often, growth by
acquisition is problematic to implement and it leads to overreach due to managerial hubris.
The functions of the HSBC in Canada and the US are survivors of inspecting procedure
which represents other banks from Japan, Canada, UK and US sell their subsidiaries in some
circumstances to HSBC. HSBC has represented to be one successful predator in
overpowering the target. HSBC initially choose to expand its operations worldwide by
acquiring weak banks as a part of the design. It has been believed that a lucrative bank cost
more than the unprofitable bank and attains the goal of diversification, ignoring the size.
HSBC is required to obtain large banks. At current, HSBC is one of the globe’s major banks
in terms of total assets and market capitalization (Porter, and Kramer, 2019).
The Upsala model is identified as Progress Model of Incremental Internationalisation. It includes
the procedure of experiential learning and incremental commitments causing to the evolutionary
development in the international market. This model is having the assumption that lack of
knowledge is a significant obstacle to the advancement of international operations. This model deals

International business 6
with knowledge attainment and learning. This model includes the procedure of enhancing
involvement in international operations (Lo, 2018). It is all about the process of adapting operations
of the organizations to the international level. It has 3 significant dimensions used to govern the
degree of internationalization of the organization such as the number and geographic space of the
global market entered, the number of the activities conceded out in the several nations along with
the level of incorporation of the activities. This model defines internationalization in the form of
learning and evolutionary perspective. The aim of the Uppsala model is to define how
establishments learn and attain knowledge throughout the procedure of international operations. It
has been observed that most efficient information lies in the own operations of the organization and
the relevancy of experiential learning is considered (Buckley, and Ghauri, 2015).
Construction of value chain
HSBC as a foremost global trade bank has been placed to assist customers and other
organizations with who bank pursue to conduct business in a responsible and sustainable
way. Almost 80% of the international business passes through the supply chains, a network of
suppliers and customers which contribute to offering an end product or service. HSBC
constructs the value chain by the following points:
The value chain of HSBC is constructed by identifying competitive advantage sources. The
conceivable sources of competitive advantages are recognized during the planning procedure.
The organization is a collection of several activities which share understanding to certain
degree. The bank cannot trade whole actions in the outward market (Rauf, 2016). The value
chain is used by the bank to deliberate these activities as economic rent sources. Such
activities also assist as obstacles to the new applicants and cause cost disadvantage to the
contestants.
The identification of compound inter-relationships and interdependencies has a role in the
development of the value chain. The interlinkages in the organization are interrelationships
between actions within the same administrative units and exterior associations are between
the business segments of same. Considering such interrelationships assists HSBC to attain
benefit from harmonization and joint optimization (Sánchez-González, García, Ruiz, and
Piattini, 2017).
The value chain is constructed by optimizing finances, products, and the information flow.
The enhanced information flow assists the bank to identify and feat new opportunities and

International business 7
lessen outside threats. The constant value chain appraisal results in opportune filling
significant gaps which can affect the efficiency of the organization. The improved material
and product flow due to the effective execution of value chain results in the improved
demand and sales anticipating. Inventory management also assists in minimizing the
interruptions caused by pursuing actions during the supply chain. On the other side,
customers now days place high importance to the instant response and convenient access to
the significant product concerning information. The unanticipated pause in the evidence flow
can influence the customer-supplier relationship (Sohrforuzani, Moslehi, and Shakib, 2017). The
value chain analysis of the bank along with the execution can highpoint and eradicate the
obstructions to the information flow.
Recommendations
Donald Trump is following the trade war campaign to level the playing field in global trade.
According to Trump, the world needs more of the US than the US needs them. HSBC in such
a scenario is recommended to get creative with the financing. The businesses need capital
even if the revenues are going down on a constant basis. It is due to the capital spending
plans. Doing partnership with the leasing companies, banks, and other fiscal institutions can
assist HSBC to offer healthier ways of finance for purchasing products. The banks are also
required to offer small business organisation loans and discover about the precise
accessibility of credit which can be accessible to the public and organizations. The low-
interest rates represent an opportunity to HSBC to work with the customers to assist them
with cash flow encounters while a trade war is active (Uçaktürk, Uçaktürk, and Yavuz, 2015).
During the trade wars, HSBC can maintain profits by keeping a watch on administrative
expenses and by checking to account. The bank needs to look for the ways so that overhead
can be cut. Another recommendation to HSBC is to expand some additional services. HSBC
can offer the banking services in the host country which are comparatively new and there is
no existence of such services in the host countries. The customer base should be reviewed by
the organization in order to perform better. The bank can also diversify its operations. The
company can expand its operations in more nations or can increase the number of branches in
the host country. The trade war is happening all over the world, but the bank can save itself
by getting elaborate in the unnecessary tariffs. The bank can go for the small business
development center and additional services to identify the markets where reinvestment can be
made. The business development resources should be properly evaluated by the bank.

International business 8
HSBC should comprehend that trade wars are temporary and will not decide the growth of
the organization. The low profitability and limited market share are temporary. The strong
base of the bank is sufficient enough in attaining a robust position in the marketplace. On the
other side, HSBC should focus on the decisions made by the authority regarding financial
policies. The local government should also boost credit support to private businesses. HSBC
is also recommended to adapt to the unconventional policy measures in order to grow faster
in the developing nations where higher rates often gave ample space for cuts while a
downturn. The bank can also shift towards a dovish monetary policy stance to trigger an
enormous capital outflow (Arte, and Barron, 2016).
In the complex environment, a change is required to encounter the challenges faced due to a
trade war. It can be helpful in capturing important opportunities. The bank can even hire
highly expertise authority deliberating the changes going go in the environment. Such
authority can help HSBC to fight with the changes going on and overcome in a better way.
They can even bring out the bank from the complex situation along with saving a margin.

International business 9
References
Arte, P. and Barron, A., 2016. Early Internationalisation of New and Small Indian Firms: An
Exploratory Study', The Challenge of Bric Multinationals (Progress in International Business
Research, Volume 11).
Buckley, P.J. and Ghauri, P., 2015. The internalisation theory of the multinational enterprise: A review
of the progress of a research agenda after 30 years. In International Business Strategy (pp. 99-121).
Routledge.
Green, E. and Lampe, J., 2017. Under Western Eyes: Foreign Banks’ Archives Relating to Central
and Eastern Europe Between the Wars Edwin Green (HSBC Holdings plc, London). In Crisis and
Renewal in Twentieth Century Banking(pp. 69-79). Routledge.
Jaklič, A., 2016. Enhanced development through internationalisation in emerging Europe: the role of
FDI in Slovenia. Transnational Corporations Review, 8(1), pp.28-40.
Kalkan, B., 2018. The Relation between Use of Information Technologies in Logistics Firms,
Customer Satisfaction and Business Performance. Internatioanl Journal of Trade, Economics and
Finance, 9(1), pp.14-19.
Kano, L., 2018. Global value chain governance: A relational perspective. Journal of International
Business Studies, 49(6), pp.684-705.
Kraus, S., Niemand, T., Besler, M., Stieg, P. and Martinez-Ciment, C., 2018. The influence of
leadership styles on the internationalisation of ‘born-global’firms and traditionally globalexpanding
firms’. European Journal of International Management, 12(5/6), pp.554-575.
Lai, J. and Chen, Y., 2019, May. Communication Process and Information Systems in HSBC. In 2019
International Conference on Management, Education Technology and Economics (ICMETE 2019).
Atlantis Press.
Lee, H.L. and Tang, C.S., 2017. Socially and environmentally responsible value chain innovations:
New operations management research opportunities. Management Science, 64(3), pp.983-996.
Lo, C.P., 2018. Business Service, International Outsourcing, And Wage Inequality. The Singapore
Economic Review, 63(05), pp.1175-1182.
Lo, C.P., 2018. Business Service, International Outsourcing, And Wage Inequality. The Singapore
Economic Review, 63(05), pp.1175-1182.
Naheem, M.A., 2015. AML compliance–a banking nightmare? The HSBC case study. International
Journal of Disclosure and Governance, 12(4), pp.300-310.
Naheem, M.A., 2018. Illicit financial flows: HSBC case study. Journal of Money Laundering
Control, 21(2), pp.231-246.
Nithisathian, K., Wall, W.P., Thanitnan, C. and Ponwiritthon, R., 2018. Maintaining Indispensable
Competitive Advantage: Corporate Strategy for 21st Century. RMUTL Journal of Business
Administration and Liberal Arts, 6(1), pp.11-24.
Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing sustainable business (pp.
323-346). Springer, Dordrecht.

International business 10
Rauf, A.L.A., 2016. Risk and return: Comparative study of active sukuk markets of Nasdaq HSBC
amanah sukuk and nasdaq Dubai listed sukuk. Global Journal of Social Sciences Studies, 2(2),
pp.104-111.
Sánchez-González, L., García, F., Ruiz, F. and Piattini, M., 2017. A case study about the
improvement of business process models driven by indicators. Software & Systems Modeling, 16(3),
pp.759-788.
Sohrforuzani, M.V., Moslehi, M. and Shakib, B., 2017. A comparative study of business skill indices in
iran, germany and india with the emphasis on business index. Revista QUID, 1(1), pp.75-86.
Uçaktürk, A., Uçaktürk, T. and Yavuz, H., 2015. Possibilities of usage of strategic business
intelligence systems based on databases in agile manufacturing. Procedia-Social and Behavioral
Sciences, 207, pp.234-241.