HSBC's International Business Strategy: A Case Study

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International Business Strategy
Assignment

Contents
INTRODUCTION...........................................................................................................................3
COMPANY BACKGROUND........................................................................................................3
INTERNATIONAL STRATEGY ADOPTED BY THE FIRM AND ITS INTERNATIONAL
MANAGEMENT STRUCTURE....................................................................................................3
FIRM’S STRATEGIC USE OF JOINT VENTURES, ALLIANCES, OR MERGERS AND
ACQUISITIONS.............................................................................................................................6
INTERNATIONAL DIMENSIONS OF THE FIRM’S SOCIAL RESPONSIBILITY
STRATEGY....................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Operating a business in international borders is might be a concern for most of the managements
as they have to deal with a variety of the aspects in regards to the different nations and its people.
So, in order to overcome from these challenges and concerns in the business, there is a need to
design a free flow structure for the business and future success with proper M&A strategies so
that the overall success rate can be enhanced. For this subject, the case of HSBC Plc. has been
taken to analyse the current international strategy utilized by the firm with the description of how
the firm uses the merger and joint ventures with its success rate. At last, the assignment will also
going to include the CSR activities of the firm.
COMPANY BACKGROUND
HSBC is the leading multinational bank across the globe which has a strong balance sheet and
easy access to high-growth in the given market. It provides services to 39 million customers all
over the world and helps various business and economies to prosper and achieve the success rate
in an effective manner. The company has been surging in their given business due to the
enhanced international flow of trade, the rise of the global middle class and high level of
investment in the low-carbon economy. This factor has made it the world's second largest bank
in the international arena (HSBC Annual Report, 2018).
INTERNATIONAL STRATEGY ADOPTED BY THE FIRM AND ITS
INTERNATIONAL MANAGEMENT STRUCTURE
In order to excel in the global platform, HSBC has adopted value-based strategy because the
company has a firm belief that they want to conduct business in an effective manner and achieve
a good result by treating their customers in a fair manner. The value of the company is central to
their procedure of achieving its objective in a significant manner. According to its value-based
strategy, the company stands firm on what is right and is committed to delivering its products so
as to win the trust among its customers in an effective manner. Furthermore, the company is
personally responsible for its deeds and empowers others to increase their efficiency. On the

other hand, the company is open to different ideas and cultures and listen to all its stakeholders in
an inclusive and fair manner so that their voice is being heard effectively (Naheem, 2018).
The international management structure of the HSBC as shown in the above-given diagram is
basically in the form of hierarchical and decentralized structure. According to it, the top level of
management has a significant command on the middle and lower level and yet, there is a smooth
flow of information from the higher to a lower level of the given organization. This structure is
beneficial for HSBC globally because it would help it to enhance its capacity and allow it to
provide significant freedom to its unit in another country to work as per the work culture of that
country (Ehrenhard and Fiorito, 2018).

International Responsiveness (I-R) Model of HSBC has shown in the above-given diagram. As
HSBC is a multinational organization; it has high forces for local responsiveness and low forces
for global integration. This indicates that the HSBC make its strategy to meet the needs and
requirements of the local market present worldwide by customising their products as per their
needs and requirements. Besides with low pressure from global integration, they have a
decentralized structure where the subsidiary of HSBC operates independently and autonomously
across the world (Doni, et al. 2019). From the given study, it could be concluded that the I-R
model of HSBC matches to that of the strategy utilized by the company as both are based on
providing more value to their customers and satisfying their needs in an appropriate manner.
Besides, I-R model of HSBC also matches with the international structure of the HSBC where
the working has been decentralized and all the units work independently to cater to the needs of
their customers (HSBC Investors, 2018).
The brand wants to connect customers to opportunities for more than 150 years and is termed as
the world's local bank and with the above mentioned structure and the ethical practices; HSBC
tries to convey the best possible results in the world (HSBC PLC, 2019). The international
strategies involve the effective practices for the responsible lending with a clear assessment of
the risks to gain some larger projects (Manipaz and Manipaz, 2016).

FIRM’S STRATEGIC USE OF JOINT VENTURES, ALLIANCES, OR
MERGERS AND ACQUISITIONS
According to the group report by HSBC on Mergers and Acquisitions (2018), HSBC knows the
new events come with new opportunities and hence they provides bespoke solutions which can
be tailored for every industry with the help of effective M&A bankers in almost 30 nations
worldwide. They manage their business from London as well as from their regional heads around
the world with major focus on emerging markets. For example, HSBC has on ground M&S
bankers from every continent. Their international M&S strategies are basically based on the
product specialists (bankers in relevant country) with the industry experts. At the same time,
HSBC is also an advisory firm to many multinational companies and government bodies. HSBC
and their M&A expertise have the full site access to the financial and risk management products
across the globe and their home country (HSBC Group, 2019). Financial Times (2006) has
presented the timeline for the HSBC actions and business practices from 1865 and shown the
major actions as in 1959, it expands in Middle East with the acquisition of The British Bank
while in 1965 they acquire Hang Seng Bank in Hong Kong afterwards owned 51% stake in New
York State’s Marine Midland Bank and rest 14.9% in 1991 and 1993 the rest.
In 1997, with the aim to expand more they moved their head office to London and moves into
Latin America with formation of Banco HSBC Bamerindus and acquisition of Roberts SA de
Inversiones in Argentina. List goes on with the acquisition of Republic National Bank of New
York for $10bn and expands into European countries with acquisition of CCF in France and lists
in Paris. They had invested a huge amount on Household International, the US consumer finance
company of $15bn. Further, they expanded also in to China with the joint venture, Beijing HSBC
Insurance Brokers and the purchase of 50 per cent of Fujian Asia Bank. Has increased the reach
by purchasing almost 16% stakes in Industrial Bank of China and 20% in Bank of
Communications for $1.75bn and buys the Bank of Bermuda and all of which has made it
possible to reach the highest profits of $20.97bn in 2006. In addition to this, the alliances of the
HSBC does not stops in 2006, afterwards they started dividing their business in to several
functions like asset management, retail banking, wealth management, securities etc. in the
emerging economic masters like India.

Overall, it can be stated that the mergers, joint ventures and the acquisitions has helped them to
become a leader in the banking sector and its services all over the globe. The strategies to expand
not only helped them to overcome from the several concerns from part years but have also
enhanced their market value and profitability. The strategies of the HSBC are quite
comprehensive and are related to the diverse subjects of its international strategy.
INTERNATIONAL DIMENSIONS OF THE FIRM’S SOCIAL
RESPONSIBILITY STRATEGY
HSBC has become the first bank to go “carbon neutral” by reducing the carbon emissions and
energy usage, buying the green electricity and then offsetting the remaining CO2 emissions by
investing in carbon projects. The bank provides the facilities for helping in the climate change
after the conference in 2004 for climate forecast. The bank internationally has made the public
intentions to achieve their three month objective ahead of their schedule.
CSR ACTIVITIES OF HSBC
The organization has been established from 1865 and constantly focuses on the needs of the
changing world. In addition, the organization has been effectively working through their CSR
activities in order to financed economic growth, fostered international trade, and overcome
events like economic crisis. The commitment of the organization is to operations in a sustainable
manner in order to attain the economic growth. There are three key areas of CSR of HSBC such
as sustainable finance, employability and financial capacity, and sustainable supply chains. In
addition to this, the organization has been contributing in the global transition to a low-carbon
economy. The focus of the organization toward the CSR activities have been significant as they
pledged to enhance the world and make suitable changes in the current operations to possess
positive influence on the environment and stakeholders.
HSBC Group has pledged to provide the long-term support to the people in order to access
education and training effectively so that they could attain substantial skills and gain success.
The role of stakeholders of the organization such as customers, NGOs, and other key
stakeholders has been effective and they have played their duties in the global supply chain at
huge level. The organization has done a sustainable financing and investment of 28.5 billion US
Dollars since 2017 (HSBC Group, 2018). In addition to this, the HSBC Group has understood

their responsibility towards the Sustainable Development Goals of United Nations. The
organization has been contributing in the SDGs of the United Nation by safeguarding the planet,
terminate poverty, and ensure that the peace and prosperity is prevalent in the society. The focus
of the HSBC Group has been stringent towards the SGD goals and they also work on their core
areas in order to fulfill their corporate social responsibilities.
CONCLUSION
The report to determine the corporate details of the HSBC has involved the different aspects of
the banking group. The report has critically examined the different aspects of the company and
how its international strategies in the global stage make it more popular and reliable for the
customers and it has been found that the role of the banking giant is quite huge and can easily
dominate the others in their business. The international strategies of the business involves the
proper delivery of the products and services in their operating zones while they also serves some
mobile locations with the help of their M&A strategies that makes them in reach of a diverse
range of the customers all around the world.
Afterwards, in terms of the business analysis of the HSBC a determined focus on its diverse
range of merger and acquisitions or even partners are evaluated with their strategy to expand and
serve the people around the world. The results of their international strategies are very effective
and have made them more popular in terms of the brand value, profitability, unit expansion etc.
So, it can be said that the strategies of the HSBC in these area are very effective and the
management has understood their role in expansion of the business. At last, the CSR activities of
business finance sustainable activities, employability and financial capacity, and sustainable
supply chains, risk management, asset management or even holdings in share markets are also
served by the company. In addition to this, for this, they provide high level education for the
local community’s people, resource protection, environmental and educations projects, carbon
neutralization, in partnership with the World Wildlife Fund (WWF), HSBC volunteer programs,
children funds, helping to combat illiteracy mentoring underprivileged children in Australia
through HSBC Kids, an innovative partnership with children's charity Barnardo's and many other
services that helped them to make a successful value and position in the markets.

REFERENCES
Doni, F., Larsen, M., Bianchi Martini, S. and Corvino, A., 2019. Exploring integrated reporting
in the banking industry: the multiple capitals approach. Journal of Intellectual Capital.
Ehrenhard, M.L. and Fiorito, T.L., 2018. Corporate values of the 25 largest European banks:
Exploring the ambiguous link with corporate scandals. Journal of public affairs, 18(1), p.e1700.
Financial Times, 2006. Timeline: HSBC global expansion, online available at
https://www.ft.com/content/25e4964e-ad05-11da-9643-0000779e2340 last accessed on 5th May
2019.
HSBC Annual Report., 2018. Online available at https://www.hsbc.com/investors/results-and-
announcements/annual-report last accessed on 1st May, 2019.
HSBC Group, 2019. Mergers and Acquisitions, online available at
https://www.gbm.hsbc.com/solutions/mergers-and-acquisitions last accessed on 5th May 2019.
HSBC Investors, 2018. Strategy Update, online available at
https://www.hsbc.com/investors/investor-events-and-presentations/strategy-update-2018 last
accessed on 5th May 2019.
HSBC PLC., 2019. Our Strategy, online available at https://www.hsbc.com/our-approach/our-
strategy last accessed on 5th May 2019.
Manipaz, E. and Manipaz, A., 2016. HSBC Corporate Social Responsibility, online available at
http://sk.sagepub.com.libproxy.ncl.ac.uk/cases/download/hsbc-corporate-social-responsibility?
format=case last accessed on 5th May 2019.
Naheem, M.A., 2018. Illicit financial flows: HSBC case study. Journal of Money Laundering
Control, 21(2), pp.231-246.