Business Strategy Report: HSBC's Macro and Micro Analysis

This report provides a comprehensive business strategy analysis of HSBC Holdings plc. It begins with an introduction outlining the report's objectives, which include analyzing the macro environment, evaluating internal capabilities, applying Porter's Five Forces model, and developing a strategic plan. The report then delves into the vision, mission, and objectives of HSBC, followed by a PESTEL analysis to assess the political, economic, social, technological, environmental, and legal factors impacting the bank. A BCG matrix is used to evaluate the strategic business units. The internal environment is analyzed using the McKinsey 7s model and VRIO framework to assess strengths, weaknesses, and core competencies. Porter's Five Forces model is applied to evaluate the competitive forces within the banking sector, and finally, a strategic plan is developed, incorporating tangible and tactical strategic priorities and objectives. The report concludes with a summary of the findings and recommendations.

BUSINESS STRATEGY

CONTENTS
INTRODUCTION...............................................................................................................3
LO1....................................................................................................................................5
P1 ANALYSIS OF IMPACT AND INFLUENCE ON MACRO ENVIRONMENT OF
HSBC AND ITS STRATEGIES......................................................................................5
M1 ANALYSIS OF MACRO ENVIRONMENT TO DETERMINE STRATEGIC
MANAGEMENT DECISIONS......................................................................................10
LO2..................................................................................................................................13
P2 ANALYSIS OF INTERNAL ENVIRONMENT AND CAPABILITIES OF HSBC
USING SUITABLE FRAMEWORK..............................................................................13
M2 EVALUATION OF INTERNAL ENVIRONMENT TO ASSESS STRENGTH AND
WEAKNESS OF ORGANIZATION INTERNAL CAPABILITIES AND SKILL SET......17
LO3..................................................................................................................................20
P3 APPLICATION OF PORTER’S FIVE FORCES MODEL AND EVALUATION OF
COMPETITIVE FORCES FOR HSBC.........................................................................20
M3 DEVELOPMENT OF APPROPRIATE STRATEGIES TO IMPROVE
COMPETITIVE EDGE AND MARKET POSITION......................................................23
LO4..................................................................................................................................25
P4 APPLICATION OF THEORIES, CONCEPTS AND MODELS AND DEVELOP
STRATEGIC PLANNING FOR HSBC.........................................................................25
M4 DEVELOPMENT OF A STRATEGIC MANAGEMENT PLAN THAT HAS
TANGIBLE AND TACTICAL STRATEGIC PRIORITIES AND OBJECTIVES............27
CONCLUSION.................................................................................................................30
REFERENCES................................................................................................................31

TABLE OF FIGURES
Figure 1 PESTEL ANALYSIS OF HSBC...........................................................................7
Figure 2 BCG MATRIX OF HSBC...................................................................................10
Figure 3 McKinsey 7s FRAMEWORK.............................................................................13
Figure 4 VRIO FRAMEWORK OF HSBC........................................................................16
Figure 5 PORTER FIVE FORCES MODEL....................................................................20
Figure 6 PORTER GENERIC MODEL............................................................................25

INTRODUCTION
Business strategy refers to the plan of action and set of decisions that an organization
implement in the industry to achieve the desired business objectives as well as a
competitive edge in the global market (Ghemawat, 2016). Business strategies are also
responsible to acquire the direction, planning and the objectives in a long-term goal of
the organization. As an assistant corporate strategy manager at HSBC Holdings plc.
This report is prepared for providing the vision, mission, and objectives of the HSBC
bank. Development of a strategic plan to achieve business objectives. Analysis of
impact and influence of the macro-environment on the organization. Evaluation of
internal environment and capabilities using the various framework. Evaluation and
application of porter’s five forces model in the banking sector.
HSBC
HSBC Holdings Plc. is a multinational banking and financial services providing
organization in the UK and headquartered at Canary Wharf, London. It is ranked as the
6th largest bank in the world and 1st in Europe as of 2020 (HSBC, 2020). HSBC has a
presence in over 65 countries with around 3900 branches worldwide. HSBC has a
customer base of more over than 38 million customers and 233,000 employee base
working full time for the organization. The organization generates revenue of US$ 56.1
billion with a net profit of US$ 8.71 billion as per reports of the financial year 2019. It has
an asset valuation of US$ 2.715 trillion as per records of the financial year 2019.
HSBC majorly deals in the following segments they are commercial banking, investment
banking, retail banking and personal banking.

LO1
P1 ANALYSIS OF IMPACT AND INFLUENCE ON MACRO ENVIRONMENT OF HSBC
AND ITS STRATEGIES
VISION OF HSBC
HSBC majorly focus on the growth that is connecting with new customers, allowing the
business to bloom and eventually assist humanity to fulfill their desires (HSBC, 2020).
MISSION OF HSBC
 The mission is to the leader in the banking industry.
 To deliver excellent customer experience related to sales, services as well as
business solutions
 To establish a fun and challenging environment
 To motivate employees and enhance productivity.
OBJECTIVES OF HSBC
 To become the leading banking and financial services providing organization in
the world
 To enhance the profitability of the organization.
 To maintain the major focus on the application of the basic principle within the
organization.
 To establish and maintain a sustainable competitive edge in the global market

MACRO ENVIRONMENT
The external, as well as the uncontrollable circumstances that affect the decision-
making process and have an impact on the organization performance and ongoing
strategies within the organization, are termed as macro environment (Jelassi and
Martinez, 2020). The various factors affecting the macro environment can be evaluated
by performing PESTEL analysis on the macro environment.
Figure 1 PESTEL ANALYSIS OF HSBC
POLITICAL FACTORS
Political factors that influence the working of HSBC are political stability, corruption
level, intellectual property safeguarding, trade regulations, government involvement in
the organization working, taxation policies, Etc. These factors have a huge impact on
the profitability and working conditions of the organization within the specific
demographic region (Yuljansyah et al. 2017).
ECONOMIC FACTORS
The various economic factors that affect the macro environment are the rate of inflation,
rate of interest, exchange rate and economic cycle (Islam, 2017). HSBC management

team is always focused on delivering the best services to the clients and utilizes the
best of their financial assets in economic conditions.
SOCIAL FACTORS
The social factors that have an impact on the HSBC environment are change in the
customers perspective, shopping habits, religion, level of education and the population
of the demographical area in which the organization is operating.
TECHNOLOGICAL FACTORS
The various factors that affect technology are online fraudulent and cyber-attack. HSBC
caught fire along with other financial service providing institutes on how they take care
of customer information and this results in the loss of customers to the other rivals
(Islam,2017). This can be termed as the operational weak point of the that breaches the
data protection act of customers.
ENVIRONMENTAL FACTORS
HSBC aims to protect the environment by the considering the following factors that are
paperless operations of banking, zero wastage within the workplace, effective
collaboration of supply chain, lower the level of energy consumption, sustainability in
travel, environment-friendly workplace, etc.
LEGAL FACTORS
The legal factors those are responsible in the affecting the operation of HSBC are
involvement of the government in the industry and imposing various rules and regulation
on the functionality of the organization and failing to operate with can lead to the take
legal action against the organization by the government (Jelassi and Martinez, 2020).

M1 ANALYSIS OF MACRO ENVIRONMENT TO DETERMINE STRATEGIC
MANAGEMENT DECISIONS
BCG MATRIX IS USED BY HSBC TO ANALYSE THE MACRO ENVIRONMENT
The BCG matrix is being used by the big firms to conduct the performance analysis of
the individual operational units within the organization and resources allotment is done
as per the requirements (Mohajan, 2017). This matrix is most opted by the business due
to the potency and ease at the time of crisis. The BCG matrix consists of four elements
they are as follows
Figure 2 BCG MATRIX OF HSBC
STARS
In the star segment, the operational units generate high profits as well as assist in the
growth of the business and acquire a high market share. These are considered as the
major units, which are intended to become the sources of income, as well as expected
to create positive free cash flow. HSBC Managers should use the stars as an
opportunity to enhance the cash flow and gain profits.

CASH COWS
In this segment, the growth of a market is slow and steady but the market share and
cash generation rate is very high (Mohajan, 2017). The cash acquired from this
business can be utilized in the other business so as to increase the market share. In
cash cow segments, the management of HSBC should pay attention to retention of
existing customer and less on marketing strategies
DOGS
In this segment, the market share as well as the growth of the market is very low. The
dogs segment is not considered worthy for investing the money that is due to the
negative cash flows and lower market growth (Kader and Hossain, 2020). The
management of HSBC should focus on avoiding the dogs and if it does not deliver cash
flow then it must be liquidated.
QUESTION MARK
In the question mark segment, the growth of a market is high but the market share is
very low. This segment requires a good understanding of the brands that is either it will
become a cash cow or ultimately dogs (Mohajan, 2017). There are various possibilities
that are responsible for the gaining market share and becoming a star and later cash
cow as well as low market share eventually convert it into dogs.
Therefore, BCG matrix assists in the diversification of the segments in the business
environment (Kader and Hossain, 2020).
HSBC is considered as a big bull in the market and regarded as cash cows, that is
because of the high value of the market share and growth of the business is a little bit
low.

LO2
P2 ANALYSIS OF INTERNAL ENVIRONMENT AND CAPABILITIES OF HSBC USING
SUITABLE FRAMEWORK
The analysis of the internal environment and the strategic capabilities can be performed
by using the following framework
McKinsey 7s MODEL
McKinsey 7s model is a suitable framework designed to analyze the organizational
environment by considering 7 major elements of the framework in order to diagnose the
alignment of the elements correctly as well as assisting in the achievement the
objectives of the organization (Buzatu et6 al. 2019). These are mainly divided into 2
parts that are soft S and Hard S and represents interrelation between the elements.
Figure 3 McKinsey 7s FRAMEWORK

STRATEGY
Strategies are a set of action plans acquired by the organization to achieve a
competitive edge and enhance growth factor in the global market. HSBC has a major
focus on maintaining long-term strategies to have a higher advantage in the future.
STRUCTURE
The structure can be expressed as the systematic flow chart of the work being
distributed among the employers consisting from the top level to lower level (Buzatu et
al. 2017). It is an open process and modifications are easy to perform within the
organization
SYSTEM
The system refers to the process and approach of the organization. The organization
strictly follows the system to achieve business objectives (Lai and chen, 2019). HSBC
adopts open system policy to innovate and implement the products and improve the
service quality as well as increasing the growth of the organization.
SKILLS
Skills are the abilities of employees working within the organization. HSBC has a high
level of skilled employees ratio that assists the organization to achieve a competitive
edge in the industry (Buzatu et al. 2019). To enhance and improve the skills of the
employees to meet the new technological requirements to perform the work more
efficiently, HSBC carries out skill development and training program for the employees.
STAFF
Staff is the essential necessity of an organization to efficiently carry out operations
within the workplace. The management at HSBC considers every aspect before
recruiting a new employee. Experienced staff can efficiently utilize the available