In-Depth PESTLE Analysis: HSBC's Strategy in the UK Market

This report provides a PESTLE analysis of HSBC within the UK business environment, examining the political, economic, social, technological, legal, and environmental factors influencing the company's performance. It highlights the impact of Brexit, economic growth, inflation rates, social and cultural factors, technological advancements, legal policies, and environmental regulations on HSBC's strategic planning and operational effectiveness. The analysis emphasizes the importance of adapting to the dynamic external environment through flexible policies and strategic resource allocation to maintain a sustainable competitive edge in the financial market. The report concludes with recommendations for HSBC to focus on continuous environmental analysis and implement flexible strategies to boost productivity in the UK market.

PESTLE ANALYSIS
1
PESTLE ANALYSIS
Name:
Institution:
Course title:
Tutor:
Date:

PESTLE ANALYSIS
2
Executive Summary
The analysis of external business environment is necessary for an organization to achieve
the desired production level. The top management is mandated to develop a plan that is highly
effective in dealing changing business environment. The business is supposed to identify the
changes in business environment factors for extended performance in the targeted market.
PESTLE analysis is a tool that is used by businesses in developing proper policies considering
the changes in business environment.

PESTLE ANALYSIS
3
Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Company Background.....................................................................................................................4
PESTLE analysis: UK context.........................................................................................................6
Political factors............................................................................................................................6
Economic factors..........................................................................................................................7
Social factors................................................................................................................................9
Technological factors.................................................................................................................10
Legal factors...............................................................................................................................11
Environmental factors................................................................................................................12
Recommendation...........................................................................................................................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

PESTLE ANALYSIS
4
Introduction
The decision makers in the organization are required to perform the PESTLE analysis to
forecast the changes in the external business environment. An organization can identify the
potential opportunities and threats in the market that will manipulate the long-term performance
of the business. An organization is required to continuously evaluate the business environment
for the achievement of needed production level in the market. According to Botha, Kourie and
Snyman (2014) the start-up and established businesses are required to access the external
business environment for a smooth flow of operations. Business external challenges negatively
impact the long-term performance of the business which requires the management to develop a
budget that will deal with issues in the market. Strategic planning using PESTLE analysis is used
to reassess the situation of the company for maximization of strengths and minimizing
weaknesses of the company (Khan, Alam & Alam 2015). The company can develop a stable
brand in the targeted market through the continuous evaluation of the external business
environment. An organization can build a proper organizational culture by executing policies
that consider the dynamic external business environment. The study will focus on HSBC a
leading financial institution in the UK and the business environment in the nation.
Company Background
HSBC is UK financial company that was established on 3rd March 1865 as Hong Kong
and Shanghai Banking Corporation Limited (HSBC 2018). The company primarily focused on
enhancing international trade globally especially Asia and Europe. The company was able to
expand to other parts of the world through the acquisition and merger with other banks. HSBC
has been able to develop a strong global brand through quality production to the consumers in

PESTLE ANALYSIS
5
the market. Consumer need analysis has greatly contributed to the increase in sales volume and
profitability in the company. The company has been able to open over 3,900 offices in 67
countries and serves over 38 million people globally making it the world’s best bank in 2017
(HSBC 2018). The management and staff of the company are consumer-oriented for a
sustainable competitive edge in the financial market. HSBC has employed 229,000 staff
speaking over 144 languages to offer quality services to the consumers. According to HSBC
(2018), the company was able to acquire a profit of USB 17.2 billion due to high demand for the
financial services of HSBC. The company policies are highly flexible to deal with the changes in
the external business environment.
Source: (HSBC 2018)

PESTLE ANALYSIS
6
PESTLE analysis: UK context
The PESTLE analysis considers the external business environment influencing the
performance of the business (Smart Insights, 2014). An organization is required to focus on
PESTLE analysis to acquire the following benefits in the production process. One is avoiding
mistakes in production through the evaluation of factors that influence the production process of
the business. The reduced mistakes are needed for a business to acquire an increased production
level. Two is the development of a budget that will assist in achieving the set short-term, long-
term goals of the business. The budgeting process is important for a business to have needed
capital to facilitate production levels in the market (Rogulenko et al. 2016). The budgeting
process assists to allocate resources effectively for sustainable performance in the targeted
market. Lastly, PESTLE analysis assists in delivering quality products and services that are
widely accepted in a particular market segment. Quality production requires a continuous
increase of business operations to deal with the changing choices and preferences of consumers.
The HSBC analysis of the UK external business environment is necessary for acquiring the
desired market share in the nation.
Political factors
The UK is a nation which is politically stable to motivate start-up and established
businesses in the area. The UK comprises England, Scotland, Wales and Northern Ireland which
are connected to achieve the set macroeconomic goals (Commonwealth Secretariat, 2018). The
nations are required to corporate in increasing the performance of the region through sustainable
economic development. It is necessary for the nations to develop a plan that will consider the set
rules and regulations for a sustainable flow of operations in the market. The nation has voted to
move from the European Union and operate as a free nation in the international market. The

PESTLE ANALYSIS
7
Brexit vote has negatively impacted the business due to the uncertainties that are experienced
due to the UK leaving EU. The UK is supposed to consider the developing plan that will sustain
the nation before the Brexit of 29 March 2019 (Wheeler and Hunt, 2018). The UK government is
confident of acquiring a large number of treaties with other nations that will provide a smooth
flow of businesses in the nation.
The government is aimed at making sure that there are a high number of people that are
willing to invest in the nation due to the stable political situation. The investment in a politically
stable nation assists in developing a plan that is highly effective to maximize the production level
in the market. Proper evaluation of business is used by the government to reduce the corruption
rate in the nation. According to Barrington (2016), the nation has formulated rules that will assist
the company to fight corruption for the achievement of desired production level in the long run.
The anti-corruption rules in the EU are modified to effectively run the operations in the UK for
proper flow in the market.
Economic factors
The UK economy positively impacts the performance of businesses towards a sustainable
flow of businesses. The Brexit has caused uncertainty especially in the financial institutions
which operate across Europe. Proper evaluation of the economy assists the HSBC to develop
proper organizational policies that will enhance the production level. The United Kingdom GDP
in 2016 increased by 1.8% which was the second highest in Europe behind Germany. The UK
was able to contribute to 16% of the Europe total GDP which is an indication that the nation is
highly depended for regional progress (Eurostat 2017). In the third quarter of 2017, the UK was
able to record an economic growth of 0.4% which is due to the suitable environment for
investment and trade (Woods, 2017). The monetary and fiscal policies implemented by the

PESTLE ANALYSIS
8
business are focused on developing the performance of the nation. The national economy has
been stable through the use of increased trade and investment to facilitate the growth of GDP.
The annual inflation rate in the UK for 2017 was 3.1% which is double from 1.2% the previous
year (Elliott, 2017). The high inflation rate has reduced the purchasing power of the consumers
and raised the cost of living in the UK.
Source: (Eurostat 2017)

PESTLE ANALYSIS
9
Source: (Woods, 2017)
Social factors
The business is supposed to consider the social and cultural factors of the consumers in
the nation for a sustainable flow in the targeted market. An organization that has an insight of the
targeted consumers is able to acquire an increased market share which is necessary for a steady
flow of an organization (Horner & Swarbrooke 2016). The UK has a high population which
contributes to the increased performance of businesses in the area. The HSBC Company has
been able to increase the number of consumers in the market through financial services that will
serve people from a different cultural background in the region. The UK is a multicultural nation
immigration rate in the nation which requires the business to evaluate the changes in social
factors. In 2017 the immigration rate was recorded at 224,000 where there are a high number of
people entering the UK compared to those leaving the nation (ONS 2018). The immigration rate
in the nation has contributed to the increase in population in the nation. The 2011 census of UK
estimated the population to be 63.2 million comprising of 32,154,000 females and 31,028,000
males (Office for National Statistics, 2018). The UK has been experiencing an increase in
population due to the suitable living conditions in the nation.

PESTLE ANALYSIS
10
Source: (Office for National Statistics, 2018)
Technological factors
The use of advanced technology in production is necessary for an organization to achieve
the desired production level (Johnston & Marshall 2016). In the UK there are proper platforms
that make it possible to use the latest technology in production. The technological infrastructures
in the UK are focused on providing social and economic development through increased trade in
the nation. The technology infrastructures in the UK have assisted to positively increase the
performance of the business for a constant flow in the industry. The easy accessibility of internet
has greatly increased the performance of business with the online operation. According to Heath
(2015), there has been an increase of 46% in the digital sector which has contributed to a 7.8%
rise in employment. The digital sector has provided other businesses with platforms to acquire
technological services that will enhance production in the market.

PESTLE ANALYSIS
11
Legal factors
The UK government trade policies are aimed at providing an increased investment in the
nation for a steady flow of business operations. Brexit requires the UK to focus on acquiring
trade agreements with other nations with the aim of increasing the performance of the nation.
The UK government has developed plans to increase international relations which will enhance
trade and investment in the nation. The analysis of national trade policies assists in improving the
rules to ensure that there is a continuous entry of businesses in the economy. According to
Barrington (2016), the UK is focused on increasing inward investment through the development
of suitable legal status. The post-EU requires the government to develop policies that will
enhance overseas deals for a sustainable flow of operations through local and international
business. It is important for a business to focus on developing a sustainable flow of operations
through the use of advanced technology in production. The quality products and services are
made possible by the business through the use of advanced technology in the market. The HSBC
has acquired an improved sales volume through the use of appropriate strategies that are focused
on using advanced technology. According to HSBC (2018), the online banking and application
banking has increased the revenue acquired by the company in the financial industry.
Environmental factors
The UK government is focused on a sustainable environment through the partnership
with businesses. It is important for businesses in the UK to consider the set environmental
conservation rules for a proper flow of operations while considering the changes in the
environment. The UK has developed a plan that aims at reducing plastic pollution and carbon
dioxide emission in the nation. The UK government has developed a 25-year plan that is focused
on increasing the use of clean energy to conserve the environment (GOV.UK, 2018). It is

PESTLE ANALYSIS
12
important for businesses and government to partner in dealing with the issue of climate change
through environment conservation
Recommendation
The HSBC is required to focus on the dynamic external business environment for a
sustainable flow in the UK market. Proper analysis of business environment factors assists in
applying strategies that will boost the productivity in the market. HSBC is supposed to
implement flexible policies that will handle the dynamic external business environment. Wirtz et
al. (2016) state the need for developing a flexible business model that will deal with the changes
in the market segment.
Conclusion
It is evident that PESTLE analysis is an important tool for a business to have an insight of
the changes in the external business environment. Proper evaluation of the political, economic,
social, technology, legal and environment factors assists a business to acquire a sustainable flow
in the market. HSBC is a leading bank in the UK due to the offering of quality financial services
to the consumers. The UK government is focused on increasing the business environment in the
region for social and economic progress through the enhanced investment inwards. The focus on
international trade and investment has assisted the government to acquire the desired economic
growth.