Understanding the Business Environment: A Comparative Analysis

This report provides a comprehensive analysis of the business environment, focusing on two key organizations: Western Union and HSBC. The report begins with an overview of Western Union, including its legal structure and operational scope, followed by a stakeholder analysis to identify key groups and their influence. The report then examines the external environment using PESTLE analysis, considering political, economic, social, technological, environmental, and legal factors impacting HSBC. Further, Porter's Five Forces model is applied to assess competitive dynamics. The report concludes with an assessment of the organizations' short-term and long-term performance, and recommendations for improvement, providing a thorough examination of the challenges and opportunities within the financial services sector.

UNDERSTANDING THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1........................................................................................................................................3
TASK 2........................................................................................................................................4
TASK 3........................................................................................................................................6
PESTLE analysis of HSBC Holding Plc.....................................................................................6
Porter five forces..........................................................................................................................7
TASK 4........................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
The report of understanding the business environment will comprehensively illustrate the
business organization's environment. Here overview of the organization and the legal structure
will be mentioned. Report will also analyse the stakeholders of the company using stakeholders
analysis. Further, pestle analysis and porters 5 forces model will be explained for the HSBC
bank. At last the business analysis with reference to the short term and long term performance of
the organization will be depicted and recommendation for the improvement will be given. The
organization taken in the report for developing better understanding are HSBC and western
union (Aifuwa, Embele and Saidu, 2018).
MAIN BODY
TASK 1
Overview of the organization:
Western union is an American multinational company providing financial services. It has
been breaking the geographical barriers of money transfer by being actively engaged in receipt
and transfer of money. It was founded in 1851 and initially it was known for the telegraph
services until 1871 as in 1871 western union introduced the electronic money transferring
services which helped western union gained the prominence. Currently the company renders
global payment services. It has the operational presence in more than 200 countries and deals in
more than 130 currencies for the payment and transfer of money (Al Nuaimi and Nobanee,
2019). It has more than one billion bank accounts that have been transacted with and company is
constantly gaining.
Western union is a public limited company listed on the new york stock exchange. The
company operates via agents. The services are available to individuals, partnerships and business
entities. Purpose of the organization is to ease the cross boarder transfer of the money globally.
Company is constantly trying to know the customer needs regarding transfer and receipt of the
money and is trying to ease the process. The objective of the western union is to have quick, easy
and reliable movement of money. As, the free movement will make the economy prosper. The
goal and objective lies in the continues flow of cross currency to meet the business and consumer
needs. The market structure of the western union is globally spread which states that it has
different market shapes in different countries (Badillo-Urquiola, and et.al., 2018).

This is the reason behind playing on competitive edge in each market, as western union is
a big player which has unmatched global network and strong global brand, significant resources,
talents onboard for the unbeatable services. Company believes in having strong relationship with
the agents in each such market in over 16000 working corridors in 500000 locations. It has rolled
out the ATMs, digital portal and loyalty card over 19 million. It has established the strategic
growth areas such as business solutions by having international B2B payments (business to
business), facilitating ventures like digital money transfer, data ventures etc. to know the
customers better (Ersek, Davison and Rajgopal, 2018). Yet the challenges which the company is
facing are the barriers of operations in the countries.
Many countries in Asia have established the rule for limitation of the western union
operation. Like an individual can not send money in foreign countries, money can be only
received. Therefore, this kind of regulations limits the working structure of the company and the
organization can not work full fledge in such countries. Other challenges faced by the company
which hinders the goal achievement in the organization associated with the market structures
such as the trade barriers and relationship countries have with other countries often create
restrictions for operating freely as the currency plays a major role in the western union as it deals
with around 130 currencies globally. Such aspects often affect the organization's Working
behaviour.
TASK 2
Stakeholder: a stake holder is a party or person who has interest in the organization and these
stakeholders has the capability to either affects the operation of the company or they might get
affected from the operations of the organization (Joo, Nishikawa and Dandapani, 2019). Few
examples of stakeholders are government, shareholders, suppliers, buyers, competitors etc.
Shareholder: a shareholder is a company, person, institute that owns or has shares in the
organization's stock. A shareholder can be holding even a share as small as one still they can be
called the shareholders. Shareholders are called as the real owners of the company.
Stakeholders analysis: Stakeholders analysis helps identify the stakeholders of the company
and their powers, interest and influence on the company. It is a process of grouping the people
according to the level of participation and determining whom to involve and communicate
though the various processes in the organization. In western union company there are various
stakeholders as company works at global level (Muserra, Papa, and Grimaldi, 2020). Company

needs to understand the influence and participation each group of stakeholders has on the
organization. Let's do stakeholders analysis of western union to identify company's stakeholders
group and their needs and influence. There are 3 major steps as follows.
Step 1: Determining the stakeholders of the western union: this step includes the identifying
process of the stakeholders of the company. For western union there are multiple stakeholders as
it has its operations at global level in more than 150 countries. Looking at the company's
structure there is a list of stakeholders such as government, financial authority, employees,
shareholders, investors, customers, agents etc. these are the major stakeholders that company
needs to determine.
Step 2: Grouping and prioritizing the stakeholders: once the stakeholders are identified now
company needs to group these stakeholders according to the level of influence, participation and
power over the operations in the organization. This is a vital step as it helps establish the
categories which are going to be of utmost importance in decision-making at each step in the
organization. A power interest grid should be formed which has the four categories such as the
stakeholders who need to be monitored (competitors in each market), who needs to be kept
informed (shareholders and agents), who needs to be kept satisfied (investors and customers) and
who needs to be managed closely (employees, government authorities and financial authorities)
(Naheem, 2018).
People who have low power and low interest should be just kept informed. Stakeholders
who have low power and high interest must be kept well-informed and check regularly if they
are facing any problems. People with high power, high interest must be prioritized and kept
happy as they are really important and have high influence. Stakeholders who have high power
yet low interest should be kept happy by having proper communication but not the over
communication which can burden them up.
Step 3: Communicating with each type of stakeholders: Once the list is prepared now it is
time for the western union management team to establish the communication strategy which
keeps each group informed according to their requirement and level of satisfaction. Find out how
to get support from each group of stakeholders and how to communicate according to the needs.
Like government authorities needs a transparency and abiding by the laws and regulations
established by the financial authorities. For investors and shareholders it bis important to
communicate each and every move of the company which can impact them (Nurse, 2018). As

western union needs cooperation from the stakeholders, it must communicate optimum which
makes stakeholders feel satisfy from the company.
TASK 3
The HSBC bank is the British multinational financial and banking services in
organization. It operates in the finance and insurance industry in the London, United Kingdom.
Financial services is the products of the business. The business environment's analysis of HSBC
bank plc with the models and frameworks through the Pestle analysis.
PESTLE analysis of HSBC Holding Plc
There are various factors in the pestle models such as political, environmental,
economics, technological, legal and social.
 Political factors: The political factors are includes the trade regulations and taxation
policies that are rule by the governments and it influences the business environments.
This helps in determine the long term sustainability and profitability of business (Barik
and Kumar, 2018). There are various factors which must be analysis before entering the
financial markets such as intellectual property protection, risk of military, legal
framework for contract enforcements, pricing regulation, taxation, wage legislation, trade
regulation, etc.
 Economic factors: The economic factor also influence the HSBC company with the
macro and micro environments factors. Macro environment factors such as saving rate,
interest rate, inflation rate and foreign exchange rate, etc. while the micro environments
such as competition in the market place. The company and financial industry can use the
economic factors such as inflation, growth rate, etc. for the business organization.
 Social factors: The social factors impact and influence the culture of the organization.
The company will able to understand the customers of market with the helps of social
factors, and they can also be planned the marketing message for banks industry
customers. The leaders of the organization should include the various factors such as
culture, power structure, hierarchy in the society, skill level and demographic of
population, education standards in industry, attitudes, etc.
 Technological factors: Technological factors also affects the HSBC holding company.
Financial services industry are adopted the new technologies with the innovation and
growth effectively with the helps of technology (Dang, 2020). so, the company must

adopt the technologies because it helps in gain more profitability for the business and
technologies are includes the various impacts such as it impacts on the products offering,
impact on the value chain structure in the bank industry, impact on cost structure in the
financial sector, and recently various technological developments by the competitors of
HSBC company.
 Environmental factors: The environmental factors affects the profitability and
productivity of organization in the financial sectors. There are various environmental
factors such as recycling, climate change, weather, environments pollution, waste
management in financial industry, etc. The company also analysis of the environmental
standards which are necessary for run the business in the finial sectors.
 Legal factors: The legal factors affects the HSBC because there are legal frameworks
and institutions to protect and secure the intellectual property and rights of organization
(Nahar, 2021). There are various laws in the legal factors which are governed by the
governments such as health and safety law, intellectual property law, consumer
protection law, employment law, etc. that all are must be considered by the HSBC bank
in the business as well as they also must ensure about the data protection which are most
essential in the financial sectors.
Porter five forces
The porter five forces is the strategic framework which look the strategic decision form
analyse and determine the competition of the business. It also helps in focus on the HSBC
competitive advantages on the domestic and international level.
 Threats of new entrants: Threats of new entrant is moderate because foreign money
centre international bank brings new technologies and innovation to do the financial
business so the company HSBC comes under the pressure with the reducing cost, low
pricing strategy, and they also provide the new value preposition to the consumers
(Njuguna, 2020). The company have to manage the new threats and face the challenges
which comes in the financial sectors.
 Bargaining power of suppliers: There are low bargaining power of suppliers such as
there are various computer equipments suppliers in the market and the suppliers of the
bank capital re also make decision according to them so, there are bargaining power of

supplier is weak. Further more, the companies invest amount business in bulk than the
bargaining power may be moderate.
 Bargaining power of customers: The bargaining power of buyer and customers is high
because there are lot of customers which demand the financial services and buyers have
the low options to switch so, the bargaining power of buyer is high and there is the no
control on the price. It helps business to run long term profitability and the customers and
buyers wants to purchase the low cost and price products and services so, the company
can also increase the offers and discounts.
 Threats of substitutes: The threats of substitutes products and services are low because
there are products and services which offer by the financial industry such as financial
services, investment advices, etc. the company provide the digital wallet services to the
customers and provide the many facilitate to the customer and satisfied them (Flanding,
Grabman, and Cox, 2018). so, the threats of substitutes are moderate in recent time
because the financial industry provide the various substitutes and facilities such money
transfer app which are provided through the internet.
 Competitors: HSBC have various competitors in the financial market such as bank of
America, standard chartered bank, Citi group, Deutsche bank, etc. the competitive rivalry
is high which affects the operations of HSBC company because competitors grab the
attention of customers to provide the discounts and offers to customers and other
competitive company try bets to achieve the success in the financial market. The
competitive market environments are most important for business to become success and
achieve the goals and objectives of company with the competitive advantages.
TASK 4
HSBC's annual report has depicted some key performance indicators in terms of
revenues, profits, assets, capitals. The total revenue of the company stands at £6120 million and
this year's total profits before tax stands at £1023 millions. Financial performance in the short
term for the western union company has reflected an improvement by the global economic
conditions and impact of the reduced interest rates in the economy. Further the revenue of the
company has seen a growth trend of 5% which shows the release of expected credit loss
allowance (Panwar and Garg, 2022). Also, company has seen the lower cost of operations this
year which had impact on the profits before tax of the company.

At global level various business operations and structures has shown growth induced
results in the annual reports. Comparison driven from the last year's performance has bettered
this year. Western union has seen a strategic transformation in the operations such as the
progressive areas of developments which are technologically driven (Rześny-Cieplińska and
et.al., 2021). As the cross boarder transactions need strong technological advancement which
ensures the smooth operations in the organization. Company has become climate ambitious
which sees the reduction in carbon footprint of the operation as all its operations are nowadays
supported by the digital platforms.
In financial terms the growth reporting practice of the company is structured, as company
every year choose to inform its stakeholders about the financial performance of the corporation
by having a clear comparison from the previous year's reports. Company has shown the risk
factors associated with the financial performance of the company. Cash flow statements, balance
sheet, a detailed profit and loss statement (that highlights each expense and operational profit)
are clearly illustrated in the annual reports of the company (Rivise, 2019). A brief notes of the
accounts informations are given for contingency funds for the transparency of the capital
requirements in the company. Therefore, it can be easily said that financial reporting is up to the
mark for HSBC.
Further, the reporting of the non financial performance of the company is reflected in the
annual reports of the company as well. Company has chosen to mention the non financial
performance in the annual reports. A non financial information statement has been formed by the
company which states the information about the employees, social commitments, human rights,
social matters, anti corruption, principle risk and environmental matters (Ryan, 2018). The
reporting of the non financial affairs is not the best way of reporting, as company has not
mentioned the efforts and initiatives it took towards the corporate social responsibilities and
charity acts that it has done in the financial year.
It is said that the companies take a lot of resources from the society, and they should
highlight in their annual reports separately the efforts company is indulging into. Further the
HSBC mus have budget allocation towards the CSR and charity must be discussed with the
stakeholders. As, the importance of the non financial reporting is to maintain the transparency
with the stakeholder of the organization. HSBC has seen a lot of backlash in the past for the
scandals of money laundering and therefore the company must be totally transparent with the

stakeholders so that they can show their full confidence in the company. In-fact HSBC can
update the reporting style by making it a quarterly mark so that the respective parties of the
influence should have the access to the inside information of the company.
CONCLUSION
As the conclusion, The western union company is financial company and it provides the
money transfer services to customers and HSBC is operated the bank and provide financial
services to customers. In the conclusion, the report discussed the organizational type of western
union company and its market structure to achieve the competitive advantages as well as analysis
the stakeholder analysis process to identify the western union stakeholders. This also determined
the political, legal and environmental factors of the Western union industry This report also
elaborated the HSBC bank UK macro and micro environmental factors which influence the
competitive environments in the both national and international level market as well as its key
performance indicators of HSBC.

REFERENCES
Books and journals
Aifuwa, H. O., Embele, K. and Saidu, M., 2018. Ethical accounting practices and financial
reporting quality. EPRA Journal of Multidisciplinary Research. 4(12). pp.31-44.
Al Nuaimi, A. and Nobanee, H., 2019. Corporate sustainability reporting and corporate financial
growth. Available at SSRN 3472418.
Badillo-Urquiola, K. and et.al., 2018, January. A Stakeholders' Analysis of the Systems that
Support Foster Care. In Proceedings of the 2018 ACM Conference on Supporting
Groupwork (pp. 158-161).
Barik, B. and Kumar, S., 2018. Macro Environment of Indian Life Insurance Business: A
PESTLE Analysis. Bimaquest.18(3).
Dang, N. T., 2020. Relationships between macroeconomic development and the performance of
foreign banks in Vietnam 2007-2019 (Doctoral dissertation, University of the West of
Scotland).
Ersek, H., Davison, L. and Rajgopal, K., 2018. Working across many cultures at Western Union.
The McKinsey Quarterly.
Flanding, J. P., Grabman, G. M. and Cox, S. Q., 2018. Technology-taking as a Strategy. In The
Technology Takers. Emerald Publishing Limited.
Joo, M. H., Nishikawa, Y. and Dandapani, K., 2019. Cryptocurrency, a successful application of
blockchain technology. Managerial Finance.
Muserra, A. L., Papa, M. and Grimaldi, F., 2020. Sustainable development and the European
Union Policy on non‐financial information: An Italian empirical analysis. Corporate
Social Responsibility and Environmental Management. 27(1). pp.22-31.
Nahar, S., and et.al., 2021. Analysis on the marketing strategy and competitive advantage of
banking industry in bangladesh: an entrepreneurial case study of hsbc bank. Academy
of Entrepreneurship Journal. 27(4). pp.1-7.
Naheem, M. A., 2018. Illicit financial flows: HSBC case study. Journal of Money Laundering
Control.
Njuguna, S., 2020. Effects of Selected Porter’s Five Forces Model On Strategic Planning In
Stanbic Bank Kenya (Doctoral dissertation, United States International University-
Africa).
Nurse, K., 2018. Migration, diasporas, remittances and the sustainable development goals in least
developed countries.Journal of Globalization and Development. 9(2).
Panwar, M. and Garg, R. K., 2022. Online learning: a stakeholders' analysis using structural
equation modelling. International Journal of Technology Enhanced Learning. 14(3).
pp.243-263.
Rivise, M. J., 2019. Inside Western Union. Pickle Partners Publishing.
Ryan, S. G., 2018. Recent research on banks’ financial reporting and financial stability. Annual
Review of Financial Economics. 10. pp.101-123.
Rześny-Cieplińska, J. and et.al., 2021. Priority-based stakeholders analysis in the view of
sustainable city logistics: Evidence for Tricity, Poland. Sustainable Cities and Society.
67. p.102751.
Venturelli, A., Cosma, S. and Leopizzi, R., 2018. Stakeholder engagement: An evaluation of
European banks. Corporate Social Responsibility and Environmental
Management,25(4), pp.690-703.
1

2