Micro Environment Of HSBC

Micro surroundings Of HSBCThe intact world is now getting so untold competitive and diversified. So the duty nerve doing business globally must have to wangle their strategy in different way that will devote them competitive advantage in the competitive global securities industry. So the aim of this assignment is to show how an organization is making its global strategy and what the competitive advantages atomic outlet 18 they getting from this business strategy. As required, Hongkong and Shanghai wedgeing Corporation (HSBC) is selected and analyzed in this assignment.The HSBC Group has a history, which is unique. Many of its principal companies opened for business over a century ago and they have a history rich in variety and achievement.The inspiration behind the founding of the confide was Thomas Sutherland, a Scot who was thus working as the Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company. Realizing the considerable demand for local stranding concerning facilities both in Hong Kong and along the China bound and he helped to establish the depone in March 1865. Then, as now, the beachs headquarters were at 1 Queens Road Central in Hong Kong and a secernate was opened one month later in Shanghai.Throughout the late nineteenth and the early twentieth centuries, the edge established a network of agencies and secernes establish mainly in China and South vitamin E Asia but alike with re initiation in the Indian sub-continent, Japan, Europe and North America. In many of its branches the bank was the pioneer of modern banking practices (Company over consume)This assignment includes analysis of the business environment of this organisation by analysis of the micro and macro environments and using different analysis techniques. such as SWOT Analysis, PEST Analysis etc. This also covers the analysis of the industry of the organization, the impact of globalization on the organization, and the foreign market wher e it operates its business.1.1 Micro Environment of HSBC GroupStakeholders Stakeholders of HSBC be always getting the preference. There are different stakeholders of HSBC. Such asShareholdersMedia PublicsGovernmentCitizen-action publicsLocal publicsGeneral publicsInternal publicsSuppliers suppliers form an of the essence(p) link in the companys overall client value delivery system. HSBC maintains a strong consanguinity with all the suppliers of this bank around the world. So they always cooperates the bank in any type of needed.Customers The bank tries to target mainly five types of customer markets. These are as Consumers, business clients, reseller market, Government, and foreign customers. HSBC mainly maintains strong relationship with internationalistic customers for long marches profitability.Competitors Competitors are the people to make the business environment dynamic and lead them to identify different new ideas of doing business. They always make a good competitive e nvironment and maintain a formal and cooperative situation of business.Market intermediaries Marketing intermediaries are composed of all the individuals or companies who help in the promotion, selling, and distribution of the companys products or services. They play an important role to make sure the growth of the organization.1.2 Macro Environment of HSBC GroupExternal humour A key part of the Groups business strategy, announced in 1998, is the creation of a global check off featuring the HSBC name and hexagon symbol. The symbol is now a long-familiar sight around the world. The Group has embarked on the next human body making the HSBC score universally synonymous with its core values of integrity, trust and excellent customer service.Economic Through the process of listening to individuals unavoidably and then acting in partnership to deliver the right solutions, HSBC is committed to help the clients make the nigh of their financial assets. This states the most favorable economic situation.Political and legal environment HSBC operate on a global basis, but also work on a local level to ensure the cross-border differences are identified and any related benefits exploited. HSBC teams of specialists ensure that whether you need solutions across the world, regionally, or locally, and they have the skills, expertise, and resources to deliver them. They alter as many functions as possible, even as ensuring retains control. So they have to cope up with the political and legal environment of the whole world.Cultural environment HSBC claims that they are the people to talk to if anyone wants the following Global cash flow co-ordinationEnhanced risk prudenceImproved security and audit controlsMinimized cost and reduced operating expensesMaximized liquidity, returns and interest benefitsThis cultivation makes the organization popular to the customer and the customer can be satisfied by the service of the bank.Resources (capital, people and native) The Hexa gon logo of HSBC derives from HSBCs traditionally flag, a white rectangle divided diagonally. The design of the flag was based on the cross of ST. Andrew, The Patron Saint of Scotland. HSBC brand corporate identity represents what HSBC wants its brand to mean to its customer. It is derived from the concourse. Without these resources it has also a large amount of capital resources and a large assembly of expert and trained employees.Technology HSBCs basic drives are high Productivity, Team Orientation, and Creative Organization, Customer Orientation. The essence of HSBC brand is integrity, trust, and excellent customer service. It gives confidence to customers, value to investors, comfort to colleagues.HSBC is a prudent, cost conscious, ethically grounded, conservative, trustpricey international builder of long-term customer relationships.1.3 SWOT Analysis of HSBCSWOT analysis is a process of situational analysis. Evaluating a firms strengths, weaknesses, opportunities, and thr eats through a SWOT analysis is an booming process that provides valuable insights relating to critical issues affecting an organization.SWOT analysisThe internal and external situations can provide valuable information which can come in handy at times. The SWOT analysis categorizes the internal organizational factors as strengths and weaknesses and the external situational aspects as opportunities or threats. The strengths can be used for building a competitive advantage, whereas weakness may hinder the process.The purpose of SWOT analysis is to identify crucial factors for realizing the goals. The internal factors of an organization can be considered as strengths or weaknesses depending upon their impact on the organization. These may include all 4Ps, personnel, manufacturing capabilities, finance, etc, whereas external factors are technological careens, macroeconomic factors, socio-cultural changes and legislation, as well as changes occurring in the marketplace.SWOT analyses o f HSBC are as followStrengthsHSBCs strengths are its resources that lie inCost advantages from proprietary know how is very favorable.It has a great value of Patents and trademarkHSBC has Influential brand namesIt also has access to natural resourcesAccessible distribution networkWeaknessThe weakness can be lack of certain strengths that include drop of patent protectionDeprived of access to main distribution channelsWeak brand nameHigh cost structureInaccessible natural resourcesOpportunitiesThe assessment of external environment may bring forth certain new opportunities for HSBC, which are as followsTechnologies innovationsElimination of international trade barriersAn untapped market needThreatsUnfavorable changes in external environment may pose threat to the organization. Some of them are as followsConsumers shift to different brand arriver of substitutesStrict regulationsGrowing trade barriers1.4 PEST Analysis of HSBC1. Political FactorsThis exercise dissects the political, gov ernmental, and legal aspects of a particular business. Both local and global environments are examine because federal, state, local, and foreign governments are major regulators, deregulators, subsidizers, employers.2. Economic FactorsEconomic analysis, a comprehensive study of national, regional, and global economic performance and trends, represents a highly important phase of strategy development for planned, start-up, and growing businesses3. Social FactorsThe social component of strategic analysis relates to assessing the social, cultural, demographic, and environmental profiles of addressable markets.4. Technological FactorsTechnology is a business enabler that has rotatory impact on the actual conduct of business. It contributes to achieving desired business productivity and efficiency. Technology is one of the key drivers of modern business firm. As an international organization HSBC try to adopt modern technology always. So this will give preference to the firm.2.1 Histor y of Bank IndustryThe history of banking begins with the first prototype banks of merchants of the past world, which made grain loans to farmers and traders who carried goods between cities. This began around 2000 BC in Assyria and Babylonia. Later, in ancient Greece and during the Roman Empire, lenders based in temples made loans and added two important innovations they judge deposits and changed money. Archaeology from this period in ancient China and India also shows evidence of money lending activity(Peter Garber, 2001).Banking, in the modern sense of the word, can be traced to medieval and early Renaissance Italy, to the rich cities in the north such as Florence, Venice and Genoa. Perhaps the most famous Italian bank was the Medici bank, established by Giovanni Medici in 1397.The development of banking diffuse from northern Italy through Europe and a number of important innovations took place in Amsterdam during the Dutch Republic in the sixteenth century and in London in th e 17th century. The financial crisis of 2007-2008 caused many bank tumbleures, including some(prenominal) of the worlds largest banks, and provoked much debate about bank regulation.In the Late-2000s financial crisis caused significant stress on banks around the world. The failure of a large number of major banks resulted in government bail-outs. The collapse and fire exchange of Bear Stearns to JP Morgan Chase in March 2008 and the collapse of Lehman Brothers in September that same year led to a credit crunch and global banking crises (Jean-Charles Rochet, 2008).In response governments around the world bailed-out, nationalized or arranged fire sales for a large number of major banks. These events spawned the term too big to fail and resulted in a lot of discussion about the moral hazard of these actions.2.2 The Extent of Globalization and Current Internal IssuesAccording to Modelski, globalization is a historic process which is characterized by a growing havement between people s on all corners of the globe (Modelski, 2003, pp.55-59). How invariably, as Heywood points out, it can refer to various things such as processes, policies, strategies, an occurrence or an ideology. He suggests, its elusive meaning lays in the fact that it is not so much and it as a team (2007, p.143). The reason for the elusiveness of the term is that, as Heywood pints out, it involves many different facets which many different academics proclaim as its defining features.This provides the best summary of what globalization is and what it involves however, different perspectives on globalization view these processes in different ways and provide competing explanations of their significance. The first of these to be outlined is the hyper globalist perspective (Held, D. and McGrew, A. (2003).Each perspective differs however on how the globalization process impacts on politics. The hyper globalists argue that globalization is leading the world into a period which will see the end of th e nation state and the emergence of a global ecesis system. The transformation lists on the other hand reject this idea, and instead claim that the nation state is still relevant in a globalised world, but needs to adapt to the challenges that the increasing flows of capital and culture impose.On the issue of cultural flows there is again divergence amongst the perspectives. For hyper globalists, the path towards a homogenous world culture is inevitable as globalization develops.For transformation lists, the process of globalization is creating a world community of diverse cultures whilst for the skeptics, cultural interaction and integration is nothing new. On the question on the extent the world is actually globalised, there is also agreement and disagreement (Peter Garber, 2001).For both the hyper globalists and the transformation lists, the contemporary world is more globalised than ever before, with economics, politics and culture never more connected than in this age of mass media, internet and rapid communication. Globalization, they argue, has touched every corner of the globe, and will live on that trajectory into the future. For the skeptics however, the world is not actually globalised but is instead regionalized. To back up this claim, they point to the massive inequalities between countries in the western world, and those in the developing world.2.3 The International Markets In Which It OperatesHSBCs International NetworkThe HSBC Groups international network comprises of some 7,000 offices in 80 countries. A brief list is presented below shape 2 HSBCs International NetworksCountry ClassificationsTo ensure that the key resources (management time, capital, human resources and information technology) are correctly allocated and that the exchange of best practice is accelerated between entities, the group has classified the countries where it operates into 3 categories the large, the major and the international.These classifications are a function o f sustainable, attributable earnings, the number of retail clients, balance sheet and size of operation. A brief presentation of this classification is shown belowFigure 3 Map of HSBCs Country ClassificationsLarge linked Kingdom, USA and Hong Kong SAR/Mainland China.DefinitionMore than one million personal clientssustainable earnings greater than US$ 200 millionBusiness FocusConcentrated group resources on wealth managementBe a masking 10 player in any market or region servedDevelop cross selling, loyalty programs and value added products.Major Argentina, Canada, Malaysia, India, Kingdom of Saudi Arabia, capital of Singapore and United Arab Emirates.DefinitionSustainable earnings between US$ 100 200 millionBusiness FocusUniversal banks (personal, corporate, and investment banking with domestic business)Platforms for international group businessNext generation of large companiesStable self funding entitiesOnshore HQInternational The rest of the worldDefinition lettuce below US$ 100 millionBusiness FocusPlatforms for international group businessLimited domestic presenceNursery for developing managementTomorrows major businessesSupported by offshore HQBanks under the HSBC GroupMany of the members have changed their name into HSBC, The Hongkong and Shanghai Banking Corporation Limited to introduce the whole group under one brand name.Midland BankHSBC Holdings acquired Midland Bank one of the principal UK clearing banks in 1992. Headquartered in London, the bank has a personal customer base of five and a half million, business customers of over half a million, and a network of almost 1,700 branches in the United Kingdom. Midland has offices in 28 countries and territories, principally in continental Europe, with a number of offices in Latin America.Hang Seng BankHang Seng Bank, in which Hongkong Bank has a 62.1% equity interest, maintains a network of 146 branches in the Hong Kong SAR, where it is the second largest locally incorporated bank after Hongkong Ban k. Hang Seng Bank also has a branch in Singapore and two branches and two representative offices in China.Marine Midland BankMarine Midland Bank headquartered in Buffalo, New York, has 380 banking locations statewide. The bank serves over two million personal customers and 120,000 commercial and institutional customers in New York State and, in selected businesses, throughout the United States.Hongkong Bank of CanadaHongkong Bank of Canada is the largest foreign-owned bank in Canada and the countrys seventh-largest bank. With headquarters in Vancouver, it has 116 branches across Canada and two branches in the western United States.Banco HSBC BamerindusBanco HSBC Bamerindus was established in Brazil in 1997. The bank has network of some 1,900 branches and sub-branches, the second largest in Brazil.Hongkong Bank MalaysiaHongkong Bank Malaysia is the largest foreign-owned bank in Malaysia and the countrys fifth-largest bank, with 36 branches.The British Bank of the Middle East (British Bank)The British Bank of the Middle East (British Bank) is the largest and most widely represented international bank in the Middle East, with 31 branches throughout the United Arab Emirates, Oman, Bahrain, Qatar, Jordan, Lebanon and the Palestinian Autonomous Area, including an offshore banking unit in Bahrain. The bank also has branches in Mumbai and Trivandrum, India, and Baku, Azerbaijan, as well as private banking operations in London and Geneva.HSBC Banco RobertsHSBC Banco Roberts was acquired in 1997. Based in Buenos Aires, it is one of Argentinas largest privately owned banks, with 60 branches throughout the country.Hongkong Bank of AustraliaHongkong Bank of Australia has 16 branches across Australia. It is the flagship of the HSBC Groups businesses there, operating under the name HSBC Australia, and providing a complete range of financial services.The Saudi British BankThe Saudi British Bank, a 40%-owned member of the HSBC Group, has 63 branches throughout Saudi Arabia an d a branch in London.Figure 1 Banks under the HSBC GroupOther associated Group banks are British Arab Commercial Bank, The Cyprus Popular Bank and Egyptian British Bank.Customer Segments of HSBC GroupPersonal monetary ServicesHSBC provides a full range of personal financial services, including current and savings account, owes, insurance, credit cards, loans, pensions and investments. In 2000, residential mortgages across the Group excluding home base grew by 15%, while non-mortgage personal lending change magnitude by over 20%. Credit cards in issue grew by 20% worldwide. gross revenue of repayment protection insurance and deposit growth reached record levels. Current account balances in the UK exceeded 10 billion for the first time at closing 2000. The number of customers registered for e-banking services via the internet and telephone more than trebled in 2000. The internet generated sales of over 2.3 million products and 87 million transactions.Consumer FinanceThrough Household International, Inc., HSBC is now a major provider of consumer finance and a top 10 issuer of credit cards in the USA. Household provides consumer loans, credit cards, vehicle finance, mortgage financing and credit insurance to middle America. During 2004, Household achieved good organic loan growth, which it supplemented with portfolio acquisitions. The strongest growth was in the real estate portfolio and the mortgage services business, and also in branch-based consumer lending. Synergy benefits with HSBC included store cards and point-of-sale financing.Commercial BankingThe provision of services to small and medium-sized enterprises around the world is core strength of HSBC. During 2000, HSBC increased its leading position in the UK business start-up market to 21% and attracted record levels of business current and deposit account balances. Business internet banking was offered in 20 countries and territories, and the number of registered users more than doubled to 600,0 00. Money transmission revenues, trade finance fees, wealth, savings and insurance products all showing growth during 2000. corporeal, Investment Banking and MarketsThis customer group comprises four main business lines Corporate and Institutional Banking, Global Investment Banking, Global Markets and Global Transaction Banking which focus on long-term relationships with major international corporations and institutions. Record results were achieved in 2000. The Global Markets business excelled, particularly in international debt issuance, risk management and structured products, and foreign exchange. Global Investment Banking was entrusted with a number of landmark deals in capital restructuring, corporate reorganization and strategic advice.Private BankingThis customer group provides world-class financial services to high net worth individuals and their families. In 2000, Private Banking posted improved financial results in all regions, led by Asia, which had a record year. New business initiatives and a widely distributed improvement in investment markets led to increased client activity across a range of products. An increase in discretionary mandates, together with a strong demand for client-tailored structured products, contributed to higher fee revenues and dealing income. Funds under management grew by 18%, reflecting both net inflows of client assets and up market conditions.2.4 The Impact of Globalization on HSBCCorporate banking is the most profitable segment of HSBC, since it has globally recognized brand name and it has competitive advantage in international trade and finance. But the nature of competition in financial service is ever-changing dramatically. Most competitive advantages are not creating long-term benefits and at best are temporarily improving yesterdays business. From the study it seemed to me that personal financial products of HSBC are mainly basic since it is less focused. Using the brand name and widening the personal financi al product range, HSBC bank has the potential to become the leader in consumer banking market of the country. So, the concerned department should formulate strategy and policies to compete bust with the challenging opportunities of the future.3.1 Moral and ethical questionsAs an international organization HSBC sometimes faces some problems in different geographical location. This problem is the moral and ethical question. The bank operates in different conservative countries. The sociological limitations of these countries make some ethical dilemma for the bank. The bank always tries to involve with different corporate social affairs. So their different strategies sometimes have a little conflict with the existing ethical framework of those countries.3.2 ConflictsWhen the bank started the journey in Africa in had to face a lot of problems in operation. Because the people of Africa have different social values and culture. So the bank had to gradually cope up with the existing cultu re. The climate change of Africa also made some problems. The general business policy had to change due to the conflict of the existing sociological forces. Though the bank is still changing their policy but still now there have some ethical and moral conflict. The anti-globalism policy of some countries makes the conflict with the globalized policy of the bank.3.3 LegislationCorporate social responsibility is the one of the key marketing policy of HSBC. The banks main focus is to involve with more international corporate affairs by factor of CSR. This planning has the impact on global marketing. But the corporate social responsibility issue is not always smooth in all in the countries. Different countries and region have some legislation and bindings in regulations relating to corporate social responsibility. In Asia the business policy sometimes faces some legislative obstacles and the bank have to face some problems in operations.ConclusionDuring the Second World War the bank wa s forced to close many branches and its head office was temporarily moved to London. However, after the war the bank contend a key role in the reconstruction of the Hong Kong economy and began to further diversify the geographical spread of the bank.The post-war political and economic changes in the world forced the bank to analyze its strategy for continued growth in the 1950s. The bank diversified both its business and its geographical spread through acquisitions and alliances. This strategy culminated in 1992 with one of the largest bank acquisitions in history when HSBC Holdings acquired the UKs Midland Bank plc (now called HSBC Bank plc). However, it remained committed to its historical markets and played an important part in the reconstruction of Hong Kong where its branch network continued to expand.HSBC understands that there are many challenges facing todays youth as they prepare to engage in the increasingly changing and complex aspects of the real world. Recognizing the importance of educating, inspiring and equipping youth of all backgrounds to succeed in a global economy, we began a partnership with Junior Achievement USA (Junior Achievement) in 1942. We expanded this partnership to launch a global initiative in 2006 and began working with JA Worldwide.