Introduction

HSBC Holdings PLC is among the leading multinational banking corporations in the world. The company name is derived from initials of The Hong and Shanghai Banking Corporation Limited. Hong Kong and shanghai are the origins of this bank and was first established in 1865.Over the years, the company has grown and currently has over 7200 offices in over 85 countries. The company has stretched its services in Africa, Middle East, Asia, Europe and United States of America. It is believed to serve almost 128 million customers globally. The major services offered by the company include commercial banking, private banking, retail banking and wealth management and global banking and markets (Dlabay& Burrow, 2008).

HSBC holdings have been noted as the largest bank in the world asset wise and the sixth largest listed company.  The company is listed in several stock markets such as the London stock exchange, Hong Kong stock exchange, Bermuda stock exchange and the New York stock exchange. It is essential to note that the company is the second largest company listed in the London Stock Exchange.  The company has unprecedented international presence which can be ascertained by the ever increasing number of shareholders which is currently at 210,000. The company’s headquarters were initially in Hong Kong which later changed to London in 1993. The relocation to London was as a result of a series of mergers and acquisitions which lead to unprecedented growth of the company. The London headquarters were officially opened in April 2003.

HSBC SWOT ANALYSIS

SWOT analysis is a very important business tool that is used in making strategic decisions in major organizations. The analytical tool examines both internal and external factors that determine the position of a business entity or an organization.  This environmental analysis forms a critical part in the strategic management process. The analytical tool aims at unearthing the strengths, weaknesses, opportunities and threats likely to be experienced in an organization. After carrying out this analysis the management should maximize on opportunities and strengths and put in place mechanisms that will help mitigate the threats and weaknesses faced by the organization (Böhm, 2009).

SWOT analysis has been appraised and criticized in equal measures. Most of its appraisal has been as a result of its simplicity and practicality which has resulted to its widespread use as a strategic management tool. However, the use of the analytical tool has been criticized since if it is used in its simplicity may lead to strategic errors. It is therefore recommended that a detailed analytical approach can be instrumental in overcoming the inherent shortcomings associated with SWOT tool. It should be used as a dynamic part of the management and business development process.

The SWOT analysis tool involves getting environmental information and separating it into internal and external issues. For instance, strengths and weaknesses are the internal factors that affect the operations of the organization (Gorgenländer, 2010). The management has the control of these internal factors. On the other hand, threats and opportunities represent the external factors that affect the organizational objectives. These external factors influencing the position of the organization are very critical factors that the management does not have control over them. In order to achieve the desired results in an organization, it is the obligation of the management to carry out this analysis.

Strengths

• Proper understanding of international finance
• Listed in London and Hong Kong primarily
• Better established in the Chinese market

Weaknesses

• Poor performance of the personal financial services
• It was late in defining the brand name (the company had set up different companies with different names)

Opportunities

• Substantial growth in emerging economies.
• Low mortgage interest rates.

Threats

• The changing global regulations.
• Economic slowdown in many countries such as US and Europe.
• Increase in competition

HSBC PEST ANALYSIS

In every business entity, there are both internal and external environments that affect the overall performance of the business. The changes in business environment are likely to create either great opportunities or threats to the running of the business. For instance, an organization is likely to realize opportunities from new technologies that can help in reaching to ore customers and changed government policies likely to open up more markets. On the other hand there is high likelihood of threats to the business in case of increased interest rates, high inflation and shrinking market which would subsequently lead to increased cost of running the organization.

In order for the management of an organization to realize this, it is essential to conduct a PEST analysis of the organization. This is a very important tool that helps organization management to understand the external environment within which an organization operates. This outlines political, economic, social, technological, legal and environmental factors that affect the running of an organization. The analysis is of great importance to the organization as it helps in strategic decision making. The management can take advantage of the opportunities offered and take mitigating actions to reduce impacts of possible threats. PESTLE analysis is mostly concerned with the external environment within which the business operates and management has little or no control (Dlabay& Burrow, 2008).

Political environment

Political environment is a crucial factor that determines success or failure of a business entity. Positive political environment is essential for thriving of a business entity while negative political factors are detrimental to the running of the business (Dlabay& Burrow, 2008).  These political factors include political stability, tax policies, labour laws, trade restrictions to name but a few. HSBC Holdings PLC is a multinational corporation which operates in different destinations all over the world. These different states have different political entities all of which the company must comply with. The different political decisions taken by the different states have significant impact on the realization of the company’s objectives.

One of the most critical factors considered by the HSBC is the political stability of the host nation. It is critical that the company only invests in politically stable countries. Some factors greatly hinder the growth of the company. For instance, in some countries, the company is forced to collaborate with other smaller organizations. It is also crucial to note that HSBC strictly complies with government laws and regulations such as tax legislation.

Economic factors

The fact that the organization has a global presence poses great economic concerns. This is because there are numerous inherent threats and uncertainties involved. Several factors such as inflation change in exchange rates, volatile stock markets in various world markets have been of great concern to the company (Dlabay& Burrow, 2008). For instance, volatility in interest rates in the Middle East and South Africa has been the notable undoing to the success of the organization. Global economic recessions and unemployment in various states have also greatly affected the organization. However, being among the leading financial service provider globally, the company enjoys a secure and successful economic strength.

Social factors

Social factors are also of great concern in the strategic decisions of an organization. This is because every business operates in a society which forms the customer base of the company’s products. Over the years, HSBC has strived to create a good image to the society. In order to achieve this, the organization has partnered with several charitable organizations globally to which it contributes monetary support (Böhm, 2009). The company has heavily invested in education, environment and community health in an attempt to promote its position socially.

Technological factors

In the recent past, the world has registered great milestones in terms of technological advancement.  This has been in terms of information technology, internet and other technological advancements which has been critical in the performance of HSBC. Advances in technology have affected the company both positively and negatively. For instance, HSBC has been a victim of online frauds which has resulted to the company suffering immense losses. Technical challenges have also been frequent in the organization which has resulted to loss of large number of customers to other competing banks. This happened after there was a substantial leakage of vital customer information. Nevertheless, the organization has adopted the technological advances to its benefit such as in advertising and promotional practices.

HSBC MARKETING STRATEGY

Every successful organization must put in place a good marketing strategy that will help in achieving the goals and objectives of the organization.  This refers to the way through which an organization interacts with consumers to create a mutually beneficial environment. Marketing involves three major steps which include segmenting, positioning and targeting.  After the firm identifies the target market, it is essential that it engages in vigorous promotion and advertising exercise to ensure that the target market is aware of the existent of the products (Dlabay& Burrow, 2008).

HSBC has strived for years to stand as a local international bank. This has been vital in creating a good relationship with the customers to the bank. By listing the company in various destinations such as China, UK and USA, the company has tried to create an image of a local bank which has been critical for customer relations. This has also put the company in a good position where it is capable of serving several customers in most parts of the world.

HSBC has for a long time known to have the most recognizable marketing strategy in the banking sector. This has been enabled by the fact that the company has for a long period used the same company logo in all its branches worldwide. This has been very important in ensuring that the company brand name is upheld (Gorgenländer, 2010).

For several years now, the company has had a massive marketing budget. This has been necessitated by the stiff competition within the industry. The leakage of crucial customer information had resulted in shifting of customers to other banks.  This led to the company in engaging in vigorous advertising and promotional activities. The advertising process has been intensified through print media, bill boards, and TV campaigns and through sponsoring activities such as sports and through corporate social responsibility. This has helped the company enjoy a strong brand name. The company has also penetrated the Middle East market where other banks are scared in investing. This has enabled the company to receive numerous awards and honors for thriving in these markets (Dlabay& Burrow, 2008).

HSBC STRATEGIC DECISIONS

HSBC has for a long time been faced with stiff competition mainly from Barclays PLC, Citigroup Inc. and The Royal Bank of Scotland Group plc. As a result of this competition, it is paramount for the company to make strategic moves that will help compete in this dynamic industry. Gaining a competitive edge remains the prime objective of every organization that aims to realize its goals and objectives. In order to effectively decide on the strategy of the company, Porters five forces analysis is critical.

Potential entrants

The banking industry has had high profits over the years. This serves as incentives for other firms to venture into the industry. For instance, Tesco and Sainsbury’s are among the leading company which poses threat of entering the banking sector.

Bargaining power of customers

Every organization should strive to ensure that consumers bargaining power is reduced to manageable levels (Böhm, 2009). This in most cases is achieved through enhancing consumer loyalty. HSBC has over the years strived to ensure that the company’s products gains customer loyalty as opposed to those of the competitors. This has made the company a global leader in the banking sector.

Threat of substitute

Another strategic move that the organization ought to make is to counter the new products offered by the competitors. In order to realize this, it is essential for the company to work hard and provide all the necessary services to the customers. For instance, HSBC strategy focuses on providing services in four fronts which include; commercial banking, private banking, retail banking and global marketing and markets. This has put the company in a pole position as it offers a wide range of services that meets customers demand.

Bargaining power of suppliers

The power of suppliers is also critical in strategic designs.  If the suppliers have a strong bargaining power, there is high likelihood that the profitability of the organization will significantly decrease. In order to deal with this problem, HSBC has adopted a strategy where it charges different prices according to the different prices of the buyer.

STRATEGIC APPROACH

HSBC is faced with a stiff competition from several rivals within the banking and financial sectors. For this reason, it is vital for the company to strategize on how to remain in a leadership position in the market (Dlabay& Burrow, 2008). The company has put in place several measures to confirm that they lead as others follow. It is as a result of this that the company survived the financial crisis that left several banks in the risk of being liquidated.

HSBC Holdings PLC has been engaging in various mergers and acquisition practices which can explain the success of the company. This has enabled the company to register tremendous growth both in terms of assets and operating profits over the years. These are essential strategic moves that enable the company to have a competitive edge over its competitors especially in such a dynamic industry (Pahl & Richter, 2007).

HSBC acquisition and merging process began in 1992, this when the bank purchased the Midland Bank. This was critical acquisition as it enabled the company to penetrate the UK market. Other subsequent acquisitions have also been finalized such as Banco Bamerindus of Brazil, Roberts SA de Inversions in Argentina and Republic National Bank of New York. The latest acquisitions by the company include the Chinese bank in Taiwan and IL&FS Investment in India (Dlabay& Burrow, 2008).  These have been very critical moves that have helped the expansion of the company’s market as well as eliminating some of the potential entrants into the industry. Merging and acquisition process is likely to continue as the competition in the industry intensifies.

References

Böhm, A. (2009). The SWOT Analysis. München: GRIN Verlag.

Gorgenländer, V. (2010). A strategic analysis of the construction industry in the United Arab Emirates opportunities and threats in the construction business. Hamburg: Diplomica-Verl..

Pahl, N., & Richter, A. (2007). SWOT analysis: idea, methodology and a practical approach. Munchen: GRIN Verlag.

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