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2009 1

XXXXXXXXXX

[HSBC MARKETING

STRATEGIES]
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1. Abstract

In today competitive world, every organization has to develop set of marketing strategies depending

on the local need to achieve their marketing objectives. Customers in different parts of world cannot

be satisfied in the same way so organizations have to adopt different marketing mixes according to

the local needs. HSBC is one of the big brands in banking industry with a very good international

presence across the all continents. As the market places are getting globalised, local needs of

customers can’t be ignore. In such remaining global and meeting local needs a challenging task for

the companies. This paper reviews the marketing strategies of HSBC in its domestic and international

market. It also reviews the affect of these strategies on the customer satisfaction with empirical study

conduct in two main market place of HSBC i.e UK and India.

Key words: Marketing strategy, business strategy & Branding.


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CONTENTS

6.LIST OF CHARTS & TABLES...................................................................47

INTRODUCTION

1.1. Context of study: “HSBC” –

In 21st century, the banking industry has revolutionized its services globally. In the last decade, banks

have operated in the environment of major changes, and to a huge level, banks have shown the ability to

transform themselves to keep up with an evolving environment. In today’s world banks have provided

numerous services to its clients. Many banks are providing services globally and HSBC (The Honkong

and Shanghai Banking Corporation) is a chief such service provider of them.

According to the Forbes magazine in 2009, HSBC is the largest banking group and the biggest company

according to a composite measure in the world. According to HSBC annual report 2007 “Headquartered

in London, HSBC is one of the largest banking and financial services organizations in the world. Its

international network comprises some 10,000 properties in 86 countries and territories in Europe; Hong

Kong; Rest of Asia-Pacific, including the Middle East and Africa; North America and Latin America.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in

HSBC Holdings plc are held by over 210,000 shareholders in 120 countries and territories. The shares are

traded on the New York Stock Exchange in the form of American Depositary Shares. HSBC provides a

comprehensive range of financial services to more than 100 million customers through four customer

groups and global businesses: Personal Financial Services (including consumer finance); Commercial

Banking; Global Banking and Markets; and Private Banking.

2.1.1. Vision, Values & Mission – HSBC (2009) Details are available on
<http://www.hsbc.com/1/2/sustainability/sustainability-at-hsbc/our-principles-and-values>
Vision – To achieve sustainable profits for our shareholders, building long-lasting relationships

with customers, valuing our highly committed employees, respecting environmental limits and

investing in communities.
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Values – The HSBC Group is committed to five core business principle. It is outstanding customer

service; effective and efficient operations; strong capital and liquidity; prudent lending policy; &

strict expense discipline.

Mission – In order to achieve its core principle, it supports business principles with certain key

business values. These key values are following - the highest personal standards of integrity at all

levels; commitment to truth and fair dealing; hands-on management at all levels; commitment to

quality and competence; a minimum of bureaucracy; fast decisions and implementation; putting

the team’s interests ahead of the individual's; the appropriate delegation of authority with

accountability; fair and objective employer; a diverse team underpinned by a meritocratic

approach to recruitment/selection/promotion; a commitment to complying with the spirit and letter

of all laws and regulations wherever we conduct our business; the exercise of sustainability

through detailed assessments of lending proposals and investments, the promotion of good

environmental practice and sustainable development, and commitment to the welfare and

development of each local community.

2.1.2. Financial Highlights interim report 2009

HSBC (2009), Details are available on

<http://www.investis.com/reports/hsbc_ir_2009_en/>

1. Total operating income 6 per cent lower at US$40,248 million (US$42,912 million in the

first half of 2008).

2. Net operating income before loan impairment charges 12 per cent lower at US$34,741

million (US$39,475 million in the first half of 2008).

3. Group pre-tax profit 51 per cent lower at US$5,019 million (US$10,247 million in the

first half of 2008).


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4. Profit attributable to shareholders of the parent company 57 per cent lower at US$3,347

million (US$7,722 million in the first half of 2008).

5. Return on average shareholders’ equity of 6.4 per cent (12.1 per cent in the first half of

2008).

6. Earnings per ordinary share 63 per cent lower at US$0.21 (US$0.57 in the first half of

2008).

2.1.3. Business Groups –

HSBC manages its business through two customer groups, Personal Financial Services and

Commercial Banking, and two global businesses, Global Banking and Markets (previously

Corporate, Investment Banking and Markets), and Private Banking. Personal Financial Services

incorporates the Group’s consumer finance businesses; the largest of these is HSBC Finance

Corporation (‘HSBC Finance’). (HSBC Annual Report 2008), Details are available on

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2008ara0.pdf>

a. HSBC - Personal Financial Services - HSBC provides more than 100 million customers

worldwide with a full range of personal financial services, including current and savings accounts,

mortgages, insurance, credit cards, loans, pensions and investments. Consumer Finance facilitates

point-of-sale credit to consumers, and lends money and provides related services to meet the

financial needs of everyday people.

b. HSBC - Commercial Banking - HSBC provides financial services to small, medium-

sized and middle-market enterprises, the group has almost 2.5 million such customers, including

sole proprietors, partnerships, clubs and associations, incorporated businesses and publicly quoted

companies.
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c. HSBC - Corporate Investment Banking and Markets - This customer group provides

tailored financial services to corporate and institutional clients. Business lines comprise Global

Markets, Corporate and Institutional Banking, Global Transaction Banking and Global Investment

Banking.

d. HSBC - Private Banking HSBC Private Bank provides financial services to high net

worth individuals and their families in 68 locations. Over the past five years following acquisitions

such as Republic New York Corporation, Safra Republic Holdings and The Bank of Bermuda

Limited HSBC’s private banking businesses have been integrated

2.1.4. SWOT ANALYSIS –

Strengths Weaknesses

1. Size: World's largest (based on a 1. Branding: HSBC setup banks under different

composite score, Forbes) and most names (Hong Kong Bank of Canada, British

profitable banking corporation Bank of the Middle East, etc) over 100 years. In

1998, they were all branded together, but the


2. Highest international presence: 128 mn
previous lack of branding and the name changes
customers worldwide
may have hurt HSBC in brand recognition.
3. Diversified approach - both
2. Bad debts due to housing market: HSBC's
geographically and on basis of customer
North American results have been significantly
group
affected by higher loan impairment charges due
4. Asian trade origins
to the impact on its portfolio of credit

5. The bank has a strong presence in deterioration related largely to housing market

emerging markets, putting it in a good weakness in the US.

position to take advantage of future growth


3. HSBC associates itself strongly with
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in those economies. investment in the small business sector, but the

current economic situation has led to increased

risks, potentially compromising the activity levels

in this area of the operation.

4. Less presence in private banking.

Opportunities Threats

1. The Middle East: HSBC has been 1. Downturn in American spending: Because of

aggressively expanding its business in this American housing market collapse and fears of

region, where other banks are hesitant to impending recession, Americans are predicted to

setup, and its reaping rich dividends. rely less on consumer credit and more on their

saving skills to get by.


2. Emerging economies: HSBC is the

largest international bank in Asia wherein 2. Trust in banks has decreased due to financial

the economies have risen by unprecedented losses suffered by investors, who may be more

levels in previous years. By investing in inclined to invest elsewhere.

these and other emerging countries like


3. Fast pace of consolidation among peers,
Brazil, HSBC can offset problems it may
using acquisition to enter new regions and
have as spending in the US and UK
business
declines.

3. Becoming world's leading financial

services company: This is HSBC's stated

aim. This requires HSBC to transform

itself from a global bank to a more

diversified global financial services

company such as Citibank.M-Commerce


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2.1.5. Internal Environment Analysis:

From above information we can conclude -

Tangible Resources Strength Reasons

Financial Resources Strong Net profit running into millions of

pounds and more efficient receivables

management than its competitors

Organisational Strong Formal reporting structure, planning,

controlling and coordinating

structure

Physical Strong Widespread international network

Technological Strong The world’s largest privately-

operated integrated corporate

network

2.1.6. Competitive Advantages:

High Loan - Deposit Ratio – In order to retain the trust of its investors and customers it has

maintained a high loan-deposit ratio, which is 90%. It is to keep its investors and customers assured

of its financial strengths. The sound financial position of the bank can also be attributed to the fact

that its stocks maintained relatively high price even during the credit crunch phase, something not

commonly seen to have happened to other banks. Of the UK-owned banks, it’s the only one to

survive the credit crunch relatively unscathed. While most banking shares are down at least two-

thirds since last August, investors in HSBC have actually made money over that period, when you
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take into account the dividends (HSBC - Safe as houses, 2008) <http://www.bank--

accounts.co.uk/articles/HSBC.html>

Improvised economics of scale – HSBC is working on economics of scale. HSBC is one of top five

credit cards issuer globally with more than 120 million cards in force, 75% are on the same global

platform. It means that it can operate in any market as a low cost provider either directly as HSBC or

on behalf of our partners. Its competitive advantage also lies in cutting-edge analytics and marketing

that allows it to cross sell consumer finance and banking products to those same customers. It has

implemented OneHSBC, a programme to enhance customer experience and improve cost efficiency

through standardizing products, processes and technology around the world. (HSBC Holdings plc

Strategy Update Transcript, 2007), Details are available on

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/071123_strategy_update_trans

cript.pdf>

Maintains the value of local decision making and local authority – Ability to implement a single

technology platform across the business – efficiency will be enhanced by taking full advantage of

local, regional and global economies of scale, in particular by adopting common systems architecture

wherever possible.

2.2. Significance of study –

This research work is significant in understanding the global organizations and their marketing strategies.

It is very important for marketers to understand the key factors, which affect the companies’ marketing

strategies across the globe. This research paper tries to analyze international marketing strategies and

consumer behavior and their response to these strategies.

2.3. Research Aims -


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The prime objective of the dissertation is to research the marketing strategies of a global organization &

to find out what are the factors which affect the marketing strategies of the organization when it goes

global. In the case of HSBC, in order to find its marketing strategies in its domestic and international

market, my research study will be based only on two countries – UK & India. United Kingdom is the

main centre of HSBC where its head quarter is situated whereas India is high growing market these days.

With the growth of middle class in India, 22 million customers a coming to the market every year. So

many banks are making its place in Indian market, where as HSBC is situated there from last so many

years. My desertion will also figure out if their marketing strategies are consistent worldwide or are based

on factors such as economy of the country, culture of the place and political factors that affect banking.

My findings are based on marketing strategies of HSBC in the domestic UK market and overseas services

provided in India.

2.4. Structure of Dissertation

This research paper starts with some basis information about HSBC bank, its internal analysis. A through

literature review was done to make our understanding more clear. In order to analysis HSBC marketing

strategy in domestic and international market a secondary research was carried out with the help of online

articles, magazine and web documents. In order to understand the impact of different marketing strategy

at consumers a primary research was conduct in UK & India. Finally, on the basis of these primary and

secondary researches a future roadmap is suggested for HSBC.

2.5. Reference -

HSBC 2009, HSBC global plc, viewed on 10th Sep,

<http://www.hsbc.com/1/2/sustainability/sustainability-at-hsbc/our-principles-and-values>
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HSBC 2009, HSBC global plc structure, viewed on 10th Sep,

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/hsbc_group_structure_chart_dec08.p

df>

HSBC 2009, HSBC global plc, viewed on 11th Sep,

<http://www.investis.com/reports/hsbc_ir_2009_en/>

HSBC 2009, HSBC global plc annual report 2008, UK, viewed on 11th Sep,

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2008ara0.pdf>

(HSBC 2009, HSBC Holdings plc Strategy Update Transcript, 2007, viewed on 11th Sep)

http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/071123_strategy_update_transc

ript.pdf

eCommerce Associates 2009, eCommerce Associates, viewed on 14th Sep, <http://www.bank--

accounts.co.uk/articles/HSBC.html>

The Implementation of HSBC’s Strategy: a Review by the Group Chief Executive, Interview of Mr.

Keith Whitson, Group chief executive

HSBC Holding plc Annual Report 2008 & 2007.


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3. LITERATURE REVIEW

As business becomes increasingly global, marketers find themselves more and more in the position of

doing business across cultural divides, and across national boundaries. Around the world corporations are

increasingly becoming aware of the enhanced value that corporate branding strategies can provide for an

organization. Corporate strategy is exciting and challenging. It makes fundamental decisions about the

future direction of an organization its purpose, its resources and how it interacts with the world in which it

operates. Every aspect of the organization plays a role in this strategy – its people, its finances, its

production methods and its environment (including its customers)

Corporate strategy – Corporate strategy can be described as the identification of the purpose of the

organization and the plans and actions to achieve that purpose. It consists of two main elements:

corporate level strategy and business level strategy. Early commentators such as Ansoff (1965) and

Drucker (1973) clearly refer to both these aspects of strategy: mapping out the future directions that need

to be adopted against the resources possessed by the organization.

3.1. Corporate-level strategy -

Corporate level strategy is the pattern of major objectives, purposes or goals and essential policies or

plans for achieving those goals, stated in such a way as to define what business the company is in or is to

be in and the kind of company it is or is to be.

The three core areas of corporate level strategy are strategic analysis, strategy development and strategy

implementation. (Richard Lynch, 1997)


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a. Strategic analysis. The organization, its mission and objectives have to be examined and

analyzed. Corporate strategy provides value for the people involved in the organization. It is

established by analyzing organization objectives and its relationship with its environment.

Organizations also need to analyze the resources available. Various business analysis techniques

can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses,

Opportunities, and Threats), PEST analysis (Political, Economic, Social, and Technological

analysis), STEER analysis (Socio-cultural, Technological, Economic, Ecological, and Regulatory

factors) and EPISTEL (Environment, Political, Informatics, Social, Technological, Economic and

Legal).

b. Strategy development. The strategy options have to be developed and then selected. To be

successful, the strategy is likely to be built on the particular skills of the organization, called core

competencies and the special relationships that it has or can develop with those outside –

suppliers, customers, distributors and government. For many organizations, this will mean

developing advantages over competitors that are sustainable over time. There are usually many

options available and one or more will have to be selected.

c. Strategy implementation. The selected options now have to be implemented. There may be

major difficulties in terms of motivation, power relationships, government negotiations, company

acquisitions and many other matters. A strategy that cannot be implemented is not worth the

paper it is written on.

3.2. Business Level Strategy –

In the organizations, strategic business unit’s revenues, costs, investments and strategic plans are separate

and their evaluation is done separately and evaluated apart from those of the parent company. Strategic

Business Units (SBUs) work in a variety of markets, which have differing growth rates, opportunities,

degrees of competition and profit making potential. HSBC also have got different business units which

includes personal financial services, consumer finance, commercial banking, corporate investment
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banking and markets, and private banking. According to Dibb (2001), Strategic planners of the group

should identify the different performance capabilities of each business unit and carefully allocate

resources or strategically implement its business objectives in order to meet the company's long term

goals. They must also ensure that the business units complement each other for the greater good of the

overall business. According to Porter (1980) each business unit need to define its specific mission within

the broader company mission. The business level strategy of the firm is the match between its internal

capabilities and its external relationships. It describes how it responds to its suppliers, its customers, its

competitors and the social and economic environment within which it operates. This is a game plan to get

what unit wants to achieve. Porter has proposed three generic strategies for this purpose – Overall cost

leadership, Differentiation & Focus.

3.3. Marketing Strategy –

In order to achieve the goals set, every company has to develop a marketing strategy. Many authors have

given its definition according to their own views. Weitz and Wensley (1988) pointed out that marketing

strategy is a pointer which specifically indicates towards the exact activities which should be targeted the

types of competitive advantages that are to be developed and exploited.

Marketing strategy consist of marketing mix. The marketing mix is the core structure of any marketing

plan. According to Philip Kotler, the marketing mix is defined as a set of marketing tools used to achieve

objectives. It comprises of four factors: Product, Price, Place and Promotion.

When looking at the international marketing mix different factors need to be considered in comparison to

when forming a domestic marketing mix. It is important to establish what international and domestic

marketing mixes are. A Domestic market is the market which is the home country of the company. For

example, HSBC’s home country is England, based on the fact that it floats on the London stock exchange

and that London is where the HSBC headquarters reside. An international market is a market or country
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that a business has diversified into. For example, HSBC moved into many countries such as the Americas,

France, China and India.

3.4. Effect of Globalization on Marketing Mix –

Globalization affects the 7-Ps framework. Overall, a firm's internationalization strategy decisions will

depend on the following factors:

a. The size of the firm in its domestic market.

b. The firm's strengths compared with overseas competitors.

c. Management experience of dealing in other countries.

d. The firm's objectives for long-term growth.

Overall effect of globalization can be analyzed on the 7-P framework of marketing mix –

a. Product - Different cultural, climatic, technical or economic issues will affect product design.

Modification of product policy ranges from the obvious issue of electricity supply to the more

subtle cultural differences (e.g. Americans prefer top-loading washing machines; Europeans

prefer front-loaders).

b. Place - Distribution systems vary internationally. Germans have a much higher propensity to buy

by mail order than do Italians; there are relatively few hypermarkets in Italy compared with Spain

c. Promotion - Clearly, promotion issues are deeply affected by cultural differences. This is why

advertisements shown on foreign TV stations usually appear humorous.

d. Price - Pricing is usually done in the currency of the target country. This leads to problems with

exchange-rate fluctuations which can be overcome by buying or selling currency on the futures

markets; most banks can arrange this.

e. People - Employing foreign sales staff, for example, can lead to problems in motivation and

control
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f. Processes - In Brazil it is normal for patrons of bars and restaurants to pay the cashier for meals

or drinks, receive a receipt, then order the items from the waiters. In Spain it is normal to pay for

drinks only when leaving a bar. Processes do not necessarily cross national boundaries.

g. Physical evidence - For many years American banks have given free gifts to new depositors;

merely handing over a cheque book and a deposit book would not be sufficient for a US

customer.

3.5. Strategic Market Plan vs. Marketing Plan–

A marketing plan includes the structure and entire set of activities to be performed; it is the written

document or plan for implementing and controlling an organization’s marketing activities. Thus a

strategic market plan is not the same as a marketing plan; it is a plan of all aspects of an organization’s

strategy in the marketplace, Dibb et al. (1996).

A marketing plan, in contrast, deals primarily with implementing the marketing strategy as it relates to

target markets and the marketing mix, Abell and Hammond (1979).

On the basis of marketing mix a detailed market plan is drawn. “A strategic market plan is an outline of

the methods and resources required to achieve an organisation's goals within a specific target market. It

takes into account not only marketing but also all the functional aspects of a business unit that must be co-

ordinated. These functional aspects include production, finance and personnel. Environmental issues are

an important consideration as well. The concept of the strategic business unit is used to define areas for

consideration in a specific strategic market plan. Each strategic business unit (SBU) is a division, product

line or other profit centre within a parent company. Each sells a distinct set of products to an identifiable

group of customers, and each competes with a well defined set of competitors”. Dibb (2001) pg -165.

So market plan is a bigger circle and marketing plan is a part of this big pie. Market plan involves all the

supporting and primary activities of a organization in order to implement the marketing plan.
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3.6. Marketing Objectives –

In today competitive world, every organization have to develop and set of marketing strategies depending

on the local need to achieve their marketing objectives Customers in different parts of world cannot be

satisfied in the same way So organization have to adopt different marketing mixes according to the local

needs.

3.7. Global market entry strategies

As per Ansoff metrics, depending on the product and market there are four strategies with an organization

follows which are market penetration, product development, market development & market

diversification. Broadly these four strategies can also be applied to global market as well. However, one

more element which affects this metric is promotion. So on the basis of three factors called product,

promotion and market we can define five basic strategies for entering foreign markets.

a. Keep product and promotion the same worldwide - The advantage of this is that it minimizes

entry costs. The major drawback of the approach is that it takes no account of local customs and

attitudes, and tends to lead to a 'lowest common denominator' advertisement which can be

understood by everybody and offends nobody.

b. Adapt promotion only - The product remains the same, but the promotion is adapted to local

cultural norms. This is a fairly common approach, since it enables the marketing communications

to reach the consumers more effectively while at the same time avoiding a redesign of the product

itself.

c. Adapt product only - This is less common, but has been done by some detergent manufacturers

to allow for differences in local water supplies and washing machines. Likewise, the supposedly

'global' Ford Escort is substantially modified for different markets in order to meet local emission

standards and road-safety laws.


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d. Adapt both product and promotion - Sometimes it is necessary to adapt both the product and

the promotion, as in the case of Cheer washing-powder, a Procter S Gamble product marketed in

Japan. Cheer was reformulated to allow for the extra fabric softeners the Japanese use, and the

promotion emphasized that the powder worked well in cold water (since most Japanese wash

clothes in cold water).

e. Invent new products - If the existing products cannot meet the conditions in the new market, a

new product must be invented. For example, the clockwork radio was invented for use in

countries where there is no mains power supply and batteries are difficult to obtain.

3.8. Corporate Branding Strategy –

As discussed above that in global scenario promotion affects organization strategy overall. Branding

being a very important aspect of promotion is of up most importance in this aspect.

In Harvard Business Review article “ Evolution and Revolution as Organizations Grow, ” Larry Greiner

(1998) laid out five stages of development and four accompanying crises organizations pass through as

they grow from entrepreneurial start - ups, passing through stages of collectivity (culture development),

delegation (professional management and control structures), and formalization (bureaucracy), to become

fully mature enterprises ripe for renewal.

According to him, the first crisis that an organization faces is a need for leadership that extends beyond

what its founder can provide. By Resolving this crisis organization replaces the cult of the entrepreneur

with a more complex organizational culture.

These developments take the company into its collectivity stage, a predominant feature of which is

centralization of control in the new management team. Under the delegation stage involves centralization

decentralizes and the company experiences growth in its middle management ranks as a means to handle

the control issues that delegation leaves in its wake. This leads to creation of formal rules and regulation.
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Creation of formal rules and procedures introduces new types of control that allow management to direct

the activities of the now much larger and more complex organization. But formalization begets

bureaucracy, which flourishes until the mounting red tape precipitates either overt rebellion or such a

slowdown of all processes that the organization must choose between renewing itself or going into

decline and finally dying.

These phases affect the corporate branding. For example, in the entrepreneurial phase, corporate brand

management occurs within the relationship the founder establishes with stakeholders, a direct connection

that makes it easy to communicate vision and align it with images and expectations. In the collectivity

stage of organizational development, corporate brand management is complicated by the emergence of

organizational culture and the growth of a middle management group that intercedes between

stakeholders and top management. Internal fragmentation will be echoed externally in the number of

markets the organization will have entered by this advanced stage of its development.

3.9. Conclusion –

At different levels, organizations follow different strategy, however all these strategies should be aligned

to its ultimate vision. In order to make its strategy aligned to its goals, every organization undertakes

different activates which governed by it mission, these activities are called marketing mix. Companies’

strategies are also affected by its geographical presence. As companies go globalized their strategies are

affected by internal environment and economic growth of the country. Thus in order to formulate a good

strategy, every company needs to align it all process and activity keeping in the mind external

environment as well.

3.10. References –

Abell, D.F., and Hammond, J.S., (1979), Strategic market planning, Englewood Cliffs, N.J.: Prentice-

Hall, P.10.
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Ansoff H. Igor “Corporate Strategy: An Analytic Approach to Business Policy for Growth and

Expansion” 1965

Chisnall, P.M (1995), Strategic Business Marketing, 3rd ed, Prentice-Hall, London,

Dibb, S., Simkin, L., Pride, W.M., and Ferrell, O.C., (2001), Marketing concepts and strategies,

Houghton Mifflin, Fourth European Edition.

Dibb, S., Simkin, L., and Bradley, J., (1996), The marketing planning workbook London: Rout ledge,

1996.

Larry Greiner Evolution and Revolution as Organizations Grow Harvard Business Review article 1998

Michael Porter (1980) Competitive Strategy: Techniques for Analysing Industries and Competitors New

York. Macmillan

PESTEL analysis of the macro-environment Oxford University Press. 2007 Retrieved 2009 01-27.

Peter Druker Management tasks, responsibilities and practices (New York: Harper and Row, 1973) Ch. 7

Philip Kotler Marketing Management Millenium Edition, Tenth Edition 2002, N.J.: Prentice-Hall.

Weitz, B.A., and Wensley, R., (1988), Readings in Strategic Marketing, Chicago: Dryden, 1988.

Whitson, K., (2001), the implementation of HSBC's strategy: a review by the group Chief Executive.

Richard Lynch “Corporate Strategy” England: Prentice-Hall, 4th Edition Page no 2-30
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4. CONTEXUAL CHAPTER
HSBC has done a fantastic job in investing in its brand name, using the hexagon logo, which states 'the

World's Local Bank'. It has not only reinforced their customer base and retained their market share at

home, but also abroad. However, it has different marketing strategy deployed at different countries

according to their economic development and social structure. In mature markets where it operates on

economy of scale, its strategy is to get a robust position in selected markets. For emerging markets, it

strategy follows 3 different patterns -

Strengthen market share – in the market like Panama and Mexico where net operating income is high

and HSBC presence is also high it follows a strategy of increasing market share by developing platform to

support evolving customer needs.

Invest to grow - in the market like Turkey and Brazil where net operating income is at middle and

HSBC presence is also in moderate it follows a strategy of acquiring scale over time.

Position for future - In the low net operating income economy, like India and China it has low presence.

It is tailoring its offering as per regulatory environment and development path.

The company has a well framed strategy in terms of compartmentalization into:

4.1. Corporate level strategy - At corporate level its strategy is aligned with the global

economic trend. In the words of group chairman Mr. S K Green, “We will continue to build our business

by focusing on faster-growing markets around the world and on businesses where international

connectivity is important – all from a position of financial strength. If anything, the current crisis

validates our renewed focus over the last few years on fast-growing economies, since it will accelerate the

shift in the world’s centre of economic gravity from west to east.” (HSBC Annual Report 2008), Details

are available on

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2008ara0.pdf> HSBC -

Managing for Value 1998-2003 Managing for Value was the strategy followed by the group between
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1998 and 2003.

HSBC - Managing for Growth 2003-2008

HSBC launched ‘Managing for Growth’ at the end of 2003 it is a strategic plan that provides a blueprint

for growth and development. HSBC aim to be the world’s leading financial services company, meaning

preferred, admired and dynamic, and being recognized for giving the customer a fair deal. As emerging

markets are growing faster than developed economies, HSBC is also investing more in developing

economy market. it is trending towards a revenue ratio of 60:40 from developed and developing

economies. its corporate strategy is to be at both front i.e. developed as well as developing economies. Its

main focus is on offering comprehensive and consistent proposition to mass affluent customers across

many markets. (HSBC Holdings plc Strategy Update Transcript, 2007), Details are available on

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/071123_strategy_update_transcrip

t.pdf> It is also experimenting in appealing to a demographic globally that hasn’t been paid much

attention that’s people over 50. The bank is trying to raise its profile as a provider of solutions for this

emerging market.

4.2. Business level strategy - At business level it follows a multi strategy approach. Following

is the example of this (HSBC Holdings plc Strategy Update Transcript, 2007), Details are available on

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/071123_strategy_update_transcrip

t.pdf> –

4.2.1. Corporate investment banking - Emerging markets-led and financing-focused

wholesale banking approach. It has positioned itself well for the next wave of global growth

through aligning its global network and emerging markets presence.

4.2.2. Personal Financial Services – HSBC is using its global reach and local knowledge to

grow profitably in selected markets strategy for Personal Financial Services. The strategy focuses

on growth in: Markets where HSBC already has scale, such as Hong Kong and the UK; and

Markets where HSBC can build or acquire scale, particularly in Asia-Pacific, Latin America,
23

Turkey and the Middle East.

4.2.3. Commercial Banking – It has a global network with local coverage which captures both

ends of the customer transaction. Its network of International Banking centers across 23 countries

is to serve customers with cross border needs. It works as an incubator for other businesses:

CIBM, PFS, and PB. It also leverages on global scale, eg transactional products (GTB),

receivables finance, Business Direct. For this it has two key initiatives: − to be the leading

international business bank, using HSBC’s extensive geographical network together with product

expertise in payments, trade, receivables finance and foreign exchange to actively support

customers trading and investing across borders; and − to be the best bank for small businesses in

target markets, building global scale and creating efficiencies by sharing best practice, including

customer experience and credit scoring, and selectively rolling out the direct banking model.

4.2.4. Corporate, Investment Banking and Markets – it is accelerating growth by enhancing

capital markets and advisory capabilities focused on client service in defined sectors where HSBC

has critical relevance and strength. HSBC’s strategy is to be a leading wholesale bank by: utilizing

HSBC’s extensive distribution network; developing Global Banking and Markets’ hub-and-spoke

business model; and Continuing to build capabilities in major hubs to support the delivery of an

advanced suite of services to corporate, institutional and government clients across the HSBC

network.

4.2.5. Private Banking - It has a unique distribution network. Customer base builds upon intra-

Group referrals from PFS and Commercial Banking. It has critical ability to source and distribute

HSBC products globally within an open architecture framework. It operated with help of Global

onshore and offshore network. It has also extended the reach of this business to existing customers

through a wider product range and penetrated new markets. Its strategy for Private Banking is to

be the world’s leading international private bank, known for excellent client experience and global

connections. For private Banking, it has built a network of domestic and international operations

that provide diversified revenue streams, helped by product leadership in areas such as credit,
24

hedge funds, emerging markets, investment advice and estate planning. This is achieved by

attracting, retaining and motivating talented individuals, by providing close communication

between clients and staff, and by making targeted investments in IT, marketing and branding

initiatives.

4.3. International strategy –

The Group has identified three main business models for its customer groups and global businesses that

embody HSBC’s areas of natural advantage:

1. Businesses with international customers for whom developing markets connectivity is crucial –

Global Banking and Markets, Private Banking, the large business segment of Commercial Banking

and the mass affluent segment of Personal Financial Services;

2. Businesses with local customers where efficiency can be enhanced through global scale – the small

business segment of Commercial Banking and the mass market segment of Personal Financial

Services; and

3. Products where global scale is possible through building efficiency, expertise and brand – global

product platforms such as global transaction banking.

In order to review and compare its strategy in domestic as well as abroad, we have taken UK and India

market for study.

4.4. HSBC in India –

The Hong Kong and Shanghai Banking Corporation’s (HSBC) association with the banking industry in

India goes back about 150 years and is nearly as old as the history of banking in the country. The

association commenced in 1853, when the Mercantile Bank of India, China and London was established

in Mumbai, with its headquarters in London. The Mercantile Bank was acquired by the HSBC Group in

1959. HSBC in India has product offerings across the banking spectrum, in product segments including

retail liabilities and assets, corporate banking, treasury operations and investment banking. It operates

through its subsidiaries in India. HSBC operates in India through number of subsidiaries companies, viz.
25

The Hongkong and Shanghai Banking Corporation Limited (HSBC), HSBC Asset Management (India)

Private Limited, HSBC Global Resourcing / HSBC Electronic Data Processing (India) Private Limited,

HSBC Insurance Brokers (India) Private Limited, HSBC Operations and Processing Enterprise (India)

Private Limited, HSBC Private Equity Management (Mauritius) Limited, HSBC Professional Services

(India) Private Limited, HSBC Securities and Capital Markets (India) Private Limited and HSBC

Software Development (India) Private Limited. The group carries out its Commercial Banking, Banking

Technology, Asset Management, Global Resourcing, Insurance and Data Processing operations in the

country through its subsidiaries. Following is the timeline of its operation in India. (HSBC India (2009),

Details are available on <http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc>

The Mercantile Bank of India, China & London : 1853

The Hongkong & Shanghai Banking Corporation Limited (HBAP) : 1867

HSBC Securities & Capital Markets (India) Private Limited (HBAP) : 1995

HSBC Private Equity Management (Mauritius) Limited (Indialiaison Office) (PEIN) : 1995

HSBC Electronic Data Processing India Private Limited (HDPI) : 2000

HSBC Primary Dealership (India) Private Limited (HCPD) : 2001

HSBC Professional Services (India) Private Limited (HPSI) : 2001

HSBC Software Development (India) Private Limited (HSDI) : 2002

HSBC Asset Management (India) Private Limited (ISIN) : 2002

HSBC Insurance Brokers (India) Private Limited (ININ) : 2003

HSBC Operations & processing enterprise(India) Pvt. Ltd. (HOPE) : 2003

Canara HSBC Oriental bank of commerce Life insurance co. Ltd.: 2008
26

4.5. Environmental Analysis –

Scanning of the environment is the first step of doing business. Here we first take a look at the external

environment by using the PEST analysis.

4.5.1. Political – In UK political interaction with the regulatory environment is becoming more

frequent as the government seeks to stimulate lending to preserve economic activity. Same way in

India, Market is regulated with the interference of government and Reserve Bank of India. The

sustained rise in inflation prompted the Reserve Bank of India to tighten policy by raising both

interest rates and reserve requirements during the first half of 2008. As Indian economy is on the

process of economic reform, various policy measures initiated by the government is resulting in

increasing competition in banking industry. The Narasimhan committee report evidence of Indian

government desire to re-regulate the banking industry so as to encourage efficiency through

competition. At the same time Indian government also regulates banking industry in big way. In

order to secure market place for domestic players, RBI restricts the offer of branch banking lisence

to maximum of 4/year to foreign banks. This kind of policy matters will affect HSBC working in

India.

4.5.2. Economic - In the UK, the economy has entered recession and the currency has fallen in

value against the US dollar, the yen and the euro. The marketplace is changing with the emergence

of the partnationalisation of some major financial institutions. Low interest rates will reduce

deposit spreads. This will affect retail banking business model, as now banks will be more

dependent on transactional fees and lending margin. Pension funding requirements, in particular

for UK defined benefit schemes, will place increased financing demands on corporate, which may

lead to unfunded commitments being drawn down, adding to pressure on system liquidity. The

recent deterioration in credit quality is expected to continue as the economy contracts, with loan

impairment charges rising as a result. Market volatility is also expected to continue.


27

India is a growing economy. Compared to many developed economies, developing economies are

not hit very badly in the recession. India has a very good tax system, which levies taxes between

the Union and State Governments. Taxation will affect HSBC since residents of India are taxed on

their worldwide income, and non-residents are taxed on their income only received in India.). A lot

of residents’ income therefore does go to the government, slightly threatening this service within

the country. A prolonged period of low interest rates is expected which will put pressure on

HSBC’s net interest income from its strong deposit base. As capital market and currency volatility

is endemic, customers are likely to seek capital protection and become increasingly rate and risk

sensitive, seeking out products which offer deposit insurance and government guarantees.

Regulatory reforms in the areas of wealth management product complexity, sales requirements and

liquidity and reserve ratios are likely, and these will lead to a higher cost of compliance, greater

standardization and slower product approvals. International trade is expected to continue to

contract, affecting import and export volumes and reducing HSBC’s earnings from trade

financing.

4.5.3. Social

United Kingdom

Great Britain is a modern and prosperous European nation, responsible for helping develop

parliamentary democracy and advance literature, music and science. The UK culture is a mixture

of different countries culture. It has greatly influenced many other countries across the globe. Out

of Great Britain’s 60.6 million population: 92.1% are white (83.6% English, 8.6% Scottish, 4.9%

Welsh, 2.9% Northern Irish), 2% black, 1.8% Indian, 1.3% Pakistani & 2.8 % mixed or other.

Great Britain’s religious makeup is: 71.6% Christian, 2.7% Muslim, 1% Hindu, 23.1% have

unspecified or no religious affiliations. CIA, (2006), Details are available on

<http://www.cia.gov/cia/publications/factbook>
28

According to Hofstede’s Value Dimensions, the United Kingdom is a high individualism, a

masculine-oriented society with a relatively low power distance & uncertainty avoidance

(www.geert-hofstede.com, 2006). The Hofstede Dimensions show that predominately Christian

countries, like the UK, usually rank high on the individualism index.

INDIA

India has a diverse economy which encompasses traditional village farming, modern agriculture,

handicrafts, a wide range of modern industries, and a multitude of services. It is growing rapidly &

services are the major source of economic growth, accounting for more than half of India's output

with less than one third of its labor. Culturally also it is very diverse. Its population comprises of

different ethnic groups: Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3% (2000). In a

population of 1,166,079,217 (July 2009 est.), - 80.5% are Hindu, 13.4% are Muslims, 2.3% are

Christian, 1.9% are Sikh, 1.9% are other, unspecified 0.1% (2001 census). CIA, (2006), Details

are available on <http://www.cia.gov/cia/publications/factbook>

According to Hofstede’s Cultural Dimensions, India is a masculine – oriented society which has

low individualism ranking (therefore is a collectivist society) and also has a low uncertainty

avoidance but has very high power distance, (Geert Hofstede 2009, Details are available on

<www.geert-hofstede.com> ) India’s PDI is very high and means that leaders and managers are

able to exercise a lot of control and authority. It also means that inequalities of power and wealth

are able to grow within the society.

4.5.4. Technological -

Technology is a key driver in banking industry, which creates new business models and processes

and also revolutionizes distribution channels. With the development of society, technological

advance also happens. As a developed economy in UK, technological advance is much more than

India.
29

4.6. Target Segment –

As per the annual report of 2008, HSBC main focus in UK is on commercial banking small firm whereas

in India it is focusing on building strong presence in retail banking. Its target market in India is basically

HNI residing in urban area.

4.7. Strategy for UK –

Leading International Commercial Bank – HSBC has always tried to position itself as a leading

international commercial bank in UK. Leveraging on its huge international presence and network with its

unmatchable IT capabilities, It has created international corporate banking team in UK and France. It has

also deployed a dedicated polish commercial banking unit in UK.

UK’s Biggest Online Business Bank - HSBC is leveraging on its IT capabilities in UK. It has automated

online current account applications. Its popularity as a online banking bank is evidence from the rise in

business internet banking users.

Bank for Small Business – under its new business strategy, it is target small and budding business units

as its potential customers. It has also launched a small business credit card.

Market Penetration – looking at the Ansoff metrics, HSBC strategy for UK seems to be market

penetration with a network of around 1500 branches England and Wales. Branches are undergoing a

rolling program of refurbishment to improve the 'retail experience' as the bank puts it, including the

rebranding of branches as 'stores' and the inclusion of more open areas for staff to meet customers. At the

same time as competition is increasing and product is getting commoditized it is also venturing into

newer domains. Under its product development strategy, In April 2008 HSBC launched a campaign

selling mortgages. This was seen as a risky move by media and HSBC staff due to their previous non-plus

attitude building on their 3% market share of the mortgage market. While other banks and building
30

societies felt the effects of the 'credit crunch', HSBC, bolstered by a favourable savings to lending ratio,

unveiled a mortgage rate matching deal that would offer non-HSBC mortgage customers the ability to

match their current mortgage rate.

Market Diversification – Leveraging on its financial it has ventured in new market in UK. HSBC Rail is

one of such example of this strategy. It has also entered in several other joint ventures and contracts with

more high street names, such as taking over Marks and Spencer Money on a partnership basis in 2004 and

the John Lewis Partnership Card contract.

Promotions – In the term of promotion it has come up with newer way of promoting its brands. One of

such is its History wall. The HSBC History Wall is an exciting and original feature of HSBC's Group

headquarters in London’s Docklands. It demonstrates HSBC’s rich and fascinating pedigree, by bringing

together nearly 4,000 images from the Group’s past. The History Wall combines the characteristics of a

gallery, a library and a work of contemporary art. The History Wall was developed in partnership with

Thomas Heatherwick, one of the UK's leading design studios, and won a special mention in the Design

Week 2003 awards. The wall is situated on the ground floor of HSBC's head office and can be seen by

customers and visitors to the building during normal office hours .

(HSBC 2009), Details are available on <http://www.hsbc.com/1/2/about/history/history-wall/hsbc-

history-making-wall>

To increase its brand visibility, HSBC is actively involved in sponsoring different sports tournaments and

other events. Its current activity is focused around golf, rugby, tennis and eventing. It has sponsored

following sports events recently (HSBC 2009), Details are available on

<http://www.hsbc.com/1/2/about/sponsorship/sports> –

1. HSBC Champions

2. British & Irish Lions


31

3. Wimbledon

4. Fédération Equestre Internationale

In order to reinforce its corporate brand strategy as world’s local bank, HSBC is continuously involved in

promoting different culture across the world. Through supporting culturally innovative organizations,

projects and people it hope to encourage individuals to enjoy new experiences, share knowledge and

appreciate other lifestyles, societies and arts from across the globe (HSBC 2009), Details are available on

<http://www.hsbcculturalexchange.com/why.php>. Each cultural project is chosen for its ability to enhance

cultural awareness and provide tangible benefits for the brand and the business. HSBC also undertakes broader

philanthropic work under its Corporate Responsibility programme.

(HSBC 2009), Details are available on <http://www.hsbcculturalexchange.com/what.php>

HSBC all promotional activity in UK is focused on corporate brand building. These activities are also a part of its

corporate level strategy.

4.8. Strategy for India-

New and innovative products for Indian market - HSBC is pioneer in introducing computerization in

India. It strategy was to develop Indian banking industry. The bank launched the first ATM in India way

back in 1987. It was also one of the first banks in India to achieve an electronic banking customer

interface and this has helped it generate higher than market growth rates for the Trade Services business.

According to countries internal economic environment it has introduced innovative products to suit

market conditions. In the falling interest rate scenario in the country, HSBC was one of the first banks to

start the innovative product offering - floating interest rate home loans.

HSBC has launched various innovative products which are focused on a particular market segment.

HSBC Pragati Finance, for instance, has enabled the bank to offer consumer finance to people who have

no credit history and are unable to prove their repayment ability, but actually have the ability to repay.
32

This product is targeting to people who have so far had limited access to organized lending. One more

such example is The `OneWorld' account package, launched in association with HSBC Bank Middle East,

offers NRIs based in the UAE a range of facilities including free transfer of funds to their HSBC accounts

in India. (The Hindu Business Line 2009), Details are available on

<http://www.thehindubusinessline.com/2006/11/15/stories/2006111501830600.htm>

Strong retail focus with excellent CRM processes – HSBC’s main focus in India is on retail baking. It

has done various acquisitions in order to achieve a commendable position in this market. It acquired the

Non-Fund activities from Gujarat Lease Financing Ltd. in 1999. In the year 2000, the bank acquired the

Chandigarh branch license from Deutsche Bank. In 2002, HSBC acquired retail banking business from

BNP Paribas and the Retail Banking Operations in Kolkata from Bank of Tokyo-Mitsubishi. Currently

HSBC has 37 branches across 18 cities. Its focus on retail baking is evident from the fact that it is the fifth

largest issuer of credit cards in the country and a leading market acquirer. Its other competitive strength is

its CRM activity, it has started Premier for individuals and Business Vantage for businesses. These are

premium services designed to look after customers’ business and personal needs including wealth

management solutions and personalized banking. It offers the service of an exclusive Relationship

Manager dedicated to the customer needs.

Positioning as complete solution provider – in terms of positioning it is trying to position itself as a

complete financial services solution provider. It has expanded its customer base by extending its product

range to include a wide variety of investment products. It has established a reputation in India of being a

provider of international quality investment products and services. It has got multiple distribution

channels for its insurance products. It has tied up with Tata AIG. HSBC has also adopted a very effective

cross-selling strategy to sell insurance to its million plus customer base of account and credit card holders.

It has also joined hand with India’s two public banks and came up with a new company called Canara

HSBC life insurance. Joint Venture is as follows - Canara Bank holds 51% equity, HSBC Insurance (Asia
33

Pacific) Holdings Ltd 26% and Oriental Bank of Commerce 23%. This strategy is basically to leverage on

the established large distribution channel of local banks.

Leveraging the India Advantage Business Process Outsourcing – it is also leveraging on the India’s

low cost manpower. In order to maintain its profitability levels, streamline its costs, improve productivity

and cut bureaucracy, HSBC Group has started outsourcing its back office transaction processing and

software development activities to India for international operations. It has launched captive BPO centres

at Hyderabad, Bangalore and Vishakapatnam and plans to gradually shift more jobs to these centres.

Software development - As India has got a huge pool of software professionals, the bank has set up a

software development centre in Pune for developing solutions for HSBC Group’s offices worldwide.

4.9. Branding –

Consumers wanted to be treated as individuals and to feel that the companies cared about them,

recognized their needs and understood what makes their community unique. Based on this phenomenon,

company used to operate on different brand identity in different countries. However, as world is

becoming borderless a new identity consumers are looking for is the global identity. The old branding of

HSBC was not based on this global phenomenon. The group announced in November 1999 that the

HSBC brand and the hexagon symbol would be adopted as the unified brand in all the markets where

HSBC operates, with the aim of enhancing recognition of the group and its values by customers,

shareholders and staff throughout the world. HSBC is now having a single corporate branding around the

world. “Since last year, HSBC has been communicating its understanding of its customers and the world

they live in by recognising their different values. From courage to status and trust, HSBC strives to

celebrate the diversity of these values. HSBC has now created two new TV spots which explore the

crucial role that people's values play in their financial decisions. In 'Integrity' and 'Responsibility', we go

from the celebrity-obsessed arena of the paparazzo to the daily struggle of the fisherman – two worlds
34

which are more alike than you might think.” (HSBC 2009), Details are available on

<http://www.hsbc.com/1/2/about/advertising>

HSBC has now created two new TV spots which explore the crucial role that people's values play in their

financial decisions. In 'Integrity' and 'Responsibility', it is moving from the celebrity-obsessed arena of the

paparazzo to the daily struggle of the fisherman – two worlds which are more alike than you might think.

HSBC’s print ads are easily identifiable – a solid red border, a repeated image, and a strong one-liner that

embodies their brand. HSBC’s ad campaign utilizes several strong and effective tactics to gain attention.

Its majority of the ads are having a single image, copied three times, with a different value printed over

each copy of the image. These kinds of ads explain the underlying meaning of HSBC tagline that is

HSBC understands different people and locations have different values. Promoting themselves as “The

world’s local bank,” HSBC gives the feeling of having the insight on local values, combined with the

strength and reliability of a global infrastructure. Ads show that different people value objects differently,

and that HSBC acknowledges those differences, respecting each location’s unique needs and concerns.

4.10. Conclusion –

So we can conclude, looking at the Ansoff Model of market entry, in UK HSBC is following a market

penetration as well as product development strategy, whereas in India it is having a market development

strategy. As a mode of entry it enters with acquiring an existing company in the new market so as to

lerage upon this company’s local knowledge like in the case of India it acquired The Mercantile Bank of

India, China & London. Its marketing strategy changes as per the economic development in the country

and market conditions. Like in India its main focus is on building strong retail banking network whereas

in UK its main focus is on commercial banking. However as we analysed that India is very different from

its domestic market UK in the terms of economically, politically, socially and technologically, following

are some recommendation for HSBC for Indian operation –


35

Recommendation 1: Branding and Reputation - HSBC need to maintain the high level of quality in

their branding, CSR practices and the way they do business. HSBC’s reputation of integrity and honesty

is crucial to their worldwide operations and needs to be diligently maintained.

Recommendation 2: Increased Competition and Deregulation HSBC India needs to view this

deregulation as an opportunity for them to consolidate their position in the Indian market and increase

their network. Another possibility is that HSBC chooses to acquire local banks in order to increase their

position in the market. HSBC has already moved ahead in this direction, for its insurance it has joined

hand with two public banks in India. The challenge for HSBC will be to increase their position in the

market under new competitive conditions.

4.11. References –

HSBC 2009, HSBC global plc , viewed on 10th Sep,

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/090529_brief_history_europe.pdf>

HSBC 2009, HSBC global plc, viewed on 11th Sep,

<http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/090529_brief_history_asia_pacific.pdf>

HSBC 2009, HSBC global plc, viewed on 12th Sep, <http://www.hsbc.com/1/2/about/advertising>

HSBC 2009, HSBC India , viewed on 12th Sep, <http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc>

HSBC 2009, HSBC India , viewed on 12th Sep, <http://www.hsbc.co.in/1/2/miscellaneous/about-

hsbc/150-years-in-india>

HSBC 2009, HSBC UK , viewed on 12th Sep,

<http://www.hsbc.co.uk/1/2/about;jsessionid=0000kf1uIBHr4U7D-GSGtiRRuLn:12ntf16af>
36

HSBC 2009, HSBC cultural exchange 2009, What, viewed on 13th Sep.

<http://www.hsbcculturalexchange.com/what.php>

HSBC 2009, HSBC cultural exchange 2009, Why, viewed on 13th Sep .

<http://www.hsbcculturalexchange.com/why.php>

HSBC 2009, HSBC Sports Sponsorship 2009, Sports, viewed on 13th Sep,

<http://www.hsbc.com/1/2/about/sponsorship/sports>

HSBC 2009, HSBC History Wall, viewed on 13th Sep

<http://www.hsbc.com/1/2/about/history/history-wall/hsbc-history-making-wall>

Geert Hofstede Cultural Dimensions, viewed on 13th Sep <http://www.geert-

hofstede.com./hofstede_india.shtml>

Geert Hofstede Cultural Dimensions, viewed on 13th Sep <http://www.geert-

hofstede.com./hofstede_united_kingdom.shtml>

CIA 2009, CIA, viewed on 13th Sep, <https://www.cia.gov/library/publications/the-world-

factbook/geos/in.html>

India brand equity foundation (IBEF) 2009, IBEF, viewed on 13th Sep,

http://www.ibef.org/download/HSBC.pdf

eCommerce Associates 2009, eCommerce Associates, viewed on 14th Sep, <http://www.bank--

accounts.co.uk/articles/HSBC.html>

Asia Times 2004, India a fortune 500 success story, viewed on 13th sep,

<http://www.atimes.com/atimes/South_Asia/GK04Df02.html>
37

Business Line 2006, HSBC India to enter new segments, viewed on 14th Sep.

<http://www.thehindubusinessline.com/2006/11/15/stories/2006111501830600.htm>\

The Implementation of HSBC’s Strategy: a Review by the Group Chief Executive, Interview of Mr. Keith

Whitson, Group chief executive

HSBC Holding plc Annual Report 2008 & 2007.


38

5. METHODOLOGY CHAPTER

5.1. Research objective -

This research was done in order to know the satisfaction level of HSBC customers in the both countries

i.e. UK & India.

5.2. Research Design and Plan -

It was a Descriptive research wherein the Questionnaire Survey method was used. The survey was carried
out through a questionnaire as all the respondents were not accessible in person, consisting of a mix of
Practice-related and Behavioural questions, framed as close-ended or using an interval scale (Likert Scale
in our case).

5.3. Research Approach -

Sample Size - In the absence of a well-defined Sampling Frame, the total population of the

Sampling Units, Sample Size, was taken as 200 consisting 100 respondents from each country.

Sampling Unit - The sampling units for the research were customers of HSBC bank residing in UK

& India.

Sampling Frame: From bank records and personal contacts.

Sampling Technique - For deciding name of countries: Judgemental sampling - United Kingdom

is the main centre of HSBC where its head quarter is situated whereas India is high growing market these

days. With the growth of middle class in India, 22 million customers a coming to the market every year. So

many banks are making its place in Indian market, where as HSBC is situated there from last so many years.

For deciding respondents: convenience sampling this survey was conduct using convenience

sampling method. Respondents were chosen on the basis of accessibility and availability.

Methods of data collection - Data was collected from primary sources. Primary data was collected

through survey conducted with the help of a structured questionnaire, (shown in the annexure).
39

Data analysis techniques - Data is analysed using frequency technique.

Limitations: We tried our best to collect and analyze the data as thoroughly we can and arrive at

suitable conclusions. However, there are certain limitations to the research, which can be improved

upon in the future:

1. Due to time and funding constraints, a judgemental and convenience sample was used,

which leaves space for subjectivity bias.

2. The sample size of 120 is not big enough to represent the whole population, but due to

time and other constraints we could not collect data from a larger sample size. This can be

rectified by choosing a larger sample size which represents the whole population.

3. As the survey was through an unadministered Questionnaire, there is a possibility of

discrepancies arising out of interpretation which may result into subjectivity bias.

5.4. Data Analysis and key findings –

Following are the results of the research conducted -

a. In the terms of profiling, research reveals that in India online banking is not a very common

phenomenon. 67% of the respondents don’t use online services on even weekly basis, even when

they are associated with a bank whose IT capabilities are unmatchable. In UK, around 91% of

them use online services at least once a week.


40

b. In India personal banking services are more popular (53%) compare to UK where only 35% of

the respondent are availing this service. Investment banking is one of the domains where HSBC

is not doing well in India. In my opinion this may also because of the recent economic

phenomenon and because of the fact that India is a growing economy. In UK, as HSBC’s focus is

on commercial banking and consumer finance it is evident from the results also.
41

c. In UK mostly respondents are availing the services from 2-10 years whereas in India most of

them are new HSBC customers (<2 years). This can be attributed to the development of society

and economy.

d. Mostly Indian believes that HSBC baking methods are according to the need of international

market and modern banking. Same kind of response was from UK respondents also.
42

e. It is a very common trend across the globe that people normal like to prevail services of more

than one bank. Results also emphasis the same.

f. Customers who avails the services of other bank have different opinion in two countries. In India

around 70% of them consider it to be better than the other bank and 30% consider it to be a

average one, whereas in UK 38% consider it to be worse than their other bank. This can be

attributed to the level of market development and competition existed in the market.
43

g. In both the countries most of the respondents are satisfied with loan availability. However with

respect to interest rates on these loans satisfaction level is lesser in both the countries.

h. As HSBC is a technology driven bank so most of the respondents are satisfied with the process of

documentation in India. However, in UK as banking industry is much more developed than India,

the process of documentation followed by HSBC is not a differentiating factor.


44

i. In India, Mostly respondents believe that HSBC’s marketing techniques are not so good are

visibility is only limited to niche market which is basically HNIs who resides in urban areas.

Whereas in UK, it has an extensive network of branch, its marketing strategies are considered to

be sufficient.

Overall in both countries respondents are satisfied with the bank and most of them are likely to

recommend it to their friends and others.


45
46

Conclusion & Recommendations

The HSBC global corporation made US$50 billion in profit making it the third highest ranking bank in

the world according to profit earned in 2009. In order to retain this impressive position in the world

banking market HSBC need to maintain their competitive advantage to stay ahead of their competition,

keep up with global trends in the banking sector and keep expanding their customer base while retaining

the superior customer service on which they pride themselves. Its core competencies are – 1) Economics

of scale across all financial products lines, 2) large network with a wide range of financial product

offerings 3) Economy of scale.

However at the same time as banking landscape is changing, HSBC also need to respond these changes

dynamically. HSBC has been able to response very well to changing economic condition in the past also.

It remained committed to SMEs in the UK and are currently opening approximately 2,000 new business

accounts every week and its relationship managers are spending up to 30 per cent more time with

customers. In order to respond to customers changing needs and emerging technological landscape,

HSBC has become the first bank in Europe to create Business Internet Banking, which is supported on

both BlackBerry and iPhone devices, improving its flexibility for customer. It is working closer than ever

to help customers with their business needs both nationally and internationally.

This research reveals that customer’s satisfaction is not only dependent on the company’s offerings but it

also depends upon the existing market condition and level of competition. HSBC, who is operating with

different strategies in different companies, is able to meet both the ends.

UK’s economic map will be redrawn as new tropics of knowledge, creativity and next-
generation industry redefine the centres of gravity for human capital and business. With
traditional economics in a state of
flux, new attitudes and behaviours towards business are reshaping the economic map. Our
UK atlas highlights these emerging industry hubs and the regional differences in business
practices, based on the sometimes surprising data gathered from our survey, as well as our
research conducted into the shifting economic landscapes of key cities. From this combined
overview, we have selected our top five super
cities’ – the economic hot spots that are set to surface in modern-day Britain.
47

According to the research there will be a new-look UK with business hubs focusing on:
• Robotics – Edinburgh, Birmingham, Essex, London, Manchester, Plymouth
• Biotech – York and Dundee
• Nanotech – Oxford, Cambridge, Newcastle, Durham, Bristol, London
• Stem cell research – Edinburgh, London, Cambridge, Liverpool, Manchester
• Nutraceuticals – Dundee / Southampton
• Renewable energies – London, Wales, Cornwall, Glasgow
• Cybernetics – Reading
• Gaming – Dundee, Edinburgh, Glasgow

6. LIST OF CHARTS & TABLES

Annexur Annexure Description Page

e Number

No.
1 SWOT analysis 8
2 Internal Environment Analysis 12
3 Usage of online banking services 33
4 HSBC banking services 34
5 Duration of availing services 34
6 HSBC services are according to modern banking 35
48

7 Account with other bank 35


8 HSBC in comparison to other bank 36
9 Satisfaction with loan availability 36
10 Satisfaction with interest rate 37
11 Satisfaction with process of documentation 37
12 Is marketing techniques are sufficient 38
13 Overall satisfaction with the services provied 38

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49

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50

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51

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