University of Szeged

Faculty of Economics and Business Administration

INDIVIDUAL ASSIGNMENT
OF
Ziroat Tosheva

„INTERNATIONAL STRATEGIC
MANAGEMENT”
COURSE SEMINAR

AUTUMN SEMESTER
2020

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Saint Petersburg – 2021

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Table of Contents

University of Szeged ........................................................................................................................1

Faculty of Economics and Business Administration .....................................................................1
SUMMARY ..........................................................................................................................................4
2. EVALUATION OF THE STRATEGY OF HSBC HOLDING .......................................................................5
2.1 General situation .....................................................................................................................5
2.1.1 Introduction of company ..................................................................................................5
2.1.2 Characteristics of industry ...............................................................................................5
2.1.3 Macro environment of HSBC ...........................................................................................6
2.2 Analysis of the strategy ...........................................................................................................8
2.2.1 Mission Statement ............................................................................................................8
2.2.2 PEST-analysis ...................................................................................................................8
2.2.3 SWOT-analysis ............................................................................................................... 10
3. Findings and Recomendations ....................................................................................................... 12
CONCLUSION .................................................................................................................................... 13
REFERENCES ..................................................................................................................................... 14

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SUMMARY

The Industry of Global Banking has turn into powerhouse of economic growth creating
ever more complex products that use risk and securitisation in business models. Recently,
Banks has lots of diversified financing services along with traditional banking services for
example: savings, deposit and transfer of funds. The main extreme risk taking and complex
financial activities of the banking industry are vulnerable to all over the economic world.

There is fact that in today’s banking world HSBC holding has a dominant market
position through market leaders in this industry. The paper demonstrates information regarding
the activities of the company, financial performance and market environment. The head office
of HSBC can be found at London’s Canary Wharf on the HSBC tower. However, the standing
point of HSBC in Hong Kong and Shanghai Banking Corporation, which was established by a
man from Scotland who was named Thomas Sutherland, in 1865.

In this paper, I have put light on giving a brief about HSBC as a global bank which is
one of the most important banks with respect to their global operations. There glоbal prеsence
and divеrse nаture of оperations, particularly during сurrent economic situation, provide an
opportunity to estimate strategic management models. The HSBC’s complex business
environment nature, its services and operations made this paper interesting. After giving brief
introduction, secondly, it is presented about the characteristics of the industry and its global
macro economic environment. Third part of the paper is critically estimated to the review of
the strategic analysys includingly PESTEL and SWOT analysys and emphasizing the
importance of the strategic objectives. This section of the paper also estimates the internal and
external forces shaping the business environment for the organization. Lastly, there is
represented conclusion, summarizing the results and given some recommendations that may
develop HSBC operations in future.

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2. EVALUATION OF THE STRATEGY OF HSBC HOLDING
2.1 General situation
HSBC Life helps clients, colleagues and communities keep their promises. To this end, HSBC
creates insurance and financial solutions that improve financial, physical and mental well-
being. The Holding offers a wide range of products and services for protection, well-being and
services to private, commercial, corporate, institutional and private clients worldwide.

Furthermore, HSBC’s global product and service standards are used to deliver comprehensible
personal banking services to clienteles in key markets around the world, such as checking
accounts, loans, and savings products.

There is a fact that Covid-19 affects to all over the business and social life of the world. Even
in this situation, HSBC keep to control the condition very closely, communicating with
government and public health officials in the countries where they activate. Moreover, HSBC
has implemented a number of activities to support individuals, businesses, and communities
affected by the spread of the coronavirus.

HSBC provides professional advice to HSBC

Premier and the immediate family relations
manager. They can access services from
anywhere in the world at any time, including
ambulance services and priority telephone
banking. The Holding is committed to building
long-term relationships with its customers by
offering products and services that help them
achieve their goals and aspirations. HSBC’s global network and the breadth of services they
offer means they can support their customers in their domestic markets as well as help them
explore new opportunities abroad.

2.1.1 Introduction of company

The Moto – “The World’s Local Bank”
2.1.2 Characteristics of industry
HSBC has more than 7,500 offices in 87 countries around the world. It is very common,
and 124 countries and regions with 220 thousand shareholders. HSBC distrubutes all services,
including personal services, commercial banking, corporate investment banking and market

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services. Mainly, the operations of HSBC holding are located in in Europe, Hong Kong, Asia
Pacific, Australia and the Americas.

HSBC's main competitors in the UK are Barclays and Royal Bank of Scotland. These
are corporate transactions that HSBC continually reviews and monitors. But, HSBC is not a
bank that follows the ideas and guidance of its competitors. Indeed, the HSBC Group is showing
continuous growth and is a very reliable corporation. This allows them to recommend an
investment in HSBC due to its growth opportunities and good profitability prospects.

HSBC holding is known as the local bank of the world which has a history of supporting
millions of customers around the world for achieving their financial aspirations. The importance
and functioning of different markets are reliazed by their experience in international trade. In a
view of the fact that the growth of HSBC into a company or banking institution lead to the
deepest respect for various cultures and people related to these cultures. The motto of the HSBC
is to look at its customers as individuals and strive to offer them with personalized service and
credit card products that meet their unique needs.

At the same time, HSBC Group is proud to be among the top 10 financial services
companies in the United States, striving to gain a good reputation in the U.S. and conquer HSBC
- the North American market. His combined team has more than 53,000 employees and the
overall goal is to meet the needs of nearly 100 million customers. Having achieved its goals in
the United States, the company turned its attention to developing countries, showed a greater
interest in emerging markets in the Asia-Pacific region, and has consistently invested heavily
in these regions.

2.1.3 Macro environment of HSBC

There are two types of macro environment which are external and internal. The main
external factors which influence the decision making of the organization and its strategies for
improving their performance. These factors contain: economic, demographic, political, and
social cultural, the changes of technologies, as well as natural forces. For internal factors to
effect decision making of the company includes Industry environment and Competitors
environment. Besides, the external environment of the company contains all relevant factors
outside the boundaries of the company. In the following the six important segments of external
estimation are highlighted.

Figure 1: The six segments of external analysis. Source: https://marketing-insider.eu/macro-

environment/

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 • political events
Global segment • global markets

•population age
Democgraphic •mix of ethic

•the rates of inflation and interest

Economic •the rate of currency exchange

•tax laws government policy deregulations

Political •trade rules

•diversity of workforc
Technological •incomes of high disposable

Soci cultural
Political Apects: HSBC banking activities are protected by rules and policies set by the
governments of the various countries in which they operate. The company was able to follow
every government policy to make the business successful and efficient.

Economic Aspect: HSBC is said to be the largest and most competitive banking and financial
sector in the world, with stable and successful economic stability. Despite the many risks that
occur in different parts of the world, HSBC management is committed to ensuring that they
overcome such challenges and remain committed to a good economic situation.

Social Aspect: HSBC influences the state of the society in which they work. At the same time,
HSBC strives to ensure that every community has an equal opportunity to use the resources
provided by the organization. The company respects the reputation and relationships in the
community to which they belong.

Technological Aspect: The information technology and Internet emergency has affected how
HSBC has performed in recent years. The company uses a variety of IT systems and has used
the Internet to reach its customers around the world and learn about the latest trends in global
business. In addition, the company also uses tools to help improve their production and
operations.

Further in the section of PESTEL emphasizing, more clear information are given.

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2.2 Analysis of the strategy
HSBC's strategic strengths help unlock opportunities for customers around the world.
As well as, HSBC is a leading international bank with access to fast growing markets. Indeed,
HSBC enjoys a privileged position in high-growth markets, especially in Asia and the Middle
East. It has a strong business with a balance sheet of $ 1.4 trillion in 2019, backed by an
international wealth supply and leading large-scale banking operations in Hong Kong, the
United Kingdom and Mexico. The company is also a leading bank in sales, payments and cash
management with a $ 17 billion bank adjustment (in 2019). It is supported by 64 networks of
international markets that cover about 90 percent of global GDP, trade and capital inflows. a
company's balance of power is a strategic advantage. the company maintains a strong position
in terms of equity, equity and liquidity. he operates a diversified business model with low
income volatility.

The company's strategic positions, slowing global growth and lower interest rates to
take advantage of long-term global trends despite recent winds. Asia will continue to account
for a share of global GDP. Supported by rapid growth in Asia, global wealth is expected to
continue to grow.

2.2.1 Mission Statement

„Providing outstanding customer service; effective and efficient operations; maintaining strong
capital and liquidity by prudent lending policy and strict expence dicipline” (HSBC Annual
Report 2019)

2.2.2 PEST-analysis
PEST (political, economic, social, technological) analysis studies business strategies in order
to understand a company's operating environment and leverage its advantages and benefits to
minimize threats and risks to the business. In the following, the PEST analysys of HSBC are
decribed.

POLITICAL ANALYSIS
HSBC banking activities are protected by rules and policies adopted by the governments of the
various countries in which they operate. The company was able to follow a policy agreed upon
by each government and for the company to conduct its business operations successfully and
efficiently. HSBC also develops its own defense strategy beyond any government restrictions
or limitations.

ECONOMIC ANALYSIS

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HSBC, one of the world’s leading and complete businesses in banking and finance, has a strong
and successful economic power. Despite the many risks faced in many countries around the
world, HSBC management is doing what it takes to get out of such struggles and have a good
economic position and a shield against unemployment.

SOCIAL ANALYSIS
HSBC is affected by the social conditions in which they operate. More efforts will be made by
this HSBC to ensure that every community is given the same opportunity to use the resources
provided by the organization. The company strives to have a good reputation and relationships
that ensure that everything in the community is normal and under control.

TECHNOLOGICAL ANALYSIS
The current state of information technology, the Internet, and technological advances in general
have influenced the effectiveness of HSBC over the years. The company searched for many
systems and used the Internet to connect with customers around the world and help them keep
abreast of the latest trends in global business. In addition, the company uses special equipment
to help them develop production and operations and help them achieve their goals.
Technological advances can create new networks that can threaten existing organizations.

POLITICAL ECONOMIC
 Government is responsible for  The activity of Competitor.
protecting the public interest.
 Competition for resources.
 The effects of political stability to
 Savings.
business decision.
 The number of Unemployment
 The protection of consumers.
 Business activities’ regulations.

SOCIAL TECHNOLOGY
 The balance of work life.  Technological position is fast-
moving up.
 Trends in consumer behaviours.
 Technology matures now products
 Leisure. (internet).
 Lifestyle.  Improved communication.
 Internet business.

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2.2.3 SWOT-analysis
If we deeply analyze the point of any company, the role of SWOT analysis is important. Like
other companies, HSBC has strong internal and external advantages, as well as external
opportunities and threats. In the following, you can see the strength sides of the company which
estimated by the author.

Strength:
The brand value of HSBC: In fact that HSBC has an international individuality and is well
recognized to customers, so that people have an optimistic image and insight of HSBC. HSBC
itself is a symbol and people desire to be a part of this company.

Quality service provider: HSBC is very worried about to provide the highest quality service to
its customers. The company also strives to deliver the same service to all of their clients. They
strive to get satisfaction by customers with a high quality service that imitates their global
image.

Listed in London: HSBC is included in the list of primarily on the London and Hong Kong
stock exchanges, which saves the company from many of the problems associated with
complying with the new US Sarbanes-Oxley Act. Many companies have chosen to list on
foreign stock exchanges, with the exception of America, due to costly new regulations.

China: HSBC has 140 years of experience in China. As a place where Chinese companies and
banks can be today, HSBC will benefit from being an old Chinese company and accepted by
the Chinese people. The best news for HSBC is that growth is growing as well as other
companies in China. This is because it attracts new customers and new global opportunities
every day. HSBC has the largest network of any foreign bank in China and understands the
Chinese market and customers well. In a world that increasingly follows the Chinese path, this
will greatly benefit HSBC.

Weakness:

Insufficient offices all over the world: Compared to HSBC’s London business, the number of
branches in other countries is very limited. On the contrary, they focus not only on big cities,
but on the whole country. Customer Attention: HSBC places great emphasis on large corporate
clients and senior clients. They ignore much of the customer base (e.g., the middle class) and
split up with other local banks.

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Less coordination between front and back office: There is no working connection in HSBC’s
back office and old office and in organizing them. The hard work and efforts of the back office
people are not equally valued by management. Work, they do not have a relationship that is
detrimental to the overall operation of the bank.

The company has announced layoffs as part of some of its cost-cutting measures, which has
fueled negative perceptions of the bank, both with its talent and its stakeholder base. In addition,
the HSBC brand has focused on presenting itself as a global bank, losing touch with the local
audience due to a homogeneous image that does not take into account its needs.

Opportunity:

HSBC can grow in many existing markets. Banks such as China, India, UK, USA and other
countries offer banking opportunities for further growth. With a total population of 1.339 billion
people (as of 2017), India is an excellent market for personal banking. HSBC also has the
potential to expand into the UK mortgage market. It is worth exploring the possibility of
entering emerging markets through acquisitions. Also, Competitors ’negative reports in the
press often overshadowed HSBC’s mistakes and allowed it to further improve its reputation
and keep any scandal or investigation out of the attention of its customers and prospects. This
includes the introduction of a formal corporate social responsibility program to make and
control transparent and ethical decisions throughout the life of the bank.

Threats:
The risk of financial loss, lending problems and unethical behavior between global banks and
financial institutions mean HSBC's prospects are at stake, and the fear of losing clients could
diminish prospects and client pool.

The global credit crunch has made it problematic to offer all banks with a loan product for a
large client base and condensed lending chances for many potential clients.

Continued defaults in the housing sector could further jeopardize HSBC's profitability due to
falling house prices and rising interest rates.

Future regulatory changes in the countries where HSBC operates could risk the company's
effectiveness.

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 STRENGTHS WEAKNESSES

 International Finance.  Insufficient offices.

 Focusing more global, losing local
 Record Profits.
activities
 Listed in London.
 China.
OPPORTUNITIES THREATS

 Growth on emerging economies.  Financial loss.

 Biggest Bank in Middle East.  New Regulations.
 Low mortgages interest rates.  Fewer Revenues from the integration
of financial markets.

3. Findings and Recomendations

There is a fact that HSBC is already a brand that is recognized throughout the world. However,
I have provided my own assessment and some guidance for HSBC in the areas that I have
covered so far. Like- HSBC has very few branches in countries which they are operating, taking
example in Russia. This will not only expand the scope of their activities, but also provide an
opportunity to serve more customers.

Additionally, HSBC has always been at the forefront of delivering new technological
advancements in products and services.

Despite the fact that Russian Bank has many rules and regulations for banks operating in Russia,
the number of competitors in this sector is growing day by day.

Hence, taking this factor into account, they must have the right strategic plans, both short term
and long term, so that they can face any type of problem and their business can run smoothly.

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CONCLUSION

In conclusion, I want to emphasize that the HSBC Group is constantly looking for ways to
grow, and key data on its financial performance over the past year has proven that they are
achieving their goals, as the company grows in almost all aspects of its activities. In all
important areas of activity, there are a stable increase in total revenue. Over the past five years,
it has increased earnings per share. The company has recently achieved successful growth in
the Middle East region and expects stable profit growth in this region. In Asia, all business
segments have grown and have contributed to the overall performance of the HSBC Group. In
my opinion, not much can be improved in a company that has achieved such enormous size and
success in terms of its financial performance. It should be noted that the HSBC Group should
pay more attention to the rapidly growing Internet banking system. I hope the information in
this report is enough to make a final decision, and I believe that investing is a good and reliable
company. Don't expect huge profits right away, but this is an ideal long-term investment.

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REFERENCES

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Pasca Akuisisi HSBC Holding Company (Doctoral dissertation, [Yogyakarta]:
Universitas Gadjah Mada).
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4. Kynaston, D., & Roberts, R. (2015). The lion wakes: a modern history of
HSBC. Profile Books.
5. Rosdiana, R. (2019). Comparative Analysis of Pt Bank HSBC Indonesia
Financial Performance between 2017 and 2018.
6. Dixon, M. (2010). Editor's Notebook: Case Comment-HSBC Bank Plc v.
Dyche [2009] EWHC 2954 (Ch). Dyche [2009] EWHC, 2954.
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Important Business Analysis Tool. PESTLE Analysis.
https://pestleanalysis.com/what-is-pestle-analysis/
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January 15, 2021, from https://www.hsbc.com/investors/results-and-
announcements
9. HSBC news. (2020, December 8). HSBC. https://www.hsbc.com/who-we-
are/hsbc-news
10. SWOT Analysis: – How to Develop a Strategy For Success. (n.d.). Mind
Tools. Retrieved January 15, 2021, from
https://www.mindtools.com/pages/article/newTMC_05.htm
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from https://www.hsbc.com/who-we-are

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