In today’s competitive environment most of the organizations nowadays are adopting various strategies through which they can expand their business globally. In this, globalization is becoming one of the most important factors due to which organization are moving towards the business expansion. It is considered as a best way through which companies can enhance their revenues as well as market share (Hartline, 2007). Further, the present report has been made by taking HSBC bank which operates internationally. This report identifies various factors that affect the working of this bank as well as the impact of globalization on it.
Techniques to analyse the business environment and their suitability
Business environment can be defined as a combination of internal as well as external factors. It effects the overall functioning of company including its employees, customers as well as suppliers. Further, it is quite essential for companies to understand their particular business environment so that all the business operations can be easily maintained. With the help of this, organization can easily attain higher competitive advantage and maintain their dominant market share. In order to analyze the whole business environment and their suitability various techniques can be adopted by company (Chernev, 2012). By utilizing different techniques HSBC can easily understand its surroundings such as:
It is considered as a most effective and important tool through which HSBC bank can easily identify all its strengths, weaknesses, opportunities and threats. It is the best way through which they can adopt various strategies in order to overcome with the weaknesses of their organizations. After knowing all its strengths HSBC can easily go through the various things which they can use to expand their business globally. In addition to this, opportunities will help to know about the areas where they can grow their business in future and enhance their sales. In addition to this, threats will help the company to develop better strategies through which company can easily overcome from all unseen threats.
Porter’s Five Force Analysis:
It is another most important technique through which companies can easily analyze their whole business environment. This technique is developed by Michael Porter’s which mainly consists of the 5 forces i.e. threats from new entrant, alternative products, bargaining power of customers, suppliers and internal rivalry. These factors must be considered by company in order to know the power of industry as well as their competitive advantage (Hollensen, 2010). By considering all these Factors Company can easily gain long term profitability. In addition to this, it can be stated that with the help of Porter’s five force analysis HSBC can identify all those factors which affects their long term success of business as well as future direction of company. For this, it is quite essential for HSBC to develop possible strategies in order to deal with these forces.
It can also be defined as a Macro environmental factors by which companies can go through all the external factors which can affects the business of HSBC directly or indirectly. PESTLE analysis can be define as a political, social, economical, technical, legal as well as environmental factors. These factors might affect the overall business of any organization (Terpstra, Foley and Sarathy, 2012). By analysing all these factors organizations can easily develop most appropriate and suitable strategies through which they can manage their business affects. By developing such strategies companies can make sure that such factors does not affects the company much and they can easily protect their market growth. It is the best way through which company can go through the market growth as well as appropriate future direction for the HSBC.
Macro and Micro environment analysis
In order to go through the macro and micro environment Analysis Company should go through the SWOT as well as PESTLE analysis. These are the most effective and important techniques by which company can easily identify all the internal weaknesses that affects its business. HSBC bank is one of the fastest growing banking institutions in Australia. Its micro environmental analysis can be defined as a follows:
One of the major strength of HSBC is that it is global leader in international finance. It is the top most effective factor through which they are attracting huge base of customers worldwide and enhance their sales. HSBC is having positive brand image in the mindset of customers as they provide different types of services for different customer segmentation (Piercy, 2012). Moreover, it is considered as a major strength due to which they can enhance their profitability of market share. Further, they also have good relations with government in different countries.
One of the major weaknesses of HSBC bank is the lower retention rate of their employees. It is becoming the major drawback due to which they are not able to develop trust among their employees. In this way, increasing security threats and victim of data theft is another major weakness.
Due to the globalization banking industries are moving towards business expansion. It helps them in enhancing their future growth as well as providing them several opportunities in future. Technological advancements is another major opportunity for HSBC due to which they can provide 24/7 services to all their clients. In addition to this, there is a good growth rate of HSBC in Asia Pacific region as well as they also go through the acquisition of other banks.
One of the major threats that may occur for the business of HSBC bank is during recession time period. It is considered as a major threat as at the time of recession in Europe whole market share of companies might get decline (Goldschmidt, Junghagen and Harris, 2003). Further, there are various drawbacks in the online banking system which affects the overall business operations of company.
On the other hand, Macro environmental analysis can be explained by PESTLE analysis. HSBC external environment includes all the applicable factors and influences which come from outside the organizational boundaries are considered under macro environmental analysis. Macro environment analysis for HSBC is as follows:
The whole business of any organization can be affected by its political condition. At this time, it can be stated that HSBC bank operates in more 80 countries and facing huge problem of political instability. Organization has to stick to the policies to make sure that HSBC will be able to execute its business operation efficiently and effectively (Aaker and Mcloughlin, 2010). Under this, government of Australia is responsible to protect the public interest. Further, political stability will affect the business decision.
HSBC is considered as a world's leading business in terms of banking and finance. Therefore is said to have a secured and successful economic strength. But at times, economic environment of HSBC is affected by wage and price inflation, Gross Domestic Product (GDP), exchange rates etc.
These are the factors which affects person lifestyle. HSBC is generally affected by the society in which they are working. Organization further has a good brand name and relation in society. These factors usually compromise of working life balance, different trends in customer’s behaviors etc.
These factors are considered when HSBC develops an understanding of rapidly increasing advanced technology. Organization adopts various IT systems and use internet to with their customers around the globe. It also leads in improved communication.
This factor comprises of increased government regulation from England Government (EU), increasing capital requirement leads to deal in legal compliance. This process is considered as more costly and time consuming.
HSBC working on to reduce their carbon footprints which recognizes as a current trend in climate change. Organization will also focus on improving energy efficiency equipments in their buildings.
How the international business environment impacts HSBC bank
With revolutionary changes in technologies, organization has developed new ways which leads in growth of international business. HSBC provides capability to generate new innovations and delivers new service to the market (Das, 2011). Further, growing economic strength of new industrialized countries helps HSBC to expand their international business activities. It usually impacted by:
HSBC believe in expansion. This is the only reason that organization has 6,600 offices in 80 countries and territories across Africa, Asia, North and South America (Global marketing, 2014). Launching new service for new market internationally, increase customers base for financial institutions and they capture more of the market to become a competitive leader.
HSBC deals in commercial banking, global banking and Investment banking. To carry out these operations organization must have skilled, multi tasking and well trained employees. Employees are there assets. Therefore, organization has to take care of their employees by giving them necessary exposure at times.
HSBC have too clearly identified the resources which can come at the time of expanding business organization. Enterprise has to make an equivalent balance of all the two major resources (About Us. 2015). This includes finance and HR resources which is necessary for HDBC to grow.
The benefits, opportunities and challenges of globalisation on HSBC
Benefits of globalization- Globalization have helped HSBC to gain competitive advantage over other banking institutions. Globalization includes free trade to exchange goods and resources between different countries. This practice implied by HSBC by transferring money globally from one account to another. Increase in labour migration gives advantage to both the employees and recipient countries (Proctor, 2014). This process comes in force when a country is facing high unemployment, then people from that country migrate to the other for work. This helps HSBC to fill the vacancies by promoting one employee to the other country for its necessary growth and expansion.
Opportunities of Globalization:
This opportunities offers global integration to less developed countries to participate in various international activities. HSBC is a developing bank and have greatest opportunities in economic area to develop themselves (Mathur, 2011). It opens the market, shares in risk and attracts more of the foreign investment. By doing so, HSBC developed and creates new challenges.
Challenges of Globalization:
With its benefits and opportunities HSBC also have some challenges which they need to overcome. HSBC must ensure that the benefit of organization extend to all the countries. This will not be done automatically as financial enterprise has to make some initiatives. Organization also faces the problem of growing ease and cheapness of international communication as it results with Internet which can be harmful at times.
Further, from the above description it can be determine that with some positive effects of globalization there are some negative consequences are as well. It defines as a major challenge faced by companies as well as banking industry due to the globalization. At the time when country liberalizes its financial system it becomes a subject to market discipline exercised by both foreign and domestic visitors. It might leads to crisis if there are imperfections in international financial markets. Due to this reason, there might be a herding behaviour, speculative attacks and crashes among various other things. Further, globalization has leads to increase the criminal activities for banking industry. Moreover, inequality is another challenge which employees might face due to the increasing globalization. Today’s world produces as per the emerging capita GDP basis, to meet even an extended basic need list of every global citizen. However, inequalities are increasing in various countries. In addition to this, it can be stated that there are several challenges faced by HSBC due to the increasing globalization such as changing needs and demands of customers, maintaining high quality assets, management of impaired assets, keeping pace with technology up-gradation etc.
Extent of globalization on HSBC and other organisations
Globalization is becoming one of the major factors due to which whole business operations of the HSBC bank can get affected. It can also be defined as a integration of all countries as well as societies. With the help of globalization HSBC can easily expand their business globally and affects the overall working of the organization. It has started flourishing in the year of 1980’s and now it is spreading into all over the world. Further, it has been founded that there are several trade barriers which also affected the HSBC bank completely. Expansion of market is the major extent of globalization as well as different companies can easily go through the huge revolution of their business operation within this extent (Elg,, 2008). Except HSBC bank most of the small business enterprises are allowing globalization to spread out as it helps them in expanding their business internationally. In addition to this, globalization has a huge impact on the several business organizations by which companies can deal with their national people and they are treating all the people around the world. Moreover, with the help of the globalization some companies have started transferring their business in poor countries and easily enhance their communication with all their employees In order to control the increasing extent of globalization different countries have developed different rules and regulation in order to maintain the financial relations with each other. In this way, it has been founded that organizations can easily develop and enhance their market share through the huge technological revolution as well as several computing advancements (Bloodgood, 2008). Due to this factor, it has been founded that extent of globalization is very large as people are transferring from poor countries to the developed ones.
Structures of different organizations operating in international markets
There are various organizations nowadays which are operating their business functions in international market (Beall, 2010). Further, it is quite essential for company to have a proper structure so that company can work effectively. International companies are having different organizational structures as per their working such as:
All those companies which are having common or single goal can use this structure. These companies serve their different business operations as per their different departments such as human resource, finance, marketing etc. All these departments are having different functioning and they work as per their capabilities. However, one of the major drawbacks of keeping this structure is that it might hamper the overall working of different departments in various ways. It might affect the overall working of organization and they are not able to achieve that common goal. In such organizations interdepartmental communication takes place where employees of only a single department can communicate with each other. These types of companies may have different structure of activities within company and it requires a proper change from managing individual functions to integrating activities into key supply chain business process. Here, total information flow takes place between suppliers, manufacturers (different departments such as: logistics, R&D, marketing, finance etc.) and consumers. They are also known as end consumers and they acquire the quality product and service of company.
It has been considered as a most important structure which is present in the most of the international organizational. There are various factors due to which companies are adopting this structure as it makes the company decentralized. This type of structure is present in those organizations where business functions are separated in terms of products and services (Ranchhod and Marandi, 2007). Further, with the help of this structure companies can easily outsource their business and manage the functioning of different departments as well. It is the best way through which they can make their performance more effective. They can also go through the appropriate communication within the different departments and easily make better coordination interdepartmentally. In addition to this, supply chain management is all about the physical distribution and material management. Different department and branches follows different supply chain process which is totally controlled by a single of a main unit of the company. In this, all the department functions inventory management, material handling, transportation service, inbound transportation, warehousing management operations management etc. Moreover, all such firm supply Chain management department is expected to increase its range of responsibilities. Under this, whole process gone under the order fulfilment process as one co-ordinated set of activities.
In order to element both divisional and functional structures companies can use this structure. By having matrix structures organizations can operate their business internationally and complete their projects on a given deadline more effectively. In this way, it can be stated that under this structure companies need to employ most qualified people so that they can better engage them with work. All the experienced people are able to complete their work on a given deadline (Chang, 2009). Further, it can be define as a best structure by which company can easily fulfil wide range of responsibilities and maintain their market share as well. In this type of company, employees who specifically work for a single project maintain their supply chain process within the employees of different organization. Further, it can be determine that the overall supply chain process of those organizations who follows matrix structure is highly depends on the process of their project completion. In this, Manufacturers, distributors, and some carriers effectively use information technology to reduce cycle times and improve the quality of total process.
International Operations of HSBC
HSBC is one of the largest multinational banks of Australia which provides top class financial services to all their customers. The bank is having it’s headquarter in London and operates their functions globally almost in 80 countries. As per the past data of HSBC it has been founded that company is standardize its brand value most effectively with the help of all its international operations. They are having almost 220,000 shareholders in almost 119 countries (Jones, 2008). Further, it can be stated that globalization has highly affected the brand value of company due to its business expansion as well as increasing communication with customers. In addition to this, HSBC bank is having totally international network which is completely linked up with latest and advanced technologies. In addition to this, some of the major financial services of this bank include commercial, corporate finance as well as investment and private banking.
It has been founded from the past data that HSBC is not able to grow their business in Asian countries. Company also has been victim of some online frauds as well as security issues (De Mooij, 2013). Further, it can be stated that company is planning hard to expand their business internationally and it can be stated that operations of company in international market is very good.
From the above report it has been concluded that globalization is having positive as well as negative impact for banking industries as well as other organizations. It also created several opportunities and challenges too for different companies. Further, it has been concluded that it is becoming most important for organizations to adopt some of the best strategies through which they can enhance their business operations and work more effectively.
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