PROJECT REPORT

(Submitted for the Degree of M. Com-2 in Banking and Finance)

TITLE OF THE PROJECT

STRATEGIC MANAGEMENT ANALYSIS ON HSBC BANK

SUBMITTED BY
Name of the Candidate: harshit kanakia

Roll No.: HFPMCBF030

Name of the College: H.R. COLLEGE

Month & Year of Submission: July, 2021
INTRODUCTION
The Hong Kong and Shanghai Banking Corporation was founded by Scotsman Sir Thomas
Sutherland in the then British colony of Hong Kong on 3 March 1865 and in Shanghai a
month later, benefiting from the start of trading into China, including opium trading. In 1980,
HSBC acquired a 51% shareholding in US-based Marine Midland Bank, which it extended to
full ownership in 1987. HSBC Holdings plc was established in the United Kingdom in 1991
as the parent company to the Hongkong and Shanghai Banking Corporation in preparation for
its purchase of the UK-based Midland Bank and the impending transfer of sovereignty of
Hong Kong to China. HSBC Holdings' acquisition of Midland Bank was completed in 1992
and gave HSBC a substantial market presence in the United Kingdom.

As part of the takeover conditions for the acquisition, HSBC Holdings plc was required to
relocate its world headquarters from Hong Kong to London in 1993. HSBC Holdings plc is a
British multinational banking and financial services company headquartered in London,
United Kingdom. It is the world's second largest bank. It was founded in London in 1991 by
the Hongkong and Shanghai Banking Corporation to act as a new group holding company.
The origins of the bank lie in Hong Kong and Shanghai, where branches were first opened in
1865. The HSBC name is derived from the initials of the Hongkong and Shanghai Banking

Corporation. As such, the company refers to both the United Kingdom and Hong Kong as its
"home markets". HSBC has around 6,600 offices in 80 countries and territories across Africa,
Asia, Europe, North America and South America, and around 60 million customers. As of
2012, it was the world's largest bank in terms of assets and sixth-largest public company,
according to a composite measure by Forbes magazine.
HSBC is organised within four business groups: Commercial Banking; Global Banking and
Markets (investment banking); Retail Banking and Wealth Management; and Global Private
Banking. HSBC has a dual primary listing on the Hong Kong Stock Exchange and London
Stock Exchange and is a constituent of the Hang Seng. This reputation has been brought into
question in the 21st century. In its technical management, however, HSBC has recently
suffered a series of headline-making incidents in which some customer data were allegedly
leaked or simply went missing. Although the consequences turned out to be small, the
embarrassing effect on the group's image did not go unnoticed. HSBC is currently audited by
one of the Big Four auditors, KPMG. The HSBC and KPMG headquarters are adjacent to one
another, with KPMG occupying 15 Canada Square. HSBC Main Building, Hong Kong is also
adjacent to KPMG office located in Prince's Building.

GROWTH PROSPECTS OF HSBC

For HSBC to achieve success and to gain the advantages in the competition, it has been using
various strategies. It has used one of the strategies called as ‘Managing for Growth’. This has
helped for the company to develop more and has also helped to strengthen the organization.
As the company has set up its main objective as to lead the banking and financial services,
the organization used the strategy which tries to help and maintain the top position in the
market.
HSBC was using the strategic HRM which gives comprehensive and intense values for the
employees. If the employees are motivated and productive, they help for the organization to
reach its goal. The main aim of CRM is to ensure that organization is all the time attached to
demands and needs of the customers. By using the internet and information technology,
HSBC managed to reach the customers all over the world and also given them satisfactory
and quality services.

To make sure about the demands of the clients and customers, HSBC also used other strategy
for each of the customer group. The HSBC had a perception that with effective management,

the external and internal reports of the customer group, the customers will be more satisfied.

SWOT ANALYSIS
This SWOT analysis looks at HSBC Group, described as one of the world's leading financial
institutions with banks located throughout the world, has recently seen profits decline more
than expected. Participating in the global banking industry means that HSBC can take
advantage of many opportunities and expand its market share, but it also must contend with
situations like recessions, volatility, and credit crises as was seen in recent years.

Strengths

 The bank is considered to be well capitalised, which means that it has been able to
withstand economic volatility and some of the credit crises that impacted its
competition.
 Being well-capitalised means that it will not have to rely on government assistance
when these types of crises arise again.
  The bank has established itself in a number of emerging markets over its competition,
creating a strong position prior to other bank entrants.
 Its diverse portfolio of locations and financial products means that it can dilute risk
more so than other banks.
 HSBC has entered some new financial markets and added new financial products and
instruments that have recently helped increase revenue streams to offset losses in
others.

Weaknesses

 HSBC association with the small business sector has made it vulnerable to more risk,
which could lead to profit shortfalls.
 The bank was involved with sub-prime markets in the US and also experienced a
financial scandal in 2012, which has somewhat damaged the brand's reputation and it
has yet to recover completely from those missteps.
 The company has announced layoffs as part of some of its cost-cutting measures,
which has furthered a negative opinion of the bank both with its retained talent and its
stakeholder base.
 HSBC's branding has been focused on positioning itself as a global bank, losing
connection with its local audiences due to the homogenised image it is creating that
does not acknowledge local needs.

Opportunities

 HSBC's strong capitalisation position will help it to acquire additional assets to

further strengthen the bank and sustain its business model.
 HSBC has the opportunity to gain market share and a foothold in emerging markets
through acquisitions, including Bank Economic in Indonesia and similar banks in
target emerging markets.
 HSBC's growing global position can help minimise the impact of external forces like
financial and credit issues that tend to impact the competition. This also provides for
the opportunity to position its brand as a reliable and safe place to invest money,
thereby furthering its lending capabilities.
  Negative press coverage of competitors has often overshadowed HSBC's own
missteps, providing the opportunity to focus on further cleaning up its own image and
putting any scandals or probes out of their customers and prospects' minds.

Threats

 The threat of financial losses, credit issues, and unethical behaviour among the
world's banks and financial institutions means that HSBC could be threatened by
prospects and customers' fears of losses may lead to a shrinking pool of prospects and
customers.
 The global credit crunch has led to challenges for all banks in terms of lending
products for many of its customer base, reducing the ability to lend to many prospects.
 Further probes and scandals could undermine confidence in HSBC.
 Further regulatory changes in the countries where HSBC does business could also
threaten the company's profitability. The company may also have to change its
reporting mechanisms and provide more evidence of its lending, banking, and
investment practices.

BCG MATRIX OF HSBC

The BCG Matrix for HSBC helps HSBC in implementing the business level strategies for its
business units. The analysis will first identify where the strategic business units of HSBC
Holdings plc fall within the BCG Matrix for HSBC
Stars

 The financial services strategic business unit is a star in the BCG matrix of HSBC
Holdings plc. It operates in a market that shows potential in the future. HSBC
Holdings plc earns a significant amount of its income from this SBU. HSBC Holdings
plc should vertically integrate by acquiring other firms in the supply chain. This will
help it in earning more profits as this Strategic business unit has potential.
 The Number 1 brand Strategic business unit is a star in the BCG matrix of HSBC
Holdings plc, and this is also the product that generates the greatest sales amongst its
product portfolio. This will help HSBC Holdings plc by attracting more customers
and increases its sales.
 The Number 2 brand Strategic business unit is a star in the BCG matrix of HSBC
Holdings plc as HSBC Holdings plc has a 20% market share in this category. It also
the market leader in this category. This could be done by improving its distributions
that will help in reaching out to untapped areas. This will help increase the sales of
HSBC Holdings plc.
Cash Cows

 The supplier management service strategic business unit is a cash cow in the BCG
matrix of HSBC Holdings plc. This has been in operation for over decades and has
earned HSBC Holdings plc a significant amount in revenue. The recommended
strategy for HSBC Holdings plc is to stop further investment in this business and keep
operating this strategic business unit as long as its profitable.
 The Number 3 brand strategic business unit is a cash cow in the BCG matrix of HSBC
Holdings plc. This is an innovative product that has a market share of 25% in its
category. It should, therefore, invest in research and development so that the brand
could be innovated. This will help the category grow and will turn this cash cow into
a star. The overall benefit would be an increase in sales of HSBC Holdings plc.
 The international food strategic business unit is a cash cow in the BCG matrix for
HSBC Holdings plc. The recommended strategy for HSBC Holdings plc is to invest
enough to keep this strategic business unit under operations. If it no longer remains
profitable and turns into a dog, then HSBC Holdings plc should divest this strategic
business unit.

Question Marks

 The local foods strategic business unit is a question mark in the BCG matrix for
HSBC Holdings plc. This product development strategy will ensure that this strategic
business unit turns into a cash cow and brings profits for the company in the future.
 The Number 4 brand strategic business unit is a question mark in the BCG matrix for
HSBC Holdings plc. This strategic business unit is a part of a market that is rapidly
growing. However, this strategic business unit has been incurring losses in the past
few years. It has also failed in the attempts made at innovation by research and
development teams. The recommended strategy for HSBC Holdings plc is to divest
and prevent any future losses from occurring.
 The confectionery strategic business unit is a question mark in the BCG matrix for
HSBC Holdings plc. The confectionery market is an attractive market that is growing
over the years. The recommended strategy for HSBC Holdings plc is to undergo
market penetration, where it pushes to make its product present on more outlets. This
 will ensure increased sales for HSBC Holdings plc and convert this strategic business
unit into a cash cow.

Dogs

 The plastic bags strategic business unit is a dog in the BCG matrix of HSBC Holdings
plc. This strategic business unit has been in the loss for the last 5 years. It also
operates in a market that is declining due to greater environmental concerns. The
recommended strategy for HSBC Holdings plc is to divest this strategic business unit
and minimise its losses.
 The Number 5 brand strategic business unit is a dog in the BCG matrix for HSBC
Holdings plc. This is operating in a market segment that is declining in the past 5
years. The company also has negative profits for this strategic business unit.
 The synthetic fibre products strategic business unit is a dog in the BCG matrix of
HSBC Holdings Plc. The recommended strategy for HSBC Holdings plc is to divest
this strategic business unit to minimise any further losses.
 The artificially flavoured products strategic business unit is a dog in the BCG matrix
for HSBC Holdings plc. The market is shrinking, and HSBC Holdings plc has no
significant market share. The recommended strategy for HSBC Holdings plc is to call
back this product.

STRATEGIES ADOPTED BY HSBC AND FUTURE PROSPECTS

HSBC Strategy First, HSBC strategy is designed to further grow the business and dividends.
They will continue to recycle risk-weighted assets from lower return to higher return parts of
the Group. They may seek to neutralise the effect of scrip dividends through share buy-backs,
subject to regulatory capital requirements and shareholder approval. They shall also continue
to wind down and thus reduce the impact of their portfolio of legacy businesses.

Second, they will continue to implement their Global Standards programme which they
believe will increase the quality of the Group’s earnings. Global Standards governs all of
their activity and will drive consistently high standards through HSBC globally. This is the
right thing to do, in line with their values, and they believe that it will also become a source
of competitive advantage.
Third, they aim to deliver a further US$2-3bn of sustainable savings by streamlining their
processes and procedures without in any way compromising their commitment to compliance
and Global Standards. Competitive advantages What matters in this environment are:

 Having an international network and global product capabilities to capture

international trade and movements in capital
 Being able to take advantage of organic growth markets and maintaining the capacity
to invest. HSBC’s competitive advantages come from:
 Strong ability to add to capital base while also providing competitive rewards to staff
and good returns to shareholders; stable funding base with about US$1.5 trillion of
customer accounts of which 73% has been advanced to customers;
 Business network, which covers over 90% of global trade and capital flows
 Local balance sheet strength and trading capabilities in the most relevant financial
hubs

A Two-Part Strategy Based on these long-term trends and our competitive advantages, we
have developed a two-part strategy: They will capture opportunities arising from social
mobility and wealth creation in their priority growth markets across Asia-Pacific, Latin
America and the Middle East, through their Premier proposition and Global Private Banking
business. Strategic Priorities Grow Profit underpins long-term business sustainability and
growing profit is an integral part of their strategy.

The conditions for creating value and generating profits are reflected in business and
operating models, which determine how global businesses, geographical regions and
functions interact. Delivering organic growth will support a progressive dividend. Implement
A global bank needs global standards – consistent operating principles that are fundamental
to the way they do business and which help them to detect, deter and protect against financial
crime. Implementing Global Standards affects how they govern the Group, the nature of their
core business and the performance, recognition and behaviours of all their people in
managing high quality customer relationships. It starts with embedding our HSBC Values in
everything they do.

CONCLUSION
HSBC is well positioned to capture growing international trade and capital flows. Their
global reach and range of services place them in a strong position to serve clients as they
grow from small enterprises into large multinationals through Commercial Banking and
Global Banking and Markets businesses. They expect to invest in full scale retail businesses
only in markets where we can achieve profitable scale.

The “strategic management” initiative was launched to ensure competitive advantage from
each business unit. In current economic slow-down, HSBC is emphasising on helping
domestic customers with additional products and advisory services as well intensify on brand
strategy to focus on globalisation. In addition, the company also applies customer relationship
management approach so as to maintain good relation among their target all over the world.
The use of the information technology, specifically the internet, has enabled to reach different
customers from all over the globe.

The brand is now sufficiently strong that can accommodate brand variety at customer,
product and even country level as and when required by the business model. Reputation is the
key element of the brand proposition and cannot be overstated. HSBC’s policies for corporate
and social responsibility are part of the brand. HSBC will treat employees with the same
values as treating with customers. HSBC can also introduce different types of loan facilities
for their customers.

This can help their existing customers as well as can enhance new customers to them. They
can plan further move to gain competitive advantage over the rivals. In pursuing advantage
over rivals, they may pursue several competitive moves. For example- lowering or changing
interest rates in their services, improving features, implementing innovations in the service
etc. HSBC is among one of those banks which has taken number of corporate social activities
and tried to put local touch with their business in India. Such respectful attitudes towards our
country and culture have been appreciated by the India people.

REFERENCE:

LARGEST BANKS IN EUROPE 2020 | STATISTA

2020 - Statista
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HSBC BANK PLC

HSCB Annual Reports & Accounts 2020
2020
In-text: (HSBC BANK PLC, 2020)
Your Bibliography: HSBC BANK PLC, 2020. HSCB Annual Reports & Accounts 2020.
[online] Available at: <http://www.hsbc.com/~/media/hsbc-com/investorrelationsassets/hsbc-
results/2020/annual-results/hsbc-bank-plc/170221-annual-report-and-accounts-2020.pdf>
[Accessed 17 April 2020].

BCG MATRIX AND VRIO FRAMEWORK FOR HSBC HOLDINGS PLC

In-text: (BCG Matrix and VRIO Framework for HSBC Holdings plc, 2021)
Your Bibliography: Case48. 2021. BCG Matrix and VRIO Framework for HSBC Holdings
plc. [online] Available at: <https://www.case48.com/bcg-matrix/3181-HSBC-Holdings-plc>
[Accessed 19 July 2021].