HSBC Case Study
Type of Industry
London, United Kingdom
US$53.8 billion (2018)
Number of Stores
3,900 offices in 67 countries
One Savings Bank, Nationwide Building Society, Lloyds Banking Group, Standard Chartered, Bank of Nova Scotia (Scotiabank), Citigroup, Bank of America, JP Morgan Chase and Banco Bilbao Vizcaya Argentaria (BBVA)
Broad range of products and diversified business segments.
Individual and corporate customers
Retail banking, corporate banking, investment banking, mortgage loans, private banking, wealth management, credit cards,finance and insurance
The British multinational banking and financial services holding company, HSBC Holdings plc (HSBC), has continued to sustain its leadership position in an industry characterized by steep competition. By 2018 it was the world’s seventh largest bank and was considered to be the largest bank in Europe. Being one of the largest banks in the world, the HSBC case study should be considered essential for evaluating how successful multinational business organizations operate in the middle of multiple and diversified market factors and business environments. It is for the sake of ascertaining and evaluating the growth prospects of HSBC that is becomes necessary to conduct the HSBC case study through conducting an explicit SWOT and PESTLE analysis of the banking giant.
HSBC SWOT Analysis
The HSBC case study should begin with a Strength, Weakness, Opportunities and Threats (SWOT) analysis of HSBC. This initiation is needed to ensure a logical flow in the HSBC case study.
Considered as one of the leading banks in the world, HSBC’s primary strength is its strong brand name and stable financial position. This stable financial positioning has protected the bank against market and financial volatility, ensuring customer and stakeholder trust. Its multiple operational manifestations, including its presence in the commercial banking sector, investment banking sector, financial services sector, and private banking sector has added to its business’ robustness. Moreover, a diversified customer base has also reduced the business risks for HSBC. Moreover, it has been observed that HSBC has been able to undertake several cost-cutting measures, benefitting its operations in a more effective and efficient way, ensuring long-term profitability.
One of the primary weaknesses of HSBC is the bank’s retail banking sector, which, in comparison with other competitors, is a weak one. Besides, the declining market of the United States has also contributed to the financial weakness of HSBC. The HSBC case study reveals that owing to the fact that the bank had been involved with sub-prime markets in the United States; the declining economy of the United States has affected HSBC’s business reputation. Moreover, HSBC’s association with the small business sector has also made it quite vulnerable to some undue business risks, and this has led to the addition to its weaknesses.
The HSBC case study reveals that the Bank has immense opportunity in terms of expanding its business to other countries. It has been observed that HSBC has the opportunity to diversify its portfolio even more for increasing its global customer base in a thorough manner. Moreover, the opportunity to lower the interest rates for boosting the market share should also be grabbed by HSBC. It should be further noted that HSBC’s strong capitalization position has provided the Bank with the opportunity to acquire additional assets that can further strengthen the Bank’s market position in the long-run (Shoeb, 2011).
The HSBC case study reveals that the greatest threat to the Bank is financial volatility and changing economic scenarios like market downfall, recessions etc. Moreover, the changing government policies and regulations in different countries where the Bank operate should also be considered a financial threat to HSBC. Also, the global credit crunch, which has led to the emergence of different financial and economic challenges in the banking sector, should also be considered a threat to the market reputation of HSBC. The HSBC case study reveals that unethical practices undertaken by other leading banks and financial institutions can lower the degree of customer trust on HSBC. Besides, default in the housing industry can indirectly hamper HSBC’s profitability to a large extent.
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HSBC PESTLE Analysis
An effective completion of the HSBC case study is in need of an explicit analysis of the political, economic, social, technological, and legal environments in which HSBC operates. Evaluating and ascertaining the aforesaid factors can gain a deeper knowledge about the business position of HSBC on a global basis.
Political environment renders a thorough impact on the business of any organization and in this respect, HSBC is no exception. In 2012 the Bank had to appear before the US Senate’s Permanent Subcommittee on Investigations (PSI) to undergo a political hearing related to an investigation by the PSI into the potential risks that HSBC pose to the US financial system (Levin & Coburn, 2012). This political scenario led to the deterioration of HSBC’s market reputation not only in the US but in other countries too where it operate. Moreover, political leaders from different countries have also held HSBC responsible for money laundering from criminal activities practiced by drug lords, and this has also hampered the Bank’s reputation.
The economic environment, in which a business operates, acts as a great determinant of the business’s success or failure. The HSBC case study reveals that the 2008 financial crisis has still been affecting the global economic environment, triggering distrust on the part of customers, and this issue of distrust is also experienced by HSBC. Risks related to liquidity problems have also made the business critical for HSBC. But as HSBC operates globally in diversified banking sectors, the financial vulnerabilities have failed to affect the Bank’s reputation and business process. Moreover, the positive economic outlook of Asia-Pacific and Latin America has also ensured the economic vigor of HSBC in a thorough manner.
Social and cultural issues play a decisive role in determining the fate of a business and this has been a truth for HSBC. As a socially responsible bank, HSBC, till date, has failed to sustain its market position. The Bank has been charged with different convictions, including criminal money laundering. This has alleviated some degree of faith on the part of the stakeholders on the Bank’s social responsibility approaches. But the HSBC case study reveals that to sustain its corporate social responsibility (CSR) image, the Bank has geared towards climate financing meant for moving into a low carbon economy that should be considered eco- and environment-friendly.
HSBC has succeeded in transforming the technological advancements in the field of environmental protection to its advantage. In this respect it should be noted that the Bank has been able to invest more in nurturing technologies that support low carbon economy, and this has also paved the way for HSBC to invest in clean technology implementation meant for upholding a greener economy.
The legal environment has played a detrimental role in terms of impacting on the business and market reputation of HSBC. Several cases of non-compliance have brought HSBC’s operations under doubt in the United States. This has affected the global reputation of the Bank in an explicit manner. Moreover, EU’s anti-money laundering requirements will also make it an imperative for HSBC to become more compliant to legal rules and regulations in both the short- and long-run.
It has been observed that HSBC has been able to align its businesses to the global environmental needs. In this respect it should be noted that the Bank has been able to address different issues related to climate change and in this relation it has invested thoroughly in programs promoting a greener economy. The Bank has committed itself to reducing its own carbon footprint through the process of recycling waste in a thorough manner. This has boosted its environment-friendly market image.
The HSBC case study has revealed that the Bank has been rendering efforts to sustain its market reputation through investing in social and environment needs. Both the SWOT and PESTLE analyses conveyed the fact that the Bank is on its way to overcome hindrances for acquiring a more stable market position in the long-run.
Levin, C., & Coburn, T. (2012). U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History. Retrieved August 7, 2019, from https://www.hsgac.senate.gov/imo/media/doc/PSI%20REPORT-HSBC%20CASE%20HISTORY%20(9.6).pdf
Shoeb, S. (2011). Internship Report On The Brand Positioning of HSBC Bangladesh. Retrieved August 7, 2019, from http://dspace.bracu.ac.bd/xmlui/bitstream/handle/10361/1743/08204055.pdf?sequence=4&isAllowed=y
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