Written Report - 2006

1.0 Executive Summary

The role of the financial services sectors continues to grow in the economies of most of the Countries and pressures are rising for a more effective marketing management of the financial services offered by the banks.

This applies especially to the banking sector, not just in terms of turnover, profits and employment, but also in its paramount impact on the other spheres of the economy.

The purpose of this article is to present how one of the most important and largest bank, like HSBC operate in the Macro environment, by illustrating the larger social and cultural forces that effect the whole microenvironment (PEST Analyses).

Than it will look at the Micro environment by showing the forces that are close to the organization that affect its ability to serve its customer.

Finally this report will look at the SWOT analysis by stressing the attention on each of the follo 535g65f wing segments: Strengths, Weaknesses, Opportunities and Threats.

2.0 Table of Contents

1.0 Executive Summary

2.0 Table of Contents

3.0 Introduction

HSBC

3.1 HSBC overview

4.0 Main text

Environmental scan

4.1 Macro environment

4.2 Micro environment

SWOT Analysis

4.3 HSBC SWOT Analysis

5.0 Conclusion

6.0 References and Bibliography

7.O Appendices

7.1 Appendix 1 - HSBC Group

7.2 Appendix 2 - Customer groups

3.0 Introduction

HSBC

3.1 HSBC overview

HSBC (Hong Kong and Shanghai Banking Corporation Limited), is one of the most significant and largest banking and financial services organisations in the world. Its head office is located in the HSBC Tower in London's Canary Wharf.

It is present in "76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa"[1].

"Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services:

o   personal financial services;

o   commercial banking;

o   corporate, investment banking and markets;

o   private banking;

o   and other activities." [2]

4.0 Main text

Environmental scan

The Environmental scan is a useful tools to "provide, analyse and interpret a flow of relevant information about the bank markets, so that management and marketing decisions are made with the real knowledge and understanding"3 of all the Macro and Micro aspects. "Marketing research is the search and utilisation of information from all available sources and its adoption to bank's marketing needs"

4.1 Macro environment

The Macro research shows that HSBC is operating in a global scale with many competitors.

At this stage of scanning, by using the PEST analyse the HSBC Macro environment could appear in this way:

• under a Political aspect HSBC is well aware of all different lows, regulations and codes of Practice that operates in the five areas that it work (policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability);
• from an Economical aspect HSBC in the past have found some obstacle with different exchange rates, inflations and low disposal incomes (the economic growth, interest rates, exchange rates and inflation rate);
• under a Social view HSBC has benefit from both cultural and demographic aspects (the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety);
• from Technological aspects HSBC is working well since is one of the most modernize banks in the world (ecological and environmental aspects and can determine the barriers to entry, minimum efficient production level and influence outsourcing decisions).

A PEST analysis is useful for quick general analysis, which can later be easily extended into a more detailed analysis on each HSBC area of operation like: Europe, Asia-Pacific, Americas, Middle-East and Africa.

4.2 Micro environment

Marketing management's job in HSBC is to attract and build relationships with customers by creating customer value and satisfaction. However marketing managers cannot accomplish this task alone but their success will depend on the other factors that are coming from the company's Micro-environment like: suppliers, competitors, customers, distributors, intermediaries and publics.

The Micro environment describes the relationship between HSBC and the driving forces that control this relationship. It is a more local relationship, and HSBC may exercise a degree of influence.

SWOT Analysis

The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:

Environmental Scan

\

Internal Analysis   External Analysis

\ / \

Strengths Weaknesses Opportunities Threats

|

SWOT Matrix

It is possible to say, that SWOT analysis is an important tool for auditing the overall strategic position of HSBC and its environment.

Strengths and Weaknesses refer to internal factors while Opportunities and Threats to external factors.

4.3 HSBC SWOT Analysis

As with most leading institutions, HSBC does have its strengths/weaknesses and is constantly faced with threats from leading competitors. The following SWOT analysis highlights this.

Strengths

• Customer service: HSBC nowadays has the best Consumer Internet Bank in the world - Global Finance magazine

• Efficiency: in June 2006, HSBC Holdings plc, was awarded as the best current account provider by the IR magazine UK Awards 2006

• Other strengths include the strong brand name, Private Banking that serve the group's highest value personal clients around the world, as well as the high growth rates achieved in emerging markets investment, strong relationships with key industry customers and very good resources: financial and locational.

Weaknesses

• Staff: low employees skills, HSBC should develop its staff skills to ensure that all employees understand how they can contribute to the successful achievement of the group's objectives.

• Competitive advantages: HSBC has a greater and perhaps increasing dependence upon emerging and less developed markets than many of its major global competitors have. This could be risky but at the same time very profitable.

Opportunities

• Expectations of stakeholders: transform itself from a global bank to a more diversified global financial service company such as Citibank.

• Competitors and competitive actions: HSBC Personal Financial Services group is rapidly expanding part of the business and it offers the opportunity to grow significantly in an area where competitors have not yet entered. The introduction of skills and practices from the world's leading retailing businesses is shaping HSBC's competitive positioning.

• Greater diversification into equity products and increase presence in insurance products.

• Political/Legal: penetrate new markets such as Russia, China, India and Brazil offer a host of new opportunities for expansion and the chance to gain significant market share at an early stage in the growth cycle. With aggressive growth continuing in China and India these two countries represent tremendous future potential and are currently yielding high GDP growth rates.

Threats

• Economic condition: the main threats come from changes in general economics conditions in the markets in which HSBC operates (such as: changes in foreign exchange rates, volatility in interest rates) and changes in governmental policy and regulation.

• Increased competition coming not only from banking sector but also from big supermarkets (Tesco, M&S) that nowadays offers a wide range of services like credit cards and insurances.

• Political/Legal: cultural diversity and legislation.

HSBC Group "announced in November 1998 that the 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"[6].

5.0 Conclusion

This report has show the Macro environment in with HSBC work. It is vital that HSBC continually monitor the economic environment at both domestic and world levels. Economic changes create a set of opportunities and threats, and by understanding and carefully monitoring the economic environment, HSBC should be in a position to lookout against potential threats and to take advantage of any opportunities.

As can be seen, changes in world economic forces are highly significant to HSB, since it engaged in an international market. However, an understanding of economic changes and forces in the domestic economy is also of vital importance as such forces have the most immediate impact. Thanks to its innovative technology HSBC provide at costumers the fastest, independent and easy-to-use internet services.

HSBC micro-environment has been considered in terms of variables over which it has control relevant to the marketing mix. This led to a description of marketing and its various sub-divisions.

The SWOT analysis, gave the opportunity to gather more knowledge about the possible services that can be developed and improved into the strategic analysis and the position of HSBC in its business environment.

Finally HSBC, like all type of organizations, should maximise the strengths and minimise the weaknesses and try to make the most of opportunities for their business and reducing the threats to lead in its competitive industry.

HSBC is one of the best largest banking and financial services organisations in the world and following the suggested steps all these helps Barclays to form their strategy effectively.

6.0 References and Bibliography

Books & Notes

o   Principle of Marketing 4^th Edition, Brassington & Petit - Pitman 2006

o   Bank Marketing Management, Artur Meidan - Macmillian Studies 1984

o   Bank Marketing Text and Cases, Hodges & Lillman 1970

o   HSBC 2005 Annual Report

o   Personal notes and annotations from lectures

Web

o   https://www.hsbc.com

o   https://www.ft.com/home/uk

o   https://news.bbc.co.uk/1/hi/business/default.stm

o   https://www.ilsole24ore.com/

o   https://finance.yahoo.com/

o   https://www.britannica.com

7.O Appendices

7.1 Appendix 1 - HSBC Group

From https://en.wikipedia.org/wiki/HSBC

7.2 Appendix 2 - Customer groups

HSBC splits its business into four distinct groups, on a global basis:

Personal Financial Services

HSBC provides more than 100 million customers world-wide with a full range of personal financial services, including current and savings accounts, mortgages, car financing, insurance, credit cards, loans, pensions and investments. The Consumer Finance group facilitates point of sale credit to consumers, and lends money and provides related services to meet the financial needs of everyday people.

Commercial Banking

HSBC provides financial services to small, medium-sized and middle-market enterprises. The group has almost 2.5 million of such customers, including sole proprietors, partnerships, clubs and associations, incorporated businesses and publicly quoted companies.

Corporate, Investment Banking and Markets

This customer group provides tailored financial services to corporate and institutional clients. Business lines comprise Global Banking, Global Markets, Global Research and Global Transaction Banking.

Private Banking

Private Banking provides financial services to high net worth individuals and their families in 68 cities. Over the last five years, acquired companies such as Republic New York Corporation, Safra Republic Holdings and The Bank of Bermuda have been integrated into HSBC's private banking business

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