HSBC International Business
HSBC International StrategiesSeveral concepts are essential concerning the perspective of international strategies, and these concepts are important, for they determine the business marketing strategies of a company. These concepts include determining the customer needs, focus on product development, and the exchange between the producers and consumers in the market scene. These basic concepts became the basis for HSBC to develop their strategies in their aim to maintain their global competitiveness and reputation.
In relation to customer needs, HSBC has several strategies for growth. Their first strategy is by making customers at the heart of their strategy, having specific approaches for each of the company’s five worldwide customer groups, namely, South and North America, Eurozone, Middle East, and Asia-Pacific. The second is to maintain their position as the world’s local bank, which enables them to approach each country uniquely, blending local knowledge with a worldwide operation platform (Who is HSBC?, 2011). This is a good approach for each of these regions are distinct from each other, having different cultures and beliefs, making it difficult to implement a single project for all clients around the world. The difference in approach is addressing the different needs of their customers, which is a good basis form the improvement of customer service of the business organization, and at their aim to find good solutions and techniques in the development and improvement of their rendered products and services. Lastly, HSBC will concentrate activities on geographies where growth and critical mass are located (Bond & Green 2003). Such activities include global outsourcing strategy, which was also implemented by the company in several countries including China and other countries in Asia. The company was able to establish itself in call centers to provide their services in relation to sales and checking of accounts. Outsourcing contributes to the aim of HSBC to focus on the needs of their customers, for these call centers are responsible for providing their customers with information regarding their accounts. Call centers agents are also responsible for answering the queries of customers regarding the company.
Pre-implementation guidelines of HSBC to Start its Business in China
In accordance to the pre-implementation guideless of HSBC as they enter the market of china, HSBC will continue to enhance certain products, which are core to the company’s customer group offering, and some products will be managed or coordinated globally. These product include the HSBC Cards, which exploits the experience and platforms provided by the Household; Cash Management, for scale and international reach; Insurance, Asset Management, Custody and Funds Administration, and Retirement Benefits (Who is HSBC? 2011). Moreover, improving the products of HSBC will ensure the customers that the company has the best capabilities, and will be able to offer a comprehensive service to their customers, particularly where products are sold globally, and use their product expertise globally (Bond & Green 2003). Developing and improving their product is important because aside from the trust of the consumers to the bank, this is also a good source of their profit for with good products and services, the company can attract more customers and maintain old ones, and in turn, determine their success in the market, and maintain their reputation being “the world’s local bank”. By improving and developing their products and their services, the company can deliver growth by enhancing their revenue generation culture, and this involves four aspects. Aspects include strengthening the use of marketing as a key management tool of the business lines, rewarding revenue performance and penalizing mediocrity, focusing investment on businesses and geographies with largest growth potential, and benchmarking growth targets and achievements rigorously against peer group (Ji, 2003). Growth can continuously be achieved if these aspects will be implemented effectively and efficiently in the market.
HSBC’s Five Forces
Industry Competitors. In the banking industry in which HSBC belongs, regulatory and technological changes are the main catalysts, making entrenched competitive structures obsolete and mandating the development of new products, new processes, new strategies, and new public policies toward the industry under analysis (Who is HSBC? 2011). Financial centers, in vigorous competition with each other, have undergone further regulatory change in their efforts to capture a greater share of international trade in financial services, even as common efforts at the regional and global level have tried to support safety and soundness and a reasonably level competitive playing field. Banks and securities firms have had to devise and implement new strategies--sometimes leading events or (perhaps more often) responding to them--and the financial services industry has seen a wave of mergers, acquisitions, and strategic alliances in virtually all parts of the world. There are numerous major banking players in the industry, included in the list is HSBC, who strive for market leadership in all their business aspects. As such, the level of industry competition is very stiff and very aggressive.
Potential Entrants. Natural barriers to entry in the banking industry include the need for capital investment, human resources, and technology and the importance of economies of scale. It also includes the role of contracting costs avoided by a close relationship between the vendor and its client, which in turn is related to the avoidance of opportunistic behaviour by either party (Bond, & Green, 2003). The competitive structure of the industry therefore depends on the degree of potential competition. This represents an application of the ‘contestable markets’ concept, which suggests that the existence of potential entrants causes existing players to act as if those entrants were already active in the market. Consequently, pricing margins, product quality, and the degree of innovation in this industry exhibits characteristics of intense competition even though the degree of market concentration is in fact quite high.
Buyers. Banks have a long history--a history rich in product diversity, international scope, and, above all, continuous change and adaptation. These competitive changes have forced adaptations, and in general have improved the level and efficiency of services banks offer to clients, thereby increasing transactional volume (Who is HSBC? 2011). Coupled with these, the customers have become informed and savvy users of financial services that banks offer. They have required that service providers meet their very specific individual needs, therefore showing that clients to this industry have shaped what it is right now. This means, on an overall note, that buyers have a high influence on the workings of the global banking industry, as they have the ability to affect it.
Suppliers. The suppliers to this industry are mainly the providers of technology that banking firms use in the conduct of their businesses (Ji, 2003). There is an enormous variety of new ‘hard’ and ‘soft’ technologies at work within the banking industry (Bond & Green, 2003). Hard technologies include advances in telecommunications, computers, analytics, software tools, and video communications, which are enabling participants to have better information at lower cost; to integrate this information with thinking, communication, and analysis; and, finally, to use the resulting knowledge along with other technologies to distribute services to clients more efficiently, effectively, and economically. Soft technologies, or financial innovation - things like, say, the use of derivative instruments such as interest rate and currency swaps - often use these hard technologies to rethink the delivery of services. Out of these hard and soft technologies have come the securitization and globalization movements so often talked about in the press. From the above enumeration, it could be said that suppliers significantly affect the banking industry through their tools of trade.
Substitutes. There is a high level of substitutes for the banking industry, evidenced by the numerous numbers of major players in the market (Bond & Green, 2003). The cost to transfer to another banking firm is also relatively low, so the substitution rate is pretty high.
References
Bond, J & Green, G 2003, ‘Welcome HSBC Strategic Overview’, Managing for Growth 2004-2008, viewed 17 February, 2011, <http://www.hsbc.com/hsbc/investor_centre/presentations-webcasts/managing-for-growth-2004-2008>.
Ji, Z 2003, A History of Modern Shanghai Banking: The Rise and Decline of China’s Financial Capitalism, M.E. Sharper, Inc., New York.
Who is HSBC? 2011, HSBC Global Site, viewed 17 February, 2011, <http://www.hsbc.com/hsbc/about_hsbc>.
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