Strategic Planning and Implementation

&

Strategic Marketing Management

HSBC a case study

Submitted by:

Sukhpreet Kaur

Student ID – E16146

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Summery

Strategic management provides direction to an organisation at all stages of business.

Strategy is, very simply, an outline of how a business intends to achieve its goals. It

analyzes how plans are formed, implemented and evaluated. It evaluates the internal and

external environment, plan according to that and then implement the plan. This report

covers the principles and theories used in Strategic planning, establishing vision and

mission of organisation and then implementing strategy.

1a

I have selected HSBC Company as a case study. HSBC Holdings plc is a United

Kingdom-based public limited company that came in England in 1990. HSBC is mainly

into finance business. The entities which form the HSBC Group provide a comprehensive

range of financial services to personal, commercial, corporate, institutional and

investment, and private banking clients.

It is big company having office in more than 86 countries. It was established in 1865 in

Hong Kong as Hon Kong and Shanghai banking Corporation to finance the growing trade

between Europe, India and China. It widened its scope early in the 20th century with

loans to governments, especially in China, to finance railway building and infrastructure

projects. Later on in 1993 it moved its headquarters to London.

Academic reasons to choose this company:

1. It is easy to understand its strategy.

2. It has well plan strategy to grow.

3. Company is MNC which started in Hong Kong.

4. Company reached too many countries with well planned strategy.

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1b

Porters five force theory:

This theory analyzes the forces which act on an organisation in its macro environment.

These forces affect the company’s ability to make profit very closely.

1. Strength of barriers to entry: It analyzes the easiness or difficulty of entering

new organization into the same industry. It analyzes the resources that are

required to enter the market and how easily they are available.

2. Extent of rivalry between firms: this analyzes the competition among the firms

in the industry. If competition would be more there are less chances of success.

3. Suppliers powers: if suppliers are powerful and supplying to many firms

organization will have less control on supplied products.

4. Buyers power: it analyze that how powerful are the buyers in that industry.

5. Threat of substitute products: it investigates that if alternate product or services

are available to customers and how costly or cheap are they. It also test that

products are of good quality.

SWOT analysis

This is an analysis of strengths, weakness and threat, opportunities of organisation. The

strengths and weakness are concerned with internal environment of organisation. Threats

and opportunities are concerned with external environment of organisation. A SWOT

analysis must first start with defining a desired end state or objective. A SWOT analysis

may be incorporated into the strategic planning model. Strategic Planning, including

SWOT and SCAN analysis, has been the subject of much research.

Strengths: attributes of the person or company that is helpful to achieving the objective.

Weaknesses: attributes of the person or company that is harmful to achieving the

objective.

Opportunities: external conditions that is helpful to achieving the objective(s).

Threats: external conditions which could do damage to the objective(s).

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Identification of SWOT is essential because subsequent steps in the process of planning

for achievement of the selected objective may be derived from the SWOT.

First, the decision makers have to determine whether the objective is attainable, given the

SWOT. If the objective is NOT attainable a different objective must be selected and the

process repeated.

1C

A framework is useful to structure over thoughts and navigates around the different

aspects of strategic management. The purpose of strategy is to enable an organisation to

achieve a sustainable competitive advantage than any framework needs to address the

process necessary.

To develop its strategy, HSBC should consider the following points:

Identify the short and long term goals

Identify the time that it will take to reach the goals

Identify the present status

Identify the markets where it want to go

Identify ways of reducing cost

Identify the resources that will be used to reach those goals

Identify the challenges

Decide the product that it want to sell

1d

Since it’s a huge organization it should use different strategies for different countries.

While forming its strategy it should keep global trends in mind.

1. As it has business in two type of areas, one where it has established it self and

second where it is trying to increase its market. In UK and China it has deep roots.

In other Asian countries it is trying to increase its turnover.

2. UK is developed country and customers are large in this. It should make such

systems that it could meet all financial needs of its existing customers.

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3. It is already established in UK. It should make planning such that it could

maintain its market share.

4. It should provide a range of financial products so that customers don’t move to

other companies to meet their different kind of needs in financial terms.

5. In other courtiers where it is new it should study the environment well, before

lunching itself or a new product.

6. When it move to new country it should not do things on large scale like, in

beginning it should open office in one city the gradually in other cities. By

working in this way it will able to forecast its success, and won’t suffer any huge

loss.

1e)

1. Ansoff’s matrix: according to this matrix there are 4 options for an organization

which are as follows:

1. Market penetration: in this a company offers its existing products to existing

markets.

2. Market development: in this a company takes its existing products to new

markets.

3. Product development: in this a company offers new products to its existing

markets.

3. Diversification: when company all together moves into new markets with new

products.

2. Boston consulting group (BCG) matrix it is used to decide in which products

organization should make more investments and in which it should not. It is also used to

decide whether a product should be continued or not. It also helps in analyzing the gains

from new products. This analysis consists of four sells.

1. Dogs: this sell contains those products which have low market share and low growth in

that market. It is recommended that company should not continue these products.

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2. Cash cows: in this category those products are included which have high market share

and low growth rate. The products make more revenues then invested in them.

3. Question mark: these products have good pace of growth but captures a small market

share as these are growing they need more investments. A thorough analysis should be

done to determine the potential game from these products.

4. Stars: these products capture a large share of market as well as have high growth

weight. They bring a high amount of profits to the company.

2a

It has four key businesses:

Personal Finance Services: They have a range of personal financial products. In this

they provide personal loans, credit cards, saving and investment, retirement planning and

insurance.

Private Banking: HSBC Private Bank offers private banking and wealth management

services to wealthy individuals and their families.

Commercial Banking: HSBC provides financial services to small, medium-sized and

middle-market enterprises.

Global Banking and Markets: it provides financial services to very large companies

like multinational companies.

HSBC has variety of marketing options available.

1. It can sell existing products to its UK and China customer where it has already

established itself.

2. It can sell new products to UK and China customers.

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3. It can sell its existing products to new markets like Asian countries where

economies are developing at a great pace.

4. It can sell modify its product according to needs of customers where it has

recently moved.

5. It can develop new products for new markets.

Strategic Options

Differentiation:

Implies that organization pursues a strategy where it offers a product o a service which is

uniquely different from those of its competitors.

Cost Leadership:

Strategy where the organization enables itself to provide the products and services at a

cost less than any other competing organization.

Focus:

Strategy where organization target is products or services at a given sector of market with

great accuracy and with a depth of capability and knowledge to support its position in the

market.

Competitive Advantage:

An organization’s position where it has got a product or service which is no only better

than competitors but have the ability to maintain this situation over a long period of time.

The analysis of business strategic situation is the first step in developing the competitive

advantage.

2b)

Stake holders are those individuals or groups who affect or are affected by the

achievement of an organization’s objective. Stakeholder theorists would argue that many

different stake holders are affected by an organisation decision.

HSBC has 8,500 offices in 86 countries. Its major stakeholders are

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It has 220,000 shareholders.

It has 330,000 Employees

It has customers 128 million

Competitors: Barclays Plc, Citigroup, Royal Bank of Scotland.

Shareholders: shareholders are people who invest their money in the company. HSBC is

very big multi national company. It has large number of shareholders. It has to make

strategy to maximize the wealth of shareholders.

Employees: Employees want planning which would take care of their interest in terms of

good salaries or wages. Also organisation should form strategy such that major senior

positions are filled form within the company.

Customers: customers want HSBC to introduce strategy from which they get good

products in low costs.

Competitors: competitors like barleys plc, Royal Bank of Scotland wants to get ahead of

HSBC.

2c

Role of management is balance these stakeholders needs rather than simply focus on

shareholder. To involve all stakeholders in the development of strategy they should be

informed about it well. Organisation should form an efficient system where decisions are

communicated to stakeholders. To involve employees, they should be made clear of all

the policies. The events like meeting and seminars should be arranged. The stake holders

should be able to understand the strategy. It should be conveyed to them in easy

language. Stakeholders should be asked for the suggestions that could improve the

strategy. This will make them happy. They would fell themselves as a part of

organisation and help it to prepare its strategy. Stakeholders can be engaged by

consulting their input on the present status of the firm and their vision. If an organisation

make very good plans but don’t consult its stakeholders and employees, it won’t be able

to execute it as it had planned.

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The focus is on shareholders there is a presumption that shareholder value is a dominant

objective of the organisation. An alternative approach is view of organisation that serves

the interest of stakeholders.

2d

To gain commitment form stakeholders an organisation should formulate its strategy such

that its executions bring benefits to them. If they would find their own benefits they will

sincerity towards the implementation of strategies. Employees can be involved by

showing that if strategy is profitable they will also be benefited. They could be tempted

by promising incentives to them. This applies to employees at all the levels right form the

managers to workers in organisation, should be told about the strategy and then ask their

opinion on the strategy. In this they way organisation gain commitment for

implementation of strategy form its stakeholders.

3a

Vision

Vision is what an organisation wants to be in future. It tells the aim of company that it

wants to achieve in future. These are short and concise statements. These tell about the

intentions of company.

According to Warren Bennis a vision is "To choose a direction, an executive must have

developed a mental image of the possible and desirable future state of the organization.

This image, which we call a vision, may be as vague as a dream or as precise as a goal or

a mission statement."

A vision is often associated with founder of an organisation and represents a desired state

which the organisation aspires to achieve. In contract with goals and objective vision

doesn’t change overtime. A vision must tap in personal goals and values of the

organisations

Mission

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Every organisation has a purpose for which it in the market or business. It has some

objectives to meet. The key measures of the company are defined by the mission. The

primarily stockholders and leaders of organisations are concerned with the mission.

This approach helps to compete in the market.

Values

Values enable to build a common way of working. The people who are comfortable with

there values and feel they can genuinely demonstrate them are needed in organisation.

The core values are organizational essentials. They don’t shift as competitive conditions

change but remain largely inviolate. It what members of organisations expected to

endorse and internalize as part of working for such organisation.

3b

According to HSBC it vision is:

Vision

As a member of HSBC family which has been serving its millions of customers

worldwide since 1865, to take our place among Turkey’s most powerful, most profitable,

most admired leader banks.

Mission

regard to ethical values; to meet its customer’s financial needs in the fastest and most

appropriate way, to continue innovative works in order to achieve: human resource with

superior qualities, technological infrastructure and service packages.

Values

1) To exceed customer expectations in service quality.

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2) To be a pioneer in the implementation of technologies those create distinction for its

customers, employees and shareholders.

3) To keep its reliability at the utmost level with the contribution of its strong capital

structure and liquid assets.

4) To make a positive contribution to the community

5) to respect meritocracy during hiring processes, improving knowledge and skills of its

employees, creating the mostly preferred work environment.

3c

There is a strong relationship between the culture and vision, mission and strategy of the

organisation. The strategy is effected the culture of organisation very much. The culture

which an organisation had been following influence strategy as the goals in the strategy

will be met only if they can be incorporated in the culture. Vision reflects the culture of

the people who develop the strategy. Cultures don’t change quickly; they are changed in

the long period of time.

3d

HSBC want to meet all the financial needs of customers in appropriate way quickly to

meet its mission to make it possible it need to have expert human resources who can

advice the most appropriate option to customers. Further they need to manage their

activities such that process is less time consuming. It should provide customized solution

according to their needs to its customers to satisfy them. They should have products

which could be molded according to the individual requirements. To meet its mission it

should have excellent customer care. Financial strength is also a requirement as to

achieve goals it need to provide financed to many small and big organisation.

4a

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Current recession had bad effects on the profitability of HSBC. As more people lost their

jobs the problem of HSBC got worse, people did not go for the loans. It cut the staff by

ten percent by giving voluntarily retirement choice. It expected growth slowed down and

reached to 1.87 percent in 2009. It share prices fell to ten percent. Recession effect was

more on western countries where most countries have developed economies. So, HSBC

decided to concentrate more on Asian markets. Strategy behind this step is entering into

emerging markets. Theses countries recovered form recession faster then western

markets. It ascertained that there is more risk of inflation in US market. So HSBC is

investing more in the emerging of Asian countries. On the part of business strategy where

they lend loan it reduced the amount they used to lend against the asset value.

4b

As HSBC changed it strategy, it has invested more is Asian market, it got more profits

form them. It has benefited form its focus on faster growing economies in Asia and Latin

America. It made two third of its profits from these counties. It shares vale increased to

1.7 percent in London trading. The deposit in the accounts of customers rose by twenty

three percent to 1.3 billion in USA in 2009. They predicted that the Asian markets will be

growing at a fast pace and it plans to hire 3000 people in China where it profited more

than $1 billion.

4c HSBC has following main functional areas

Administration: It performs the important routine task. It collects, distributes and

dispatches the mail. It stores and retrieves electronic and paper records. It responds

quickly to the enquiries. Arrangements of important events are also a part of this

functional area. It also facilitates communication among all the divisions of HSBC.

Marketing and market research: This is an important division of HSBC. It plans for

the promotion of products. It research about the trends of market. It studies that which

product will be suitable for which market. It also forms the strategies for sale.

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Finance: it is vital division of HSBC. It handles the finance of company. It records the

cash flow and monitors the income revenue. It also monitors the expenditure and prepares

account statement.

Human Resource: This area performs the functions of recruiting the staff of company. It

is also responsible for developing and retaining staff.

Customer Service: The customer service unit provides the service to customers in terms

handling their complaints and enquiries.

4d.

In finance division it has gained the financial strength as it is in business from around 200

years. This a very crucial competitive advantage of HSBC which helps to maintain it

position in the market.

In customer care department it has employed people who are expert in financial products.

In human resource department, it gives special training to its employees. It has designed

learning and development programs in which it provides knowledge about its

comprehensive of financial products. This leads to development of its people to provide a

good quality service. It emphasize on performance of its employees and reward them

according to their performance which.

5a

Time table is action plan according to strategy devised pre decided time frame. First of all

the key milestones should be identified. Then time taken to reach those milestones or

targets should be ascertained. Resources that would be required to achieve those

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milestones should be identified. It should be analyzed the goals are achievable or not and

if they are achievable than the time should be divided for different activities that would

be required to reach those goals. Time table should be very close to actual happening, it

should not be mere a plan on paper. Goals that hard to achieve and demand more

resources and time, should listed. In the same way the goals which are easy should be

listed. Then short term and long term goals should be arranged such that time is utilized

efficiently.

5b.

Business Milestone Recourses Time frame

Personal Finance

Services

16% Growth Capital 2010

Private banking 7% Growth Investing in good advisors 2010

Commercial

Banking

12% Growth Expert to provide the

customised solution

2012

Global banking

and markets

5% Growth Capital 2015

5c

A strategy can be evaluated by analyzing the expected gains that organisation can make

by following that strategy. Information and data from many sources can be used to

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evaluate the strategy. According to the results of analysis should be incorporated in the

strategy plans, the changes should be done in the strategy which is required. Balance

score card is a tool that used to improve the corporate performance. The balance

scorecard is by far the most poplar. The concept of scorecard is simple.

5d

Monitoring a new strategy is very important. If an organisation uses a new strategy for

example, if it goes to very remote part of country where there is very less population, but

at the same time there is no other competitor in that part. It would be very important for

organisation to keep a strict eye on its strategy. There is great amount of risk involved in

this. Possibility is that organisation might not succeed to low population. But the

possibility is also that it will succeed due to no competitor at all. Let us assume that

organisation is bank. People will go for the products of that bank because they don’t have

any other choice. Monitoring strategy is necessity at every step because it will be facing

hurdles that it actually would not have predicted. The problems will occur when they start

doing business.

Conclusion

The study reveals that HSBC has been following very competitive strategy which has

helped to remain it on among the companies which are at top position in the world for

long time.

16th April

Fawn, J., Cox, B. (1987), Corporate Planning in Practice, 2nd edition, Kogan

page Ltd., London

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http://tutor2u.net/business/presentations/strategy/stakeholders/default.html , ,

[accessed on 09/04/2010]

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Strategy Implementation

http://www.referenceforbusiness.com/management/Sc-Str/Strategy-

Implementation.html, [accessed on 14/04/2010]

What is a Vision Statement?

http://www.wisegeek.com/what-is-a-vision-statement.htm , [accessed on

17/04/2010]

http://compoundthinking.com/blog/index.php/2006/10/25/so-what-is-vision/ ,

[accessed on 20/04/2010]

HSBC Says Asia, Deposits Are Buffer Against Recession

http://www.bloomberg.com/apps/news?

pid=20601085&sid=abG4uwdWate0&refer=europe, [accessed on 02/04/2010]

http://www.hsbc.com

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