The report presented below highlights the concept of international business environment in detail. Traditional marketing process has been modified with the emergence of globalization, thereby introducing new marketing aspects affecting overall organizational performance positively. Considering the scenario of HSBC Bank PLC, a study work is presented below to analyze the impact of global business environment regarding financial and investment services provided to corporate as well as individual customers. The cited company’s business environment have been analyzed in the report undertaking various techniques to examine various internal and external factors. List of benefits, opportunities and challenges have been covered to be included as a part of wider concept of globalization. HSBC Bank PLC is a prominent part of HSBC holdings having its headquarters in east London. It has well exploited various benefits of globalization by successfully operating in international business environment providing a strong defeat to its competitors in investment and banking industry(Gnosa, 2011). Moreover, the report also includes determining structure of different organizations existing in global market.
1. Techniques to analyse environment
Every organization that is existing within international business environment, needs to carry out analysis of internal as well as external business environment. HSBC Bank is a leading investment and banking organization, that has acquired a prominent position in European market by carrying out analysis of environment on regular basis. Number of techniques have been applied by the cited entity to study internal as well as external factors in detail. Each of these techniques have been mentioned below in detail:
SWOT is an abbreviation of Strengths, Weakness, Opportunity and Threats. Having a clear idea of factors existing within organizational environment has enabled the cited entity to align internal resources with that of external agents including opportunities and threats confronted before HSBC Bank from external sources (Motohashi, 2015). It is one of the most common techniques applied by organizations operating on global basis.
Resources Analysis: Detailed information of resources possessed by organization that can be utilized in enhancing the organizational performance to achieve overall organizational objectives. Sources that supply various resources must also be studied in detail. It provides complete information for ensuring none of these are wasted and are utilized effectively.
PESTLE Analysis: Understanding external factors that are not in control of cited organization as well as other banking companies can be completed by undertaking PESTLE analysis. The cited organization has expanded its scope of operations and is thereby impacted to a greater extent by number of factors emerging within different national markets of globe. It highlights Political, Economical, Social, Technological, Legal and Environmental factors (Trompenaars and Hampden-Turner, 2011).
Porter’s Five Model Analysis: Michael porter highlighted five important aspects of competitive environment that help in analyzing the extent of competition prevailing within banking and investment industry. Having a knowledge of new entrants and bargaining power of creditors can help in framing modified policies to sustain in competitive environment.
A) Analyzing micro and macro business environment
HSBC Bank is existing within banking industrial environment that is recognized as its macro environment whereas internal environment within its own organizational structure is defined as its micro environment. Micro environment consists of internal resources, core competences, strategies, etc. Whereas external environment consists of factors that are beyond the control of cited banking corporation. Understanding of internal business environment can be completed by SWOT Analysis and PESTLE analysis for studying external business environment.
SWOT analysis: Strength includes strong relationship and positive participation of various stakeholders. On the other hand, increasing percentage of uncleared loans and debts have been analyzed as a threat for HSBC Bank. It will have to exploit the opportunity of expanding business operations to obtain more funds to pay off its debt. However, the cited organization has not been able to manage with increasing liability (Teece, 2010)
PESTLE analysis: Elements of external environment dominate the working pattern of cited organization to a greater extent. HSBC Bank has been following regulations and policies of European Union to deliver an image of obedient member organization of the nation. Political factors are those that emerge due to government intervention. Economical factors shape various policies to be introduced in order to sustain within changing economical trends of respective economy. The cited organization has received a positive favor from supportive economic trends of European countries that have expanded the scope of investment facilities provided to various customers (Neeley, 2012). Social factors determine common beliefs and assumptions followed by citizens of respective national area. HSBC acts in according manner that suits the ideology of its prominent customers and stakeholders. Technological factors having been emerging on regular basis on account of rapid globalization. For operating on larger business base, the cited organization has to align with technological up gradations to continue with financial activities carried on regular basis. Failure in aligning with latest technological trends might directly impact overall performance and financial stability of cited entity. Environmental factors include policies framed by respective political authority with respect to protection of environmental conditions. HSBC has been a finance provider for number of multinational companies, for which it carries out analysis of project to for which it would be providing required funds. This provides a level of surety for HSBC, that these companies would not be undertaking a project which would be harmful for environment of specific region. Moreover, legal factors such as legislation and legal provision with respect to various financial policies of cited enterprise have influenced HSBC to a greater extent (Neeley, 2012).
b) Impact of international business environment
The modern concept of modified business environment have expanded the scope of financial as well as investment services provided by HSBC Bank. Initially, the cited organization had a list of stakeholders belonging to European region only. With improved performance of financial functions it has acquired maximum market share by attracting investors from Asia-pacific, east African and middle east regions too. International finance is a boon provided to various banking companies including cited organization too. Import- Export business activities requiring facility of foreign exchange has been efficiently provided by cited company and thereby attracting various investors world wide, to invest in acquiring shares of HSBC that are listed on London Stock Exchange. Moreover, investors having US nationality , are provided with opportunities to purchase shares of cited bank through issuance of American Depository Receipts (Casadesus-Masanell and Ricart, 2010). Shares of cited organization are listed at US stock exchanges and can be traded by foreign investors following common method of purchase and selling of these shares. Also, European Depository receipts are issued by HSBC Bank, thereby providing services to European investors for purchasing shares of non European companies. These shares are thereby listed at London Stock Exchange. International business environment has also provided an opportunity for HSBC Bank, wherein it can list its number of shares with foreign stock exchanges and attract foreign investors through cross listing method.
c) Assessment of benefits, opportunities and challenges of globalization
Benefits: Globalization has enabled the cited firm to establish its branch offices in number of countries, outside geographical boundaries of European territories. Economical stability of these economies have provided a base for establishing and promoting overall performance of HSBC. It has acquired a prominent position in leading stock exchanges in international market including New York Stock Exchange.
Opportunities: Emergence of globalization has appreciated various acquisitions and mergers on large basis. These takeovers usually require lots of funds to be gathered, thereby providing opportunity for the cited organization to earn huge profit margins by providing facility of currency exchange to foreign clients. US oriented companies have been acquiring many medium scale corporations of UK, requiring exchange of dollars for Euros (Hill, Cronk and Wickramasekera, 2013). Challenges: Aligning with technological changes, to provide quality services to increasing customer base has been quite difficult for the corporation. Customers are most likely to operate online and this requires transfer of information to a greater extent. Cash management and treasury management have become complex due to increased scope of operations.
Extent of globalization on organizations
Globalization has provided list of benefits and opportunities for various organizations. Organizations that initially had limited scope of operation within geographical area of their location, have now been appreciated to exploit benefits of international marketing by exploring there core competences in markets that are located overseas. There has been a rapid increase in level of competition which has directly impacted the working pattern of multinational organization. These firms have been making continuous attempts to enhance the quality of there products, thereby providing better quality services to customers. Organizations that desire to acquire a prominent position in international market have modified there strategies accordingly so as to design plans to attract clients on global basis. US based clients provide more benefits on account of strong currency value of dollars. Cross border exchanges along with increased imports and exports activities have expanded the scope of business activities for organizations existing in international business environment. Moreover, these organizations have been considering impact of various external factors to prepare various protective strategies in advance. However, considering impact of various factors have enabled organizations operating internationally, to promote positive image in global village for providing higher level of satisfaction to customers from different geographical location (Cuervo‐Cazurra, 2011).
Structure of different organizations
Complex organizational structure of an international firm is divided into number of national markets that are located in different geographical regions. Each of the subsidiary company located differently, carries out its own set of activities. Specific subsidiary is liable for its own performance only. These companies have to follow guidelines provided by parent company, but they operate independently.
Companies that are a part of global market, might adopt centralized structure for controlling various functional activities of number of subsidiary companies on central basis. The parent company monitors each activity performed by its subsidiaries and provides directives to be followed by each of them, ensuring discipline in performance of various tasks and projects.
This structure is a combination of fully centralized and decentralized structure. This structure has eliminated limitations of both structural forms and thereby included features of both of them. Concentration on customization to cater different cultural trends has been possible here. Moreover, disciplinary actions are imposed to ensure successful completion of task on time (Farndale, Scullion and Sparrow, 2010).
Covered in PPT
Evaluation of the international operations of HSBC.
The below mentioned is the explanation of the critical evaluation of the business operations which has been done for the business organization:
Higher level of political risk
There are a number of risks ascertained while carrying out the business operations at a global level level and political risks are to be considered from one of them. For instance if the relation between the two economies are not good then HSBC will face many problems. There will be a number barriers due to the political conflicts. The business organization will not be able to carry out the business operations properly and smoothly. For example HSBC will face many problems while carrying out the business with the other nation with whom the home economy is having bad relations (Woodcock, Green and Starkey, 2011).
Diversity in religions
The basic problem faced by a corporation is to carry out the business operations in a different economy. This problem is raised by the different religions which are followed by the concerning economy. For example if the home nation of the organization is US then the employees or the staff members of HSBC will face problems while explaining and interacting the public which are from other nation or are aware of the language of US which is English.
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Laws are the rules or the guidelines on which an organization has to carry out the business operations. There will be difference in the laws of nation to nation. So the this is also a barrier for the business corporation as it is very much difficult to carry and manage the business activities as per the different laws of the different economies. And also these laws keeps on changing or any amendments are also brought so the company will have to make the necessary alterations according to that.
It can be hereby concluded that, emergence of rapid globalization in international market have promoted the concept of international finance. HSBC is most of the prominent part of finance industry of UK. The cited organization has exploited all most all of the opportunities provided on emergence of globalization concept. Analyzing internal and external factors and thereby framing appropriate strategies to sustain current position in banking industry is an important aspect considered by HSBC Bank (Ratajczak-Mrozek, 2012).
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Cuervo‐Cazurra, A., 2011. Global strategy and global business environment: the direct and indirect influences of the home country on a firm's global strategy. Global Strategy Journal. 1(3‐4). pp.382-386.
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