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Global Business Strategy: How It Works & Defination

2159 Downloads1 I Published: 29 May ,2019

Introduction

Global business strategy is combination of diverse business tactics that organisation follows for effectively operating in the international market. It consists of various organisational plans and procedures that can facilitate management in accomplishment of organisational goals (Nickols, n.d). It also covers number of policies and schemes that are related to the day to day operations of business. It also facilitates organisations to have better business opportunities in the global market and provide strength so that they can effectively expand their business.

This report will focus on work culture of HSBC which is one of the multinational banks. It will provide information about various factors that impact the operations and strategies of the organization. It also focuses on various key components that are related with the global environment and assist HSBC to enhance its total revenue. Furthermore, it will also provide information about the challenges that company faces during the business expansion in the international marketplace.

Activitiy 1

A.) Techniques to analyse the business environment and their suitability

Business environment analysis plays a key role in success of every organisation and provides ways that can enhance sustainable growth factor. It also facilitates in the decision making process by providing information about the current market status and competitors strategies. It is one of the key beneficial factors in order to gain effective competitive advantages (Yousif and Hassan, 2013). Management of HSBC focuses on various techniques to have effective information about the business environment. The classification can be as follows:

SWOT analysis: The improved focus on SWOT provide effective environment analysis. With the help of SWOT analysis the management of HSBC gathers information regarding company's strength, weakness, opportunities and threats. Company can use its strength for effective business expansion in the global market (Cantrell, 2001). It also assists in overcoming the weakness. Information about opportunities helps HSBC to understand the areas that can lead its business to impressive success. At last, the information about threats helps company to design strategies which can help in overcoming the unseen threats (Passerini, 2013).

Pest analysis: It is one of the most commonly used tools that facilitates organisation to understand several external factors that can impact the operations of the organization. The factor can be classified as political, social, economical and technological (Burden, 2000). It provides information about the risk factors that can impact the functioning of HSBC. It also covers factors like market growth, market decline, market potential and directions.

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Five force analyses: It is a tool that provides information about various factors such as new entry, rivals, supplier, customer and substitute products. It provides understanding about the power of all these factors so that management can design better strategies to overcome the risk related to factors (Thompson, 2004). It forces the social group to make decent strategies in order to deal with all the categorized forces. The factors considered in five force analysis varies from industry to industry but it is necessary for every business to focus on these factors so that business can have impressive success and gain more profit. It will facilitate the HSBC to design better strategies which can impact the business operations in a positive manner.

Stakeholder’s analysis: It has also been spotted that the stakeholder plays a key role in success of every organisation and their perception can impact the overall operations of the bank. In other aspect, it can be stated that it is vital for the management of HSBC to focus on needs and demands of all its stakeholders. Improved knowledge about market needs and demands will facilitate management to accomplish organisational gaols in a better way (Neuland, 2009).

There are number of stakeholders which can influence the operations of HSBC. The classification of stakeholders can be as employees, customers, government, other banking institutions, etc. In support of this, it can be said that actions and perception of these stakeholders have great impact on the organisational performance in both direct and indirect manner. It is also necessary for business to have enhanced level of relation with all stakeholders in order to accomplish goals in a smooth manner (William, 2014). Company must provide proper information to all stakeholder and design strategies as per their needs.

B). Macro and Micro environment analysis

PEST Analysis

Political: HSBC operates its business in 80 nations that means company need to deal with diverse political factors while dealing in the international market. It is necessary for the organisation to follow various taxation policies as per the nation in which company is operating its business (William, 2014). It has been identified that in some nations political factors forces the company to have alliances and other agreements if they want to enter in the market. Some time, it impacts the business of HSBC in a negative manner.

Economical: HSBC plays a key role in global economic system as it is one of the biggest banks that operate in international market. The operations of HSBC face issues due to changes in global economic system (William, 2013). In this, it is necessary for the organisation to consider various factors such as recession rate, employee fluctuations, foreign exchange, GDP, stock market, etc. It is one of the critical aspects of company to manage balance between all economic factors.

Social: HSBC is operating its business in diverse nations so it is necessary for management to focus on various cultural and social aspects of every nation in order to meet the customers need. It also facilitates in effective sustainable development (Kelley, 2003). It has been witnessed that company is also active in various charitable events in order to meet social aspects.
Technological: HSBC is continuously focusing on technological advancement in its operations to overcome the technological issues. Bank is involved in various online fraud thefts that have impacted customer’s perception. In order to overcome these issues, the bank is focusing on various technological tools that can enhance the security measures (Turner, 2012). Further, it is installing various latest systems in order to have better protection from theft issues. HSBC has also introduced its banking mobile application to provide better convenience to customers.

SWOT Analysis

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
HSBC is one of leader in international finance market The issues of theft have impacted brand image in a negative manner (Parnell, 2010) Organization can expand its business in Asia Pacific Region Changes in trends and culture have negative impact on the operations of HSBC
Organization offers wide range of services for diverse customer segments.Employee’s dissatisfaction also influences the bank operational activities. HSBC can have effective diversification of its products and services (Allio, 2006). Changes in economic condition of European nation impact the business.  
HSBC management maintains effective relationship with governance authority of various nations. Improper approach in Asian Countries decreases the work effectiveness. The bank can acquire various domestic banks in Asian nations. The security and technological issues impact the effectiveness of online banking system (Marren, 2012).

Stakeholder analysis

Customers: Success of HSBC depends on the customer satisfaction level so it is one of the most crucial sections. It is necessary for business to maintain good relations with all its customers and develop strategies in order to meet their needs (Bartle, 2005). Moreover, the management of HSBC is also required to focus on training and development program which will facilitate in better handling of customer needs by increasing employees skills.

Supplier: It plays a key role in operational activities of HSBC as they provide number of equipments. Improved level of relationship with supplier is essential because they provide low cost services which are beneficial for low cost operations (Hartline, 2007). Payment must be provided in a proper way so that supplier needs can be fulfilled in a better way.

Government: It is necessary for management of HSBC to follow all the rules and regulations in a proper way in order to meet the governance needs. It has been spotted that without maintaining good relations with the governance company cannot operate its business in the nation. Proper tax must be paid as per governance policies to meet satisfaction level.

Competitors - These people are also very important stakeholders for the company because it can directly and indirectly affect the activities of bank in the regular course of work (McLoughlin, 2009). It has been spotted that HSBC is operating its business in international market so it is necessary for management to consider diverse factors of competitive market in order to have better development in the market share.

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C). Impacts of international business environment on HSBC

There are number of factors that can impact the international business environment of HSBC. It has been witnessed that the HSBC is continuously looking for business expansion in the international market so it is necessary for management to consider the following factors during the expansion.

Political: It has been identified that the political factors of any nation have direct impact on the organisational structure and other procedures, especially with the help of governance authorities. HSBC is operating its business in diverse nations so it is necessary for the management to consider diverse governance rules and regulations for effective operational activities (Schwarz, 2011). In several nations, company needs to pay taxes and other charges on expansion activities that reduce the profit margin ratio of the organisation.

Other than this, in some nations the political factors forces business to get involved in partnership as company cannot expand business under own name. This also impacts the business opportunities and divide profit margin share with another organisation (Uggla, 2008).

Culture: It is one of the key aspects which impact the business of HSBC, as the bank operates its business in the international market that means organisation deals with diverse culture. The diversification in cultural aspects creates some barriers in business expansion and reduces the ability to work which directly lead to great failure (Zahra and Covin, 2003). In order to understand the cultural aspects, it is necessary for organisation to focus on market research which may increase the bank overall operational cost. In this, HSBC needs to consider market research, consumer behaviour, etc to overcome the cultural issues.

Employees: Employees plays a key role in success of operational activities so it is one of the critical issues for organisations to overcome problems regarding employees. It has been spotted that the HSBC operates its business in more than 80 nations which means management deals with diverse needs and demands of employees (Grosse, 2000). Most important critical task for management is to identify the employees needs and demands because workers in HSBC belongs from diverse cultures which categorizes employees needs and demands in diverse segments.

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D). Benefits, opportunities and challenges of globalization for an organization

Globalisation has become one of the critical aspects in modern era of business as it provides number of benefits to the organisation. It increases free trade opportunities among nations and allow businesses to use latest technological devices which can boost the effectiveness of operational activities (Beer, 2010). With an assistance of this, HSBC is able to operate banking actions in cheap rates that has boosted its profit margin ratio. It has also increased liquidity in capital that facilitates in enhancing the investment ratio of organisation in diverse nations. The flow of information sharing has also improved with an assistance of globalisation (Nelson, 2013).

There are some more opportunities that globalisation provides to every business such as it provides ability to develop business opportunities in any part of world at very low risk. With an assistance of globalisation, the management of HSBC can also cut down the cost of technology advancement in its operations (Dickson, 2007). The bank can easily share economic system information with diverse nations so that more business expansion opportunities can be created. It also helped the firm in creating better brand awareness by various merger and acquisition of domestic banks.

However, HSBC faces some challenges in business due to globalisation such as increased level of competition. With the development of globalisation, the number of banks has expanded their business in diverse nations which is one of the critical factors for management of HSBC (Galbreath, 2006). It sometime impacts the market share of the bank and forces to have continuous improvement in key measures. There are some cultural issues such as it is difficult to maintain the cultural aspects of diverse people.

ADDITIONAL SECTIONS

A). Extent of globalization on HSBC and other organisations

Globalisation is all about the integrated actions of diverse nations and social aspects in a collective manner. It provides effective utilization of various aspects such as enhanced services, effective labour, fund allocation, etc. It has boosted the effectiveness of operational activities and facilitates the organisation to accomplish its tasks in desired time period (Kunnanatt, 2011). In this support, it can also be said that the globalisation has boosted the market expansion opportunities that is one of the key beneficial factor for HSBC and other organisations. In traditional world, the companies were focusing on nation but organisations are now focusing on people around all over the world.

With the help of globalisation, the number of trade barriers among nations is also removed which has boosted the trade opportunities for businesses (Elg, 2008). Other than this, the globalisation has also increased the effective use of various technological tools at very low cost. It has also enabled companies to outsource their work with local organisations of diverse nations. Number of developing nations is looking forward towards globalisation as it helps in improving the economic system and lead businesses to international level (Kippenberger, 2000).

Furthermore, the increased level of globalisation has also introduced some issues that act as barriers for the organisations. It has been identified that some companies has expanded their business in developing nations but instead of nation development, the exploitation of people and other resources has been noticed (Jones, 2008). Due to globalisation, the people are also migrating to the developed nations which have impacted negatively on economic conditions of the host nation.

B). Structures of different organizations operating in international markets

There are various forms of structures in which organisations operate their business. The classification of structures can be as follows:
Functional: It is a form of organisational structure that is adopted by diverse companies which further improves management focus on organisational goals. In this structure, the companies have number of departments for effective operations such as marketing, human resource, finance, etc. Every department have its individual operation according to skills of its employees (Kippenberger, 2000). One of the key advantages of functional structure is that it provides clear information about the objectives and purpose of operations.

Matrix: In this structure, the companies focus on key components of both divisional and functional structure. It facilitates the management to design projects and actions which can be accomplished effectively in the desired time period (Elg, 2008). With the help of organisational structure the organisations can hire skilled employees for effective accomplishment of diverse goals related with different areas. In this structure, the department heads focus on employees which belong from different areas that help in improving organisational capability.

Divisional: It is an organisational structure that is most commonly used in diverse organisations which operates in the international market. In this type of construction, all the roles in the division are distributed in context of various merchandises and services. It enhances the decentralisation within organisation by creating diverse functional department (Kunnanatt, 2011). It is commonly used in organisations which focus on outsourcing their work. This kind of structures also facilitates the organisations to balance their work in separate units for effective accomplishment.

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Activitiy 3

A). International Operations of HSBC

It has been spotted that the HSBC is operating its business in more than 80 nations so it is necessary for management to ensure about various critical aspects that can impact the overall operations (Galbreath, 2006). HSBC is well known for its highly effective financial services that are offered to premium class of society. Company is operating in diverse nations such as Africa, Asia, Europe, North America, and South America by holding 6600 offices and offering job opportunities to 60 million people (Dickson, 2007). Organisation is continuously focusing on actions that can amend thestandard of its services and lead business to impressive success in the international market.

The bank is also holding nearby 220,000 stakeholders from different nations like London, Hong Kong, New York, Paris and Bermuda. It has also been spotted that the international network of organisation is highly focused on advancement in technological use so that business can have better growth opportunities (Nelson, 2013). Company offers various kinds of financial services which can be classified in diverse categories such as individual, commercialized, corporate funding, investments and private banking.

According to various environmental analyses it can be said that the company is operating its business as the leading financial institutions in international market. Organization is offering number of financial services to wide range of customers. HSBC management is also constantly focusing on maintaining good relationship with government of diverse nations so that business opportunities can be boosted (Beer, 2010). The brand image of organization has also faced some negative impact due to issues of theft. It has also been spotted that employees of HSBC are also not satisfied which have great negative influence on their operational capabilities. Company is also not able to maintain the service standards in Asian Countries which also have direct negative impact on its work effectiveness (Grosse, 2000).

CONCLUSION

As per above study it can be concluded that the global business strategy is a set of various techniques and tactics that every business organisation uses for effective operations in the international market. It has been identified that the management of HSBC faces number of issues and conflicts while operating in the international market that impacts its operational activities. The bank can easily overcome the issues by focusing on ethical aspects and regulations.

REFERENCES

Allio, M., 2006. Practical strategy development: a wise investment for middle market businesses. Journal of Business Strategy.

Bartle, I., 2005. Globalization and EU Policy-making. Manchester University Press.

Beer, L., 2010. A Strategic and Tactical Approach to Global Business Ethics. Momentum Press.

Burden, P., 2000. Powerful Classroom Management Strategies: Motivating Students to Learn. Corwin Press.

Cantrell, S., 2001. Five business-model myths that hold companies back. Strategy & Leadership.

Dickson, P., 2007. The fundamentals of standardizing global marketing strategy. International Marketing Review.

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