Your Task Strategy Development – A Long Term View Selecting ANY ONE FINANCIAL SERVICES Company currently listed on the UK FTSE Stock market and undertake the following tasks: 1. RECENT PAST (5-25...

Strategic Development - HSBC Holdings

1 Strategic Development - HSBC Holdings
Strategy Development – HSBC Holdings

2 Strategic Development - HSBC Holdings
Contents
Introduction ................................................................................................................................................... 3
Recent Past .................................................................................................................................................... 3
History of the company: ............................................................................................................................ 3
Strategy: .................................................................................................................................................... 5
Mergers and acquisition strategy of the company: ............................................................................... 6
‘World’s Local bank’: ............................................................................................................................. 7
Current Strategic Situation: ........................................................................................................................... 7
Macro-environmental STEEPLE analysis: ............................................................................................... 7
Porter‟s Five force Model: ...................................................................................................................... 10
Resource Based view theory: .................................................................................................................. 11
Future Strategies: ........................................................................................................................................ 14
Corporate Level Strategy: ....................................................................................................................... 16
Growth strategy - Diversification Strategy: ........................................................................................ 16
Conclusion: ................................................................................................................................................. 17
References: .................................................................................................................................................. 17

3 Strategic Development - HSBC Holdings
Introduction
HSBC is one of the largest financial services and banking organizations in the world head
quartered in London. The company is widely spread across the globe. Its international network
comprises of close to 8000 properties in 88 countries situated in Europe, North America, Latin
America, Rest of Asia – Pacific, The Middle East etc. Due to global presence , the company is
listed many stock exchanges like Bermunda , London, Paris, Hong Kong, New York Stock
Exchanges. More than 220,000 shareholders hold shares in HSBC Holding Plc in 121 countries
and territories, close to 100 million of customers getting served by HSBC providing
comprehensive range of products. While offering the services, HSBC has segregated the
customers into four groups like Commercial Banking, Global Banking and Markets, Personal
Financial Services (Including Consumer Finance) and Private Banking. (Annual Report‟ 2011)
Recent Past
History of the company:
HSBC is a banking and financial services organization that provides investment banking,
commercial banking, and wealth management services. The group's international network
comprises over 12,500 offices in 121 countries in the following six regions: Europe; Hong Kong;
rest of Asia Pacific; the Middle East and Africa; North America; and Latin America. (Annual
Report‟ 2011)
With assets of around $2,454.7bn as of 31 December 2010, HSBC is one of the world's largest
banking and financial services organizations. (Annual Report‟ 2011)
HSBC provides financial services to more than 100 million customers through four customer
groups and global businesses: personal financial services (including consumer finance);
commercial banking; global banking and markets; and private banking. Personal financial
services provide a range of banking and related financial services to over 105 million individual
and self-employed customers in 62 countries. Products provided by the segment include current
and savings accounts, mortgages and personal loans, credit cards, and local and international
payment services. In addition, the segment also offers consumer finance and wealth management
services. (Annual Report‟ 2011)

4 Strategic Development - HSBC Holdings
HSBC offers wealth management services including insurance and investment products and
financial services. Insurance products are distributed through HSBC direct channels and branch
networks include loan protection, life, property and health insurance, and pensions. HSBC also
makes available a range of investment products such as traditional long-only equity and bond
funds, structured funds and fund-of-funds products. The bank also offers a choice of third party
funds, as well as financial planning services including customers' investment, retirement,
personal, and asset protection needs through qualified financial planning managers. (Annual
Report‟ 2011)
HSBC Finance provides point of sale credit services to customers not well catered for by
traditional banking operations. This division includes the consumer lending business unit, the
mortgage services business unit, the retail services business unit, the motor vehicle finance
business unit, the credit card services business unit, and the taxpayer financial services business
unit. HSBC Finance's business in the UK, HFC Bank, provides midmarket consumers with
mortgages, secured and unsecured loans, retail finance, and insurance products. (Annual Report‟
2011)
HSBC Direct offers customized products for online customers across selected markets. HSBC's
global banking and markets business provides customized financial solutions its clients which
includes government, corporate, and institutional clients across the world. Global banking and
markets is managed as four principal business lines: global markets, global banking, principal
investments, and global asset management. (Annual Report‟ 2011)
The global markets line consists of treasury and capital markets services for supranationals,
central banks, corporations, institutional and private investors, financial institutions, and other
market participants. (Annual Report‟ 2011)
HSBC's operations in global banking consist of financing, advisory, and transaction services for
corporations, institutional and private investors, financial institutions, and governments and their
agencies. HSBC global asset management offers asset management products and services for
institutional investors, intermediaries, and individual investors and their advisors. (Annual
Report‟ 2011)

5 Strategic Development - HSBC Holdings
HSBC has 4.9 million commercial banking customers in 83 locations, including sole proprietors,
partnerships, clubs and associations, incorporated businesses, and publicly quoted companies. As
of December 31, 2012, HSBC had a total commercial customer account balances of $236bn, and
total commercial customer loans and advances of $204bn. HSBC segments its commercial
banking business into corporate, medium, small, and micro business. The range of products and
services includes financing, payments and cash management, international trade, treasury and
capital markets, commercial cards, insurance, and wealth management services. (Annual Report‟
2011)
HSBC Private Bank is the principal marketing name of HSBC's international private banking
business. HSBC Private Bank, along with HSBC Guyerzeller and HSBC Trinkaus & Burkhardt,
provides investment services, global wealth solutions, specialist advisory services, and general
banking services. The division offers products and services in 63 countries and territories from
90 locations, with client assets of $552bn as of December 31, 2012. (Annual Report‟ 2011)
Investment services of the company include advisory as well as discretionary investment
services. The company provides an array of services for equities, derivatives, options, bonds,
futures, structured products, mutual funds, and alternative products such as hedge funds and
fund-of-funds. The company also deals with the Global wealth solutions which comprises of
inheritance planning, trustee, and other fiduciary services designed to protect existing wealth and
create tailored structures to preserve wealth for future generations. (Annual Report‟ 2011)
Strategy:
Considering the case of HSBC holdings, we can say that HSBC has changed its business model
over a period of time, HSBC from a bank has diversified its portfolio as well as its services from
banking services, to different financial services. HSBC has strongly focused on building up a
major retail banking presence across the globe, the company has strongly followed the strategy
of aggressive series of acquisitions in countries like America and other Asian nations. It has
strongly focused on integrating with its alliances so as to meet up with the competition and
expand in the global market. (Annual Report‟ 2011)

6 Strategic Development - HSBC Holdings
HSBC bank has also focused on the strong application of the financial services which has helped
in different environmental regulation. The company has a strong focus on sustainability which
has helped the company in attaining a strong competitive edge in the target market.
Mergers and acquisition strategy of the company:
Mergers and acquisitions can be defined as a corporate strategy that is followed by the
management of the company while dealing with the growth by way of selling, buying,
combining or dividing either similar types of companies or different types for the purpose of
working together as a single enterprise. The term mergers and acquisitions are sometimes
interchanged, but there is a difference between the two. (Stahl, 2005) Acquisition refers to the
purchasing of one company by another company that is either financially or strategically strong.
Acquisition can be either hostile or friendly in nature that depends on the forceful agreement or
the mutual agreement between the companies.
The mergers and acquisition are carried out in order to reap the benefits, such as: improvement in
the utilization of capacity; enhancement in the sales force coverage; reducing the managerial
staff and thus the overall cost of operation. The company is able to attain the economies of scale,
new and advanced technologies, and reduction in the tax obligations on the whole. (Hitt M A,
Ireland R D, Hoskisson R. E, 2008)
The company has also focused on diversification and growth strategy with which the company
has expanded its existence across the globe. It is considered to be one of the largest banks which
have extensive international operations. The company followed the strategy of „The world‟s
local bank‟. (Tschoegl, 2004)
Some of the major acquisitions that has been done by the company in past are Bank of British
Columbia, Banque de Baecque Beau,...