Operations Management Preventing HSBC Bank from Transactional and Administration Problems - Case Study Example

ASSIGNMENT 2 by (Name) Course Tutor University City and State Date Executive Summary HSBC bank is a financial institution, whose conceptualization age dates back to 1865 in Hong Kong. Commonly known as the HSBC Holdings plc, the multinational bank expanded and it opened other branches in several countries while offering financial and banking services. With its headquarters located in London, the bank is ranked as the fourth largest in the world. In Oman, however, the experienced problems within the bank are not what one would expect from a financial institution with such a reputation. Since its establishment in 1948, the bank has always offered top-notch services with fewer mistakes in Oman. Currently, there have been reports that the country is experiencing problems with their ATM machines. Customers are unable to use their ATM cards to access their accounts. The administrative sector is also having problems involving registration of clients to their newly introduced Advance Credit cards. The process has become strenuous for its customers. This study aims at identifying the problems and resolving it through operations management theories in gaining global competitiveness. According to the theories of operations management, organizations can solve their problems in three distinct ways. The six-sigma approach suggests identifying the defects and solving them afterwards. The lean approach, similarly advocates for the identification of defects though it focuses more on the wastes. After identification of such wastes, it is plausible to eliminate them. Contrary to that, the theory of constraints suggests that in every organizational structure, there is a limit. Identification of these constraints should be solved by redesigning the operational process. Furthermore, drawing examples from banks, which have suffered similar problems, facilitates the solving process for the concern. Thereby, a combination of experiences by other banks and insights from operational theories, HSBC would be able to solve and even prevent the bank from experiencing transactional and administration problems. Introduction In every organization, project management and business strategy is a significant tool in enhancing global competitiveness. The HSBC is a multinational financial and banking services business headquartered in London with an international network comprising of approximately 9,500 offices located in 85 countries within America, Asia-Pacific and Europe regions including the Middle East and Africa. Ranked as the fourth largest and extensive bank in the world, the HSBC as expected has several branches in many countries. Nonetheless, this report focuses on the HSBC bank branch in Oman. Ideally, every business has its own shortcomings and it is the responsibility of the management team to ensure that such falls are rectified. The Oman bank branch, thereby experiences certain problems involving its services, both online and through its ATM machines over the past. It is plausible that the company deals with its issue from both a theoretical and real perspectives in order to actualize the best approach and solutions. Servicing problems require specialization and amendments within the project management since they emanate from the loopholes within the implementation of the ATM and internet banking services. The aspects of operations management including business strategy and project management, when implemented in an appropriate manner will facilitate global competitiveness in HSBC banking branch in Oman by solving its company problems. Organization Background HSBC Group in Oman is represented by the HSBC Bank Oman commonly referred to as S.A.O.G. The HCBC Middle East Bank’s Oman operations amalgamated with the Oman International Bank, which has a rich heritage as listed under Muscat Securities Market. Eventually, the merging of the two institutions resulted in the renaming of the bank to HSBC Bank Oman S.A.O.G (HSBC in Oman 2014). Two decades after its establishment in Oman in 1948, the bank had solely offered banking services without any competition from any other institution. During the first issuing of Omani currency, the banked played a significant role in distribution. Throughout the years, the bank has gained the name of being the first in several interventions within the banking industry. Some of these attributes include being the first to provide ATMs, offer international withdrawals through ATMs, to introduce online banking and commercial electronic banking via the Hexagon product. The bank has improved throughout the years and it currently offers a wide range of services for retail and corporate customers. Additionally, the bank offers other services that are not directly related to banking. It helps in enlightening school-going children about the significance of protecting the environment through a program it runs together with the Ministry of Education. Apparently, the bank is more interested in environment related issues as it also funds the ESO Frankincense project that is run by the Environmental Society in the country. It also assists children in the country to gain access to reading materials through its partnership with the Ministry of Education and British Council. Charity organizations under the bank’s administration include the Al Rama and Dar Al Atta organizations. Moreover, its operations can be classified into the visibility dimension as customers are able to track and see their experiences through operation processes, the variation dimension with both online and catalogue processes and the variety dimension evidenced by the different services being offered (Hongkong & Shanghai Banking Corporation 2000). Theoretical Framework Operations management involves converting labor into services and goods efficiently in order to optimize the potential profits within an organization. Heizer and Render (2011) define operation management as the designing, controlling and overseeing production and redesigning processes of business operations in production of services and goods. Ideally, operations management encompasses other aspects including global competition, customer service, quality, productivity and e-business. With the three key functional aspects: marketing, finance and operations, HSBC Oman bank appears to have dealt with most of its functions. However, according to Osborne and Bachelor (2011) the bank has been experiencing problems concerning its services. Customers reported technical problems, which prevented them from withdrawing cash from their accounts in certain ATM machines and in accessing the online banking services. Moreover, the effect was detrimental as other customers were unable to pay for services in restaurants, petrol stations and even shops. The effect was a bizarre, as its customers could not access several services aggravated by the fact that they could not withdraw money from their own accounts. The situation boils down to operations management and there is need to understand the causal factors, the impact and solution from a management perspective. Lean and Six-Sigma are the most popular operation theories utilized by managers in improving efficiency in their servicing and production processes. Through these two concepts, they are able to convert organizational inputs including labor and materials into outputs such as services and goods (Češnovar 2006). In the case of the bank, managers are responsible for ensuring their customer’s needs are met through efficient services. Focusing on the six-sigma theory, it functions by improving the outputs processing quality. The six-sigma is unique in the sense that it functions by identifying the causal factor to the defects, removes the errors and minimizes the variability in the business and manufacturing processes (Braunscheidel et al. 2011). Evidently, the theoretical approach depends on specific quality control methods including statistical analysis in creating special infrastructure among employees within an organization. The theory dictates that organizations need to have sequential steps with quantified financial targets such as increasing profits and reducing costs in order for it to function appropriately. Proponents of this theory are Similarly, lean theory works by eliminating problems with a slight difference since it focuses more on eliminating excessive steps and waste amounts during its operation (Hadid & Mansouri 2014). The production theory considers expenditure of resources with the goal of creating value for a business’ customer, which translates to the elimination target. From the lean theory perspective, service or product value is defined as a process or action, which a customer is willing and ready to pay for. Nonetheless, this theory is only limited to the elimination of excess inventory, motion and overproduction. It fails to focus at organizational problems at a wider perspective, which facilitates in understanding the cause of the problem before devising a solution. In this perspective, it therefore stands out that the theory is only able to solve a section of a problem, leaving behind another part. Contrastingly, the theory of constraints suggests that the inability to actualize organizational goals is due to the presence of some constraints. Accordingly, the theory of constraints (TOC) is a managing paradigm with the view of pre-existing constraints within business operations that not only limit a company’s capabilities but also affect its production processes (Gupta & Boyd 2008). It emphasizes that an organization cannot be strong than its weakest link. In this perspective, businesses are vulnerable to detrimental impacts since breaking of the weakest part of the company could result in an adverse effect. In order to solve the problem, TOC works by focusing on the involved processes to identify the constraint and finally restructuring the entire organization around the restraint. Agreeably, the theory manages to solve problems through its method of identifying constraints. However, its resolution perspective is not easily applicable since some problems cannot be solved by restructuring but by eliminating it. The theory of constraints is thereby, significant in identifying the problem but in solving it, other theories need to be consulted. Following the review of relevant theories, operation management is a wide concept and it is impossible to use one theory in solving organizational problems. The problem can only be solved through a combination of these interrelated theories. Since the problem at HSBC involves poor servicing to its customers, it is necessary to utilize the three theories. Using the six sigma theory, management is able to identify the defects within its processes and rectify them (Mahadevan 2010). The defects might either be technical or because of poor performance by a particular worker in a specific post. Consequently, the lean approach facilitates the removal of wastes alone of which in this situation, it implies the non-functioning systems. The process is followed by replacing the eliminated wastes with useful ones through the six-sigma approach. Finally, the theory of constraints facilitates in identifying the restraints, which are the probable cause of technical problems involving the ATM machines and internet banking. Rather than eliminating the problem, of which abolition will translates to negative outcomes, TOC suggests that the bank should redesign its strategies in order to avoid the problem. With this perspective, HSBC might synthesize the aspects of each theory in applying to the organizational problem. Organizational Analysis In order to identify and solve the problem at HSBC, all related-aspects need to be assessed while applying relevant operational theories. HSBC’s organizational structure is designed according to the functionality of each department and service. Its organizational hierarchy runs from the Chief Executive Officer to the chief executive committee, which is comprised of managers from different departments including services manager, human resource manager, financial control manager, marketing manager, the corporate banking chief and personal banking chief. Each manager needs to ensure that their department is fully functional by addressing all problems efficiently. In this perspective, it is evident that part of the problem could be because of a specific department of employees slacking within their working areas. Regardless of the causal factor, respective departments need to analyze their process. Most likely, the problem in Oman could be because of underpayment of employees who decide to retaliate by being reluctant in their working area or even the financial control department. Several customers also complained of poor recording of data, even if it was stored in hard copy forms. This is a direct reflection of lack of competency within the bank. The departments can also work together in identifying the problem ad solving it appropriately, since they are all affected by the outcomes. Within the technological segment, it is plausible that the problem could have been caused by technological factors. Ideally, the bank uses a combination of advanced software, innovative products with high internal and external access to internet. Non-functional ATM machines could be because of tampered software, faulty installation of software and hardware as well as poor data readings due to malware. The inability to access their accounts could be caused by technological problems within the organization. Furthermore, since it is an international bank, the company is vulnerable to software attacks due to political conflicts between countries. The bank’s reputation was severely tarnished, given that it is one of the best and biggest financial institutions in the world. By focusing on all relevant aspects, the bank can solve the problem from recurring even after it had been solved in the past. Poor strategic and project management is most likely the main reason why the bank experienced servicing problems. Within the workplace, most managers utilize more than one management theory by linking them together in order to actualize its primary goals (Agwu et al. 2014). Apparently, the bank at this point failed to fulfil the requirements stipulated within its mission statement. With a clear articulation, the bank aims at providing services to its customers through an easier process that fulfil the customers’ needs. Alvesson, Hardy and Harley (2008) define organization and management theory as collective ideas that set the general rules in managing businesses by addressing how supervisors and managers relate to organizational goals and knowledge. The theory focuses on the implementation of efficient means in ensuring that goals are accomplished and the employees are motivated to perform not only better but also to their highest standards by overseeing its processes. Operations Management theory is a generalized concept whose aspects do not pin point to a specific issue. It is thereby, constructed by other minor theories that interrelate in order to benefit an organization. Apparently, other banks in the world have also experienced similar problems as those in HSBC bank in Oman. For instance, the Commonwealth Bank had a problem involving their networks, as customers could not access their accounts, especially those interested in online banking (Commonwealth Bank 2014). In order to solve the problem, the company communicated with its employees and customers about the issue, rather than keeping silent about the entire concern. Furthermore, it employed IT experts to work on the problem on a 24-hour basis so that it could regain its status before the entire system crashed even further. In due course, the management investigated on the possible causes by incorporating the six sigma approach and theory of constraints. Similarly, residents from Manila experienced similar problems involving ATM issues due to system updates. The only difference with the problem in Manila is that the systems were intact and needed minor updates, of which he BDO bank was solving (ABS-CBNnews.com 2014). Basing on these examples, HSBC can solve its financial transaction issues by drawing the same solutions as those used in the banks. It should communicate the internal issues to the customers so that they can prepare both psychologically and financially. It should also try to solve the issues quite early before it gets any worse and it should update its software occasionally in order to avoid further occurrences from happening. Incorporating the techniques administered by other banks while experiencing financial transactional crisis would be significant in deriving plausible solutions to the problem. In addition, HSBC bank can incorporate other strategies with those adopted by other banks in actualizing its goals, which is bound to be more profitable. Conclusion HSBC is a multinational bank, which boasts of having customers from different parts of the globe. In Oman, the bank was established in 1948 and it is the most prominent bank in the country with a variety of banking services on a global scale. Its services range from online transactions to traditional forms of banking. However, it has been experiencing problems regarding its servicing quality to its customers. Initially, the company did not have issues involving incompetence’s regarding its employees. Currently, the bank has several issues regarding submission of request forms as there are discrepancies regarding this issue. Additionally, the ATMs in the country are not working appropriately; thereby customers become stranded, as they cannot purchase anything from the shops or petrol stations using their debit and credit cards. Despite the bank’s move in solving some of these problems, it has not fully settled the issue, and it is probable that the situation might recur. Apparently, such issues emanate involves the operation management within the business perspective. Therefore, using operational management approach, the discipline is characterized by theories that could help in solving the problem. Among them are the six-sigma approach, lean theory and theory of constraints. The six-sigma dictates that solving the solution requires the identification of the defects and working on them while the lean theory is rather constrained as it only deals with removing or eliminating wastes. Contrastingly, the theory of constraints suggests that upon identification on of the restrain, the problem could be solved by redesigning the transaction system and management within the company. Moreover, the insights drawn from experiences by banks those similar problems in the past could also be used in identifying the most appropriate solution. If the stated approaches were met, then HSBC bank in Oman would gain global competitiveness. Recommendations HSBC bank could avoid transactional and administrative issues if it adheres to the following recommendations in order to compete in the global arena and gain worldwide competitivenes. It is recommended that: HSBC bank to conduct software system updates twice a year in order to avoid it from crashing in the future. Additionally, system updates facilitates the bank in identifying potential problems and those that are more likely to occur in the future. The bank should inform its customers of system crashes in order to prepare them both psychological and financially. If the bank is aware that its systems are likely to fail, it should also inform the customers much earlier. Whenever there are transactional problems, the bank should try as much as possible and solve the problem quickly and accurately in order to avoid further breakdown and panic among its customers. It should adopt other administrative techniques that guarantee proper registration, especially for the Advance Credit Cards, which people are having trouble in being registered. HSBC should employ the three theories of operations management including the six-sigma approach, the lean theory and the theory of constraints in identifying the causal factors in the future. Moreover, the three theories should be used in solving further problems depending on the nature of the concern. The employees together with their managers should be critically assessed in order to identify whether they are competent enough in their respective posts. The working spirit of the employees dictates the banks potential earnings be it profits or losses, which translates into global competitiveness. References ABS-CBNnews.com 2014, BDO clients experience ATM, online banking woes, ABS-CBNnews.com, viewed 17 December 2014 . Agwu, E, Atuma, O, Aigbiremolen, M, Iyoha, F 2014, ‘The Impact of Information Communication Technologies in the Strategic Management of Financial Institutions’, International Review of Management and Business Research, vol.3, no. 3, pp. 1588-1602. Alvesson, M, Hardy, C, & Harley, B 2008, ‘Reflecting on Reflexivity: Reflexive Textual Practices in Organization and Management Theory’, Journal of Management Studies, vol. 45, no. 3, pp. 480-501. Braunscheidel, M, Hamister, J, Suresh, N, & Star, H 2011, ‘An Institutional theory perspective on Six Sigma adoption’, International Journal of Operations and Production Management, vol. 31, no. 4, pp. 423-451. Češnovar, T 2006, ‘The impact of strategic management on business outcomes - empirical research’, Journal for East European Management Studies, vol.11, no. 1, pp. 227-243. ‘Commonwealth Bank experiencing ‘system problems’’ 2014, News.com.au, viewed 17 December 2014 . Gupta, M & Boyd, L 2008, ‘Theory of constraints: a theory for operations management’, International Journal of Operations and Production Management, vol. 28, no. 10, pp. 991-1012. Hadid, W, & Mansouri, A 2014, ‘The lean-performance relationship in services: a theoretical model’, International Journal of Operations and Production Management, vol. 34, no. 6, pp. 750-785. Heizer, J, H, & Render, B 2011, Operations management, Upper Saddle River, N.J., Prentice Hall. Hongkong & Shanghai Banking Corporation 2000, Sultanate of Oman, Hong Kong, Hongkong and Shanghai Banking Corp. HSBC in Oman 2014, HSBC, viewed 17 December 2014, . Mahadevan, B 2010, Operations Management, Pearson India.  Osborne, H & Bachelor, L 2011, ‘HSBC investigates card and website problems’, Guardian, viewed 17 December 2014 . Peng, M, Wang, D & Jiang, Y 2008, ‘An institution-based view of international business strategy: a focus on emerging economies’, Journal of International Business Studies, vol. 38, pp. 920-936. Read More