Marketing Strategy for HSBC Bank Company - Case Study Example

Marketing in the Operational Context Introduction PESTLE analysis is the investigation of the external macro-environment including the factors that affect the business. These factors may be political, economic, social, technological, legal and environmental factors. Such are the factors that cannot be controlled by the business firm and sometimes they become a threat to the operations of the business. These macro environmental factors vary from one country to another and they should therefore be investigated in all the countries that the firm has interest in. In marketing, the analysis of the macro environment is very important since it is not advisable for a firm to begin its investments in a country before it is informed of the possible effect the country may have on the business. Political factors are the government policies that will have an impact on the business. The government may affect a firm through business subsidy and the type of goods and services that the government want to provide. Such decisions are made politically and have much political influence on their implementation. Political decisions may also impact the education of the workers in a firm and the quality of the infrastructure system. Economic factors include the exchange rates, taxes, inflation and interest rates. The economic status of a country may affect the economic decisions of a firm. For example high interest rates may hinder borrowing, inflation may lead to higher salary demand for the employees, a high exchange rate may make exporting and importing difficult, and a higher economic growth may widen the market for the firm’s products. Social changes may also affect the demand for the firm’s product. When the lifestyle of people changes, their demand for certain products also change. Technological changes also affect the type of products. A firm has to keep updating its technological knowhow to fit in the market. Technological changes also increase the market competition since the buyers also want to go for new technologies. Environments factors such as weather and climate changes affect the demand of the firm’s products. The needs of the buyers vary according to the climate. What is required during the hot season is different from what is needed during the cold season. Legal factors concerning the operations of the firm are also very important. Any firm has to conform to the legal environment in which it operates1. This report looks at macro environment analysis of the HSBC Bank Company. This is a financial institution and is at the verge of influence by the macro environment. HSBC has branches in many countries in Europe which have different economic, social, technological, legal and environmental factors. The report therefore looks at the macro environment issues that face HSCB and its SWOT (strengths, weaknesses, opportunities and threats) that helps it to survive in the macro environment issues it is faced with. Macro environment analysis of HSBC Bank Company HSBC stands for Hongkong and Shanghai Banking Corporation Limited. It is the largest bank in Hongkong and the world’s second largest bank. It provides a wide range of monetary services including personal financial services, commercial banking, and investment banking among others. On its macro environment analysis, the bank faces many political challenges. It has branches in most countries in Europe including France, Switzerland, Germany, Ireland and Turkey. All these countries have different political set ups which the bank has to fit in, in order to gain market in the countries. Some governments in those countries are very concerned with the services it offers to the nationals and therefore influence them. The bank is also affected by political decisions on employment since it has to provide employment to the citizens of those countries it ventures in. The other factor that affects the bank in all the countries is the economic changes. The bank is a borrowing point for individuals and companies. The economic status of the country really determines its lending interests. The exchange rate of the countries where it operates is also different and this is a challenge to its operations. The economy of most of the European countries is however stable and this makes its operations easier. There are no cases of inflation which might affect the demand for its services. Inflation may also lead to high salary demands for its employees and therefore a decrease in its level of profits. The social factors which may affect the HSBC bank are very limited due to the nature of services it offers. It does not offer services that may have effect or may be affected by the social status of the nationals. There are however many legal issues that may affect the operations of the bank. In every new country that the bank opens a branch, it has to undergo all the legal processes required. These include the laws that guide the registration of a foreign investment. The firm also deals investment in securities, an area that concerns many legal procedures. Monetary services are surrounded by many legal issues and the bank has therefore to conform to them2. The lending on loans also requires legal agreements which have to be signed according to the law. This constitutes to the legal environment under which it operates. The banking sector generally is guided by many legal issues. Environmental factors are not a big challenge to the operations of the bank since most of the European countries face the same climatic conditions. However, the cold season hinders the movement of the people into the bank since most of them remain indoors. On technological factors, the bank is fast working on its technological advancement. For example, the bank introduced internet banking servicers where the customers can be attended to through online means. Market and customer analysis The banking sector is a very marketable field due to the many financial needs of the people in the world. Many people are in great desire for investment which is well achieved through the banks. The financial services offered in the banking sector are in very high demand and contribute to the high market demand of the banking services. HSBC has a market range of over one hundred million customers worldwide for the personal financial services. These are services such as current and savings accounts, loans, credit cards and investments. In commercial banking, the bank provides the financial services to around 2.5 million customers worldwide. These are customers such as the sole proprietors, associations, clubs and partnerships. The HSBC has branches in various European countries including France, Germany, Ireland, Malta, Switzerland and Turkey. It has more than 1500 branches worldwide. Its market is very wide and this is contributed to the nature of services it offers. Most people get attracted to the HSBC bank due to the personal financial services it offers. The loans and mortgages are of much interest to most of the customers. The HSBC categorizes its operations to fit into four groups of customers. The first group of customers is those who personalised financial services. These are individuals who want to operate accounts in the bank. Through these accounts the customers can get mortgage loans, insurance services, car loans, and pension schemes. This group of customers form the majority in the bank’s general customers. The other group of customers are in the commercial banking services. These are the small and medium sized market enterprises. They include the sole proprietors, partnerships, clubs and associations. These go for services such as loans to finance their already running businesses. The other services they receive are on selling and buying of securities. The other group of customers are on global banking. These are those people who are interested in foreign investments. The HSBC helps in running and financing of their businesses in the foreign countries where the bank operates. The last group is based on private banking. These customers are the high worth individuals where they receive HSBC services through other banks. The services are passed on through the private banks to the customers. Internet banking has also attracted a big number of customers to the bank. This is due to the efficiency of the service3. SWOT analysis of HSBC Strengths The strength of this bank lies in its size, and diversification. The bank is the world’s largest bank serving more than one hundred million customers worldwide. It is well capitalised thus making it to outdo the others banks in the past economic events. This means that it has no borrowing activities from the governments and this makes it more independent. The bank has the ability to position itself in the newly coming markets and this puts it at an advantage of growing in the future with those economies. Its presence globally helps it to spread its risks giving it considerable economies of scale. It has a diversified approach geographically and also in the nature and number of its customers. Weaknesses Its association with investing with the small business people compromises its operations since the current economic situation has rendered the sector to have many risks with it. Its involvement in the subprime markets in the United States led it into writing off large amounts of money that had been lent to high risk borrowers. The bank also raised its mortgage rates despite the falls in the interest rates in United Kingdom. This was considered as a negative move by those who wished to borrow and those who had already borrowed. Many of the borrowers could default payment due to much economic struggles. The bank recently announced a redundancy programme which is likely to lower the morale of the workers leading to decreased performance. The bank rebranded itself and this was seen as lack of personalisation by most of its customers. This also interfered with its recognition. Opportunities HSBC has a high level of capitalisation which gives it a higher advantage to attain assets. The bank also has enough capital that can enable it to buy others banks in different countries regardless of the economic difficulties. Due to its strong financial position, it outperforms other banks even when the economic times are hard. This contributes to the trust people have on it and build on its reputation. People will therefore find it to be safe for depositing their money since it is not prone to collapse. This also increases its pool for lending to the customers. The other opportunity for development of this bank is how the media issues negative reports of its competitors. Customers therefore move from the competitor banks to HSBC instead. Many banks also fear to invest in the Middle East due to poor economic conditions. HSBC is however penetrating its market in the Middle East where the competition is low4. Threats Many investors in the banking sectors have faced losses making them invest in other places other than in the banking sectors. The customers trust on the banking sector has gone down. The financial losses that are also being faced by the banks have resulted in little credit to give to the customers. For example in the United Kingdom, this has led to increased living standards characterized by heavy spending and people are left with little money to save. HSBC has been claimed to have made losses due to the sub-prime markets in the United States and this has led to low confidence in the bank among its customers. Recommendations for marketing strategy The bank should make a proper macro environment analysis on PESTLE (Political, Economic, Social, Legal and Environmental) factors before setting up its ventures in any given country. The bank should also ensure that it has institutionalised a strong structure that will enable it to withstand the challenges of the macro environment. The bank should also asses the market environment before venturing to ensure that the environment will not be threatening and challenging. Conclusion The macro-environmental changes especially political and economic factors may affect the performance and the market of HSBC. This is especially in the Middle East where most of the countries face political instability leading to insecurity. Political instability affects the economic status of a country and consequently the living standards of the people. However, HSBC is well capitalised and economically stable to be affected by economic changes in the country. It is well established in most countries which gives it an option in case some countries are faced with hard economic times. Bibliography David, J., (2007). Principles and Practice of marketing, 5th edition. New York: McGraw-Hill Higher Education Publishers. Slack, N., Chambers, S., & Johnston, R., (2007). Operations Management, 5th edition. Boston: Prentice Hall. Huppes, G., (1993).Macro-environmental policy: principles and design. New York: Elsevier. Drummond, G., & Ensor, J., (2005).Introduction to marketing concepts. Oxford: Butterworth- Heinemann. Read More