Case Study Description of HSBC Credit Card Rewards Program
Around 1994, competition in the credit card market was based on price (i.e., interest rates and annual fees). After Chase and American Express launched bonus point programs in 1993, HSBC was forced to follow in 1994. The original program was targeted at high-income consumers as with luxury brand redemption items. Competition reacted and consumers quickly learned to expect a points program as a standard feature. Again, HSBC differentiated their credit card products by adding a wider range of redemption items, and lowering redemptions levels. Problems emerged in 1997-1998 as the program became a source of complaints because of operational difficulties in fulfillment and a lack of competitive advantage in the marketplace. In 1999, HBSC's credit card was rated poorly, largely because of the problems with the bonus point system. Research was used to understand consumers and revitalize the program. Significant changes were made in the features, improved operations and an improved selection of redemption items. By 2002, the program was rated as one of the best in the industry. The challenge is, "Where does HSBC go from here?"
Swot Analysis of "HSBC Credit Card Rewards Program" written by Robert J. Fisher includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hsbc Redemption facing as an external strategic factors. Some of the topics covered in HSBC Credit Card Rewards Program case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the HSBC Credit Card Rewards Program casestudy better are - – there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, geopolitical disruptions, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%,
wage bills are increasing, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of HSBC Credit Card Rewards Program
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HSBC Credit Card Rewards Program case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hsbc Redemption, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hsbc Redemption operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of HSBC Credit Card Rewards Program can be done for the following purposes –
1. Strategic planning using facts provided in HSBC Credit Card Rewards Program case study
2. Improving business portfolio management of Hsbc Redemption
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hsbc Redemption
Strengths HSBC Credit Card Rewards Program | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hsbc Redemption in HSBC Credit Card Rewards Program Harvard Business Review case study are -
Effective Research and Development (R&D)
– Hsbc Redemption has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study HSBC Credit Card Rewards Program - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Hsbc Redemption has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Diverse revenue streams
– Hsbc Redemption is present in almost all the verticals within the industry. This has provided firm in HSBC Credit Card Rewards Program case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Sales & Marketing industry
– HSBC Credit Card Rewards Program firm has clearly differentiated products in the market place. This has enabled Hsbc Redemption to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Hsbc Redemption to invest into research and development (R&D) and innovation.
Organizational Resilience of Hsbc Redemption
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hsbc Redemption does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Hsbc Redemption are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Hsbc Redemption is one of the leading recruiters in the industry. Managers in the HSBC Credit Card Rewards Program are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Sales & Marketing field
– Hsbc Redemption is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Hsbc Redemption in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Hsbc Redemption is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert J. Fisher can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Hsbc Redemption is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Hsbc Redemption is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HSBC Credit Card Rewards Program Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Hsbc Redemption digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hsbc Redemption has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Hsbc Redemption is one of the most innovative firm in sector. Manager in HSBC Credit Card Rewards Program Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses HSBC Credit Card Rewards Program | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HSBC Credit Card Rewards Program are -
Slow decision making process
– As mentioned earlier in the report, Hsbc Redemption has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Hsbc Redemption even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Products dominated business model
– Even though Hsbc Redemption has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - HSBC Credit Card Rewards Program should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Hsbc Redemption is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Hsbc Redemption needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hsbc Redemption to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Hsbc Redemption has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study HSBC Credit Card Rewards Program, is just above the industry average. Hsbc Redemption needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Hsbc Redemption supply chain. Even after few cautionary changes mentioned in the HBR case study - HSBC Credit Card Rewards Program, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hsbc Redemption vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the HSBC Credit Card Rewards Program HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Hsbc Redemption has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert J. Fisher suggests that, Hsbc Redemption is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Hsbc Redemption products
– To increase the profitability and margins on the products, Hsbc Redemption needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Hsbc Redemption, firm in the HBR case study HSBC Credit Card Rewards Program needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study HSBC Credit Card Rewards Program, in the dynamic environment Hsbc Redemption has struggled to respond to the nimble upstart competition. Hsbc Redemption has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities HSBC Credit Card Rewards Program | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study HSBC Credit Card Rewards Program are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hsbc Redemption can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, HSBC Credit Card Rewards Program, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hsbc Redemption in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hsbc Redemption can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Hsbc Redemption can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Hsbc Redemption can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. HSBC Credit Card Rewards Program suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Hsbc Redemption can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Hsbc Redemption has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study HSBC Credit Card Rewards Program - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hsbc Redemption to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hsbc Redemption to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Hsbc Redemption to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hsbc Redemption in the consumer business. Now Hsbc Redemption can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Hsbc Redemption can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Hsbc Redemption has opened avenues for new revenue streams for the organization in the industry. This can help Hsbc Redemption to build a more holistic ecosystem as suggested in the HSBC Credit Card Rewards Program case study. Hsbc Redemption can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Hsbc Redemption can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Manufacturing automation
– Hsbc Redemption can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Hsbc Redemption can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats HSBC Credit Card Rewards Program External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HSBC Credit Card Rewards Program are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Hsbc Redemption will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Hsbc Redemption needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Hsbc Redemption can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Hsbc Redemption
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Hsbc Redemption.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Hsbc Redemption.
Consumer confidence and its impact on Hsbc Redemption demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hsbc Redemption with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Hsbc Redemption high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Hsbc Redemption in the Sales & Marketing sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hsbc Redemption can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Hsbc Redemption business can come under increasing regulations regarding data privacy, data security, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Hsbc Redemption needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study HSBC Credit Card Rewards Program, Hsbc Redemption may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Weighted SWOT Analysis of HSBC Credit Card Rewards Program Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study HSBC Credit Card Rewards Program needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study HSBC Credit Card Rewards Program is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study HSBC Credit Card Rewards Program is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of HSBC Credit Card Rewards Program is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hsbc Redemption needs to make to build a sustainable competitive advantage.