Case Study Description of HSBC--The Bital Acquisition
HSBC is one of the largest and most global financial institutions in the world. The company has identified Bital, Mexico's fourth largest bank, as a potential acquisition target. Negotiations have come down to the wire, and the controlling Mexican shareholders are trying to get HSBC to raise its offer. Is it worth it? HSBC must decide on both strategic and short-term financial criteria under some degree of uncertainty, as illuminated by a due diligence process. The HSBC executive who has handled the acquisition at a local level, and would be CEO of HSBC Mexico should the deal go ahead, is assessing the pros and cons of the acquisition and must also identify the priorities that he and his team would have to address, including culture change issues, rebranding Bital as HSBC Mexico, personnel issues, and maintaining the continuity of the business.
Authors :: Jeffrey Gandz, Allen Morrison, David Barrett
Swot Analysis of "HSBC--The Bital Acquisition" written by Jeffrey Gandz, Allen Morrison, David Barrett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hsbc Bital facing as an external strategic factors. Some of the topics covered in HSBC--The Bital Acquisition case study are - Strategic Management Strategies, Cross-cultural management, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the HSBC--The Bital Acquisition casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, there is backlash against globalization,
cloud computing is disrupting traditional business models, increasing commodity prices, etc
Introduction to SWOT Analysis of HSBC--The Bital Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HSBC--The Bital Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hsbc Bital, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hsbc Bital 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--The Bital Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in HSBC--The Bital Acquisition case study
2. Improving business portfolio management of Hsbc Bital
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hsbc Bital
Strengths HSBC--The Bital Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hsbc Bital in HSBC--The Bital Acquisition Harvard Business Review case study are -
Strong track record of project management
– Hsbc Bital is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Hsbc Bital 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 Jeffrey Gandz, Allen Morrison, David Barrett 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.
High switching costs
– The high switching costs that Hsbc Bital 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.
Highly skilled collaborators
– Hsbc Bital has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in HSBC--The Bital Acquisition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Hsbc Bital is present in almost all the verticals within the industry. This has provided firm in HSBC--The Bital Acquisition 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.
Successful track record of launching new products
– Hsbc Bital has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hsbc Bital has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Finance & Accounting industry
– HSBC--The Bital Acquisition firm has clearly differentiated products in the market place. This has enabled Hsbc Bital to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Hsbc Bital to invest into research and development (R&D) and innovation.
High brand equity
– Hsbc Bital has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hsbc Bital to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Hsbc Bital
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hsbc Bital does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Hsbc Bital in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Hsbc Bital in the sector have low bargaining power. HSBC--The Bital Acquisition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hsbc Bital to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Hsbc Bital is one of the most innovative firm in sector. Manager in HSBC--The Bital Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses HSBC--The Bital Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HSBC--The Bital Acquisition are -
High bargaining power of channel partners
– Because of the regulatory requirements, Jeffrey Gandz, Allen Morrison, David Barrett suggests that, Hsbc Bital 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hsbc Bital is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study HSBC--The Bital Acquisition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study HSBC--The Bital Acquisition that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case HSBC--The Bital Acquisition can leverage the sales team experience to cultivate customer relationships as Hsbc Bital is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Hsbc Bital has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study HSBC--The Bital Acquisition, in the dynamic environment Hsbc Bital has struggled to respond to the nimble upstart competition. Hsbc Bital has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Hsbc Bital is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Hsbc Bital needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hsbc Bital to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Hsbc Bital has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As HSBC--The Bital Acquisition HBR case study mentions - Hsbc Bital takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Hsbc Bital products
– To increase the profitability and margins on the products, Hsbc Bital needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study HSBC--The Bital Acquisition, it seems that the employees of Hsbc Bital don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Hsbc Bital 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.
Opportunities HSBC--The Bital Acquisition | 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--The Bital Acquisition are -
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 Bital in the consumer business. Now Hsbc Bital can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Hsbc Bital has opened avenues for new revenue streams for the organization in the industry. This can help Hsbc Bital to build a more holistic ecosystem as suggested in the HSBC--The Bital Acquisition case study. Hsbc Bital can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Hsbc Bital can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Hsbc Bital to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hsbc Bital 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 Bital 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hsbc Bital in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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 Bital can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Hsbc Bital to increase its market reach. Hsbc Bital will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hsbc Bital can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hsbc Bital 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--The Bital Acquisition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hsbc Bital can use these opportunities to build new business models that can help the communities that Hsbc Bital operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Hsbc Bital can develop new processes and procedures in Finance & Accounting 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hsbc Bital is facing challenges because of the dominance of functional experts in the organization. HSBC--The Bital Acquisition case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats HSBC--The Bital Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HSBC--The Bital Acquisition are -
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 Bital.
Regulatory challenges
– Hsbc Bital needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Shortening product life cycle
– it is one of the major threat that Hsbc Bital is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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--The Bital Acquisition, Hsbc Bital may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Stagnating economy with rate increase
– Hsbc Bital can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hsbc Bital in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Hsbc Bital
– 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 Bital.
Technology acceleration in Forth Industrial Revolution
– Hsbc Bital has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Hsbc Bital needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hsbc Bital can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Bital in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Consumer confidence and its impact on Hsbc Bital 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hsbc Bital can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study HSBC--The Bital Acquisition .
Weighted SWOT Analysis of HSBC--The Bital Acquisition 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--The Bital Acquisition 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--The Bital Acquisition 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--The Bital Acquisition 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--The Bital Acquisition 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 Bital needs to make to build a sustainable competitive advantage.