HSBC Holdings PLC - Building a Global Wholesale Banking Capability SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of HSBC Holdings PLC - Building a Global Wholesale Banking Capability
This case deals with efforts by HSBC, one of the two largest banks in the world by market capitalization, to develop a wholesale banking franchise that can effectively challenge those of major universal bank competitors such as Citigroup, as well as dominant "monoline" firms such as Goldman Sachs and Morgan Stanley. It highlights the key dimensions of wholesale financial intermediation: loan syndication and project finance, loan securitization and credit default swaps, equity capital markets, debt capital markets, secondary market trading and other investment banking services for clients, as well as principal trading and positioning. Like most players in this market, HSBC had some notable successes and failures, but on the whole did not succeed in breaking into the top ranks of global investment banks despite clearly having the resources to do so. By understanding what it takes to succeed, students should learn a great deal about the competitive dynamics of this industry.
Authors :: Anthony O'Connor, Ingo Walter, Milstein Seymour
Swot Analysis of "HSBC Holdings PLC - Building a Global Wholesale Banking Capability" written by Anthony O'Connor, Ingo Walter, Milstein Seymour includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hsbc Wholesale facing as an external strategic factors. Some of the topics covered in HSBC Holdings PLC - Building a Global Wholesale Banking Capability case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the HSBC Holdings PLC - Building a Global Wholesale Banking Capability casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, cloud computing is disrupting traditional business models,
technology disruption, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of HSBC Holdings PLC - Building a Global Wholesale Banking Capability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HSBC Holdings PLC - Building a Global Wholesale Banking Capability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hsbc Wholesale, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hsbc Wholesale 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 Holdings PLC - Building a Global Wholesale Banking Capability can be done for the following purposes –
1. Strategic planning using facts provided in HSBC Holdings PLC - Building a Global Wholesale Banking Capability case study
2. Improving business portfolio management of Hsbc Wholesale
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 Wholesale
Strengths HSBC Holdings PLC - Building a Global Wholesale Banking Capability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hsbc Wholesale in HSBC Holdings PLC - Building a Global Wholesale Banking Capability Harvard Business Review case study are -
Strong track record of project management
– Hsbc Wholesale is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Finance & Accounting industry
– HSBC Holdings PLC - Building a Global Wholesale Banking Capability firm has clearly differentiated products in the market place. This has enabled Hsbc Wholesale to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Hsbc Wholesale to invest into research and development (R&D) and innovation.
Organizational Resilience of Hsbc Wholesale
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hsbc Wholesale does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Finance & Accounting field
– Hsbc Wholesale 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 Wholesale in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Hsbc Wholesale digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hsbc Wholesale 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.
Learning organization
- Hsbc Wholesale 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 Wholesale is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HSBC Holdings PLC - Building a Global Wholesale Banking Capability Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Hsbc Wholesale 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.
High switching costs
– The high switching costs that Hsbc Wholesale 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.
Ability to recruit top talent
– Hsbc Wholesale is one of the leading recruiters in the industry. Managers in the HSBC Holdings PLC - Building a Global Wholesale Banking Capability are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Hsbc Wholesale in the sector have low bargaining power. HSBC Holdings PLC - Building a Global Wholesale Banking Capability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hsbc Wholesale to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Hsbc Wholesale has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hsbc Wholesale 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.
Analytics focus
– Hsbc Wholesale 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 Anthony O'Connor, Ingo Walter, Milstein Seymour 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.
Weaknesses HSBC Holdings PLC - Building a Global Wholesale Banking Capability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HSBC Holdings PLC - Building a Global Wholesale Banking Capability are -
Need for greater diversity
– Hsbc Wholesale 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.
Slow to strategic competitive environment developments
– As HSBC Holdings PLC - Building a Global Wholesale Banking Capability HBR case study mentions - Hsbc Wholesale 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study HSBC Holdings PLC - Building a Global Wholesale Banking Capability, is just above the industry average. Hsbc Wholesale 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.
Slow decision making process
– As mentioned earlier in the report, Hsbc Wholesale 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 Wholesale 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.
No frontier risks strategy
– After analyzing the HBR case study HSBC Holdings PLC - Building a Global Wholesale Banking Capability, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space 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 Wholesale supply chain. Even after few cautionary changes mentioned in the HBR case study - HSBC Holdings PLC - Building a Global Wholesale Banking Capability, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hsbc Wholesale vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study HSBC Holdings PLC - Building a Global Wholesale Banking Capability 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 Holdings PLC - Building a Global Wholesale Banking Capability can leverage the sales team experience to cultivate customer relationships as Hsbc Wholesale is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Hsbc Wholesale is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Hsbc Wholesale needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hsbc Wholesale to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study HSBC Holdings PLC - Building a Global Wholesale Banking Capability, it seems that the employees of Hsbc Wholesale 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Hsbc Wholesale needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Hsbc Wholesale products
– To increase the profitability and margins on the products, Hsbc Wholesale needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities HSBC Holdings PLC - Building a Global Wholesale Banking Capability | 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 Holdings PLC - Building a Global Wholesale Banking Capability are -
Manufacturing automation
– Hsbc Wholesale can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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 Wholesale can use these opportunities to build new business models that can help the communities that Hsbc Wholesale operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Using analytics as competitive advantage
– Hsbc Wholesale 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 Holdings PLC - Building a Global Wholesale Banking Capability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hsbc Wholesale to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hsbc Wholesale 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hsbc Wholesale 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 Holdings PLC - Building a Global Wholesale Banking Capability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hsbc Wholesale 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hsbc Wholesale 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 Wholesale 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 Wholesale in the consumer business. Now Hsbc Wholesale can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hsbc Wholesale can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Wholesale can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Hsbc Wholesale to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Hsbc Wholesale can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Hsbc Wholesale 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 Finance & Accounting segment.
Threats HSBC Holdings PLC - Building a Global Wholesale Banking Capability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HSBC Holdings PLC - Building a Global Wholesale Banking Capability are -
Regulatory challenges
– Hsbc Wholesale 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.
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 Wholesale business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hsbc Wholesale with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Hsbc Wholesale 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 Holdings PLC - Building a Global Wholesale Banking Capability, Hsbc Wholesale 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 .
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hsbc Wholesale 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 Holdings PLC - Building a Global Wholesale Banking Capability .
Technology acceleration in Forth Industrial Revolution
– Hsbc Wholesale has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Hsbc Wholesale 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.
Increasing wage structure of Hsbc Wholesale
– 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 Wholesale.
High dependence on third party suppliers
– Hsbc Wholesale 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.
Stagnating economy with rate increase
– Hsbc Wholesale 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.
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 Wholesale can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of HSBC Holdings PLC - Building a Global Wholesale Banking Capability 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 Holdings PLC - Building a Global Wholesale Banking Capability 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 Holdings PLC - Building a Global Wholesale Banking Capability 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 Holdings PLC - Building a Global Wholesale Banking Capability 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 Holdings PLC - Building a Global Wholesale Banking Capability 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 Wholesale needs to make to build a sustainable competitive advantage.