Based on various researches at Oak Spring University , HSBC Holdings PLC ADR is operating in a macro-environment that has been destablized by – technology disruption, challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing commodity prices, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, etc
Introduction to SWOT Analysis of HSBC Holdings PLC ADR
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that HSBC Holdings PLC ADR can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the HSBC Holdings PLC ADR, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which HSBC Holdings PLC ADR 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 ADR can be done for the following purposes –
1. Strategic planning of HSBC Holdings PLC ADR
2. Improving business portfolio management of HSBC Holdings PLC ADR
3. Assessing feasibility of the new initiative in United States
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of HSBC Holdings PLC ADR
Strengths of HSBC Holdings PLC ADR | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of HSBC Holdings PLC ADR are -
Ability to lead change in
– HSBC Holdings PLC ADR is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled HSBC Holdings PLC ADR in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that HSBC Holdings PLC ADR 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.
Low bargaining power of suppliers
– Suppliers of HSBC Holdings PLC ADR in the sector have low bargaining power. HSBC Holdings PLC ADR has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps HSBC Holdings PLC ADR to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of HSBC Holdings PLC ADR in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy of HSBC Holdings PLC ADR comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Organizational Resilience of HSBC Holdings PLC ADR
– The covid-19 pandemic has put organizational resilience at the centre of everthing HSBC Holdings PLC ADR does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– HSBC Holdings PLC ADR is one of the most innovative firm in sector.
Cross disciplinary teams
– Horizontal connected teams at the HSBC Holdings PLC ADR 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.
Highly skilled collaborators
– HSBC Holdings PLC ADR has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive industry. Secondly the value chain collaborators of HSBC Holdings PLC ADR have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- HSBC Holdings PLC ADR 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 Holdings PLC ADR is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at HSBC Holdings PLC ADR emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– HSBC Holdings PLC ADR is present in almost all the verticals within the industry. This has provided HSBC Holdings PLC ADR 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.
Effective Research and Development (R&D)
– HSBC Holdings PLC ADR has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – HSBC Holdings PLC ADR staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses of HSBC Holdings PLC ADR | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HSBC Holdings PLC ADR are -
Capital Spending Reduction
– Even during the low interest decade, HSBC Holdings PLC ADR 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, HSBC Holdings PLC ADR is slow explore the new channels of communication. These new channels of communication can help HSBC Holdings PLC ADR to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative at HSBC Holdings PLC ADR, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. HSBC Holdings PLC ADR has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on HSBC Holdings PLC ADR ‘s star products
– The top 2 products and services of HSBC Holdings PLC ADR still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though HSBC Holdings PLC ADR has relatively successful track record of launching new products.
Skills based hiring in industry
– The stress on hiring functional specialists at HSBC Holdings PLC ADR 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.
Aligning sales with marketing
– From the outside it seems that HSBC Holdings PLC ADR 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 at HSBC Holdings PLC ADR can leverage the sales team experience to cultivate customer relationships as HSBC Holdings PLC ADR is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, HSBC Holdings PLC ADR 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 Holdings PLC ADR 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.
Lack of clear differentiation of HSBC Holdings PLC ADR products
– To increase the profitability and margins on the products, HSBC Holdings PLC ADR needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, HSBC Holdings PLC ADR has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of HSBC Holdings PLC ADR is dominated by functional specialists. It is not different from other players in the industry, but HSBC Holdings PLC ADR needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help HSBC Holdings PLC ADR to focus more on services in the industry rather than just following the product oriented approach.
High bargaining power of channel partners in industry
– because of the regulatory requirements in United States, HSBC Holdings PLC ADR 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.
HSBC Holdings PLC ADR Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of HSBC Holdings PLC ADR are -
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 Holdings PLC ADR can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for HSBC Holdings PLC ADR in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the industry, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, HSBC Holdings PLC ADR 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.
Developing new processes and practices
– HSBC Holdings PLC ADR can develop new processes and procedures in 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.
Leveraging digital technologies
– HSBC Holdings PLC ADR 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.
Learning at scale
– Online learning technologies has now opened space for HSBC Holdings PLC ADR 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.
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 Holdings PLC ADR 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for HSBC Holdings PLC ADR 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 Holdings PLC ADR to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– HSBC Holdings PLC ADR has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled HSBC Holdings PLC ADR to build a competitive advantage using analytics. The analytics driven competitive advantage can help HSBC Holdings PLC ADR to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects HSBC Holdings PLC ADR can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help HSBC Holdings PLC ADR to increase its market reach. HSBC Holdings PLC ADR 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.
Building a culture of innovation
– managers at HSBC Holdings PLC ADR 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 industry.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for HSBC Holdings PLC ADR in the industry. Now HSBC Holdings PLC ADR can target international markets with far fewer capital restrictions requirements than the existing system.
Threats HSBC Holdings PLC ADR External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of HSBC Holdings PLC ADR are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, HSBC Holdings PLC ADR 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 HSBC Holdings PLC ADR prominent markets.
Environmental challenges
– HSBC Holdings PLC ADR 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 Holdings PLC ADR can take advantage of this fund but it will also bring new competitors in the industry.
Technology acceleration in Forth Industrial Revolution
– HSBC Holdings PLC ADR has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, HSBC Holdings PLC ADR needs to keep up with the evolution of technology in the 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for HSBC Holdings PLC ADR in industry. The 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.
Consumer confidence and its impact on HSBC Holdings PLC ADR 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 industry and other sectors.
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.
Regulatory challenges
– HSBC Holdings PLC ADR 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 industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, HSBC Holdings PLC ADR may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of sector.
Stagnating economy with rate increase
– HSBC Holdings PLC ADR 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 industry.
Shortening product life cycle
– it is one of the major threat that HSBC Holdings PLC ADR is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Holdings PLC ADR needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. HSBC Holdings PLC ADR can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– HSBC Holdings PLC ADR 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.
Weighted SWOT Analysis of HSBC Holdings PLC ADR Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at HSBC Holdings PLC ADR 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 HSBC Holdings PLC ADR 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 HSBC Holdings PLC ADR 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 ADR 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 Holdings PLC ADR needs to make to build a sustainable competitive advantage.
