HSBC: Case Study for Business Report

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Table of Contents

Executive Summary
Introduction
Significant Challenges Faced by HSBC
Evaluation of Improving the Operation Management
Recommendations
Conclusion
References

Executive Summary

HSBC is a British multinational banking and financial services corporation with its headquarters in London. Today, the bank is placed at position six globally, and it is the only European bank found in the top ten banking entities ranked worldwide (Kerr, 2021). Accordingly, the organization has suffered challenges that have impacted limited operations at HSBC. For instance, the organization has undergone atrocities of the newly imposed Brexit legislation that has led to decreased assets due to their relocation on HSBC entities based in the U.K. Moreover, technological advancement by their competitors has also affected the loss of clients thanks to their sufficient implementation of new technologies that have overwhelmed HSBC.

Further, the organization also proved that it is crucial to update new techniques and abandon the traditional; due to this, the organization has bowed to vulnerabilities of fraudulent activities that have crippled the bank’s assets. In this way, it is critical to adopt new measures that counter such infamous activities. Finally, the organization also suffered the recent surge in COVID 19 that led to massive losses. Ultimately, the organization has implemented strategies that are critical in ensuring efficient operational management of the HBSC Corporation. In this regard, the policies have incorporated theories that assist in enforcing the operational management strategies. Such include production overhaul, logistics improvement, personnel management, and financial strategies. The operational management practices require relevant recommendations to ensure they are adequately administered in the organization to result in productivity.

Introduction

HSBC, one of the largest business entities globally, has faced management challenges that have hindered effective operations in the organization. For instance, the ongoing Brexit laws have seen banking entities exiting the market. Additionally, the existing organizational culture has made it challenging to execute change efficiently. Over time, HSBC has had system failures due to obsolete technology that has hindered efficient service delivery, affecting performance and consumer unhappiness (Barber, 2021). Due to the constant nature of ever-vibrant technology, businesses’ banking systems require periodic changes. The deployment of advanced technology is a competitive advantage because it boosts consumer confidence in protecting their personal belongings and their banking privacy.

Along with upgrading software and acquiring new technology, the bank must purge outdated program versions that may surrender to vulnerabilities for a potential intrusion. Moreover, the lead acquisition that is bureaucratic has subjected the organization to incompetent management. Therefore, the organization needs to implement leadership initiatives through management theories to curb this undesired situation. Therefore, it is also critical to deploy remedies towards ensuring efficient service deliveries of the operational management practices this report encompasses.

Significant Challenges Faced by HSBC

The Current Geopolitical Situation

The British exit from the European Union has created an unforeseen situation for the U.K. and E.U. economies and, particularly, banking entities. In that circumstance, nearly ten percent of banks’ assets have relocated to the E.U. or are in that process (Martill & Staiger, 2018). To be precise, the HSCB bank has since been a victim of such inconsiderate Brexit legislation; some of the bank’s branches have relocated part of their assets, staff, legal entities, and operations to the E.U (Wilson & Spezzati, 2020). In addition, thousands of financial services positions have migrated, leading to fear for the future that new employment may be produced in the E.U. rather than the banks in the U.K. (Fernández et al., 2020). The inference is that HSBC holdings particularly suffered significantly from the unpredictability created by the 2016 Brexit election. For instance, the efficiency loss of assets and finance is predicted to be 5.6 percent for U.K. banks and 3.7 percent for Irish institutions (Fernández et al., 2020). The Brexit laws that untimely ravaged the banking holdings affected the closure of the entities due to bankruptcy.

The Global Technological Disruption to the Banking Sector

The new global technological advancement in banking industries has been received with great enthusiasm. At the same time, Vives (2019) accentuates that the traditional banking techniques are becoming archaic; in this way, HSBC has suffered tremendous drawbacks by still employing the now extinct techniques in banking. According to Cheng et al. (2019), the problem has been circumnavigated since rival banking entities such as the Agricultural Bank of China use the new methods; therefore, they have lost their customers. The deployment of advanced technology will mean that less human workforce will be needed; hence some employees will be relieved of their duties. Although the banks cannot permanently relieve employees of their duties, the significant technical infrastructure investment and change will take time to recoup in a fast-moving business. This recovery phase will be incredibly costly when things are changing so fast. The bank has to innovate and adapt quicker than its competitors to acquire its target markets locally, worldwide, and regionally.

Compliance and regulatory enforcement

HSBC has been criticized for its failure to deal with prevalent activities; the bank has suffered a series of fraudulent and money laundering activities. Hence, the firm has since incurred exorbitant losses in assets and finance; they also saw their clients migrating to their competitors, such as the flawless Agricultural Bank of China (Short, 2019). For instance, the recent case of Hong Kong’s financial regulator fined HSBC for regulatory breaches and internal control failings (Allabasc, 2021). The bank had to improve its internal audit procedures to prevent such occurrences from damaging its global reputation as a reliable banking body.

Corporate governance that is hierarchical and complex

As a hierarchical organization evolves within the organization, so does its structure. In that way, bureaucracies develop within the organization, which slow down, communication, decision-making, and action; thus, the business becomes a sluggish, instead of a sprightly, organization. Events move slowly because information and requests must travel up and then back down the chain of command. Bureaucracy is particularly harmful in fast-paced corporate as HSBC, and it requires to necessitate an immediate response. As a consequence, HSBC has been affected by bureaucracies as it attributes unproductivity in the organization; for instance, it isolates department members from other parts of the business, diminishing interdepartmental cooperation and communication (Hacker, 2017). Different departments must cultivate an ambivalent culture that cultivates other divisions’ interests and acquire a solution (Singh, 2009). Therefore, when feuds arise, the departments prioritize their agendas rather than the organizations.

The COVID 19 pandemic

COVID 19 pandemic negatively impacted HSBC holdings, and it still does despite the recent measures to counter the unprecedented event. In particular, the HSBC organization underwent a massive loss of profits amounting to billions (Shahzad, 2021). Moreover, it also impacted the staggering job loss of 3500 people working in various bank branches globally (Shahzad, 2021). The recent drawbacks led to ineffective production as the organization succumbed to a labor shortage. Thus, the company suffered severe losses as the productivity level became too low. (Battistella, 2020). Recently, the organization started recovering from the effects of the pandemic as new vaccine were discovered to combat the epidemic.

Evaluation of Improving the Operation Management

Production Overhaul

The theory under this operation management is Business process management, and the concept accentuates that continually optimizing, assessing, and automating production procedures are critical. As per Zelt et al. (2018), the process is gradual involving steps and cannot be achieved once; therefore, one needs to watch for prospective improvements continually. Regarding production overhaul and HSBC bank at the height of the COVID 19 pandemic, HSBC bank conceded to challenges resulting from losses. The corporation struggled to make ends meet in the serving industry. Therefore, to curb this menace, the organization needed to restructure its service rendering procedures since it needed operational adjustments.

Nonetheless, the goal is to fundamentally change how HSBC delivers services while considering the previously abandoned corporate strategy. Changing services processes is critical to bettering operation management since it directly impacts the company’s bottom line, lowering expenditures and increasing net income. In addition to that, the organization leaders must advance prudential initiatives such as giving people the authority and tools they need to succeed. In this regard, complete autonomy in sales and customer service increase team involvement and consumer delight. Clients who are extremely happy become the organization’s advocates, thus bringing in new business ideas and increasing sales and profits.

Logistics Improvement

The notion of high production and minimal losses has been the objective of companies; therefore, to better this, the trick is to recreate existing products to compete with other similar services. According to Chang (2019), business process re-engineering theory emphasizes that optimizing procedures is not the most efficient course of action. Rather than that, organizations re-engineer procedures to enhance productivity. Thence, rather than refining a new process, they re-create a product from the ground up that is frequently accomplished through technology (Chang, 2019). After all, organizations cannot substantially alter something worthless; this theory relates to HSBC and logistics improvement in that, for efficient productivity, it is essential to undesired products and services and improves them. For example,

In HSBC, logistics refers to the manner in which the banking corporation distributes products and services, as well as the instruments and business partners it utilizes to reduce the danger of material loss and obsolescence throughout the conveyance of services to consumers. As a result, recreating an effective logistics strategy enables the business to keep its timely delivery and high-quality products. Logistics optimization is crucial for long-term infrastructure projects at HSBC, such as project finance and export credit structures that will ensure success in their endeavors (Davradakis & Santos, 2019). An HSBC develops further aspires to develop creditworthiness and bankability to support the firm, and they must hire and educate employees with a high degree of dedication and expertise as a leadership effort to increase productivity. As a result of this tendency for applicants to place a premium on talent over engagement characteristics, effective interview tactics by leaders and peers are crucial. Additionally, engagement training and applauding those that prosper are effective techniques for developing appropriate behaviors. Interactional ability is a desired characteristic.

Personnel Management

The Six Sigma theory of operational management is applicable in personnel management in that it focuses on minimizing defects during production. Therefore it calls for a terrific production and sound personnel. For instance, it entails controlling products, measuring analysis, improving, and refinement. In this regard, it extends its concept towards personnel management (Gupta et al., 2020). An illustration is that if operation management at HSBC fosters one type of enhancement, it is a keen understanding that the company staff is still an essential component of today’s operational toolkit. A people management approach enhances a business’s operations by instilling in employees that the company’s achievement is also their success (Losada, 2009). Further, personnel management includes the organizational activities that supervise a firm’s personnel, including recruitment, employment, and benefits administration. Therefore, it is more prevalent in non-profit organizations and government agencies; human resource management may be more prevalent in the commercial sector.

However, HSBC holdings frequently considered the more administrative activities associated with filing paperwork and performing other routine chores, in contrast to human resource management, which is viewed as the entire development of an organization’s people and culture. Management of personnel is important anytime there are individuals to supervise. HSBC needs to incorporate prioritizing a culture of incentive above punishment towards employees. As a consequence, by rewarding learning and rewarding ventures beyond the box, a business may eradicate the fear of failure.

Financial Strategies

In this operational management, supply management theory can be applied as HSBC holdings have grown more complicated and global in scale, the strategic movement of resources, commodities, services, and information between suppliers, firms, and customers has developed into a separate sector. Maintaining a healthy and functioning supply chain benefits everyone involved in the organization, but several variables might slow things down. Compared to some of the other parts of operations management discussed thus far, supply chain management is a relatively new concept, coined in 1982 and widely employed in the 1990s by many organizations such as HSBC (Khan & Yu, 2019). In this regard, supply chain management is responsible for each contact point of a business’s product or service, from conception to sale, which makes it a critical part to manage because doing it right or wrong impacts efficiency, costs, and profitability.

In this way, a business’s financial strategy at HSBC primarily focuses on acquiring and using cash. The firm’s fundamental purpose is to establish an adequate and stable stream of funds to support the diverse business enterprises that foster present and future financial demands. Thus, effective HSBC financial strategy considers a variety of factors, including financial resources, cost structure analysis of projects, profit estimate, and accounting processes (Kadim et al., 2020). Providing the consumers with essentially sufficient supply, usage, and management of financial resources at the HSBC equals a desirable business environment. Nonetheless, it aligns the organization’s financial management with the corporate and business objectives of obtaining strategic superiority over their competitors. Sufficiently, it is critical to employ leadership initiative programs such as linking the HSBC to a higher purpose than profit.

Recommendations

The challenges of Brexit also present enormous opportunities, as corporates rethink their approach in the region. In this way, HSBC will continue to support businesses as they manage and grow their operations. Still, with Brexit, the key will be to make HSBC offerings available to them wherever they operate (Kalaitzake, 2021). The organization’s robust presence and availability of people on the ground in vital areas across the region mean HSBC can support businesses operating out of the E.U. or the U.K., and whether they are importers or exporters. Therefore, the organization can maximize its offering on the back of existing strong and established trade flows between the U.S. and, Europe, India, and Europe, or vice versa (Wee & Lacqua , 2021). In addition, the banks undertake more important roles as supporting their business clients by having a strong local footprint backed up the bank’s global presence.

Subsequently, the holdings services harness the experience of years of banking in Europe, understanding regulations and ways of doing business, as well as the insight of a regional and global team of experts. By boosting consumer confidence in the protection of their belongings and the privacy of their financial transactions, the use of innovative technology provides a competitive advantage (Pilot, 2015). HSBC wrote in an email that a simpler leadership framework with clear purpose and accountability would assist in speeding the transition and promoting development (David, 2021). The kind of modification will have no effect on the financial benefits of contractual workers.

Conclusion

HSBC Holdings, as of today, have experienced challenges that have undermined its routine operation, for instance, the rise of the COVID 19 pandemic, which deteriorated business operations. Moreover, the new geopolitical legislation has also crippled various banking entities belonging to HSBC, and fraudulent activities have also limited the bank operatives as the use of outdated technology has rendered the organization vulnerable to scammers (Trad et al., 2021). Finally, management practices that define leadership have also affected poor service delivery. On the other hand, leadership initiatives that proved critical in efficient productivity and service delivery include production overhaul, logistic improvement, personal management, and financial strategies (Wee et al., 2021). The mentioned initiative defined the face of HSBC organizations; they ensured efficient and effective operational management of the organization.

References

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