Table of Contents
Introduction
As a manger at the Hong Kong and Shanghai Banking Corporation (HSBC), a retail bank based in United Kingdom (UK) I have come across a corporate situation that has over time crippled its functioning (Lim and Randhawa, 2005). In the recent years banking sector has experienced tremendous growth. As a result, it is becoming very difficult for the executives to combat the challenge of competition and as well manage the pressure for them to be the global intensifies. Although the environment has at times become volatile, this doesn’t prevent the rising competition from being more intense.
Therefore, the HSBC bank must be prepared to confront all the marketing issues so as to cope with the intense competition both in the United Kingdom and globally. This means key strategies need to be developed. Much more, the corporate bank needs to align its marketing strategies that will be crucial in improving their position and brand value. The other strategy is that both the internal and external market environments need to be addressed so that that it can work out towards the corporate’s competitive advantage, performance and positioning. In this study the researcher’s aim is to pursue these market channels and suggest an extended study that will comprise of the new strategies that are essential in improving the recent standings of the HSBC (Berger, Smith and Judge, 2003).
The competition problem has become a bother to many retail corporate institutions across the globe. This is not different with HSBC Bank it is still facing the same challenge of competition. This problem is being investigated in this report with an aim of finding the solution. The aim of this research is to identify key marketing issues that are affecting the bank in UK. The researcher intends to meet the following objectives in this research.
Objectives
- To identify and address the key aspects of both the internal and external environments that has hindered the successful functioning of HSBC globally.
- Identify the mix in the markets that need to be adopted and integrated in the competitive and marketing strategies of the bank.
- Investigate the key organizational functions such as the management of information system (MIS) and the customer relationship management (CRM) in that they are aligned with the structures established in various markets.
- To reevaluate the HSBC brand and its value in the markets so as to come up with new strategies that is crucial in improving its position globally.
Problem statement
The retail corporate banking institution, HSBC has been facing the competition problem from other financial institutions. The problem is pronounced mainly in the internal, external and upcoming markets (Karbhari, Naser and Shahin, 2004). Therefore, the institution needs to lay strategies to counter the changing market strategies and improve customer satisfaction both in UK and worldwide.
Background
In the modern world most of the consolidated organizations are integrating the change catalysts into their systems so as to ensure flexibility is achieved in line with the changing needs of the consumers (BBC, 2001). The banking sector is following the same trend that is consolidation via mergers and acquisition (M&A). This is happening irrespective of the fact that complex organizations are been created through the (M&A). These cases can be measured through the organizational spread of the HSBC. More so, HSBC has a huge customer base across the globe that is estimated to be over 100 million. This comprises of 335,000 staff members and 9,500 offices in over 85 countries and territories. Much more, HSBC has been rated by the banker’s magazines as one of the top financial brands across the world.
HSBC is regulated by the UK financial services authority. Around the globe, the retail bank’s operations are being monitored by approximately 510 central banks. The bank has been engaging in new strategies or rather evolving so as to combat the global challenges. For the past decade, the retail has been referred as the “the world’s local bank” (Bryman, 1995). This is because the retail bank has an established network that has been spreading across the upcoming international markets. With such a wide base of customers the bank has a strong financial standing. The retail bank has four key areas. These are personal financial services, private banking, global banking markets and commercial banking. Such are critical in helping the HSBC bank to align itself with the global trends. Some of these trends are world trade, longevity in business and emerging markets. Also, the retail bank is focused in leveraging its networks and brand so as to optimize efficiency and at the same time increase revenue.
The positioning strategy that has been adopted in this research is conservative in nature. This strategy has been used for over a decade due to its high returns and increase in performance. Although this is the case, the profit margin has reduced significantly over the years (Berner, and Kiley, 2005). This has translated to decline in performance. There are some factors that have contributed to the bank woes. These are inflation in the developed markets, credit crunch and slow down of upcoming markets. This is especially happening in UK and its neighbors (Deloitte, 2007). Globalization is only seen to put emphasis on the need to engage in integrative strategies of marketing that have been realized under the competitive strategies so as to improve the performance of the bank in the future. According to Deloitte report, the bank needs to understand the internal and external factors so that they can come up with a comprehensive competitive strategy. Therefore, it needs to revise the strategic orientation.
Literature Review
Taking a brief overview of retail banking, a brief literature review was carried out in the research with an aim of studying the corporate issues surrounding retail banking in UK. If this section, the researcher explores the environment of the current market that has resulted from competition in addition to trying to understand it clearly via a theoretical framework.
Banking Industry
With the globalization of retail banking industry as well as its consolidation, there has been the fall of cross bounder investment barriers giving way to new and volatile markets. In order to serve the banks that have continued to evolve, banks has been observed to come up with new competitive strategies that are aimed at capitalizing on resources, operations and functionality as well as serving new types of clients (Blankson, and Kalafatis, 2007). The greatest challenge for retail banks today that has been disturbing the managers is the structural market challenges and the geopolitical risks. The retail banks must thus adapt to this challenges to address the international compliance of standards, growing relationship with customers as well as the demographic shifts. The diversity in the nature of retail banking environment makes it quite hard for the global organizations an excellent epitome being HSBC. A global retail bank has got the widest reach when it comes to offering services to affiliates while the local banks has got narrow reach in providing services to institutions in the nation (Blankson, and Kalafatis, 2007). The challenges that effect the organizations include:
External Environment
The primary premise of getting competitive advantage in the worldwide environment is via the formulation of strategies that will reflect the conceptual framework of the matrix of TOWS (Threats, Opportunities, Weaknesses and Strengths). This matrix is a model that systematically analysis and identifies factors that has got an effect on the industry. The matrix then assists in the identification of solutions by maximizing strengths and the opportunities as well. Identification of the competitive advantages against the competitors is paramount in that it enables the company to maximize the attributes that it possesses at the international level. The competitive advantages are factor conditions among which are infrastructure and the skilled labor, conditions of demand such the demand of a service or a product as well as supporting and related industries (Bansal and Penza, 2000). That does not eliminate firm’s structure, strategy and rivalry as well. The key issues that have continued to be a challenge to the retail banking industry include local insights for global balancing, off-shoring, the emergence of hedge funds, cost-reduction as well as the regulation of complex anti-money laundering.
Internal Environment
The internal environment of retail banking needs to be revolutionized. At the beginning is the slogan “the customer is the king”. Global retail banks have been changing their strategies to change the banking environment such that it fit the needs of the customers, their choices and rights (Jagersma, 2006). Products as well as services are being tailored to the living conditions and client patterns of the retail banking use. The conditions have set off alternative strategies for marketing whose emphases have been on the relationship building as well as individuality. For instance, investment in skills, technology as well as branch networks have assisted the retail banks to profit and grow from various new sources of income. In the UK, there has been a large scale investment in technology and knowledge management has played a key role in the transformation of the retail banking industry to succinctly create benefits for organizations and harness potential businesses.
Global retail banks are also continuing to undergo structural changes. With the continued transformation of retail banks that have continued to become global, that calls for revisiting the traditional roles that has been in existence for the retail banks (Dietz, Reibestein and Walter, 2008). The issues that have been affecting HSBC such as market and credit risks, expertise and competence has come to the forefront as the retail banks continue to diversify their businesses (Islam, Kumar and Biswas, 2007). The above reasons require HSBC to prepare to change management in the firm’s internal environment.
The Marketing Mix
Putting into a consideration the diversified nature if the retail banking industry, retail banks should rethink their marketing strategies to overcome the competitive challenges that has been in existence in addition to improving client focus, pricing of products and services in a competitive way, innovating products not to forget organizing the information of the product for strategic positioning of the same (Jayawardhena and Foley, 2000). The key challenge that awaits firms is rethinking of the strategic objectives that will be effective in the alignment with the new environment. An approach that can be applied is the development of the visual identity as well communication network that is vital in establishment of good relationship with customers. The communication strategy is imperative as it will help the organization in adapting to other environmental alterations. Relationship marketing is an entirely new approach to marketing and focuses on suppliers, customers and organization communication framework that retail banking sector need in addressing the brand values to have a successful marketing mix.
Segmentation of Market and Targeting
Currently, clients no longer have the limitation of walk-in type. However, they extend to internal clients that include employees, shareholders and the stakeholders (Jones, 2005). Service delivery is also not limited to the provision of services but moves further to expectations and standards. For firms to operate and succeed, they must be ready to adopt alternative strategies. The segmentation in the retail banking industry has continued to change from niche segments to accumulated client base of corporate and commercial or private customers. However, the principles that must be applied for targeting them remain the same, which is, client relationship building, and collaborative banking strategies and ease access. Therefore, HSBC needs to improve when it comes to customer focus, drive aggressive campaigns in addition to introducing new ideas to customers via a strong communication network in building the brand image.
Brand Positioning
The primary objective of the competitive advantage entirely depends on the positioning of the product. The communication strategy of a firm as well as its effectiveness is dependent on the positioning strategies. Therefore, strategic implications of the positioning of the brand are vital for firm’s competitive strategy. From the above literature review, the researcher confirms that HSBC as a global retail bank has been facing tremendous challenges and thus needs to improve its marketing strategies to cope with the continued competition (Stokes and Blackburn, 2001).
Method
The methods used in this research are aimed at gaining knowledge. These are systematic and logical methods. More so, research is considered as a broad discipline that needs to be examined carefully before the methods of evaluation can be adopted. The method chosen by the researcher is either survey, naturalistic, historical or experimental. However, the choice must be consistent with the inquiry. In particular, the approaches used in the research can be either qualitative or quantitative (Mangan, Lalwani, and Gardner, 2004). The most important step that the researcher needs to handle with caution is when choosing the research approach. The quantitative approach is related to the scientific methods at the manner in which the results are acquired and is used to show casual relationships.
The qualitative method assumes a constructivist approach and is used to study physical and human objects. The topic used in this research is qualitative in nature (Bryman, 1995). Thus the researcher proposes to use the constructivist way. The reason is that this method would be the most appropriate to use in investigating the competition problem facing the HSBC. Further, it is a more logical proposition as it presents better tools for the researcher to use when predicting the behaviors seen across markets (HOWARD, 2007). This is based on the theoretical framework that has been expressed in the literature review section comprehensively. This method of research has been used in this study as the social sciences always seek to control and predict. Much more before a decision is reached the research questions are raised. They must be open-ended and extensive at the same time. Therefore, the qualitative method is the most appropriate for use in the study of market challenges affecting HSBC (Deloitte ,2006).
Conclusion and Recommendations
To curb the challenge that has been in existence and threatening the operations of the retail banks, it is recommendable for the firms to come up with marketing strategies that will be in a position to cope with the existing competition. Putting into a consideration the fast-paced as well as the highly volatile retail banking environment in UK as well as globally, HSBC should enhance its performance in addition to improving the customer relation by offering the best as well as affordable services to their clients in order to cope with the intense competition (Fahy, 1993). Much more, the retail bank should look critically into all factors in the internal and external markets that need to improve so as to maintain the customer base (Gummesson and Evert, 2002). Regarding the upcoming markets HSBC should enhance the customer service by offering a huge variety of products at competitive prices.
The other recommendation is that the retail bank should focus on strategies that need to be incorporated within the banking system and in service delivery so as to make the bank competitive (Harris, 2002). Much more, the bank should build a strong relationship with the customer through better credit services. Also, the bank needs to ensure that its brand value is highly rated in the markets. This is a key strategy in ensuring that the bank is well positioned. All in all, HSBC bank will be the leading retail bank in the international and UK markets if the competition challenge is well addressed.
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