Global Business Environment

Introduction

For the international corporate organisations, the onus of business decisions firmly rests on the concurrent market environment regarding competitiveness and external influences on the core business disciplines which could shape the outcomes of such operational decisions. The significance of globalisation and the internationally integrated business environment could be comprehended from the perspective of implications of evolving conditions on the international scenario which could encompass sub-categorical aspects such as political, social, environmental, legislative as well as technological changes which are occurring at increasing pace in the global context.

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LO1 Analysis of the key factors which drive globalisation P1 Key factors of cost, market, environment, and competition driving global commerce and trade Globalisation concept

According to Nadtochy et al (2016), the operational implications of any business organisation within the globalised business environment are also determined through the scale prerogatives of the benefits and challenges associated with the business objectives of respective organisations. As per the research of Aquino and de Castro (2017), the concept of globalisation represents the method of incremental interaction within the countries in the international sphere concerning the differential aspects of trade, commerce, business, polity, transport, technology sharing, communication and finally, overarching effects of economic co-operation. The objectives of business operations performed under globalised conditions are firmly oriented towards increment of the overall productivity of any business organisation through implementation of necessary changes through which expansion of operational capability could be undertaken in terms of gaining greater sales and profit margins. In case of HSBC and the banking sector as a specific business discipline, increment of offering of financial product portfolio has been a definite outcome of the Globalisation process under the influence of Information Communication Technology (ICT) utilisation. Primarily, this has culminated in the improvement of efficiency in the financial functionalities and business process of HSBC. The service quality has been maintained at a standardised threshold and return on investments has been also expanded. These have been underscored by the positive impacts of Globalisation in the format of adoption of advanced technology for data management and communication, expansion of reach to new consumers and augmentation of previously existing market segments through addition of new financial market horizons. For students and professionals who are seeking business dissertation help, analysing such factors can provide the most valuable insights into formulating effective strategies and understanding the dynamics of the market.

Impact on the banking sector

Georgiadis and Mehl (2016) have observed that, in the economic context, the effects of globalisation could be characterised by progressive removal in the state formulated barriers of market access so that flow of capital, services, goods and labour could be effectively facilitated. In case of the banking sector in a broadened sense and HSBC in terms of singular unit based approaches, financial activities have been specified by the transformative effect of ICT. Specific examples could be ascertained in format of development of EFTPOS Electronic Funds Transfer at Point Of Sale), direct debit and credit and online banking facilities which have contributed to the reduction of commercial application of conventional monetary instruments such as printed cheques. For HSBC, the direct impact of globalised financial functionalities has been the development of financial services to conduct current account based transactions for customers so as to enable the customer to remit payment or access service offerings of the bank through third parties. Gopalan (2017) has opined that HSBC have been primarily influenced through Automated Teller Machines (ATMs) instillations throughout the branches of the bank at different national scenarios as this has signified the automation of financial transactions within the public spaces which has negated the necessity for human intervention in the form of a bank teller or clerk. For instance, at the Hong Kong branch of HSBC, most of the instilled ATMs have enabled the customers to deposit their cash amounts to their bank accounts through deposition of notes at the designated slots of the machines and then through entering their account numbers so that their accounts, which could be listed at any of the global branches of HSBC, could be credited with the deposited amount. Furthermore, the advent of online and phone banking, in tandem with the ATMs, has enabled the HSBC account holders to verify their account balance and withdraw cash amounts.

Explanation of key driving factors of globalisation

The research of Disyatat and Rungcharoenkitkul (2016) has brought forth the driving factors of the process of globalisation in the form of status of trade barriers, the differential trade policies of individual nations, technological advancements, environmental policies, product costs, global financial integration, foreign direct investments (FDIs), market competitive scenarios and finally, the demand measures of different consumers. The cumulative effects of such factors influence the external business environments for companies such as HSBC. Furthermore, the different economic discourses on the national levels, have been subjected to consistent integration in the form of development of internationalisation of flow of goods and services with ubiquitous measures of financial transactions as an outcome of Globalisation. The multifarious factors associated with the concentration of business activities related with the global multinational business entities, such as the HSBC, closely correspond to multiplicity of external business environmental influences such as political, economic, technological and legislative scenarios.

Furthermore, Perraton (2019).has argued that one of the prime factors involving the drive of Globalisation, as a definitive process, has been the integration of individual markets and consumerism permeation from the perspective of fostering consumerist cultural frames of references. This factor could be further explained as merger of diverging and differential markets into a singular and global unit for the purpose of enhancement of sales and product availability. This factor is further assisted through the progressive removal of trade barriers when conducting cross-border based transnational commercial operations.

LO2 Determine the strategic complexities associated with operating in a global environment.

P2 Complications of strategic challenges while operating in the global environment

Selection of the profitable market

For HSBC, the initial challenge regarding operating within the globalised market environment pertains to the selection of the appropriate market where the bank could participate, in the most extensive manner, to the overall economic process of the targeted country so as to maintain optimised cost efficiency and profitability. This involves HSBC to undertake the most effective comparative financial perspective regarding the examination of the investment spheres within the LICs (Low Income Countries), Ems (Emerging Markets) as well as the AEs (Advanced Economies). For HSBC, it is imperative to conduct extensive market research so that identification of the markets for future expansion could be performed. The primary objectives of HSBC, in terms of new market identification, are the following:

1: Ensuring safety of deposits.

2: Offer profitable interests on the deposits of customers so that prevention of the loss of value of capital performing assets against inflation could be ensured.

3: Most importantly, lending of money to the customers, businesses and to other service subscribers with predetermined premium amounts as return interests.

4: Offerings of economic services such as financial advices and insurance policies.

Mastering the profitability propositions within the market

Verbeke and Kano (2016) have been off the opinion that identification of prospective customers within the financial markets is the primary concern for any business process within the global market scenario so as to maintain and expand on the existing profit percentages. To this effect, Kim and Caporaso (2016) have forwarded the proposition that the banks are required to adopt particular measuring standards to evaluate the profitability extents which could be gained. The most important of these measuring standards is the Return On Assets (ROA) which outlines the net income from the total performing assets after the deduction of taxes. For the HSBC, ROA would demonstrate the ability of the bank to manage the profit generation policies effectively so as to generate optimised revenue returns from the existing assets. Furthermore, the instrument of Net Interest Margins (NIM) could as well be utilised by the HSBC so that the difference between the interest income of the bank and that of the interest expenses could be properly scaled to highlight the performance measures of total bank assets.

Effective communication

The communication measures between the various service generation segments and the potential service subscribers for the HSBC bank could be considered to be some of the most significant strategic challenges while having to operate within an increasingly hyper competitive banking market scenario on the global arena. In this context, Rothaermel (2017) has observed that HSBC has to concentrate upon enhancing service communication through External Application Programming Interfaces (APIs). This could enable the bank under consideration to increasingly offer new services since the APIs could provide effective gateways for the most innovative and contextual solutions which could be impossible to be offered without the prospects of open banking systems. Watson et al (2018) have outlined that by the end of 2019 financial year, up to 50% of the global Tier 2 and Tier 1 banking service operators have commenced offering of at least 5 new APIs. For HSBC, thus, it would be incumbent to formulate effective partnerships with financial technology providing business enterprises through open APIs and this could be effectively managed through fulfilment of existing regulatory requirements.

Management of security concerning globalised threat perceptions

Any bank has to establish itself as the most secured place for deposition of money since it is not practical for anybody to maintain all of the savings as liquid cash. According to Aljawarneh (2017), within the UK, the commercial banks could be guaranteed for their deposits by the Bank of England as it acts as the lender of the final resort. Thus, it is necessary to ensure optimum safety of the assets which are deposited in the bank accounts by the customers. This is one of the most intractable challenges for HSBC in the globalised market scenario since the threat profiles in the globalised contexts have consequently transformed and become enhanced in potency. Thus, new layers of security to the existing services would be required to be added consistently. This requires , for the HSBC, to invest greater assets on the security authentication methods based on next generation secured financial technologies. This could enhance the digital trust factor amongst the bank and the customers. One particular suggestion has been highlighted by Lane (2019) to be that of the authentication of payments through thumbprints which could be operated by the applications provided in customer smartphones as well. Furthermore, voice prints and facial recognition patterns could as well be inculcated to the existing security measures of the bank. Finally, greater improvement in the biometric authentication methods could effectively simplify the security processes through which authentication of payments and withdrawals could be made invulnerable from possible threat perceptions.

LO3 Global market based operational influences on structure, culture and functions of the selected organisation

P3 Influence of globalisation on organisational governance and leadership, structure, culture and functions.

The focal point of any business operation in the globalised market scenario is the implementation of various procedures through which the organisational efficacy to adapt to the exigencies of the globalised marketing conditions could be enhanced. This could entail the utilisation of the factors associated with the McKinsey 7s model by the HSBC bank to better facilitate change management and adaptations within the overall organisational structure, culture and functions.

McKinsey 7s model

Strategy

Concerning this aspect of operational change management, HSBC would have to develop an effective plan through which both the short term and long term strategies could be productively aligned with the rest of the factors such as organisational Structures, Systems, Styles, Staff, Skills and Shared Values. The research of Mansfield and Reinhardt (2015) has suggested that HSBC and other internationally active banking service providers are primarily influenced through advancement of technology in the global scenario. This would require HSBC to depend greater on the shared value propositions while having to implement the red ocean strategy of business progression in the current intensive competitive perspectives. The emphasis is on the fulfilment of market objectives based transformation of operational measures in the concurrent financial contexts.

Structure

This is reflective of the systematic outline of the organised patterns of the business under consideration. This factor is also responsible to enforce accountability at the individual levels. This also encompasses the totality of the functional undertakings of any business organisation such as the HSBC where the revenue returns and operational costs based business investments become of critical significance. Perraton (2019) has specified that HSBC operates on the principles of the divisional organisational structure which highlights a hierarchical managerial segment based organisational working architecture with greater emphasis on the centralised hierarchical structure. This centralised hierarchy has so far assisted the company to formulate a shared sense of organisational vision which could be implemented at the global operational perspectives.

Systems

As has been stated previously within this study, every internationally operating financial institution such as the HSBC banking service provider is profoundly influenced through the change of technology since this fundamentally alters the operational perspectives of such business organisations. Thus, the emphasis is firmly concentrated on the implementation of extensive innovation and technology within the banking structure of the HSBC so that communication procedures could be simplified and information could be accorded to the necessary reception points with real time effect. One particular example could be highlighted in the format of utilisation of the Internet of Things (IoT). HSBC would require to identify a number of high-traffic operational branch locations of the bank so as to test the IoT applications through placement of proper sensors which could identify and authenticate the customers through reading their biometrics identity patterns. Specific beacons and sensors are required for this purpose. After authenticated identification, the sensor could forward the data to the nearest ATMs so as to pre-stage any cash withdrawal scenario on the basis of the preferences of identified customers. This could culminate in the immediate dispensation of the amount of money which could be stated by the customers after deposition of their Personal Index Number (PIN).

Skills

This aspect of the organisational functionality indicates the significance of organisational competencies, capabilities and strategic adaptation qualities. Thus, new structures and strategies could be implemented to reinforce the existing work parameters of the banking organisation under consideration. This could entail hiring of employees which extensive experience and technical competencies to better perform their designated task roles. Furthermore, HSBC also invests extensively in the development of the human capital through hands on approach to better utilise their existing skills and competencies.

Staff

Regarding the HSBC, the staff related factors are mostly indicative of the recruitment, motivation management and training of the organisational working personnel. The divisional hierarchy based organisational structure has ensured that the current staff number of the bank is extensive (235000). This could contribute to the development of diversity in the staffing operations with greater scope of human resource talent sourcing and overlapping of professional competencies. However, Lueg, Schmaltz and Tomkus (2019) have observed that HSBC follows the policy of according small numbers of staff members to each of the regional branches through which training processes could be effectively managed and this improves the scenarios of following of instructions on part of such human resources of the bank.

Style

The factor of organisational style could be determined to be associated with the service diversification opportunity realisation prospects. HSBC has to enter a targeted market sector either through the extension of subsidiaries and branches or through undertaking off effective acquisitions and mergers with different private financial institutions within the host markets.

Shared values

According to Paulet (2018), the shared values could be implemented as definitive outcomes of globalisation to manage change within any organisation. HSBC has utilised this perspective to expand further within the LICs and Ems so as to achieve the objective of transforming the financial revenue generation perspectives. The emphasis has been on the fomenting of trust, simplicity and integrity within the customers along with humility, accountability and responsibility in the operational staff.

LO 4 Evaluate the influence of globalisation on organisational decision-making and strategy

P5 Evaluate the different ways decision-making can work effectively in a global context

According to Ferreira, Jalali and Ferreira (2018) decision formulation could be considered to be the most significant phenomena through which effective leadership could be initiated and evaluated to enhance the position of the business organisation under consideration. Regarding the global conditions of banking and financial operations, strategic management perspectives are the most significant variables which have to be factored in while having to adapt to the situational contingencies presented by the international markets. Uncertainty management is central to this approach to mitigate the effects of complex volatility of financial markets which could affect the services of the HSBC.

Business decision model

The above demonstrated model of business decision formulation could be adopted by the HSBC to enhance the business policies through effective decision making. The outlined principles are as the following:

1: Strategic decisions

This involves the long term based complicated policy parameters which require the attention of the senior management personnel of the bank under consideration. Some examples of such strategic decisions in the context of the HSBC could be comprehended as improvement of digital experience of customer services, enhancement of data based financial trends analysis capabilities of the company marketing assets, formulation of policies regarding prioritisation of competitive responsibilities and imperatives, reduction of operating costs, increment of investments in the innovation prospects of service development initiatives, meeting of compliance and regulatory requirements and management of core operating systems in terms of retail banking management.

2: Operational decisions

These decisions are mostly related to the general working prospects of the bank under consideration such as accounting, distribution of assets, technological assets management, finance related decisions such as changes in the structure of emoluments and remunerations, marketing and staff management. The junior management staff are required to be engaged with such decisions.

3: Tactical decisions

These decisions are primarily formulated by the medium grade managerial personnel so as to ensure that compliance to the strategic norms and policies formulated by the bank hierarchy should be effective enough.

Conclusion

The preceding research report has concentrated upon the processes through which global operations of a selected organisation, the HSBC Bank, could be assisted in terms of global business operations of the same organisation. The report has covered the functionalities such as analysis of the key driving factors of globalisation as well as the challenges, opportunities and benefits such as the costs, market, competition and market environment associated with the same, the determination of the strategic complications which could have profound implications on the business environment of the selected business organisation, evaluation of the influences of globalised market operations on the organisational structure, culture and functionalities regarding the business enterprise under consideration which has been inclusive of the factors of leadership as well and finally, evaluation of influences of globalisation on the strategic decision formulation procedures of the selected organisation.

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REFERENCES

  • Nadtochy, Y.V., Klochko, E.N., Danilina, M.V., Gurieva, L.K., Bazhenov, R.I. and Bakharev, V.V., (2016). Economic factors and conditions for the transformation of the education services market in the context of globalization. International Review of Management and Marketing, 6(1S), pp.33-39.
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  • Aquino, H. and de Castro, J.M., (2017). Knowledge internalization as a measure of results for organizational knowledge transfer: proposition of a theoretical framework. Tourism & Management Studies, 13(2), pp.83-91.
  • Shaqrah, A.A., 2018. Analyzing business intelligence systems based on 7s model of McKinsey. International Journal of Business Intelligence Research (IJBIR), 9(1), pp.53-63.
  • Georgiadis, G. and Mehl, A., 2016. Financial globalisation and monetary policy effectiveness. Journal of International Economics, 103, pp.200-212.
  • Gopalan, S., 2017. Banking. In Handbook of Globalisation and Development. Edward Elgar Publishing.
  • Kim, M.H. and Caporaso, J., 2016. Globalisation: trends, limits, and controversies. In Globalisation, Multilateralism, Europe (pp. 55-71). Routledge.
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