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Introduction: HSBC is a British multinational banking and financial services company which are

headquartered in London. HSBC is one of the worlds largest banks. HSBC was founded in London by
the Hong Kong and shanghai Banking Corporation in 1991. Like every other business that operates
globally HSBC faces different challenges for example:
Economic condition in the UK: the importance of stability for HSBC in the UK is very important
because their main headquarters is in the UK and they have to direct and control other branches of
the bank globally from the UK. Due to the recession a total of 175 staff at HSBC in the Isle of Man,
Guernsey and Jersey are at risk of redundancy. HSBC announced that 107 staff, a third of the bank's
workforce on the Isle of Man, were under "potential risk" in the securities services sector.
(http://www.theguardian.com/global/2009/apr/07/recession-watch-job-losses).
The growth in the UK economy means that HSBC will employ more staff and make more profit rather
than make their staff redundant due to the recession.
The ripple effect is a situation in which one event causes a series of other events to happen. This is
when a bank has money but then loses it, then gains it back. This is when banks go into recession
and get back out of recession.

Inflation in a business is when the level of prices for goods and services is rising and the purchasing
power is falling. HSBC would attempt to stop inflation, along with severe deflation, in an attempt to
keep the growth of prices to a minimum. HSBC would gain money from inflation. HSBC will need
qualified labour force in order to keep up with the demand of the services in the UK, due to the
nature of the kind of services they offer they will need qualified staff preferably graduates in fields
that are required for their services.

Changes in government policy (legal, fiscal, monetary) in the UK means HSBC will need to adjust
their operations in order to comply with new legal, fiscal and monetary policies which might tighten
the rules and regulations that govern banks in the UK.

The availability of credit in the UK is lower than in china because of the economy and the rate of
inflation in both countries.

Economic condition in China: Chinas economy is stable and growing. This is a good thing for HSBC
because they can expand the business which would bring in more profit, and employ more staff. The
change in government policy in china means HSBC will need to adapt to the changes from the new
Chinese government. Due to lack of human rights in china, labour is cheaper and people are
exploited to the maximum which is against the law in the UK.

This means that HSBC can exploit their local Chinese workers and make them work extra hours etc.
because the Chinese government makes it flexible for businesses to exploit workers due to lack of
human rights.

HSBC will need similar labour force of the UK also in china due to the nature of the services they
offer. Due to the population in china HSBC will need more staff in china than in the UK to keep up
with the demand for their services. They will also need qualified staff in order to deliver a high
standard performance in both countries.

Changes in government policy (legal, fiscal, monetary) in china the rules and regulations might be
tougher than the UK due to different government policies.

Demand and supply in the UK: In the UK the demand for HSBCs services is very high due to the
types of services they offer which include everyday banking, borrowing, investing, insurance and
planning. The supply of their services is influenced by the availability of money in the economy and
their services is delivered by their well trained staff. The raw materials for HSBC is money and the
organisation gets hold of money in the UK from the bank of England and their customers, they get all
the money from their customers through different means which include interest rates on loan
repayments, insurance, mortgage and percentage on small and large businesses. HSBC in the UK has
competitions with other banks for raw materials which is money. HSBC and other banks in the UK
compete for money by offering unique services that can help them attract new customers and retain
existing customers. Some of these unique services include online bonus savings under everyday
banking on their website, they also offer student credit card under borrowing on their website.
(http://www.hsbc.co.uk/1/2/)

In the UK it is easy for HSBC to transport their services to their customers, this is done through
online banking and visiting the high street branches of the bank in the UK. In the UK HSBC use secure
vans to transport money from one branch of the organisation to another. HSBC also transfer money
from one branch to another through their online services in the UK.

In the UK HSBCs ability to produce profitably is affected by the UK government policies which
includes base rate which is currently 0.5%, this affects how much interest the customers would get
from the base rate.

In the UK HSBC and other major banks have received bail out from the UK government, HSBC chief
executive Michael Geoghegan suggested that the UK government's 37 billion bailout package will
encourage banks to return to more risky lending operations in due course as they now have the
added backup of government assistance.
(http://www.financialadvice.co.uk/news/12/ukeconomy/8517/hsbc-chief-executive-suggests-uk-
bailout-is-wrong.html)


Demand and supply in China: In China the demand for HSBCs services would be higher than in the
UK because of the population increase, the services in which HSBC in China offer are investments, e-
banking, international banking and home loans. The supply of their services in China is influenced by
the availability of money in the economy. This graph is about a different topic but it gives out the
same meaning, the demand for the product/services would increase if the population increases.



In China HSBC offer their services in a similar way compared to the UK. Which includes online
banking and visiting the high street branches of the bank in China. In China HSBC use similar ways to
transport the money from one branch of the organisation to another, HSBC also transfer money
from one branch to another through their online services.

In China the base rate would be higher because of the stability of the economy. Because of the
stable economy HSBC would want more customers so they would increase the interest rate.

Demand: The demand for HSBCs services is very high due to the demand for money and their
services which include everyday banking, borrowing and insurance. Competition is one of the factors
that influence the demand of HSBCs services for example if the interest rates on borrowing in HSBC
is lower than that of their competitors the demand for HSBCs services will increase.

If HSBCs insurance is cheaper than that of their competitors their affordability of their services will
increase. If the needs and aspirations of HSBCs customers is met the demand for their services and
products will increase for example the needs of HSBCs customers might include secure banking
against fraud and other financial crimes if these needs are met by HSBC the demand for their
products and services will increase.

This is similar to China because needs such as secure banking is very important to HSBC and due to
the high population in China if these needs are met the demand for HSBCs products and services
will increase. In the UK and China if the GDP level is high it means both economies are flourishing
and the demand for their products will increase but if the GDP level is low the production level will
be low as well, this will affect most of the services that HSBC provides. Because when the GDP level
is low the country export less and make less profit.

Changes in supply and demand: There are certain situations that influences changes in supply and
demand for an organisation. These include change in population for example an increase in
population in the UK means the demand for HSBCs products will increase. Changes in supply for
HSBCs products can be influenced by technological changes for example due to modern technology
people can now access their bank account and other financial information online and via mobile this
means HSBC have to adapt to technological changes in order for them to be able to supply their
services to their customers more effectively and efficiently.
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Quantity Demanded
Change in demand from 2010 to 2013
coffee 2013
Coffee 2010
2010


The diagram above is an example of a demand curve, the demand curve illustrates that when a
product or service is under demand by the customer, and this means that as the price increases the
demand for the product decreases. For example if the interest rates of HSBCs loan repayments
increases the demand for the service will decrease.



The supply curve illustrates the relationship between price/quantity, how much the supplier is
willing to offer, the law of supply states that as the quantity increases the price increases. For
example if HSBC have more money to borrow, their customers the price of their interest rates will
increase.
Elasticity varies because some products or services are more essential to some customers than
others. For example the number of close substitutes that there are in the market, the more elastic
the demand is because there is a substitute product/service which consumers can turn to. Another
example of this is when products are in demand and not in demand. Some products are inelastic at
their peak times and sometimes more elastic at non-peak times. With HSBC there are substitute
banks which other customers can go to.
Influencing of branding and price sensitivity is all about creating and maintaining a good brand image
and being able to predict the impact when prices change have on sales. Customers show different
price sensitivities to different products, some people are price insensitive and they only stay within a
certain price range, but then they will go out of that price range when its the right product or
service. For example HSBC elasticity varies because some services are more essential to customers
than others. Some of their essential services include home insurance, car insurance are more
essential to customers than share dealing and investment funds.
Price sensitivity is the degree in which price affects the sales of a product or service. It will influence
the services of HSBC because if the interest rates of HSBCs loan repayments increases the demand
for the service will decrease.
Global Interaction: HSBC is dependent on internal and external influences such as supply chain, the
internal influence of their supply chain will be mainly on the corporate governance because they are
responsible for making decisions about all other aspects of the organisation. The ownership of HSBC
is influenced by both internal and external influences, for example some of the stakeholders of the
business which includes investors, employees, customers and suppliers influence the
organisation through their opinions and operations.
If HSBC choose to move their capital and business operations from the UK to China for example
the organisation will be influenced externally by the Chinese government and their corporate
governance.
HSBC are a global organisation with their headquarters in the UK, the UK national government have
limited power over HSBC because they operate globally. For example HSBC still needs to comply with
rules, regulations and legislations of other national governments of countries where they operate.
Although most of the decisions about the organisation will be made by their headquarters in the UK
they still need to comply with foreign legislations in other countries where they operate.

M2
There are certain challenges that HSBC will face while operating in different environments some of
the challenges include:
Recruitment of staff: in the UK and China HSBC needs to employ qualified and professional
graduates due to the nature of the jobs they offer. In the UK HSBC will need to comply with
recruitments and employment laws to ensure that they employ all their staff without any form of
discrimination. This will be similar to China. In China due to the economic condition HSBC might
need to employ more staff although most of their operations will be done through the internet
which will not require extra staff but they might need the extra staff to do some of their casual jobs
which includes cleaning etc.
Product of design: due to high competition between banks in the UK and China HSBC needs to
design their service in unique ways that will simplify the supply and demand of their products and
services to their customers. This can be done by ensuring that all their staff are professionally
qualified and trained to deliver a high standard service. They also design their products in order to
gain an advantage over their competitors. Example of their designed product/service is their premier
relationship manager which gives personalized support whenever needed.
Product promotion: HSBC has less challenges of promoting their products in UK and China because
of the higher rate of technology that is available to the organisation in both countries. In the UK and
China HSBC promote their products in similar ways which include:
TV adverts
Radio adverts
Online promotion on HSBCs website
Social media sites

Transport of goods: HSBC transfer their goods which is (money) in the UK and China using secure
vans to transport money from one of their branches to another. They also transport money via
online on their websites which enables global interaction within the organisation.