Business strategy - LO 2 Be able to formulate a new strategy

1. TANYA YANKOVA
ID 22724
Business Strategy
Assignment Code AB265B7Francis
Marfo

2. LO 2 Be able to formulate a new
strategy
 2.1 Analyse the strategic positioning of a given
organisation by carrying out an organisational
audit
 2.2 Carry out an environmental audit for a
given organisation
 2.3 Assess the significance of stakeholder
analysis when formulating new strategy
 2.4 Present a new strategy for a given
organisation

3.  HSBC serve more than 37 million
customers through four global
businesses: Retail Banking and
Wealth Management,
Commercial Banking, Global
Banking and Markets, and Global
Private Banking.
 (HSBC Group, 2017)
 HSBC’s founders started out
in 1865 with a clear and
simple aim – to establish a
bank in Hong Kong and
Shanghai for the support of
local and foreign trade.
 The inspiration behind the
founding of the bank was
Thomas Sutherland.
 The HSBC name is derived from
the initials of The Hong Kong and
Shanghai Banking Corporation
Limited, the founding member of
HSBC.

4. Internal Factor Evaluation (IFE) Matrix – strategy tool used to
evaluate firm’s internal environment and to reveal its
strengths as well as weaknesses
External Factor Evaluation (EFE) Matrix – strategy tool used to
examine company’s external environment and to identify the
available opportunities and threats
 Weight – Each key factor should be assigned a weight ranging
from 0.0 (low importance) to 1.0 (high importance). The number
indicates how important the factor is if a company wants to
succeed in an industry. If there were no weights assigned, all the
factors would be equally important, which is an impossible
scenario in the real world. The sum of all the weights must equal
1.0. Separate factors should not be given too much emphasis
(assigning a weight of 0.30 or more) because the success in an
industry is rarely determined by one or few factors.

5.  IFE Matrix Rate - The ratings in internal matrix refer to how strong or weak
each factor is in a firm. The numbers range from 4 to 1, where 4 means a major
strength, 3 – minor strength, 2 – minor weakness and 1 – major weakness.
Strengths can only receive ratings 3 & 4, weaknesses – 2 & 1. The process of
assigning ratings in IFE matrix can be done easier using benchmarking tool
 EFE Matrix Rate - he ratings in external matrix refer to how effectively
company’s current strategy responds to the opportunities and threats. The
numbers range from 4 to 1, where 4 means a superior response, 3 – above
average response, 2 – average response and 1 – poor response. Ratings, as
well as weights, are assigned subjectively to each factor.
 Weighted Scores is the result of weight multiplied by rating. Each key factor
must receive a score. Total weighted score is simply the sum of all individual
weighted scores. The firm can receive the same total score from 1 to 4 in
both matrices.
 Total Weighted Scores of 2.5 is an average score. In external evaluation a
low total score indicates that company’s strategies aren’t well designed to
meet the opportunities and defend against threats. In internal evaluation a
low score indicates that the company is weak against its competitors. (David,
2008)

6. HSBC Internal Factor Evaluation Matrix
Key external factors Weight Rate Weighted
score
Strengths
Strong Management 0.26 4 1.04
Innovation 0.08 4 0.32
Various business groups (commercial
banking, investment banking, financial
services and privet banking)
0.10 3 0.3
Brand Value of HSBC 0.09 4 0.36
Weaknesses
Customers concentration 0.08 1 0.08
Customers satisfaction 0.18 2 0.36
Location 0.11 2 0.22
Opening time 0.10 1 0.1
Total 1.00 21 2.78

7. Strong Management
37%
Innovation
11%Various business
groups
11%
Brand Value of
HSBC
13%
Cutomer
concentration
3%
Cutomer satisfaction
13%
Location
8%
Opening time
4%
HSBC Internal Factor Evaluation Matrix
Weighted score
Strong Management Innovation
Various business groups Brand Value of HSBC
Cutomer concentration Cutomer satisfaction
Location Opening time

8. HSBC External Factor Evaluation Matrix
Key external factors Weight Rate Weighted
score
Opportunities
Online service 0.12 3 0.36
Acquisition Synergies 0.10 3 0.10
Branding 0.09 2 0.18
Strong capital 0.16 4 0.64
Threats
Political risk 0.17 3 0.51
Economical uncertainty 0.15 2 0.3
Strong Competition 0.13 4 0.52
New products 0.08 2 0.16
Total 1.00 23 2.77

9. Online service
13% Acquisition Synergies
4%
Branding
6%
Strong capital
23%
Political risk
18%
Econimical uncertainty
11%
Strong Competition
19%
New product
6%
HSBC External Evaluation Matrix
Weighted score
Online service Acquisition Synergies
Branding Strong capital
Political risk Econimical uncertainty
Strong Competition New product

10. Stakeholder quadrant
 Employees
 Business
Partners
 Competitors
 Shareholders
 Group Executive
Board
 Supervisory Board
 Government
bodies
 Trade Unions
 Customers
 Opinion formers
(journalists)
 Community members
 Interest group

11. Stakeholder power and interest analysis
MAP
 High level of
interest
 Low Power
Business Partners
Meet their
needs
Key player
Show Consideration
Low level of interest
High Power
Government
Least important
Low Power
Low level of interest
Community members
 High level of interest
 High Power
Group Executive
Board

12. HSBC a new
strategy
VII VIII IX
I II III
IV V VI
4.0
3.0 2.0 1.0
3.0
2.0
1.0
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
High
3.0 to 4.0
Medium
2.0 to 2.99
Low
1.0 to 1.99
 Market Penetration
 Product Developmen
Hold and maintain
 Market Penetration
 Market Development
 Product Development
Grow and build

13. REFERENCES
David, F., 2008. Strategic Management: Concepts and Cases.. 12th ed. s.l.Prentice
Hall of India.
Famouslogos.us, 2017. HSBC Logo. [Online]
Available at: http://www.famouslogos.us/hsbc-logo/
[Accessed 07 Marc 2017].
HSBC Group, 2017. Company history. [Online]
Available at: http://www.hsbc.com/about-hsbc/company-history
[Accessed 06 March 2017].
My sites, 2017. Fellowship of the Minds. [Online]
Available at: https://fellowshipoftheminds.com/2014/01/27/hsbc-bank-restricts-large-
cash-withdrawals-then-backs-off/
[Accessed 06 March 2017].
Ondiek, J. A., 2015. The Complete Idiots Guide to Stakeholder Analysis. [Online]
Available at: https://www.linkedin.com/pulse/complete-idiots-guide-stakeholder-
analysis-jacob-aliet-ondiek
[Accessed 07 March 2017].