STRATEGIC ANALYSIS PORTFOLIO
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STRATEGIC ANALYSIS PORTFOLIOTABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 MAIN BODY...................................................................................................................................3 CONCLUSION..............................................................................................................................10 REFERENCES..............................................................................................................................12
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INTRODUCTION Strategic management refers to the continuous process of planning, analyzing, monitoring and assessing all the task which are necessary for an organization in order to meet their goals and objectives (Cinquini and Tenucci, 2010). In other words, this involves the formulation and implementation of the main goals and objectives which are initiated by the top management of the company. This portfolio describes the strategic management of HSBC and Royal Bank of Scotland Group. Moreover, this report describes the comparison of the strategic choices of each selected organization. Further, this also gives explanation about the implication of the strategic decision on the competitive advantage of both the firm (Allio, 2006).
MAIN BODY Strategy can be defined as the plan or action which are designed by the firm in order to achieve a long-term goals or the overall aim of the organization. Further, strategic decision is not an easy decisions to be taken by the enterprise, however, this involves range of decisions to be taken and by taking due care (Marren, 2012). It is not always necessary that strategies made by the corporate always excel, sometimes it also leads to the failure. This is done when the firm does not assess the environment in an appropriate manner and also the analytical tools have not applied in a clear manner. This might impact the firm in an adverse manner and the decline stage of the company may get start if the strategic decisions are not made in an appropriate manner. Thus, for the success of the organization, senior management must do the proper strategic management so that failure of any strategy does not impact the organization's success and growth (Parnell, 2010). Thus, for this context HSBC UK and Royal Bank of Scotland Group have been taken in order compare their strategic management. HSBC is a British multinational banking and financial services company and it is headquartered in London, UK. It is the third largest bank in the world by total assets of ÂŁ1.87 trillion. The strategy has been taken by the company's top management for increasing the customer base and also to increase the turnover of the bank (Ireland, Hoskisson and Hitt, 2011). The firm decided to advice their clients by giving several alternatives for hiding their savings in order to prevent themselves from paying the taxes and eventually firm will also be saved from TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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saving the tax. Thus, this will help in raising the customer’s loyalty as the clients will get attracted towards this company and will invest as per the bank's instruction. This have created a win-win situation where company and their clients both have got benefited from this task. This strategy of hiding the customer's savings got failed as the government recognized this practice of HSBC (Sekhar, 2009). On the other hand, Royal Bank of Scotland Group is a British banking and insurance holding company. It is based in Edinburgh, Scotland. This bank is operating its services in a wide variety of banking brands and it offers personal and business banking through its offices which is located in Europe, North America and Asia (Ulwick, 2005). Further, this bank also made the strategy of taking over of ABN-Amro. However, this strategy of RBS got failed because they adopted the hostile takeover approach. Due to this, they had to face a lot of issues in the industry. Thus, these failures had a great impact on the organization and on its profitability. There are several reasons due to which strategic failure happens and this impact the company in an adverse manner. Some of the reasons of strategic failure are listed below:

Lack of Communications: When the organization does not communicate internally in an appropriate manner while doing the strategic planning then the strategies get fail. Further, it can be understood from the examples that the banks who failed in implementing the strategy (Venter and et.al., 2009). In HSBC, employees do not have clear information about the unethical practice going in the company. This strategy was planned by the top management and they did not communicate the aim behind this planning to their employees. This is how, the information about such practice got revealed in front of the government. On the other hand, RBS also failed while taking over the ABN-Amro due to the lack of communication among the staff members.

Poor Leadership Style: If the leaders does not apply the proper style of leadership than also the company can face the strategic failure (Raynor and Allen, 2005). Thus, in case of HSBC, leaders were not efficient enough to carry out this strategy in an effective manner. Further, the company had to face unfortunate event. Thus, leaders could not identify the potentials of their team members and this lead to the occurrence of event. While, the poor
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leadership as not an issue in case of RBS. The leaders were effective in this firm but the style adopted by them was not hard-hitting. This is why the strategy failed. It is because, they adopted the hostile approach of takeover (Moon, 2010).

Lack of Coordination: This is also one of the main factor which lead to the strategic failure. Thus, it is highly required by the management to maintain coordination among different department. In the case of HSBC, senior management did not create the coordination in all the departments, thus it lead to the failure of strategic plan made by them. In this, management failed in coordinating all the activities of whole banking sector (Zott and Amit, 2013). Further, there was a contradict in the activities of all department and this revealed the truth of the company in front of the market. On the contrary, RBS also failed in coordinating the departmental activities and the conflicts between the departments have resulted in the unsuccessful takeover. Already they have adopted the hostile approach while takeover of the ABN-Amro and due to this they could not maintain the coordination among both the firms and their departments which have lead to the failure of take over.

Failed to Understand the customers: Whilst implementing new strategy in the market, it is highly important for the company to understand their customer's needs and preferences. Further, by assessing the customer's demand, company can plan its strategy. If the company fails in understanding their customers than it cannot succeed in implementing new strategy (McAfee, Mialon and Mialon, 2008). Thus, in the case of HSBC, a firm fails to understand their customer's need as they did not wanted this unethical practice to be adopted by them. Without knowing their intention, company implements their plans which lead to the failure. These were some of the reasons due to which HSBC and Royal Bank of Scotland failed.
This failure have impacted both the firms in an adverse manner. Some of the impacts which two banks faces are as follows: Impacts on HSBC
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After getting failure in strategy implementation, company have faced many complications. Thus, when the strategy of the firm that is to hide the savings of the clients in order to get relieve in the tax will lead to the increase of customer's base and growth and profitability (Rothkopf, 2007). This unethical practice of the company get revealed in front of government and due to which company has to face several complications. Their reputation got affected and this reduces the customer base. In a financial or banking industry, HSBC's name got devalued and this reduces its customer's satisfaction level. Further, the firm has to pay large amount of penalty for adopting such unethical practice against government. This had impact their profitability because people started withdrawing their money and closed their accounts in the company (Lambert-Mogiliansky, Majumdar and Radner, 2007). Further, the turnover of the firm got reduced which directly affected its profitability. On the other hand, the staff members of the company also got demotivated and due to this performance of the enterprise got reduced. In a similar aspect, company has to start up its business in UK from scratch. Moreover, the cost have to be incurred in order to motivate their employees by giving rewards and recognition. Due to this reason over expenditure occurred and this reduces the profits of the company. Moreover, company also got impacted that they were unable to build the trust in the minds of consumers and this reduces the customer's base. Further, the HSBC bank has to feel ashamed in front of the government officials due to which the stakeholders got disappointed. Along with that, it will take too long to build the same goodwill which it had prior to the tax scandal (Strategic Analysis Model, 2001). Impacts on RBS When the RBS acquired the ABN-Amro that time hostile approach of takeover was adopted. That time company was running out of money and this decision was taken in order to overcome this issue. Thus, in hurry the company took the wrong decision and it becomes the worst takeover (Allio, 2006). Further, the company had to face large amount of impacts in the banking industry. Moreover, the RBS bank were unable to manage the human resource of both the firm as it was a sudden takeover. Due to this, company's performance got down. As both the firms were rival and this was the main reason of failure of strategic implementation. Thus, the TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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profitability reduced and further, the company collapsed. The British government bought the shares of the collapsed bank by 58%. However, the company got impacted as the government took over this bank (Marren, 2012). On the contrary, the management was unable to deal with the technologies and also the share price of the firm started decreasing due to the reason of reducing growth of the bank. Along with that, company also faces the problems of getting more prospective customers as after hearing the mismanagement of the company's personnel, market share of the RBS started declining. Moreover, company also got affected as the cost of operations exceeded the budgeted cost. This lead to the decrease in profits of the firm (Parnell, 2010).These were the impacts which have been faced by both the firms after the failure of the strategic planning. Further, the competitive position of the HSBC and RBS got disturbed and the top position held by the firm started declining (Sekhar, 2009). Thus, both the firms can be compared by their failure in implementation of strategic plan. Comparison can be made by analyzing the SWOT of both the company.
SWOT Analysis of HSBC
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Strengths
Weaknesses
There is a positive cash flow in the
organization.
investment purpose.
Financial management is skilled and
firm which has reduces the goodwill of
quite good (Rothkopf, 2007).
the company.
The brand name is strong which help in
Poor
credit
control
leads
to the
unpredictable cash flows.
Sales force and other employees of the
worker is highly skilled.
Unethical practices is followed by the
credit control by the management is
creating competitive advantage.
Sufficient fund is not available for the
Company
over-relies
few
of
its
customers (Moon, 2010).
After sales services are effectively
Innovation is limited in HSBC.
provided by the company.
The firm fails in delegating and training
Management makes the quick decision.
Employees are skilled and effective
the successors.
There are limited and out dates product
training and development is provided
range which makes
to them (Marren, 2012).
uninterested to the customers.
the company
Inefficient process is followed by the company.
Opportunities
The
company
can
Threats insolvent
the
competitors.
improved products can threaten the
The firm can improve the access
company.
towards the potential customers and
potential market (Zott and Amit, Company
can
develop
distribution channels. TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
new
Due to the tax scandal, significant customers may get lost.
2013).
Emergence of new competitors with the
Suppliers my not supply the quality requirements which may leads to the failure of the company.
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Further, the firm can focus on the
social changes such as demographics change,
change
in
customer's
and Tenucci, 2010).
preference, etc.
The
bank
Price rise from the suppliers (Cinquini
Political, legal and regulatory change may affect the company's growth
can
enter
into
new
negatively.
technological world so that innovations can be introduced.
Political and economic changes should be brought in so that trends can be met out (Raynor and Allen, 2005).
SWOT Analysis of RBS Strengths
Weaknesses
UK government have provided the
support to the bank which ensures
the reputation of the company because
adequate ratings.
the company got collapsed.
RBS owns a range of global franchises
and this makes the company globally This firm leads in the domestic market
There is a less penetration of the market (Sekhar, 2009).
leading financial group.
The failure of ABN-Amro has reduced
Declining operational efficiency have impacted the margins.
for having highest franchises (Zott and Amit, 2013).
The
company
approach
has
towards
an the
integrated wealth
management and banking.
Technological advancement have been adopted by the firm in order to have
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excellent infrastructure.
The employment base is highest as it have more than 140,000 employees. Opportunities
Threats
If the firm trades in a commodity than
it is expected to be profitable in the
highly competitive which can create
long run.
threat to the company.
Restructuring of the company may re-
position the RBS as a strong financial service provider (Strategic Analysis
The environment of the banking is
Government policies are changing due to unstable government.
Global financial crisis have imposed a
Model, 2001).
major threat on the company (Venter
The bank can go for rural and social
and et.al., 2009).
banking.
It can merge with smaller institution in order to stay safe. Thus, after assessing the internal strength and weaknesses of both the company it can be
interpreted that HSBC is more better in doing the strategic management than RBS. Although, HSBC has adopted unethical practice, however after that firm has reached to the top position again (Ulwick, 2005). Whereas, the strategy made by the RBS was vulnerable and it completely collapsed the firm and government has to buy the shares in order to maintain the reputation of the enterprise. On the other hand, after the tax scandal by the HSBC, company has learned to unfollow such practice and further, they have gained the trust of the customers up to certain extent (Marren, 2012). While the RBS has learned not to adopt the hostile approach while taking over the rival firm.
CONCLUSION After conducting an study over the strategic analysis of the HSBC and RBS, it has been concluded that it is highly important for the company to do strategic management in a proper TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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manner. It is because the failure of it cannot affect the company in an adverse manner. Further, the HSBC has failed in making the strategy which reduces its reputation in the market. The company is still doing better in the industry and has gained the competitive advantage after the strategic failure. On the contrary, RBS took over the ABN-Amro by adopting hostile approach which became the biggest reason for the failure of strategic planning by the company. Furthermore, this firm totally collapsed and British government has to purchase 58% of its stocks in order to maintain its reputations. Thus, the HSBC is more better as compared to the RBS.
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REFERENCES Journals and Books Allio, M., 2006. Practical strategy development: a wise investment for middle market businesses. Journal of Business Strategy. 27(2). pp.31–42. Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a loose coupling?. Journal of Accounting & Organizational Change. 6(2). pp.228–259. Ireland, D. R., Hoskisson, R. and Hitt, M., 2011. Understanding Business Strategy Concepts Plus. Cengage Learning. Lambert-Mogiliansky, A., Majumdar, M. and Radner, R., 2007. Strategic analysis of petty corruption: Entrepreneurs and bureaucrats. Journal of Development Economics. 83(2), pp.351-367. Marren, P., 2012. The devil's dictionary of business strategy. Journal of Business Strategy. 33(4). pp.58-60. McAfee, R.P., Mialon, H.M. and Mialon, S.H., 2008. Private v. public antitrust enforcement: A strategic analysis. Journal of Public Economics, 92(10), pp.1863-1875. Moon, H., 2010. Global Business Strategy: Asian Perspective, World Scientific. Parnell, A. J., 2010. Strategic clarity, business strategy and performance. Journal of Strategy and Management. 3(4). pp.304–324. Raynor, E. M and Allen, D. 2005. Preparing for a new global business environment: divided and disorderly or integrated and harmonious?.Journal of Business Strategy.25(5).pp.16 – 25. Rothkopf, G., 2007. A blueprint for green energy in the Americas: strategic analysis of opportunities for Brazil and the Hemisphere. Inter-American Development Bank. Sekhar, S. V. G., 2009. Business Policy and Strategic Management. I. K. International Pvt Ltd.
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Ulwick, W. A., 2005. Business Strategy Formulation: Theory,Process and the Intellectual Revolution. IAP. Venter, D. and et.al., 2009. Global business strategies : managing for global competitive advantage. Oxford University Press Southern Africa. Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization. 11(4), pp.403-411. Online Strategic
Analysis
Model.
2001.
[Online].
Available
through
<http://www.auburn.edu/~boultwr/html/strategic_analysis_model.htm>. [Accessed on 1 February 2016].
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