Redo

3.2 The way in which market forces shape organisational

responses
There are five forces having a direct impact on HSBC. They are the threat of new entrant, the
threat from substitute products, the bargaining power of customer and the bargaining power of
suppliers.
The threat of new entrants to the industry
Due to the fact that HSBC has many rival in UK and different countries all around the world, it
has to make a plan to solve this problem. HDBC has it own reputation because it has been
established for a long time. This enable HSBE to block too many new entrants - new banks - that
come to UK bank industry. If these new entrants want to gain customer in UK market, they must
tell the difference between their power, ability or good quality of services and the rivals'. The
customer will take these things into account before decision taking. They also consider about
switching cost. If the switching cost of HSBC is high, the customer will not choose new entrants.
Moreover, HSBC take a lot of aids such as tax reduce, technology research from the government
because of its responsibilities for society. These aids will be obstacle for any new bank.
Generally, the barrier is high so that the threat of entry is low. As a result, it is essential for HSBC
to keep aids from the government.
The threat of substitute products or services
Thank to internet, a website can be established within little money. The internet makes many
organization uses smaller a mount of money to provide the same service within the lower cost.
The customer will change the service to other organization because of convenience and low cost
of this new service. As a result, the internet make the barrier of bank became disappear.
However, the customer has much belief in the current bank so that the threat of substitute
products or services is reduced.
The bargaining power of supplies:
The suppliers are divided into two groups. The first group that supply the banks with its core
product money include the credit market and the central bank. The credit market is supplier of
money to the bank. Besides, The Central Bank is the most source of supplier of money for the
commercial banks and financial institutions. Operations of banks are essential for the
development of economy. The second group that supply services that assist in the banking
operations. They are the providers of information technology, security guards, and even the
employees who perform the banking operations. The bank's other suppliers, who help to run the
operations are the ones like the providers of Information technology, security guards, the

providers of furniture and also the employees who perform the banking operations. The suppliers
of information technology create software enabling the banks to carry out their services. This
suppliers are aware of the banks cannot do their tasks without this technology therefore they sell
these technologies to the banks with a lot of money. Another supplier is security guards, but the
automated alarms are being used to this threat is minimized. Moreover, there are many students
graduating and ready working in the banking. As a result, the power of the supplier in the
banking industry is low and cannot put a threat to the banking industry.
The bargaining of customers
There are many banks in England, the customers can easily go to one bank and ask for their
services. They also come to other banks and bargain to get a better price for the service. There
are individual customers who keep money in the bank with intention to enjoy the percentage of
interest. Moreover, there are customers who own a huge business. They get a high bargaining
power because they use banking services monthly for their business. Therefore, the customer has
big influence on the bank. Individual customers are in compare to corporation customer, the
corporation customer's power is higher because they enjoy a large amount of services. However,
this power is not much to affect the banks.
The rivalry amongst current competition in the industry
If a company expands its business, it will be put under pressure of intense competition. HSBC
also face this situation. HSBC are coping with its rival such as Barclays and Lloyds. They make
the marketing share of HSNC go down. Moreover, HSBC deal with those who fake its services.
They make HSBC lose its image in the customer's mind. Therefore, HSBC have to improve their
service quality with suitable price to help them avoid those who fake the product of HSBC. To
sum up, HSBC needs to evaluate the market and make a suitable strategy based on these five
basic competitive forces, if it wants to run its business well in the future.

3.3 An analysis that judges how the business and cultural

environments shape the behaviour of a selected
organisation
Political factors
Because of a number of finance crises in recent decades, they forces England government to
tightly control the activities of banking system by stricter laws and regulations, which breaks
down the power of banking sector. There is an increase in governmental activities such as
inspection parameters and enhancement of reporting requirements. Bank of England is the

central bank and this bank can affect the operations of all banks in UK by monetary policies. It
directly impact on the activities of all UK banking industry.
Economic factors
Banking Industry is directly related to the growth of the economy. UK suffered from the
financial crises in 2008 therefore it has the lowest growth rate of GDP for 4 years later. In 2012,
the total value decrease of GDP is up to 1.3% (0.3% higher than expected). Unemployment rate
is up to 8.1%, which results in lower demand of goods. Businesses are in a very difficult time.
Therefore, the government creates a budget, which affects the banking sector to boost the
economy by giving certain concessions or facilities, to attracted more deposits towards the banks
and in turn they can lend more money to the agricultural sector and industrial sector and
increasing the bank's revenues. Moreover, UK Banking also low the interest rate for loans to help
businesses enough finance for remanufacturing and paying their bad debts. By lowering interest
rate for savings, UK banking can cut down their cost and offer cheaper loans for businesses.
Social factors
Social culture factors also affect the business. They show in the ways people behave in country.
There are several socio cultural factors such as career attitudes, consumer confidence and worries
regarding pensions having impact on the operations of UK Banking.
During the recession time, the people lose belief and confidence in the ways of savings such as
gold, share, stock bonds, divident and etc. Therefore, they put money into bank accounts to gain
percentage of interest on their amount of money. That ends up with the abundance of money in
banks, leading to lower the value of money. Whereas, customers who borrow money from the
bank reduced, because they cannot afford the current interest rate. As a result, UK Banking
decides to lower the interest rate of savings with intention to cut down the cost so that they can
offer a lower interest rate for borrowings from banks.
Technological factors
Technological growth allows UK banking to offer online banking system. This is more
convenient for customers and more effective for the banks. This enables banks to asses a number
of Internet users which is growing up rapidly. Moreover, the latest developments of technology
in computer and telecommunication have encouraged the bankers to change the concept of
branch banking to anywhere banking. The use of ATM and Internet banking has allowed it. Aside
from ATM, banks release Credit card has encouraged an era of cashless society. Today
MasterCard and VisaCard are the two most popular cards used all around the world for making
payments. Another effective approach is mobile banking. The average number of mobile banking
transactions conducted weekly via mobile app more than doubled between 2012 and 2013, from
9.1 million to 18.6 million (British Bankers Association, Emarketer, April 28, 2014).

4.1 The significance of international trade to UK business

organisations
UK organization shoul be expanded over the world because of some reason. First of all, UK
organiztions are able to access many new markets, creates more new sources of revenue and
could find partners from other countries, enabling them to raise revenue. Secondly, it help create
mark for UK in foreign market. and motivate local firms to develope and moidify products in
order to meet demand of international customers. Last but not least, UK can attract better human
resources.
In term of international trade drivers, there is the exploitation of a UK comparative advantage.
UK organizations are promoted to produce good with better cost compared to others. In addition,
The UK has a strong network of trade relations with non-EU countries with an interest in open
markets which are in compliance with World Trade Organization (WTO) rules. UK also invests
in market of North America Free Trade Agreement including US, Canada and Mexico, which
through EU. This brings about new opportunities in environmental business. Furthermore, UK is
a country where has cultural and technical convergence. The level quality of products increased
promoting innovation, design and the application of new technologies. Trade will also encourage
the transfer of technology, products and cultural between countries.
In case of International Trade Barriers, The common barrier to international trade are tariffs,
quotas and exchange currency controls. Firstly, a tariff is a tax on imported product collected by
the government. The two main aims of tariff is to limit imported products and raise revenue.
Secondly, quota is a limit on the amount of a certain type of good that may be imported into the
country. A quota can be either voluntary or legal enforce. Finally, exchange controls is
modification currency. This seek to control foreign currency and domestic currency.
There are four types of trade blocs. The first one is Free Trade Area, which are created when two
or more countries in a region agree to reduce or eliminate barriers to trade on all goods coming
from other members. (Trading blocs, Economicsonline). Any imports from other countries in EU
will not be charged tariff. However, they have import tariffs on imports from the countries
outside EU. The second one is Custom union, where all member have consensus for removing
tariff barriers between members and acceptance of a common external tariff against nonmembers. UK through EU creates barriers to other non-member countries. The third one is
Common market where the member nations have custom union agreement with one another and
they accept to freely move between member countries, this lead to free movement of labor and
capital amongst the member nations (Trading blocs, Economicsonline) UK and other coutries in
European are joining this common market, enabling company easily pass over barriers. The last
one is Economic Union where is highest level of integration. This arrangement is akin to
economic and monetary union amongst the member nations. Euro has been used between UK

and other members in EU and have the same baking system, which allow them to complete
unification of monetary and fiscal policies.

4.3 Evaluate the impact of policies of the European Union

on UK business organisations
Social Policies
The UK government is trying their best to encourage business efficiency, and then UK
organization will have more abilities to compete in international markets and provide better job
oppotunities. The government has also created a program 'The New Deal' that help the people
find out suitable job. This program offers people the opportunity to training and gain job
experience. This enables UK banks to take more professional and skilled woker and get
businesses from companies.
Transportation policies
The tax that UK organization have to pay for make a valuable contribution to the community.
The government will take full use of this amount of tax by spending money on project like
airport roads, aid to developing countries and many other items. These infrastructure help UK
organization to transport their product as quick as possible. It partly promotes UK organiztion
more and more develop.
Financial Policies in 2015
The European Commission will inform plans to keep the balance of the bloc's capital markets in
2015 and reduce the reliance of Europe's businesses on bank lending. Therefore, the bloc's new
financial services chief has released. The UK bank will have less influence on firms. This
regulation states that the UK banks will be foreced to boost the amount of capital they hold on
their balance sheets, with intention to avoid future financial crises.

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