Unit-43 New And International Markets Assignment Sample

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Introduction :New And International Markets

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Executive Summary:

This report will focus upon the marketing strategies for multinational companies named, HSBC-investment banks and financial services. A thorough evaluation will be reflected including the importing and exporting process and tapping into the international market. The paper discusses PESTEL analysis of HSBC for comprehension of the environment of international business. Marketing Strategies implemented by HSBC to tap into the international market. This paper will take heed to the potentiality of Southeast Asia and how Small Medium Enterprises are foothold their trading.

The main aim of this management report is to investigate the marketing strategies and significance of globalization. Although with the help of digitization, tapping into the global market is becoming easier. Despite the plethora of opportunities, the international market is a challenging place to survive. This report will focus upon the marketing strategies for multinational companies named, HSBC-investment banks and financial services. SWOT analysis will be utilized thoroughly to analyze the internal strength of the company along with threats and opportunities will be evaluated at the same time in respect to the global market (González, et al., 2019). Subsequently, this paper will discuss the significant global drivers to penetrate the international market. Hence, tariff and non-tariff obstacles of the global market will be discussed elaborately. A thorough evaluation will be reflected including the importing and exporting process and tapping into the international market. Lastly, this report will conclude with appropriate recommendations for HSBC to arrange sustainable market strategies to tap into their business and spread all along in Southeast Asia.

Company background:

In the Global Private Banking and Wealth Management sector, HSBC is considered the world's largest finance service in the world. The headquarters is in London, United Kingdom. In 1865, HSBC was founded with branches situated in Hong Kong and Shanghai. Interestingly, the name of the bank still reflects the name of the initial letter of the Hong Kong and Shanghai Banking Corporation (Karjaya, et al., 2019). In 1992, the organization faced a watershed moment in the history of UK finance as HSBC accomplished a significant hold on the UK's market. Along with the transformation of the sovereignty of Hong Kong to China, this acquisition permitted the bank to move its headquarters to London in 1993.

Small and medium enterprises (SMEs) are an evaluative operating force in Southeast Asian economies, accumulating for 69% of the government labor force from 2010 to 2019, a report from the Asian Development Bank.

Explain the global business environment in which small and entrepreneurial businesses operate.

Global business operation is considered as an immense strategic method and very critical to be sustained. The paper discusses PESTEL analysis of HSBC for comprehension of the environment of international business.

Political: Political aspects are important which can obscure or support the expansion of the business in global markets. The rate of tariff, taxation, the law of environment, and many others are obtained under political aspects. HSBC is willing to expand its business into the south-east Asian countries- the Indian and China markets. The financial company should analyze the governmental impressions about those countries where they pursue to penetrate, hence the strategy for penetration into global markets could be effective (Tuan, 2020) However, the democracies of China and India are among the largest and the size of the population is more than 1 billion. In addition, south-east Asian countries are following the effective taxation process and undoubtedly have massive markets.

Economical: Since HSBC has a strategy to expand into south-east Asia, the rate of tax and interest, exchange rate, customs, and the ruling schemes of the government should be evaluated properly. As HSBC has a b capital structure, it is predicted that HSBC plc can manage the necessities effectively (Naradda Gamage, et al., 2020). The average progressive tax rate in south-east Asia is more than 40%. However, the GDP has reduced over some time.

Social: social environment provides challenges due to the behavior of the customers. Although south-east Asian countries usually follow western trends, hence this will help the organization to expand effectively. However, the economical capacity of the customers, social patterns, and attitudes should be assessed properly.

Technological: south-east countries enable e-commerce operation largely, hence the organization should be technologically advanced and digitally active. These aspects obtain intellectual assets rights, modern customer care services, investments for research and development, etc.

Legal: HSBC plc. is a British multinational financial service provider. Since the organization will serve other foreign regions; hence the legal and lawsuit aspect will be a crucial issue. Global legislation, norms, and regulations should be followed strictly (Liñán, et al., 2020).

Environmental:Currently, environmental aspects influence the business immensely. Southeast Asian countries are among the susceptible areas across the globe to climate change. More than 55% of issuer states environmental factors are crucial to their company. Therefore, HSBC plc. should include green programs and environmental protection awareness.

Analyze the threats and opportunities that face SMEs in an increasingly competitive global environment

Strengths

• HSBC obtains effective capital which indicates that the bank can withstand financial volatility. Some credit issues affected its competition.
• The bank obtained huge capital which indicates the bank will not depend on governmental support during the crisis period.
• HSBC has founded itself within a set of emerging businesses for its competition, generating a b ranking earlier to several bank entrants.
• Diverse employees, ideas, perspectives have assisted HSBC to create a powerful, dedicated, and loyal workforce. In addition, the bank has invested a huge resource for the development of its workers.
• HSBC has undertaken several cost-cutting calculations to make the operations more effective and boost long-term profitability.
• The bank has occupied fresh economical markets and developed financial products along with tools that assist in boosting profitability to balance defeats in several.

Weaknesses

• HSBC's connection with the SMEs sector has created its vulnerability to greater risk, which can lead to revenue reduction.
• HSBC was engaged with the borrowing sector in the United States and in 2012 the bank experienced a monetary scandal which has to some extent affected the reputation of the bank which is still recovering. Currently, the bank disclosed that the bank is investigating potential forex business sector operations, which will not assist its endeavors to repair its brand name (Reza, et al., 2021).
• HSBC has disclosed notice regarding some cost-cutting calculations that include an adverse statement of the company both its shareholder's grounds and retained potentiality.
• The branding of HSBC has been concentrated on ranking the organization as an international bank, cutting association with the local customers because of the homogenized aspect it is making that will not acknowledge local requirements.

Opportunities

• HSBC's powerful capitalization situation will assist it to obtain supplementary assets to future reinforce the bank and maintain its business framework.
• HSBC has successfully accumulated market share and bench head in amalgamation markets through acquisitions, such as Bank Ekonomi in Indonesia and related financial services in selected emerging sectors.
• HSBC's developing global situation can assist to reduce the effect of externally driven forces including financial and credit challenges that lead to affect the competitiveness of the global market. This also generates the convenience to hold its brand worth as a worthy and trustable sector to invest capital and for further lending functionalities.
• HSBC often faced discouragement or negative press coverage from challengers. Though it seemed to be a threat, strategies can fold threats into opportunities. As HSBC can observe their missteps, they can learn from the previous mistake. This may comprise a formal press meeting to clear things out for their customer and holds social responsibilities for ethical decision making and to supervise transparency along with needful action towards the bank's conducting environment.

Threats

• Economic losses, credit problems, and unethical attitudes across the global banking sector and the institution of finance can offer threats by prospects along with people's fear of financial losses might stimulate the reduction possibilities and customers.
• The international credit issue has stimulated challenges for every bank in respect of product lending for multiple of its client ground, the lending capacity reduction to several possibilities.
• The current defaults within the housing sector as decreased home worth and increasing rates of interest can additionally threaten the profitability of HSBC. Further probes and scandals could undermine confidence in HSBC.
• Regulatory varies across the countries where the operation of HSBC can also threaten the profitability of the bank. The bank might renovate its mode to report and offer verification of banking, product lending, and investment exercises.

Provide evidence-based analysis of the global business environment in which small and entrepreneurial businesses operate using specific examples

It is very significant for an SME to evaluate and recognize the internal strength minutely. By examining SWOT analysis, an SME can initiate it productively. Hence, there must be more than one focus area for an SME. HSBC has already targeted the Southeast Asia zone for its four major economic transitions such as subsequent growth in wealth and huge acceleration of digitization. Thus, the international market is different from the local market. It will be critical for HSBC to monitor its strategies as per the southeast market demand. HSBC has initiated to mobilize their financial service and to assist their shareholders to avert the challenges and convert the risk into opportunities (Prashantham and Birkinshaw, 2020).

Critically analyze the implications of threats and opportunities that face SMEs in an increasingly competitive global environment.

There are some risk factors to stepping into international trade. This is a common process of global business culture due to the intensity of international aggression. However, there are different scopes for an SME also and only need to obtain better plans to grab the opportunities and reduce threats. HSBC provides attractive financial products and advanced customer services. However, HSBC must encounter some threats such as tariffs, politics, etc.

Determine and analyze the advantages of international trading blocs and agreements.

A business bloc refers to a process of signing a contract with the norm and regulation between two or many countries. The contract is generalized through easing trade restrictions between the nations hence the companies can run a business operation effectively between the countries due to the agreements (Faulconbridge, 2019). This is done to limit the competition of global organizations.

Manufacturing cost: the contract between the nations plays a pivotal role to reduce manufacturing or production cost thoroughly. Eventually, new products could be launched. Due to the large population of the south-east Asian countries, there will be more demand for financial products of HSBC.

Maintaining quality: The organization should focus on the product's quality. This will increase brand value and awareness to the people of the host countries.

Increasing profitability: organizations launch new products when the company predicts that the customer's demand for the product has increased, so the company increases production and sales. Hence, the profitability also increases.

Explain the various tariff and non-tariff barriers that exist in the international trading environment.

There are some limitations by activating custom duty and several factors of global business which are imposed by Associated administrative and agencies. The administration imposes these barriers to advance the business method of the country and eliminate aggressions. Tariff restrictions could be divided into import and export tariffs. The nation which is exporting to the other nations must pay an export tariff to the associated government (Mwika, et al., 2018).

There are several excise duties and obscurity charges on global business:

Tax restrictions: global business organizations have some responsibilities in terms of tax, excise duty, charges, and other factors while the operation is conducted between two countries (Kinzius, et al., 2019). Tariff restrictions are levied on hence the government could earn excess income for conducting the nation and also eliminate the needless aggressions to save the local business. At the same time can remove unnecessary competition to save the local companies. HSBC has a plan to introduce its business in south-east Asia. Hence the organization must follow important taxation norms. Thus HSBC needs to evaluate tariff barriers of the foreign countries.

Non-tariff restriction: The non-tariff barrier is imposed by the government are:

Quota: Government can make restrictions that there is product limitation which could be exported and imported. HSBC might face such barriers due to local financial institutions.

VER: Voluntary Export Restraint means the contract between both nations to trade maximum product amount limitation.

Subsidies: local companies have to compete with global organizations to develop the efficiency level. The host authority eases barriers for the local business in terms of subsidies. However, HSBC must not collaborate with the local organization.

Government dealings: Administration is always prone to maintain high export and less import for the development of the local companies. Due to this governmental authority strictly checks all imported items to maintain the norms.

State trading: the trading schemes of the State are different from local organizations' trading policies. Certain norms should be included by the nation to trade products and services.

Evaluate the advantages of international trading blocs and agreements and their implications for SMEs.

In terms of global trading responsibilities, trading with large organizations is a powerful investment for international business expansion. Trading blocs will promote free trading incorporation which considers business without tariff. Also offers good relationships with other nations in the trading bloc (Kwon, et al., 2018). Trading Bloc will assist HSBC to achieve more new customers and will gather opportunities to tap into the global trading business more precisely in the Southeast Asia region.

Produce valid and justified recommendations for use of different approaches in an international context.

It has been evaluated that majorly a variety of factors for global trading are introduced including centric polycentric geocentric and region-centric.

Ethnocentric approach: this approach refers to the mission, and vision along with the recruitment process that would be executed from the native country in respect to the global business aspect.

Polycentric approach: this approach means the international trade concept to apply the mission-vision of the foreign nation in respect of applying the function and employee recruitment. The Centric approach considered that the objective and the employee retention will be considered upon the parent country to maintain the international business polycentric approach reflecting the mission vision and employment incorporating the host countries objective and mission.

Geocentric approach: this approach plays a significant role in the context of international business. For the international context, the geocentric approach is very significant. It indicates the materializing concepts without nationality or governmental perspectives. As an international trading advisor, a geocentric approach would be perfect for this trading approach (Tien, 2019).

A geocentric staffing policy employs effective employees in their organization without considering their nationality. HSBC must implement this approach to build trust in the global market for their customers. It can also help to establish a nucleus of international executives and generate equality in corporate culture and management. The geocentric approach will truly impact a mode of entry for HSBC as it refers to thinking global and acting global.

Regiocentric approach: Regiocentric approach incorporates related strategies for a collective of nations. Whereas the geocentric approach is uniquely applied for the trading as it has metalizing ideas, has no boundaries of setting objectives and in the recruitment process.

Determine the advantages and disadvantages of importing and exporting and how to secure an agreement.

For conducting business, imports and export are both constitutive techniques. International trading evolves for procuring merchandise including other various elements from other states considering export reflects the process of transferring merchandise and service to various countries. According to this report, HSBC finance services have a target to enter into the southwest region to elaborate their trading (Ismail, 2019). Hence, HSBC finance service has to accumulate services with export and import solutions for customers. Some advantages have been discussed.

According to the swot analysis, the wide range of networking will assist HSBC to achieve safe, secure, and feasible trade finance solutions. Those are beneficial for both ends including incorporating a trading account to import and providing solutions to export financial services. Despite that, some challenges may occur including high range funding complications and regional market competition (Feenstra, and Sasahara, 2018).

However, to accomplish a safeguarded deal HSBC, investment banks, and financial service providers should accumulate the ethical procedure minutely. Thus, the required amount of capital must be raised to tap into the international market. For providing a solution and to receive a smooth agreement of export and import, a legal advisor is a must for HSBC's end. A legal advisor can assist HSBC from the taxation gap and can also guide through the category to bring down the tax amount for the organization and their customer.

Explain the differences between merchandise and service imports and exports.

Merchandise international trade and exterior trade: Merchandise international trade is the procedure of developing measuring physical products from foreign nations. In this context, physical assets are considered merchandise imports. There are both side agreements for exporting and importing goods. Along with that they mutually agreed to pay their export tariffs and customs duties (Raghutla, and Chittedi, 2020).

Service exports and imports: It is a global factor from emanating non-product service entities or particular earning from other nations in trading of furnishing service. Therefore, payment has to be received to an individual or company for accepting services that are not substantial such as financial services, consultation services, etc.(Ali, et al., 2018).

Thus there is a significant variation between international trade and external trade for international trading.

Implement the appropriate import and export strategies to an organization and potential recommendations on how they could be applied in a global context.

For sustainable import-export-trading, an entity must follow particular procedures. Import is considered as to receive merchandise from other nations in terms of exporting is implemented to earn more revenue (Rahman, et al., 2021). HSBC financial service provider's objective is to expand their business in Southeast Asia. Therefore, this organization has to strategies a few import and export processes. Those procedures are-

Import process:

• Accumulating sources of revenue
• accumulating import license
• handling transportation documents
• generating an offer to the customers
• submitting legal documents with LC (a letter of credit)
• Appointment of clearing and forwarding agents
• Receiving documents
• Arranging bill of entry
• Managing delivery order
• Clearing merchandise
• Payment to the clearing agent
• Clearance to an exporter

Export process:

• Procuring IEC (Importer-Exporter Code) number (De, 2020)
• acquiring export registration
• dispatching samples to the importer regarding the order
• creating manufacturing products
• Prevailing quality control certificate
• Forwarding products for transit
• communicating clearing agent
• Handing the products over to the clearing agent
• arranging part payments
• generating ethical documents of the importer to the bank
• Receive payment from the importer

HSBC requires following the above-mentioned aspects to conduct imports or exports. Since the bank is entering Southeast countries, the import and export process should be enabled. This is recommended that HSBC must follow all legislation and regulation and written papers, thus the process of import and export could be effective.

Evaluate the various methods by which SMEs can tap into international markets.

There are several available ways by which an SME can set foot into the global trading market. HSBC also expanded its ventures in the global arena. With that fact, the entity has to go through with a few strategies. To achieve sustainable international expansion, HSBC has to assess the niche market to accumulate the required customers and build effective channels to gain trust along with that legal consideration must be encountered in this situation.

There are various techniques for tapping into the international market. Those are discussed here:

Licensing and franchising agreement: HSBC can go international by licensing and franchising concurrence. Licensing will provide HSBC to receive legal rights to operate services of several other companies in the Southeast region.

Establishing joint ventures: Establishing joint ventures is an alternative way to expand in the global market. HSBC Plc. has created joint ventures with 50% equity interest in HSBC Life Insurance from the National Trust Limited (Chan, 2020).

Partnership with potential entities: Partnership with established entities is one more opportunity to tap into the international market. The SMEs can receive opportunities on a big margin to operate the business. Thus, a partnership can be a potential option for growth in the international market.

Establishment of branches: this can expand the opportunity to grow internationally. This process will also help to build the brand value of an organization.

Compare and contrast the various ways SMEs can tap into international markets, investigating the pros and cons of each method.

An SME can step into the global market regarding franchising or authorizing, collaboration, partnership with giant companies, and establishing more branches across the foreign nations. However, all methods obtain advantages or disadvantages, which are called the pros-con effect (Dinu, 2018).

Licensing and franchising:

Pros:

• No deficit will be encountered
• No, require to produce any expenditure for the licensor
• Evolving valuable knowledge from the licensee
• No threat of getting duplicated by another organization.

Cons:

• Licensee can withdraw the contract and set up own trading sector as the same aspect of the licensor
• Concealment will be disclosed.
• increasing conflict.

Joint ventures:

Pros:

• Feasible opportunities
• High amount scale of trade can be attainable
• Growing communication networks

Cons:

• Disparity of ownership
• Disagreement of interest

Partnership with a large organization:

Pros:

• Enormous number of production
• Growing profitability
• Better operation

Cons:

• Reduced scope of concerning plans
• SME becomes inferior here

Establishment of branches:

Pros:

• Accelerating business ventures
• Connecting more customers
• Serving in more business

Cons:

• receiving trade barriers
• Complication risk of immigration laws.
• Challenging cultural differences.

Justify recommendations with associated critical consideration of various processes

As an international trade advisor of HSBC Bank, specific recommendations have been made for the organization to accomplish the goal of expansion in Southeast Asia. Firstly, a geocentric approach will be effective for business expansion with no barrier of rule. After that, establishing branches involved in joint ventures will be a ber move to tap into the international market (Haapanen, et al., 2018). Licensing and franchising can bring more stability and will help to gain trust in their customer. For exporting finance services to avoid taxation risk organizations should avail an advisor for custom duty and legal procedure.

Conclusion:

Therefore, to step into global trade, there exist some particular considerations. An organization should analyze the scale and opportunities for making the business successful. Meanwhile, swot analysis has been evaluated to minimize disadvantages. It is crucial for penetrating any fresh market the expert should analyze the system of entering for international business organization. Effective marketing strategies should be obtained, hence HSBC, the bank could derive to create effective strategies and obtain better planning. The organization must determine strategies more precisely in such a context. SMEs must compete with big organizations. Therefore, small enterprises need to get achievements from trading. This paper has demonstrated these considerations for HSBC. Since the company has a plan to develop the business into a global context, the important criteria and methods have been illustrated in this paper.

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