Case Study: HSBC Balance Scorecard

HSBC Holdings plc is a global financial services company in Canary Wharf, London, United Kingdom. As of 2010 it is the sixth largest bank in the world and the Financial Services Group and the company ranked eighth is a composite measure of Forbes magazine. On June 30, 2010, it had total assets of 2.418 trillion U.S. dollars, about half in Europe, fourth in the U.S. and a quarter was in Asia.

HSBC Holdings plc was founded in 1991 in London by The Hong Kong and Shanghai Banking Corporation, to serve as a new group Holding Company and to allow the acquisition of British Midland Bank. The bank origins in Hong Kong and Shanghai where the branch was opened in 1865.

HSBC is a universal bank. It is organized into four business segments: Commercial Banking, Global Banking and Markets (Investment Banking) Financial Services (retail banking) and Private Banking.

HSBC first listing is on the London Stock Exchange and is part of the FTSE 100 Index. It has a secondary listing on the Stock Exchange of Hong Kong (which is a component of the Hang Seng Index), the New York Stock Exchange, Euro next Paris and Bermuda Stock Exchange €. Since August 2010, it was the largest company on the London Stock Exchange with a market capitalization of 115.8 billion pounds that had been achieved.

The balanced scorecard developed in 1992, belongs to a strategic management system that includes efficient implementation and effective policies and tasks necessary to promote the company’s customers, employees and management meet.

The usage of the e Balanced Scorecard can actually vary depending on the structure and philosophy of the company. But in the case of HSBC, it centralizes the use of Balanced Scorecard in a single department. The Balance Scorecard may also be able to identify closely with managers and solve a variety of problems.

Background and problems

The research problem to be addressed: “A study to analyze financial performance and management of HSBC”

The researcher wants to highlight:

A. Financial Perspective

B. Customer perspective-which is an approximation of HSBC’s efforts to reach target groups

C. Business Process perspective – shows an alignment of key business processes from HSBC

D. Lessons and prospects for growth – shows an approximation of the learning curve HSBC

Research Objective

• The researcher wants the vision of HSBC leading operational objectives. Communicate the vision and the individual results.

• The researcher wants to organize wants to commute the HSBC’s Business planning, Feedback and learning and then adjusting the strategy accordingly using the balance scorecard

Literature Review / Theoretical Framework

HSBC is to have sustainable growth as a market leader in the overall market in financial and insurance sectors, as well as leadership in this segment. In both cases, the insurance and financial services at HSBC will play a crucial role. HSBC is able to provide overall guidance to the rule through the acquisition of other banks and financial institutions and utilities are combined into a new, large undertaking. Train their employees, business processes and introduction of new technologies will strengthen the positions of the various financing with HSBC Insurance. This means in practice in the economies of scale to be able to create a distribution network for local and international financing and insurance services. When a market is already controlled by other companies, HSBC has devoted his attention to the development of a premium segment with its funds and various insurance services (2004).

HSBC aims to ensure sustainable growth, while continually improving the profitability of the company. The strategy to achieve this consists of four elements:

• The struggle for leadership positions in attractive markets

• Always focus on the sharing of financial and competitive segments of the insurance industry.

• Work to improve business processes efficiency and reduce operational costs.

• Continued growth through targeted acquisitions, if they are able to create added value for shareholders.

Balanced Scorecard and HSBC’s Improvement

1)Translating HSBC’s vision into operational goals.

The appearance of the Panel of the economy reflects the difficulty in managing the growing need for organizations, that require the effective use of valuable resources such as money, materials, equipment and people. And HSBC is no exception to them. That is why the Balanced Scorecard is used by the company to the most effective ways to use their resources through the application of methods of analysis disciplines such as mathematics, science and engineering to determine coordinate derivatives (2003).

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Through this process, problems with HSBC meet operational objectives in different ways and alternative solutions are then forwarded to management. Management then selects the appropriate measures in accordance with business objectives. Often, the Balanced Scorecard complex issues within HSBC and the high level strategy, resource allocation, design, production and prices and the analysis of large databases.

2) Communicate the vision and the individual results.

All businesses and organizations are governed by their goals and tasks. These objectives are often considered a “corporate vision” or “business philosophy” .Therefore, some strategies are implemented to achieve these objectives, and is a key element in the characterization of a company or organization. The staff is clearly a key indicator to determine the characteristics of a business or organization.

It is known to play a crucial role of human resources for HSBC differentiation and a potent source of competitiveness for the company. That’s why HSBC is constantly investing in the development of human resources, even in times of recession. But determining the extent that HSBC may want to develop human resources depends on its financial performance for a specific period of time.

With the Balanced Scorecard from HSBC in the last decade has transformed operations at very low levels of writers to the success of the organization . However, budgets are also increasing at a rate faster than the gross national product. In the midst of this influence on growth and increase, managers and executives from HSBC are misled by the question: How to invest in human resource development? Certainly the answer will not be easy, especially since the actual level of expenditure is often an elusive figure, depending on the financial performance of the organization. However, the balance scorecard allows at HSBC’s investment in human resources development to be determined.

3) Business Planning

Operational planning is a necessary function within HSBC. In most financial and insurance companies that process is often very difficult due to the rapid evolution and the occurrence of unanticipated events. HSBC uses different methods depending on the speed of customer demand and level of financing, insurance. However, HSBC aims to change for each transaction is not: the efficiency and effectiveness

Business planning by HSBC for its activities and resources will be implemented over time coordinates. This allows the company to achieve its goals with minimal resources. Business planning also enables the company to the status of their business plans at regular intervals to monitor and control operations. Planning activities of HSBC is in four elements: planning, production planning, financial planning and budgeting.

The program includes the specification of the onset, duration or length, and at the end of planned activities.

Work planning is to allocate the necessary staff and delegation of responsibilities and resources

Financial planning is to identify the types and needs in terms of equipment.

Cost planning is to determine the costs and the possibility of occurrence.

4) feed back and learning strategy and adaptations accordingly.

One of the most important factors in improving HSBC is to measure the implementation and use of the Balanced Scorecard as a performance indicator and measures around customer satisfaction. These measures or indicators are measurable characteristics of products and services company that HSBC is normally used to study and improve performance. The indicators are chosen that are able to cover the essential factors that are essential for improving the operational and financial performance of HSBC. Through analysis of accurate information from monitoring processes, measures or indicators themselves may be analyzed and to increase its support for the objectives of this type.

Methodology:

There is certainly a need to reconcile both the inside and outside functions. While HSBC’s operations management involves focusing on the usage of the balanced scorecard as its core competency with market position following its resource base, the company will be at a disadvantage if it neglects the macro and finance and the industry environment. Therefore, HSBC has to be aware of recent changes in the management of operations and changes in the political, economic, legal and demographic or develop customer outside functions such as identifying the market, the link Technology channel bonding, and monitoring.

The benefits derived by HSBC, is to use the Balanced Scorecard as from higher incomes. Knowing what the market demands and trends could help the company come to fully exploit its research and development capabilities with insurance and financial services which are not only profitable but also high quality. The strategic option as a marketing tool, where attention to the proximity with customers and focus their comments. On the other side of the coin, there is a great mobilization of resources and risks associated with HSBC will be granted.

However, the above option seems to be a practical strategy in the wake of globalization, because there is an abrupt change towards a more integrated global economy and independently. Key stakeholders should not object if HSBC heart of business is not threatened. Centralized control of the company activity is anticipated that key obstacles should exist in the exercise of this option, unless additional time is necessary, given the scope and duration of operations of HSBC.

In the meantime, the partnership with HSBC’s main competitors is ridiculous at first glance as a measure. But after careful consideration, the measure could pave the way for the company to continue to improve its management. The conclusion is that both parties are increasingly significant in this type of alliance. High performance measurement in operations management capabilities can be combined with their competitors suddenly invincible force that has transformed HSB. Another failure could be possible if one of the competitors of HSBC are in the need for alliances.

However, the question remains whether HSBC might be able to implement any of these options, and if these options may be acceptable to key stakeholders. Any merger or alliance may be the exchange of knowledge. This company has always supported the approach of the Interior. It is important to note that the merger could be many implications for HSBC :values ​​and culture and resources. Key stakeholders would certainly be affected by options and must be convinced of the positive aspects. Somehow, HSBC will be able to overcome this barrier in the process of implementing the policy options above.

CONCLUSION

The results of the analysis carried out on the impact of the Balanced Scorecard of HSBC indicated significant effects, even under the threat of unrest. Therefore, we conclude that the management operations of HSBC is still expected to improve faster than average.

The review of HSBC’s operations management capabilities and resources revealed very little inconsistencies regarding its strategy in using the balanced scorecard. However, the need to reconcile both the inside-out and outside-in approaches becomes a need for HSBC.

The analysis of the financial sector environment, and management of operations and functions of HSBC has shown some shortcomings, most of which are distorted to the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of HSBC through the continued utilization of the balanced scorecard.

In addition, HSBC,has to find a balance between the internal forces within the administration and the evolution of environmental forces so that such policy options can be implemented.