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FTSE 100 Companies In London Stock Exchange Marketing Essay

81% percent is comprised by FTSE 100 companies in London Stock Exchange. Even though FTSE 100 is most used UK stock market indicator. Other related indices are FTSE 250(next largest companies list after FTSE 100), FTSE 350 and several others like FTSE small index and FTSE fledging index.

“The FTSE 100 gets its name from FTSE – the company which calculates the index, and the fact that it contains 100 companies. FTSE is actually FTSE Group, and is 50/50 owned by the Financial Times and the London Stock Exchange (hence FTSE - FT and SE)” ( Imogen Dillon Hatcher,2005)

This element of index is firmed quarterly; the largest constituents of the index were BP, HSBC holdings, Glaxo Smith Kline, Royal Dutch Shell and Vodafone Group which each were valued at more than £60 billion. The FTSE companies must meet the requirements to selected in the FTSE group, including a full list in London Stock Exchange with a sterling or euro denominated price, and meeting the several tests on liquidity, nationality, & free float, also with certain exceptions the listed companies must include the abbreviation of ‘plc’ at end of their name and it’s a law for being in the group.

Ins and outs

The index should be changed all the time and make sure it reflects the top 100 companies, these changes happen once a quarter, although changes will be taken place if there is any takeovers or mergers between these companies in FTSE 100.

The process for evaluation the index is clear-cut all companies listed on the LSE and entitled and intended for the FTSE UK indices are position in arrange of their size, or market capitalization. Committee made through up of independent market experts meets in March, June, September and December and regard as which companies ought to be permissible into the FTSE 100. Basically, if a company is in the FTSE 250 and climbs into the top 90 companies, it can enter the FTSE 100. If a FTSE 100 company falls to 111th position or below in the rankings, it will fall into the FTSE 250. So it is not just a case of alternative the largest 100 companies and drawing a line a banding system is in place. These group live therefore there are not too many transform at each review the index requirements to be set aside somewhat steady for investors not to contain unnecessary and expensive alteration to create to their collection. On number of occasions, no changes to the FTSE 100 contain been complete on a review, other than that through internet boom, market activity destined with the aim of large numbers of companies possibly will enter and leave the index when changes were made. the changes will be wrapped up by reporters in the business section of the national press whenever the changes are made quarterly.

Ups and Downs in the FTSE 100 index

(Source: The FTSE 100-what does it all mean?, 2007)

The figure above illustrates the FTSE 100 in UK for the period of Jan 84-April 07, this index has been calculated on every 15 second basic from 8am to 4.30 pm excluding bank holidays. In this 8am is the time the market opens and 4.30 is the time it shuts down. The level of the FTSE 100 has a pressure on the people in UK and they might get affected even though they don’t involve directly, most of the pension holders have been invested in UK equities. This based on the performance level if the group is performing well they will get direct returns. FTSE 100 is also a good reflection for economical changes and in international level. It will also get affected due to market fall around the world. For example the Chinese market fell which affected the group. Also this was affected drastically in September 2001 where the index dropped by 287.7 points. The technological advances in 1990’s increased the rate in FTSE 100 group where it was raised to high rate up to 6930.2 points.

The level of the FTSE 100 is considered by means of the total market capitalization of the element companies, in addition to this the index value, to create the solitary outline you observe extract. Because the market capitalization is affected by individual share prices of the selected companies. As prices changes throughout the day the share prices also changes drastically which shows the index value change, the graph explains and illustrates the ups and downs of the share market. The index was launched over £100 billion, now it has been increased up to £1.6 trillion, which show the effectiveness of the group itself.

Proposal on HSBC

Introduction

The office world is and the organizations are currently demanding and unstable in the present environment. Therefore to survive in this current market and environment the companies should use strategic plans to tackle the environments and be competitive in the market. Therefore HSBC had been the leading financial service organization in the present scenario which is one the FTSE 100 companies.

“HSBC’s strategic direction is to be the world’s leading financial services company, with ‘leading’ meaning the HSBC brand is preferred to others and HSBC’s corporate character is admired, its earnings per share growth are dynamic and it holds leadership positions in selected markets. Financial success is measured in terms of earnings growth and by comparing the Group’s total shareholder return (‘TSR’) target against a weighted TSR benchmark composed of a peer group of banks” (HSBC, Interim Report,2007)

The report consist the elements of identifying the main factors of being in FTSE 100 the it should be derived through SWOT analysis, PESTLE Analysis, and Marketing mix.

SWOT Analysis

Strength

The bank is well organized and well capitalized which had been functioning and performing better in the recent economic changes.

International finance since HSBC is a multinational company and its well qualified to advice other companies in different geographical locations, with offices around the world helping the companies in the business activities, it was an Asian bank until it took over UK bank in 1990’s which gained its momentum and becoming the second largest bank by profit.

HSBC is listed primarily on the London Stock Exchange and in Hong Kong stock exchanges. With high reputation build being in FTSE 100

The bank is vigilant and has strong presence in the emerging market, putting a good position to gain advantage in future.

Since its multinational company and its presence in Europe, Asia, and south America which helps the company to spread the risk and offers of significance economies of scale.

Weakness

HSBC links itself strongly among investment in the small business sector, but the current economic condition has guided to high risks, probably negotiating the activity levels within this area of the operation.

The bank had been involved with subprime markets in US and had to write off large no. of amount for providing to high risk borrowers.

Due to decrease of interest rate in UK, HSBC has increased its mortgage rates which would affect the customers’ perception of the potential borrowers and add pressure for housing market which ultimately lead to depressed and more pressure on borrowers to struggle with higher repayments.

A joblessness program declared recently might influence confidence between staff, leading to diminish production and loyalty.

HSBC’s branding highlights its worldwide presence, furthermore this might be observed harmfully through some customers during its implication of homogenization and lack of personalization.

Opportunities

HSBC has high level capital places it’s a strong attitude to acquire other assets.

Pessimistic press coverage of competitors may encourage customers to choose HSBC instead.

The present condition may be an advantage for banks like HSBC due to the trading conditions which would be in a low cost.

HSBC’s strong condition may be an advantage to outperform its competitors especially in economic down turns.

Threats

There issues stating that HSBC has understated losses in subprime markets which would affect the confidence of the bank.

Trust in banks has been reduced due financial losses suffered by investors, due to economic recession.

Financial losses affecting the banks in global scale has resulted less saving being available to customers, in UK it is visible that high living cost has resulted in less savings.

Growing technological changes and the survival of new amended policies plus government regulations.

PEST Analysis

Political

Since HSBC is operating in so many countries it has been protected by regulations and policies which had been originated in the following country and HSBC is capable to adhere to those policies in which the bank is operating. This will make sure and able to conduct its business operation effectively and successfully. In addition to this the company also have formed its own regulation and protection strategies against any governmental and boundaries.

Economical

HSBC being the largest and competitive industry in terms banking and finance, and also HSBC is strongly stable and successful in every operating country. In spite of numerous dangers that they come across in different parts of the world, the management of HSBC distinguish to it with the intention that they would be capable to exceed such resist and attempt to have a better economic condition.

Social

HSBC is being affected through so many circumstances of the society in which they are operating. Along with this, HSBC seek harder toward to make sure to facilitate every society is given equal chances to take advantage of the resources known through the organization. The bank sticks to having good reputation and relations in the society that they operate.

Technological

Rapid technological changes had been take place over the period and emergence of information technology and internet had affected how HSBC was operating over the period. The company has different IT/IS systems to run their operation worldwide which is used to reach their customers all over the world and to show the latest trends in the global business. Apart from that the bank also uses technology for its own productions

Marketing Mix

Product

This is the main part of a firms marketing strategy, poorly designed products or service won’t have a value for its customers which would be a failure regardless how the 4P’s are executed. Therefore the company should be keen in their products, for HSBC it should mainly focus on its customer service. In order to capture the mindset of the customer HSBC should market new products which should mainly satisfy the customers. HSBC in stage of launching two prepaid cards to manage your monthly budget namely “financial manager” and “budget manager”,

Price

While pricing strategy is highly dynamic for other products and services, pricing for current account services have become rather static in recent years. Most banks do not require any fees to set up a current account. Banks instead rely on the money that floats in the interval when they are deposited to when they are spent in order to profit from current accounts.

The catch with the prepaid card scheme is that it encourages bank customers to save. Any money that is saved is held within the customer’s current account and remains available for banks to provide further lending. This may prove to be highly beneficial to HSBC during times when raising new capital is extremely difficult.

Place

The place part engages delivering the product to the customers through suitable methods and delivery channels. Delivery may include both physical and electronic. Failure to make a service product readily available to customers would guarantee its failure regardless of how good the service product is. The new current card package would be made readily available throughout HSBC’s 1,492 branch network and also throughout the internet.

Promotion

“The choice of media that would be utilized includes newspapers, magazines, outdoor advertising and the internet. A sales promotion will also be carried during the first three weeks after the launch date to help stimulate customer purchase and the effectiveness of intermediaries” (Adrian Palmer, 2008). Other promotional materials include press releases, posters and brochures.

Tesco proposal

The direct selling industry is amongst the most energetic and famous industries in the world. Those rivals in this industry includes through at the moment come and gone on account of this constantly altering quality of this industry. Fundamentally, the process concerned and the practices seen by both modern and conservative retailers are alike.

The companies in the direct selling industry who have been experts in the process of retailing continually becoming familiar to the changes in the environment have been the ones successful in their field. This is observed in the case of the retail industry of UK, where Tesco Plc prevails as the leading retail company in the land. This was established in 1919 in the east end of London, nowadays the vital player in the retailing industry.

“Tesco is a leading retailer in the UK, and one of the largest food retailers in the world. It also sells non-food products such as electrical products and clothing. Tesco is headquartered in Hertfordshire, the UK and employs about 318,300 people.” (www.datamonitor.com)

SWOT Analysis

Strength

Key player in retail industry, with wide knowledge

The existing customer base is a strength to the company which had been functioning over a century

Top level management and its competencies for operation and maintenance

Financial investment backing,

Strong technological advancements through internet shopping

Weakness

Low supervision over stock losses and employees

Low involvement on international markets

High labour turnover

Require local partners because it’s a big company to handle

Opportunities

Expandable target market

Increasing amount of small business retail business in several countries

Healthy environment and customers.

Threats

Government regulations

Competitors aggressive marketing strategy

Economic reforming

PEST Analysis

Political

“It has to be highlighted that the organization is operating in the public sphere as a public entity. Hence, excluding the buying and selling of its stocks, it is also obligated to comply with the competition regimes of EU and UK. Government posts such as the Office of Fair trading (OFT) monitors their every stirs to guarantee that the other players are cosseted from any unscrupulous actions.” (Miller, Harvey, Parry 1998, 151) this states that company can operate in any other country in EU. The only problem they have among the competitors who has great market share in EU

Economical

The retailing industry in UK is significantly secure. starting from the food industry to the non-food trade, the consumers in UK have frequently depend a lot on shops like groceries for their essential needs and other product needs. This might healthy be the basis why there are several participants in the retailing industry of UK. Present there are those center points on a detailed target market to those to facilitate support a locations-specific strategy, retailers of all sizes has been gathering in the UK market and Europe for the motive of the prospective it tenders.

Social

The most widely and major alteration in UK is healthy living, this represents that retailing industry have consider on nutritional aspects to merchandise its products that are being sold to the public. “A case inside position of such signs of this trend is seen in the individual programs of schools to provide clean and healthy nourishment to their students”. (1998) furthermore, the state has also begun programs that preserve the force towards the healthy living in UK.

Technological

The company runs its process through technology with the use of World Wide Web, This is absolutely possible for big companies as they go through and now own the brand recall from their core customers. Furthermore, small retailers could similarly make use of these resources to achieve their business other than that they have to clearly differentiate themselves from the other competitors in the UK market.

Marketing Mix

Product

Tesco should differentiate its products from its competitors in order to gain a competitive advantage by considering all the facts above and cater according to the market needs. Exporting products to different provinces of the country and doing so pressing frontward on top of the potential opportunities of increase the company’s market penetration and market share.

Price

As we looking at the company the only way to acquire cost advantage is by enhancing process efficiencies, and expanding their contact over their suppliers of lower cost materials, conditions of the competitors organizations in the country are unable to lower their costs by means of a similar quantity, Tesco will be able of supporting a competitive advantage secure cost leadership.

Place

To capture the market TESCO should invested millions of pounds in order to open up an outlet in low income districts and localities. By getting similar kind of customers the company should analyze thoroughly and cater according to their needs, it should study the market in order to compete.

Promotions

TESCO is a company with and affordable price rate and extensive products, therefore they should represent long lasting strategic advertising plans to centre and expand their market share and loyalty towards their customers. To expand globally and to position the function on retailing services like on-line shopping, is the new trend of promoting their products.

Conclusion

The FTSE 100 is a group and an independent group which started as a joint venture between financial times and London Stock Exchange (LSE) and index is maintained.

To conclude this report the both companies are the largest in their sector of performance but they have similar characteristics which is why they have been chosen into the FTSE 100 group, based on the facts and data’s both the companies has high extensive capital structure which is advantage to perform in their relevant sector, according to HSBC Being the leader of the banking and finance industries, HSBC is supposed to use different strategies to facilitate its customers which will meet market needs and demands. The study explains that HSBC has been outperforming its competitors because of the strategies that they used which adhere to the current situation of the market environment.

The main subject of Tesco illustrated that it is not enough to facilitate the products that they are selling the public are top of the line. The company has to make sure that the products they are selling do have an actual demand from the customers. Therefore according to the study it visible those companies should be keen in their operations and with their customers and also they core objective to be in this particular group.


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