The Performance Of Nottingham Trent University Commerce Essay

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Becoming more and more competitive is an objective of every company and for this purpose various strategies and policies are made by the companies. This is because winning competition means having more customers thus increased profits. In today's world, customer focus is one thing that cannot be ignored one way or the other. Various policies and strategies are made in order to grow the business, capture more market share, and to compete the others but all these activities are to make the customers happy and satisfied whether directly or indirectly.

When we talk about the banking industry it is known as one of the most competitive industries of the world. The services offered by various banks are very, somehow, similar to each other, so being competitive by offering some kind of related services is very hard. So various methods and techniques are adopted by banks in order to make their customers satisfy and make them feel comfortable.

Factors Affecting Growth of Banking Industry:

There can be two kinds of factors that can affect the banking industry. These are:

Internal Factors

Strengths

Weaknesses

External Factors

Opportunities

Threats

These internal and external factors combined make the SWOT Analysis of the company.

Internal Factors:

These factors are internal to the bank. These may include certain management practices, objectives of the company, growth rate and share price stability. These are those factors which are in the control of the company. Let's discuss each one of these internal factors one by one.

Objectives:

One of the main internal factor that affects the company's operations is its objectives or goals. Once the goals are clear, the path will also be very clear towards the achievement. One of the major reasons for companies' failure is their unclear objectives and goals. For the purpose of defining clear goals a tool is used called "SMART" objectives. This means that goals of the company should be

S - Specific

M - Measurable

A - Attainable

R - Realistic

T - Timely

Management Practices:

What kind of management practices are being performed in an organization, this really affects the business performance. Organization's hierarchy, management style, delegation of authority, and decision making strategies are some of the salient features of management practices.

Having more centralized decision making is not getting obsolete. Giving employees more empowerment and more decision making rights leads the company towards more growth and development.

Staff:

In a service oriented industry, like banking industry, the role of organization's staff is very crucial. Having more competitive workforce means more chances of being competitive. Competitive and capable workforce is a true essence of the successful organization. So having competent and trust worthy workforce can make a significant difference in the growth of the company.

Coping up with the diverse workforce is a really big issue as far as the human resource is concerned. Those international banks which are dealing with this diversity in an efficient way are getting best out of it.

Share Price of Bank:

The success or failure of operations and functions of banks are normally shown in their share price. Higher the share price, higher will be the consumers' confidence. This is a strong indicator of company's growth and success. Most of the banking companies are trying to enhance the market price of their shares in order to capture more of the market share.

International Recognition:

HSBC is internationally recognized bank. For this reason it says itself as "World's Local Bank". This is a major strength for the company that it cover a huge area around the world. That's why it also faces the competition all over the world.

Branding

Although HSBC is a globally recognized company, but it decided late to adopt an integrated marketing strategy and so was not able to take much advantage of its global recognition. It set up different banks in different countries of the world over a hundred year period. HSBC set up these banks with different names like, Hong Kong Bank of Canada, British Bank of the Middle East, HSBC Banco Roberts. None of these banks had the logo of HSBC until 1998. So this resulted in a poor marketing strategy adopted by HSBC.

External Factors:

These factors are external to the bank. These may include banking laws, regulations by the central bank, technological improvements, changing consumer demands, and tough competition in the market. These are those factors which are in the control of the company. Let's discuss each one of these internal factors one by one.

Central Bank Policies:

Every bank in any country is bound to obey the policies directed to it by the central bank. It is strictly prohibited for banks to do something which is out of the domain of those policies. Sometimes these policies are not according to the planned strategies of banks and thus can limit the bank's growth. But sometimes these policies can give certain relaxation to the banks and may give them some sort of autonomy.

Economic Conditions:

The economic conditions also plays very important role in the growth of a bank. If economic conditions are in the favour of banks then nobody can stop the banks from growing.

The existing banking crisis is due to the unsupportive economic conditions all over the world. So banks are being affected in very negative way because of such worst economical conditions.

Competition:

Competition exists everywhere and so in the banking industry as well. Facing bad economical conditions, banks are also facing tough competition from its competitors. Banks are offering more and more services to gain more market share and so the competition is becoming more intense. This is predicted that the competition will grow rapidly in the future.

Changing Consumer Demands:

Consumers' demands are changing on almost daily basis. Banks need to cope up with the changing demands of consumers. Becoming closer to consumer means more customer loyalty and retention and thus leads to growth in the business.

Emerging Economies:

Besides Chinese growing middle class, there is a significant growth in the Brazilian and Indian economies and therefore more consumers are seeking banking services as compared to past.

Technological Issues:

Online banking is one of the superlative service offered by HSBC. But there are many kind of technological issues faced by such companies. These issues are like identity theft, email viruses and credit card thefts. So this is becoming a major threat for the bank.

Elements of a Suitable Business Plan:

A business plan leads an organization to become more viable in the industry. Business plans include the strategies and policies to act upon in order to achieve the set objectives and goals. Elements of a feasible business plan for HSBC bank include the following elements.

Properly conducted market research

Clear objectives and goals are to be set

Effective strategies to be made in order to clear the way to set goals

Strategies to be converted into policies to achieve short term goals

The strategies and policies are to be made through brainstorming session among the bank's employees and managers

Estimation and budgeting of required resources

Training of human resources of bank

By acting upon the above mentioned points, HSBC will be able to create an effective business plan that will lead to a competitive position in the industry.

SWOT Matrix

Strenghts

Human Resource

Share Price of Bank

International Recognition

Management Practices

 

 

Weaknesses

Branding

 

 

Opportunities

Emerging Economies

 

 

Threats

Competition

Economic Conditions

Changing Consumer Demads

 

 

Plan Elements for HSBC:

Objectives:

The objective of HSBC is to make its personal loan facility more customers oriented. HSBC wants to make its facility up-to-the-mark as compared to its competitors.

Strategies:

Strategies like making the process of verification less time consuming, keeping the interest rates as lower as possible and setting the terms and conditions with the consent of customers.

Brainstorming Among Employees for Making Policies:

In order to make better and effective policies various brainstorming sessions will be conduct among different employees of different departments in order to translate the strategies into effective policies.

Performance Indicators:

Performance indicators can simply be said as the factors to measure the performance of an organization. The companies strive to enhance their performance and for this purpose various strategies and policies are made. But at the end in order to measure that how much enhancement is there in the performance, "Key Performance Indicators" are used.

Categories of Performance Indicators:

The performance indicators can be classified in the following categories according to their nature:

Quantitative Indicators:

These are the indicators which can be defined or presented in numeric terms.

Practical Indicators:

These indicators show the improvement in the company's processes.

Directional Indicators:

These indicators identify that whether the organization is getting better or not.

Actionable Indicators:

These indicators specify the organization's capacity to cope up with change.

Financial Indicators:

Like name shows that these performance indicators shows the performance improvement in terms of financial figures.

Key Performance Indicators for HSBC:

As the HOQ of HSBC shows that how to make the personal loan process of the bank more easy and feasible for its customers so using the factors involved in HOQ following will be the Key Performance Indicators (KPI) for HSBC.

Time Required for the Approval of Loan:

When banks issue the loans, they conduct a detailed verification of customers so this takes so much time of customer. With trained workforce and shortening the process of verification this time can be reduced. The less time it will take to verify and issue the loan the greater the customer satisfaction will be.

Interest Rates Comparison with Others:

Banks earn through the interest they get on the issued loans. The interest rates offered by the banks are more or less similar but if a bank offers much less interest rate as compared to others then there will be a chance that customers of other banks will come to your bank for taking the loans as you are offering less interest charge as compared to others.

High Customer Loyalty:

When customers will be given much importance and they will experience good quality of service, their loyalty will get a boost. So how loyal the customers will be with the bank, will be a clear performance indicator.

New Customers:

In quality management it is said that "every satisfied customer further tell 3 people about good quality of services but every dissatisfied customer further warns 10 people about the bad quality of service". So how many new customers are coming to the bank will be an efficient performance indicator for the bank.

Increasing Reserves:

With every new loan there will be new source of income for bank from its customers. So this will increase the reserves for the banks and thus will also affect its rating in the banking industry.

Enhanced Bank's Credit Ratings:

When there will be more customers and the existing customers will be more satisfied then the bank's credit ratings will also be improved by Federal Deposit Insurance Corporation (FDIC) or other regulatory authorities.

More Employee Commitment:

If the bank and its business will grow then employees working in the organization will also be more committed to the bank. More people will be looking to work for the HSBC around the world. The number of application for a particular post in the bank will show that the bank is recognized as a good organization to work for in the job market.

Share Price:

The stability in share price of the bank in stock exchanges is an important financial indicator of the company's performance. The commitment with customers and then satisfied customers means that there is a complete trust shown by customers in HSBC. Thus there will be a continuous business with the bank and this will support the banks financial position and would not let the share price of the bank down in the stock market.

Revenue growth

The growth in the revenues of bank will be a strong indicator for the bank. High revenue as compared to the previous period means that more business has brought in the bank. The percentage of growth is also very important. If there is a significant change in the revenue growth percentage as compared to last period then this is a very healthy sign for the bank.

Dividend Per Share Growth

If the revenue and income growth is high then it will also affect the dividend paid to the shareholders. Dividend growth rate shows that how much the bank is paying back to its shareholders. The higher the profits, higher the dividends paid to the shareholders.

Critical Success Factors for HSBC Bank:

Critical success factors can be defined as those key elements which are crucial for the organization to achieve its objectives in the short run and in the long run. As HSBC is a service oriented organization so it has a close contact with its customers and that's why critical success factors (CSF) of HSBC will be more towards customer oriented. Some of the critical success factors of HSBC are defined below.

Quality of services provided

Relationship with customers

Sustainability of business in the long run

Customer satisfaction

Service development

Money, cash flows, revenues and growth

Employee retention and attraction

Quality of Service Provided:

The service quality provided to the customer is one of the major CSF for the bank as the long relationship with customer depends on the quality of service.

Relationship with Customers:

The better the service quality, the longer the relationship with the customers and a longer and trusted relationship with customers will leads the bank to better financial results and sustainability of business.

Customer Satisfaction:

Customer satisfaction will be on its peak when they will be provided with excellent quality of service by the bank.

Sustainability of Business:

Business sustainability is a very obvious factor for every business and so for the HSBC as well.

Service Development:

With the passage of time the development in the services provided by the bank is very important to be successful and to be up to the mark.

Money, Cash Flows, Revenues, and Growth:

Achieving financial strength is one of the priorities of banks. Better financial situation reveals the company's success in a positive way.

Employee Retention and Attraction:

The employee retention or turnover rate also measures the performance and success of any organization. If the bank is growing, customers are satisfied, cash flows are high then employees will be more satisfied and potential employees will prefer HSBC for their careers as the bank would have a good reputation in the market.

Dashboard Layout:

Customer Satisfaction:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Measuring the customer satisfaction

Number of Satisfied Customers per month

More than 90% customers should be satisfied every month

Customer surveys

Customer service department

Guidelines:

As the customer satisfaction is one of the major critical success factors for HSBC, so customer service department will conduct surveys on frequent basis in order to measure the satisfaction level of the customers of HSBC.

Customer loyalty:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Measuring the customer loyalty

Number of returning customers

More than 90% customers should be return every 3 month

Customer data collection and maintenance

Customer service department

Guidelines:

The number of returning customers affects the business critically, in order to measure that previous customers of HSBC are coming back to the bank for again taking benefit of service of HSBC, the customer service department will collect and maintain the data in order to measure that how frequently a single customer visits the bank for any kind of service. This report will be provided to the upper management every 3 months.

HSBC's Credit Rating:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Credit rating analysis

The points increment in the credit rating over the past 2 months

The credit rating of the bank should at least remain same or there should be one degree increment in that

Through quality of service provided by the bank to its customers

Business development department

Guidelines:

The credit ratings are measured by the independent agencies globally. They also provided the reasons for good or bad ratings in order to let a particular organization know that what are their weaknesses and strengths. HSBC will monitor the credit ratings of bank every 2 months in order to know that what are the major weaknesses it. Also in order to measure that what are the things bank is doing great in.

More Employee Commitment and Loyalty:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Employee Loyalty

How much committed and satisfied the employees are

There should be less than 2% turnover rate annually

Employee satisfaction surveys, employee turnover statistics, performance appraisal

Human resource depart

Guidelines:

The committed employees are gift for any organization. For HSBC, the target of less than 2% turnover rate annually is very important. The data regarding employee commitment and satisfaction with the organization will be provided by the human resource department. Data will be collected i.e. through employee satisfaction surveys, performance management systems, and through measuring the employee turnover statistics.

Share Price:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Analyzing share price

Share price stability/increment in share price

There should be a 10% growth in share price on annual basis

Data will be collected from stock exchanges and brokers

Finance department

Guidelines:

The share prices are to be monitored on daily basis. The main motive is to control the fluctuations of the share price and to make them grow in the future. Finance department will keep an eye on the share price and collect the data from the stock exchange and from the bank's brokers.

Increasing Revenues:

Dept. / Function

PI/KPI Metric

Target

Data collection method

Data input

From/to

Revenue increment

Percentage increment in the revenues annually

Growth in the revenues of the bank by 20% annually

Financial statements

Finance department

Guidelines:

Financial department will make the policies to enhance the revenue growth. The revenue growth will be monitored on monthly basis and will be analyzed that how much growth is recorded. Policies will be made by the top management in order to enhance the revenues of bank in the light of the analysis made by the finance department.

Conclusion:

HSBC is known for its global recognition. This is a major advantage it has but besides this advantage it also competes globally. So it needs to improve its processes and service so frequently so that it can meet the desired and requirements of its international customers at the same time.

Personal loan is a kind of facility that is provided by almost all banks. So what distinguishes among these banks is the quality of service and customer satisfaction. This is one thing that every bank strives for. So for HSBC, customer satisfaction is the number one priority.

Making customers feel satisfied at every step of personal loan process is essential in order to retain the customer for a long period of time. It is a principle that every satisfied customer tell 3 other potential customers about the good quality of service he got and every dissatisfied customer tell 10 more potential customers about his/her dissatisfaction and so company, whether knowingly or unknowingly, lose that customer.

Customer satisfaction also affects the company's financial situation and the sustainability in the long run. More satisfied customers mean more cash inflows and thus more revenues. It also affects the credit rating of the bank and eventually also have a positive effect on the employees working in the organization. So we can say that making customers feel satisfied is a chain process and every one good step makes the other step to achieve easily.

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