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RESEARCH PROPOSAL TOPIC
"The world economy has suffered a global recession over recent years. Suppose you wish to investigate whether major organizations in your country have developed a strategic response to the current global developments. How would you go about conducting such research?"
The problem statement of our research methods is mainly focused on the corporate world, which has recently hit by the global recession that had led to many organizations restructuring their business processes and taking effective strategic responses to overcome it. These necessary measures have been taken in order to sustain in the current market and overcome financial distress. The main objective of this research is to carry out investigation whether major organizations have developed a strategic response to the current global developments. HSBC, one of the banking giants is also one of the organizations that have been hit by global recession.
The loss of confidence by investors in the value of securitized mortgages in the United States resulted in a liquidity crisis that provoked a significant injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank which led to global financial crisis of 2008-2009 in July 2007. In July 2007, The T-bills and Euro dollar (TED) spread, an indicator of perceived credit risk in the general economy, spiked up, remained volatile for a year, then spiked even higher in September 2008, and reached a record of around 4.75% in the first week of Ocotober 2008. The crises was more deepened, in September 2008, as stock markets worldwide crashed and entered a period of high volatility, and a considerable number of banks, mortgage lenders and insurance companies failed in the following weeks. 1
The leading economist has considered the financial crisis of 2007-2009 as the most serious financial crisis since the Great Depression, with its global effects characterized by the failure of key businesses, declines in economic activity and consumer wealth. This crises has been caused by many causes, with varying weight is proposed bye experts. Though market-based and regulatory solutions have been implemented, still significant risks remain for the world economy. 1
Banking giant HSBC bills itself as 'the world's local bank', a phrase no doubt intended to highlight the importance of local knowledge, combined with financial might that businesses need in their banking partners today. It is, of course, also consistent with a banking group rich in history - dating back to 1865 - better known as the Hong Kong and Shanghai Banking Corporation. HSBC's origins in India could be traced back to October 1853, when the Mercantile Bank of India, London and China was established in Mumbai. The Mercantile bank opened offices around the world with the initial investment of Rs 5 million. The offices were opened in London, Chennai (India), Colombo, Kandy, Kolkata (India), Singapore, Hong Kong, Canton and Shanghai.
HSBC has its head office in Mumbai with eight other branches. It also has few offices in Pune, Nagpur and Thane in Maharashtra state. The current global financial crises have affected most banks and have drained liquidity from the banks and other financial institutions. It is posing a great problem to HSBC's global outreach program to the extent that HSBC is finding it hard to maintain its massive network of branches throughout the world at enormous costs. This research will be directed to analyze the steps taken by HSBC India to overcome the financial distress by the global recession of 2007-2009. Being an international giant in the financial industry, the organization has to face enormous challenges in terms of employee reduction, consumer satisfaction, and strategy formulation in order to survive and overcome this period of financial distress.
Consumers are affected by global economic crises psychologically as well as financially. With the global recession the consumers feel less secure about the job and many ague that they have to work more so that they can bear the difficulties and not loose their job. However they are not happy about this situation since they can not enjoy good lifestyle and cannot find time for entertainment and for their family (Shama, 1978). They have to get adjusted or accustomed to change in their shopping behaviour and habits, to be able to adjust to the changing economic conditions. Studies have shown the statistics about how the population from the countries like Asia and South America made adjustments accordingly (Ang, 2001a, b; Zurawicki and Braidot, 2005).
Statistics from last 25 years have attributed to the fact that, "Companies" are also impacted due to different ways of economic crises. Few organizations are forced to shut down their operations, some have to change or reduce their productivity or production capacity because of insufficient consumer demand for their products and services combined with fierce competition in the marketplace. The input prices soars to a new height which results in the higher production cost of the companies due to the economic, crises. This in turn in anticipation increase their prices to customers. This altogether has a daunting negative affect the company and their competitiveness in the marketplace. Some organizations are challenged to downsize or to lay off some of their personnel, and reduce salaries, which poses a considerable managerial challenges (Zehir and Savi, 2004, pp. 346-47).
In many situations, some of the managers have to hold-up or desert investment projects. These changes force the organizations to react in the marketplace by taking the relevant measures to regulate their corporate behaviour, as consumers acclimatize their consumption behaviour. Some of the well know measures are to reduce cost, to downsize the production, reducing investment, to enter into foreign markets. These factors can not have any impact on the organizations performance unless they increase the sale. Also capital equity, improving organizations efficiency are some of the critical factors into considerations. (Laitinen, 2000; Uslu, 1999; Pearce and Michael; 1997). Though this literature emphasizes on some of the distinctive and important measures taken during the economic crises to improve the revenue, there is a considerable lack of investigation as to how to achieve this measures with changes in the marketing strategy.
Changes should be made during an economic crisis in the marketing strategies which particularly focuses on the four main elements of the marketing mix: product, price, place and promotion. To implement general strategy, organizations require to pull out from those segments of the market where they have less business and have to concentrate more of the segments where they have a strong hold (Ang et al., 2000, p. 109). To enter in moneymaking foreign markets is considered as a important strategic option, especially for companies which are adversely affected by recessions at home (Rao et al., 1988). During the crisis in some asian countries which was prevalent in mid 1997, some companies which were good in finding new foreign markets, did quite well, even though their products were bases on non-branded commodities (Goad, 1999, p. 38).
Nevertheless, to overcome the financial crises is much more difficult than designing a marketing strategy which can be accomplished immediately. Statistics prove that to increase organizational performance it is important to increase marketing expenditures, or at least maintain it on the same level as it was before the recession. The organizations were not appreciably less profitable during the recession are the finding of a study based on PIMS database (Roberts, 2003, p. 33). In addition, once recovery was started, these firms saw a dramatic increase in their profits compared to those firms that had slash their marketing budget, whose profitability actually cut down despite the recovery. Moreover, companies gained their market share three times as quickly as those that had reduced them. Thus the conclusion or inference in drawn from this example that the companies should plan their marketing budgets for the long term and maintain spending in the short term, so that they can survive the recession and be profitable in the long run.
A company focusing on withdrawing its weak product from the market is considered as the most basic survival strategy. (Shama, 1981). Research indicated that the companies which spent considerably more on R&D, performed better than the other(Morbey and Dugal, 1992). However this effort should be considered as a long term strategy to survive the recession or adverse financial crises. Change in the return on common equity was directly related with increase in the product development capabilities and the control over the types or research and development was deduced by DeDee and Vorhies (1998, p. 57). Therefore, if the company aims to achieve long-term sales growth, the management must avoid the enticement to cut down on research and development activities during a recession.
The price decision of the company is significantly changes by economic crisis, Shama (1978) which is mostly attributed by reductions. Increase in the sales volume in the short term is the business rational; however, a serious damage can be caused to the firm in the long run by lowering profitability. As a result, the brand image could be destroyed. Also the customers might resist to return to the previous price after the end of the financial crises. During cyclic fluctuation in the construction industry in the UK, the comapanies performance remained unaffected even after maintaining price stability Bennett (2005). Two quality strategies have been suggested by Ang et al. (2000) which is related to pricing in conditions of crisis: Firstly to regulate similar prices for higher quality products, or to offer the same quality product at lower prices. These literatures suggest that during the crises, pricing strategy should be integrated with other marketing mix initiatives. The changes related to promotion strategies during a crisis are of significant importance. Also the companies which increase or maintain their level of advertising will boost their sales, income and market share during and after a recession (Kim, 1992; Werner, 1991).
The research design is the framework or blueprint for collecting the information needed for project in the best possible way. It is necessary to identify the strategic business processes, the organizational structure, client segments, sales and marketing processes and the employees of HSBC, India. The academician's researchers and practitioners have set down various such methods, but a researcher applies only the most suitable method of research, data collection, and data analysis. Obviously therefore, in the present research, I have tried to apply the most appropriate method of research, data collection and data analysis to the possible extent. The case study method is an in depth examination of a case of interest is one of the important design that could be used to collect the data for analysis. By virtue of its imminent generating potential, the case study method is a useful method of research; there are five sources that could be used to conduct a case study. These sources are: Interviews, Documents, Archival records, Direct observation, and physical artifacts.
The following would be collected as Primary Data for the research:
Interviews with the employee would help to determine whether they are happy with the recent changes in the organizational structure and/or downsizing by their employee. Organizations resist change, however individuals do. The success of the project lies with each employee doing their work differently irrespective of the size of the project.
Documents pertaining to the current business processes of HSBC India, whether the organization follows horizontal or vertical hierarchy system, their current clients and the amount of revenue generated along with the earnings before interest and taxes (EBIT) which would help to score on firm's profitability that excludes interest and income tax expenses.
The following would be collected as Secondary Data for the research:
Archival records are of prime importance to get information on old client list and the organizational structure. It would also be used to compare the current structure to the old structure and thus draw inferences and conclusion on the current changes in the organization due to the recession.
Direct observation would be in terms of employee reduction, downsizing, and consolidating its operation to its headquarters. It can also be deduced from the current position of the bank in the market and its share price.
Physical artifacts on the other hand will prove to be useful to deduce the conclusion and inference based on the first hand and real time information obtained.
Primary data will be collected for the specific purpose of addressing the problem at hand. The collection of primary data will involve various steps. Thus obtaining primary data can be expensive and time consuming. Primary data are those data that are collected for the particular purpose of research in hand. The disadvantage of collecting primary data is that it is lengthy and resource and time consuming process but the advantage of primary data is that they are first hand information and comparatively more reliable. Primary data will be collected from various sources and methods that are case studies, observation, survey and interview and the target respondents for this study will be the people that would be capable of answering research related to intranet. It will include people like:
- IT Managers
- IT Executives
- HR Managers
- HR Executives
- Finance Manager
- Marketing/Sales Manager
- Operation Manager
- Administration Manager
Secondary Research, which is usually factual information, will be obtained through secondary data that has already been collected from other sources and is readily available from those sources. The definition and characteristics of secondary data presented above suggest us that secondary data are data that have already been collected for purpose other than the problem in hand. Before detailing as how and what secondary data were collected in this research, it would be worth to examine the advantages and disadvantages of such data. Secondary data are easily accessible, relatively inexpensive, and quickly obtained. Some secondary data are available on topics where it would not be feasible for a firm to collect primary data. Although it is rare for secondary data to provide all the answers to a non-routine research problem, such data can be useful in a variety of ways. Secondary data can help to identify the problem, better define the problem, develop an approach to the problem, formulate an appropriate research design (for example, by identifying the key variables), answer certain research questions and test some hypotheses and interpret primary data more insightfully. Because secondary data have been collected for purposes other than the problem at hand, their usefulness to the current problem may be limited in several important ways, including relevance and accuracy. In addition, secondary data may be lacking in accuracy, or they may not be completely current or dependable. Before using secondary data, it is important to evaluate them on these factors. Secondary data will be collected by from various web sites, journal, magazines, books etc.
Ethical Issues: Assessment of Risk & Mitigation Plan
There are numerous risk factors involved while conducting a research and collecting the data for research purpose. During the primary collection of data, the risk can be of target individuals whether or not the target selected for research suffices the need. In addition, the questionnaire must consist relevant topics and the target audience must have some information before hand regarding the same. Data privacy is of main concern when dealing with financial organization. The audience must be assured that their data will be protected. The results obtained from various techniques used be analyzed using various other techniques to cross check and validate its use. The use of various techniques and formulas help to minimize the error and check for data usability.
The study will consists of both primary and secondary research; therefore considerable time will be taken to complete the research, the questionnaire preparation, appointments for interview with managers and the executives, and the compilation of all the data in one place with the final analysis. Hence, by considering all the dimensions of the research we required 11-12 weeks to complete the study. With due reference of above-mentioned discussion, the study will contribute towards the strategic response taken by HSBC India during the global recession of 2007-2009. It will also help in operations and maintenance research uncovered general trends affecting corporate and business unit operations and maintenance organizations across multiple industries.
The study will makes some significant contributions to theory and practice. Firstly, it will investigate the effects global recession on the organization. Secondly, the study will indicate the strategic response taken by the organization to survive and overcome the global crises. The primary research will help us deduce the importance of daily activities carried out by the banking giant, taking consumers into account and thus any changes to the structure of the bank and its effect on the business will be highlighted. Though the literature review focuses on the general measures taken by companies to lessen the negative effect in such situations, it fails to explain the outcomes on performance indicators. The tactical measures used such as lowering production capacity, reducing the workforce and so on will only have a short-term effect on organizational performance.
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