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Question 1
Examine the organization structure of a FTSE 100 company and evaluate the reasoning behind its choice. Explain the advantages of this structure against other types of organizational structure.

The FTSE UK index series is designed to represent the performance of UK companies, providing investors with a comprehensive set of indices that measure the performance of all capital and industry segments of the UK equity market. HSBC is on the 3rd rank of FTSE 100.

History of HSBC
HSBC Bank plc and its subsidiaries form a UK-based group providing a comprehensive range of banking and related financial services. HSBC Bank plc (formerly Midland Bank plc) was formed in England in 1836 and subsequently registered as a limited company in 1880. In 1923, the company adopted the name of Midland Bank Limited which it held until 1982 when the name was changed to Midland Bank plc. During the year ended 31 December 1992, Midland Bank plc became a wholly owned subsidiary undertaking of HSBC Holdings PLC (“HSBC Holdings”), whose Headquartered is in London. HSBC Bank plc adopted its current name, changing from Midland Bank plc, in the year ended 31 December 1999. The HSBC Group is one of the largest banking and financial services organisations in the world, with over 9,500 offices in 79 countries and territories in Europe, Hong Kong, the rest of Asia-Pacific, including the Middle East and Africa, North America and South America. Its total assets at 31 December 2009 were £579 billion. The Bank is the HSBC Group’s principal operating subsidiary undertaking in Europe.
As at 31 December 2003, the Bank’s principal subsidiary undertakings and their main geographical areas of activity were: * CCF S.A. (formerly Credit Commercial de France S.A.) France * HSBC Asset Finance (UK) Limited United Kingdom * HSBC Bank A.S. Turkey * HSBC Bank International Limited Jersey * HSBC Bank Malta Plc Malta * HSBC Guyerzeller Bank AG Switzerland * HSBC Invoice Finance (UK) Limited United Kingdom * HSBC Life (UK) Limited United Kingdom * HSBC Rail (UK) Limited United Kingdom * HSBC Private Bank (Guernsey) Limited Guernsey * HSBC Private Bank (Suisse) SA Switzerland * HSBC Private Bank (UK) Limited (formerly HSBC Republic Bank (UK) Limited) United Kingdom * HSBC Trinkaus & Burkhardt KGaA Germany * HSBC Trust Company (UK) Limited United Kingdom

HSBC Holdings plc organizational structure is as follows :
(Appendix 1)

HSBC has been known to maintain a strong built organisation that maintains a liberal view in terms of recruitment. Most of HSBC’s employees on its country branches are people of the locality. Moreover, its organisational structure can be considered liberal as every country’s branches reports directly to the executive committee. This structure provides a more effective management, not only within localities but more of it on the whole HSBC organisation. HSBC in Hong-Kong is considered as one of the main branch in HSBC organisational structure. HSBC maintains a typical structure for multinationals organisations, it has a central committee that oversees all its branches and is also partly divided on national or domestic markets. The local workers are given their own independence in the structure. It had been a tradition that zonal presidents handle the local operations of HSBC. In this way, management decisions within the company are more flexible.
Each of the members of the organisational structure of HSBC has their own functions to contribute to the organisational performance of the company. Through the organisation structure, the strategy imposed by the company has become more effective because it enables the management, the ability to plan, to coordinate and control every activities in the company. Similarly, formalisation is thought that it will lead to greater efficiency because of the pre-set rules and procedures serve to repetitive activities and transactions. Organisational structure institute how people interact with each other, how communication flows and how relationships are defined. The structure of an organisation reflects the value based choices made by the company, it refers to how job tasks are divided, grouped, and coordinated.
Moreover, company effectiveness necessitates changes in organisational structure. This is true for multinational organisations such as HSBC. Under the organisational structure of HSBC in its brand, the management has been able synchronise the parts of the organization. In addition, through it structure the company has been able to ensure productivity. In addition, as part of its strategic management, HSBC has also been able to stock of its workforce and assess their performance in existing jobs.
Through its organisational structure, the HSBC has been able to improve organisational performance via improving the performance of individual contributors, within the structure. Further, the company has also recognises existing capacities which is use to fill vacancies higher in the organisation or to transfer individuals into jobs where better use can be made of their abilities or developing skills.
Managers have the primary role to make specific identifications of every possible sources of evaluation information which includes observable employee behaviour. This is because from the observations of the immediate supervisor, performance evaluation information can still come from a variety of other sources, including the employees, subordinates, and work products, etc…
On the other hand, HSBC does not only have an effective organisational structure, it also has its unique and effective organisational culture as part of its strategic management. It can be said that the HSBC had a unique strengths in terms of its management system. The company has invested heavily in order to have a strategic management that will enable it to achieve competitive advantage and position in the global market. HSBC has a strong organisational culture co-existing with various cultures that enables the strategic management of the company into the central binding of force and prevents it’s from becoming a conglomerate despite of its diversified situation. As part of the organisational culture of the company, the management has initiated localisation policies which are opened for most senior positions within operating industries to nationals that enables the company to tap high quality employees from different parts of the world.
One of the known practices within the HSBC organisational culture is its high regard for work ethic authorisation. This practice involves the careful screening of employees with the necessary skills and high potentials for improvement. Through this culture, the company are able to create an effective workforce that will determine to succeed and is highly committed to work.
Based from the reports of different books, the hiring of the workers does not stop from the selection process for example in the Japanese organisational culture, the development of the workers is also significant. Through training, various work issues such as job satisfaction, employee attitudes, quality performance and constant skill improvement are addressed. The sense of work community and a well-trained workforce are among the practices incorporated in HSBC communities, which in turn have led to significant effects to the industry.
The culture of the company also influences its overall behaviour. As culture promotes the sharing of a mutual goal between the top management and the employees, the organisation and its multi teams naturally works in a more harmonious relationship. As the managers and employees work together, the focus of the workers is no longer concentrated on satisfying their immediate supervisors. Rather, they work to satisfy the needs of the other teams in the process. This dynamic motion within the organisation gives a more defined role and purpose for each team. Since the teams are held together, their actions are more coordinated.
With organisational culture, the managers and the employees of HSBC are able to work in harmony to enhance the competitive advantage of the company. The management structure involved an impact which is similar to that of a chain reaction where the common goal of the organisation is to enhance the current situation of HSBC and enlarge its rival. Furthermore, HSBC’s culture increases the employees’ sense of pride and self-worth. Thus the company positively influences the organisational behaviour, which makes work teams perform more in accordance with the strategy of the company.
Another significant importance of organisational culture in HSBC’s strategy is its ability to enable the acquisition of new skills. It also promotes employee’s adaptation with the overall operation of the business. In other words, organisational culture facilitates the generation of well-rounded employees who are well-equipped and capable of providing new or better business solutions. The involvement and participation of the employees help in creating team orientation organisation efficacy. Organisational efficacy is defined as a generative capability found in an organisation so as to effectively overcome various challenges, opportunities and demands most businesses encounter within its environment.

Why has HSBC stayed strong while other banks have been unsuccessful?
A bank’s capital ratio is a strong indicator of failure (Federal Reserve Bank of New York Economic Policy Review) The fact that HSBC has the strongest Tier 1 ratios of any of the big banks (Forbes April 2008) is key to the fact that it has stayed strong when other banks have been unsuccessful.
HSBC’s core businesses are divided into six categories: * UK Personal Banking * UK Commercial banking * UK Corporate, Investment Banking and Markets * International/Global Banking * HSBC Private Banking * CCF ( Credit Commercial de France )

UK Personal Banking provides current accounts, savings, personal lending, mortgages, cards and wealth management services to customers through a number of channels under the HSBC and First Direct Brands. Also provides more than 100 million customers world-wide with a full range of personal financial services.
UK Commercial Banking provides products and services to a broad range of commercial organisations from sole proprietors to major companies. Also provides financial services to small, medium sized and middle-market enterprises.The group has almost 2.5 million of such customers including sole proprietorships, partnerships, clubs, and associations incorporated businesses and publicly quoted companies.
Corporate, Investment Banking and Markets, formed out of the alignment of Corporate and Institutional Banking, Global Markets UK and Investment Banking, provides tailored financial solutions to major government, corporate and institutional clients.
International Banking provides a range of retail financial services, primarily across Europe, to local and expatriate customers and wholesale banking to corporate and institutional clients.
CCF offers a wide range of retail, commercial and asset management products to individuals, companies and institutional customers through a network of regional banks in France. CCF has continued to expand with the purchase of BanquePelletier (2000) and Banque Hervet (2001).CCF SA became HSBC France on 1 November 2005, rebranding its operations as HSBC along with subsidiary companies UBP, Banque de Picardie and Banque Hervet.
HSBC Private Banking offers an array of client services to high net worth customers, including advisory portfolio management, discretionary asset management, tax, trust and estate planning, mutual funds and currency and securities transactions. Banking is the marketing name for the private banking business conducted by the principal private banking subsidiaries of the HSBC Group worldwide.HSBC Private. Bank, together with HSBC Guyerzeller and the private banking activities of HSBC Trikaus & Burkhardt, known collectively as Group Private Banking, provides services to high net worth individuals and their families through 93 locations in some 42 countries and territories in Europe, the Asia Pacific region, the Americas, the Middle East and Africa
Organisations and businesses operate effectively through a number of significant elements. In a business for instance, the organisation would need the capital, strategies, and market to function. The organizational structure and organizational culture implemented within HSBC were evaluated.
HSBC’s competitive environment, defined by the industry in which it chooses to compete was initially characterised by companies organisational structure and culture. Within the constraints imposed by the personal products competitive environment, firms such as HSBC use their resources to develop strategies for competition in their marketplace which, in turn, affects the firm's financial performance. In this case, HSBC’s strategic management, effective organisational structure and strong culture are critical not only to its leadership in the beauty soap field but also in its survival. It is said that a strong culture and the internalized controls associated with it result in individuals who contribute to the growth of the company.
The results of the analysis carried out on the organisational structure and organisational culture of HSBC indicated very significant importance as part of its strategy. Therefore, we could conclude that having efficient and effective organisational structure and culture is an important aspect of an organisation to ensure success and competitive advantage. The review of organisational structure and culture of HSBC also revealed very little inconsistencies considering the company’s strategies.
All and all, it can be concluded that, in order for the company to be more successful, the management should be able to learn to think more systematically and strategically in using the organisation’s most valuable asset and the company’s great resource and that is the people. The management should be able to develop a flourish organisational structure and a stronger organisational culture by good management of the people, providing their needs and the things that they deserve in order for them to be motivated and satisfied and for them to seek more improvement and career development for the organisation’s sake.

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