Impacts of Globalization on Business Borders

Question: Discuss about the Impacts of Globalization on Business Borders. Answer: Introduction: Globalization refers to a process, which different companies spirited with the feelings to operate internationally opt to attain the desired goal (Pi 2013). Globalization apart from its advantageous does also bring some challenges, opportunities and problems. HSBC has its headquarter based in London and is the worlds sixth largest bank by total assets, which is US$2.67 trillion. Merger and acquisition are two important terms in the corporate world of finance (Angwin 2012). These key terms more or less represent the term globalization as it involves merging of two companies into one and acquiring of a company over other to establish the global presence. HSBC ever since its inception continues to evolve as one of the most versatile company, which acquit other banks in different countries to fulfil their slogan Think Global, Act Local (HSBC.com, 2017). This is a study-based report on the HSBC acquisition process over other banks in irrespective of the countries to win international customers while operating like a local company adjusting with the culture of the concerned country. International banks do practice acquisition process for few reasons such as reorganization of the loan portfolio of the acquired bank, which is the main source for generating revenues in banks as well as sound risk for the safety of the bank. Moreover, an enhanced lending policies effect in elevated profits. However, the acquisition process might not bring the worth every time as it involves a grand collaboration of companies. Moreover, it is difficult to analyse a potential market and potential local bank to choose for the acquisition. This indeed carries some potential threats for the acquisition trend. The study also highlights certain challenges and problems, which HSBC might have faced during their acquisition process in countries such as UK, Hong Kon g, Shanghai and Japan. Impacts of globalization on business today: Globalization in a company opens its door to an international market with new challenges in the form of changed socio-culture lifestyle of the concerned organization (Lu 2014). Globalization does not only influence the business but also to the common people representing the targeted country (Parves 2013). The socio-culture effect acts like a retarding force to the globalization process by bringing the social barriers in front of a foreign company. A company might come up with something, which is profitable but immensely challenging making its way for those who are skilled and dedicated to their assigned job (Grave, Vardiabasis and Yavas 2012). The importance of the project needs its inception in the common people of the targeted country crossing the entire barrier that comes its way (Angwin 2014). It is where the role of mangers comes in the picture, which helps in effective operation of the project in the targeted country with their years of expertise dealing with the local people. Country managers are those who take care of local customer needs, functioning of the project, legal adherence. Nonetheless, these are inseparable part of a globalization process, which involves the acquisition of a company representing a different country (Kumar, Gera and Saha 2016). Globalization brings about various changes to the concerned company by affecting its revenues, market shares, shareholders, stakeholders etc. Globalization strengthens the economy of a company by increasing the GDP by bringing it closer to an international market. It opens up various export options at the same time. Nevertheless, increased export requirements give way to an increased production of domestic products to meet with the changed requirement (Amadaev 2015). An export normally involves quality product only, which could help in sustaining a healthy export business. In doing so, it only leaves the less in quality product for the local market use. Nonetheless, this can result in a significant fall in reputation in the local market. Globalization has dominated many of multinational companies with its sheer benefits but only few of them are successfully balancing their market performance (Bauer, King and Matzler 2016). Essential elements for international managers to maintain the competitive edge: The worldwide managers focus mainly on to the capitalising of the full benefits of integrated wide-reaching operations (Grant, Frimanson and Nilsson 2015). The business managers, the country managers and the functional managers form the structure of the worldwide managers. They have separate responsibilities depending on their expertise in bringing out the change in the concerned company. The business manager is one who takes care of the designing part of the business (Lian and Zhang 2012). These managers communicate to the country managers regarding the plan to expand the business of the Company in the country. They try to build up the significance of the business in front of the country managers to fill them with utmost excitement for the project, which is important to take a move on the designed path. It is an essential element of the business manager to present the effective picture of the proposed project to give it a further go with measured success. Globalization in a company can never happen if any of the three managers are not efficiently meeting with their assigned task (Mishra 2013). Nonetheless, country managers are very important in setting up the platform for the execution of the business to a global level. They structure the necessary elements that are immensely helpful in establishing global recognition. Traditional values play an important role in establishing the global appeal of a company (Vargas-Hernandez, Lpez-Morales and Palafox-Alcantar 2016). Producing high quality product cannot solely build up the desired image rather it asks for a serious look on the traditional values also. These are country managers, which help in building necessary structure to lay the foundation for the outsource business by keeping the traditional values intact with this. Apart from the business managers and the country managers, the functional managers have distinctive work role to successfully launch the outsource business (Chastagner, Lan and Zhang 2015). Func tional managers are responsible in assimilating the expertise of the Company with the traditional requirement of the outsourced country to maintain a healthy competition in the market (Huang and Brass 2016). Nonetheless, this plays a significant role in widening the reach for a Company in the outsourced country as planned. Big brands such as The Industrial and Commercial Bank of China, Wells Fargo of U.S. and many more displays the importance of managerial performance in the three mentioned segments, which have helped these brands in establishing their worldwide recognition. Business structure and management of HSBC aligning their global concept: Business structure and the management strategy is the key feature of a successful brand in establishing its global presence with sheer class and potential (Naheem 2015). Ever since its inception, the HSBC Company is continually deploying its strategy to capitalise global market with wide range of network through acquiring different banks in different regions of world. Acquiring different banks in UK, Hong Kong, Shanghai, Japan and many more clearly depicts the picture of a brand, which believes in earning fame by expanding the network worldwide. HSBC merged with The Midland Bank in UK and The Bank of Shanghai in Shanghai to strengthen their foothold in these regions. HSBC believes in creating international presence by acquiring local banks to give it an international recognition. Merger brings strong loan portfolio to the Company, which is extremely helpful in increased revenues generation (Mountis 2012). An increased revenue generation for a merger company establishes a strong image of it in the market, which attracts more and more investments in the Company. Nonetheless, it carries on strengthening the foothold of the merged brand. Merger also helps in capitalising the domestic interest of the common people of the country by creating a strong bond with them with the help of the acquired bank. However, the present scenario in Japan where HSBC is losing its significant presence with the downfall in their revenues generation is worth catching and indicates the serious loss to the strategy of the Company. Nonetheless, the acquiring of its significant shares by the Swiss Private Bank in Japan shows the shutdown for the Company in Japan. Moreover, the Company is now focussing more on other parts of Asian region citing Japan as the non-potential market for the acquisition process (Playfoot and Izura 2013). HSBC relies significantly on the use of technology for the expansion of its services, global flood of goods and finance. HSBC is one of those few global companies , which has an access to more than 90 percent of international GDP, trade and assets flows. The Company has a diverse spread banking network, which has a strong funding and capital base, which produces steady shareholder profits. These are some of the unlike features of the HSBC banking strategy, which is scripting the success story for the Company across its wide range of network. Three kinds of managerial behaviours comprising of business managers, country managers and functional managers is of high urgency in the Company, which is helping the Company in narrowing market competencies, political, economical and legal issues (O'Brien 2015). Political, economical and legal are such issue, which acts as a strong barrier to the expansion and acquisition of different regional banks of numerous countries. To enjoy the same kind of dominance than the one in its own country, it is compulsory for a company to have a supreme command over these three factors. Their management structure to fit the local culture: The three kinds of managerial behaviours for a global operation of a business hold an utmost importance in the world of business market (Morkoetter and Wetzer 2015). HSBC is such a company, which is conservative in their approach establishing this as the most suitable approach to catapult the world market in the 19th century. However, this approach could not stand in the 21st century as it reflects in their adoption to the technology to the fullest of its exposure in the Company to narrow any uncertainties in the future. To maintain a wide coverage of the business, avoiding local clashes in the same segment of the market, the expertise in imparting satisfactory offerings to the local cultures is of utmost urgency (Mountis 2012). There are certain instances of complaints regarding the data leaked of some of its customers but still it is an undeniable fact that HSBC takes all these uncertain happenings seriously. Moreover, the use of CRMS in the acquisition process more or less defines the utmost care of the bank to its customers (Zhu and Zhu 2016). Identification of challenges, opportunities and problems in HSBC: Challenges, opportunities and problems are an inseparable part of any organization (Szpektor et al. 2015.). It is an undeniable fact, which finds its sustenance in every form of organization. HSBC is no any exception and the sale of its effective assets to the Swiss private bank to cut down on its annual expenditure by $3.5 billion efficiently reveals the cautious move of the Company in some part of the world. After spending its significant time, the Company has come across certain business threats in its Japanese circle and that is the reason, the Company has come crossed certain gutsy decision related to the survival of the business in Japan. They are now shifting their focus to those Asian regions, which have potential for the HSBC business. HSBC adopts a principle of acquiring different regional banks representing different countries to establish the market in those parts of the world. The large number of subsidiaries of the HSBC bank globally clearly supports the picture. Operat ion of the business across such a large network opens up ample of opportunities to its customers as well as to its employees and the management. Nevertheless, it also faces certain challenges in the form of its competitors, which creates a bit of problem to the Company. HSBC is no any exception, which carries with it a bundle of variations in its success (HSBC.com, 2017). Of the entire region in the world, the Asian region has proved their status as the potential market for the Company. Moreover, acquiring of different banks in regions like China, Japan, Hong Kong and Shanghai efficiently indicates the scenario surrounding the history of the Company. The acquisition has not produced the same result in all of these regions, which varies significantly in its performance in respective regions. In Japan, the Company is losing its grip with series of incidents related to the customers privacy and this has resulted in making of a tough decision of selling its significant assets to the Swiss private bank. However, with Hong Kong, the case is different. In 1965, the HSBC acquired 51% shares of Hang Seng Bank, which afterward enlarged to 62.14% helping the HSBC in owning the control over the Hang Seng Bank. The acquisition of Hang Seng Bank by the HSBC helped them spreading their network to a wide range in Hong Kong. Around 220 destinations, which Hang Seng Ba nk had previously provided solutions with its utmost services and emerged, as the single centre to extensive services, are now the part of the HSBC bank. The acquisition of Midland bank in UK speaks more about the dominance of the HSBC in this part of the world. In 1992, HSBC acquired the complete possession of the Midland Bank in UK, which gave HSBC a foremost grip in Europe. At that point, it was the major acquirement in banking record. The possession process of the HSBC Company in China is also very significant for the fact that the Company has acquired the Bank of Communications in January 2005 with 19.9% of its shares in the market. The acquisition of the bank was the part of the plan of the HSBC bank to cover a wide area of China as the acquired bank was among the top five leading commercial banks in China. Nonetheless, the plan did not turn around as expected in the favour of the HSBC bank at present. The Company is experiencing a mixed business from some of its subsidiaries with notching performance in other parts of world (HSBC.com, 2017). Use of Technology in CRMS in the acquisition process: Customer relationship management is an important characteristic of any business and this significantly establishes the importance of technology implementation in CRMS (Mountis 2012). Customer relationship management mainly depends on two important factors such as customer profitability and the services to the customers. Customer profitability further depends on the wider operation of the Company, which opens door to various offerings to the customers based on its marketing shares. Of all the services to the customers, keeping their data securely is of utmost responsibility for any banking sector (Zhu et al. 2016). The recent series of incidents in Japan regarding the data leakage of customers have left a bad impression on the HSBC acquisition in Japan. Technology implementation to monitor CRMS is extremely effective for a banking company as it show concerns for long-term bonding with clients, customer interactions with the entire necessary requisite related to their account (Zhu et a l. 2016). It enables customer to go online for all their queries, which also reveals the banking style of the concerned bank. Nonetheless, transparent management system is extremely helpful in forming a resonant identity (Zhu et al. 2016). However, technologies in the form of internet service do also present it as a home to some potential threat to the security of the data. There are possibilities when some unidentified object get its access with those accounts of customers, which have no transactions in it for a long past time. Those kinds of accounts are generally the inactive accounts. Moreover, with the help of hacking software, the unidentified object may establish the access and withdrew a substantial amount without any prior permission. Nevertheless, this clearly constructs a fact that technology reduces the workload and provides ample of solution to various problems. However, at the same time, it also invites some unwanted activities, which are not possible manually. Recommendation: Acquisition is such a process, which enhance the businesses of both the acquired company and the acquirer by exploring a broad view of the international market. However, there is no sure shot tips to achieve acquisition successfully but there are certain rules, which can produce a comparatively better result for the acquirer. HSBC are a successful acquirer, which they have proved from their past performances but certain technical glitch has hampered their reputation a bit especially in Japan. The first point of recommendation to HSBC is for improving the objective companys show by making quick investment in adopting technology that could produce a comparatively lesser flaws in its service. The second point of recommendation is getting technologies quicker at a lower cost to produce a secured service. For this, the Company can acquit such companies, which are innovative in their technology at a rate quicker than before. The last point of recommendation is identifying the potential company for the acquisition to enhance its universal appeal. HSBC have achieved a significant feet in the world of market today with its strategy to acquit other banks in different parts of world. However, there is certain gap, which has affected the performance of the Company in Japan. Inception of entrepreneurship skills can bring added innovative ideas in the Company, which are extremely helpful in navigating the business successfully in the market. Conclusion: HSBC is a global identity with its presence in almost all corner of the world. The Company has achieved a global recognition for its strategy to acquit other banks in different part of world. Nevertheless, the Company is effectively successful in Hong Kong, UK followed by Shanghai. However, series of incidents related to the data leakage of customers in Japan has affected the reputation of the Company to a significant level. Acquisition of its significant assets in Japan by the Swiss private bank represents the scenario of the Company. After realizing the fact that Japan is not a potential market for the Company, they are now focussing more on other part of Asian region. Ever since its inception, the Company has faced certain challenges and problems in their acquisition process. The working principle of the Company suits the gone ages back in the 19th century but a rapid growth in the working format of the market, the principles have no longer foothold in the market. The Company is s uffering significantly for its working principles by losing its significant business in few parts of World. There is an urgency to adopt some technologies to counteract the technical flaws in the Company to secure customer privacy. Inception of entrepreneurship skills to flourish innovative ideas in the Company is of utmost requirement. Nevertheless, innovative ideas open the door for a company to the technology adoption by showing its importance. References: Amadaev, A., 2015. INTERNATIONAL MERGERS AND ACQUISITIONS MARKET: RECENT TRENDS AND PROSPECTS FOR GROWTH.Contribution to International Economy,1(1), pp.38-43. Angwin, D., 2012. Merger and acquisition typologies: a review.The handbook of mergers and acquisitions, p.40. Angwin, D., 2014. Acquisition Strategy.Wiley Encyclopedia of Management. Bauer, F., King, D. and Matzler, K., 2016. Speed of acquisition integration: Separating the role of human and task integration.Scandinavian Journal of Management,32(3), pp.150-165. Chastagner, K., Lan, S. and Zhang, C., 2015, January. When do firms take their domestic MA ownership patterns overseas?. InAcademy of Management Proceedings(Vol. 2015, No. 1, p. 16502). Academy of Management. Grant, M., Frimanson, L. and Nilsson, F., 2015. Mergers and acquisitions as multitude of processes.The Routledge Companion to Mergers and Acquisitions, p.287. Grave, K., Vardiabasis, D. and Yavas, B., 2012. The global financial crisis and MA.International Journal of Business and Management,7(11), p.56. HSBC.com. (2017). About HSBC | HSBC Holdings plc. [online] Available at: https://www.hsbc.com/about-hsbc [Accessed 11 Jan. 2017]. Huang, Z. and Brass, D.J., 2016. Cross?Border Acquisitions and the Asymmetric Effect of Power Distance Value Difference on Long?Term Post?Acquisition Performance.Strategic Management Journal. Kumar, B.R., Gera, S. and Saha, S., 2016. Wealth Creation in the Largest Banking Mergers-An Empirical Analysis.Asian Economic and Financial Review,6(4), pp.206-217. Lian, Y. and Zhang, Y., 2012. Foreign institutional investors and Chinas financial service industry: the intra-industry effects of the foreign acquisition of Shenzhen Development Bank. Lu, Q., 2014. Is the speed of post-acquisition integration manageable? Case study: post-acquisition integration of HSBC with the Mercantile Bank, 195984.Business History,56(8), pp.1262-1280. Mishra, L., 2013. A Research Study on Employee Appraisal System Case of Hong Kong and Shanghai Banking Corporation (Hsbc Bank).International Journal of Business and Management Invention,2(2), pp.60-7. Morkoetter, S. and Wetzer, T., 2015. Do Private Equity Funds Benefit from their Relationships with Financial Advisors in MA Transactions?.Available at SSRN. Mountis, G., 2012. Banks Domestic Cross-border MAs: Where Can They Go Wrong?.Cyprus Economic Policy Review,6(1), pp.39-67. Naheem, M.A., 2015. AML complianceA banking nightmare? The HSBC case study.International Journal of Disclosure and Governance,12(4), pp.300-310. O'Brien, J., 2015. HSBC: will the sword of Damocles fall?.Law and Financial Markets Review,9(1), pp.63-73. Parves, M., 2013. Customer perception about the trade service of HSBC. Pi, S., 2013. Transaction Cost Approach in Mergers and Acquisition Process.Communications in Information Science and Management Engineering,3(1), p.68. Playfoot, D. and Izura, C., 2013. Imageability, age of acquisition, and frequency factors in acronym comprehension.The Quarterly Journal of Experimental Psychology,66(6), pp.1131-1145. Szpektor, I., Tanev, H., Dagan, I., Coppola, B. and Kouylekov, M., 2015. Unsupervised acquisition of entailment relations from the Web.Natural Language Engineering,21(01), pp.3-47. Vargas-Hernandez, J.G., Lpez-Morales, J.S. and Palafox-Alcantar, P.G., 2016. Analysis of an Acquisition in the Banking Sector: Banamex and Citigroup.International Journal of Business and Management,11(11), p.39. Zhu, H. and Zhu, Q., 2016. Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals.Asia Pacific Journal of Management, pp.1-43. Zhu, X., Song, B., Ni, Y., Ren, Y. and Li, R., 2016. Software Defined AnythingFrom Software-Defined Hardware to Software Defined Anything. InBusiness Trends in the Digital Era(pp. 83-103). Springer Singapore.