Micro-Environmental Analysis

Potential entrants The threat of new entrants should be extremely high because many new banks entering the market each year. (n.n, 2011) From the industry perspective, HSBC in Australia market have lots of potential entrants like insurance companies, asset management companies and securities companies. Because the commercial banks have no real core competencies and the products and services have lower level. The main source of profits is the interest rate differential. The blocking ability of potential entrants is very weak. But the banking sector is very strong attraction fat profit margins. Although the banking sector is very high barriers to entry and exit, the huge profits it still attracts many large state-owned enterprises, private enterprises, small and medium sized insurance companies join into bank industry. For example, Coles will open the bank.

Bargaining power of customers and suppliers

Suppliers and customers are overlapping in HSBC. Government, enterprises and residents are the bank's capital and financial services providers. HSBC’s capital is the primary resource on any bank and there are four major suppliers (various other suppliers [like fees] contribute to a lesser degree) of capital in the industry.
1. Customer deposits. 2. mortgages and loans. 3. mortgage-baked securities. 4. loans from other financial institutions. (Jack, 2010) Deposit business is a major liabilities of HSBC. When the customer deposits to the bank, the bank must pay interest to them. Although the central bank only make deposit rate limit, HSBC is free to float down. There is no bargaining. Because total deposits determines the total loans (loan ratio not exceeding 75%), HSBC will use total deposit growth as a major assessment indicators. In order to attract residents of customer deposits, HSBC have resorted all of the methods, such as the target decomposition to each employees, provide 3‰ -5‰ for new deposits.（n.n，2008) If the customers deposit to HSBC, they will give the presents to the customer. In order to attract deposits, corporate deposits and pure premium deposit-taking companies (no loans) deposits, HSBC signed an agreement with most of deposit rates that are much higher than the corresponding ordinary deposit rates. In summary, the commercial banks to deposit client almost no bargaining power. To reduce operating costs, saving the banking system resources, thus providing customers with better service, commercial have started to receive a small account management fees. At the same time in order to attract high-quality customers to transact their business, HSBC provide more incentives to their VIP customer. When clients were loaned form bank, the central bank allowed commercial banks float on basic rate and release interest rate ceiling. In this situation, the quality customers are very important for the every commercial bank. Because the excessive competition is in a large credit market, the bank loan pricing diminished capacity and pressured to improve the net interest margin. Although many small businesses need funds and the bank can have a strong bargaining power, the commercial banks want to prevent risks. HSBC can not lend too much. The actual amount of loans to small business is shrinking. Commercial banks do not have the right to choose our customers. But customers have right to choose commercial banks, Thus, between commercial banks and customers bargaining space is limited, customers often in active position. Therefore, the price war is banking products what all commercial banks compete in different ways. Thus, commercial banks and customers bargaining space is limited. Customers are often in active position. Overall, superior customer bargaining power in HSBC is decreasing. HSBC had a strong bargaining power for the low-end individual customers and small business company. HSBC is not only raise prices, but also adopt various ways to push it to the other commercial banks