HSBC in the Market of Islamic Banking

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Barney's framework was chosen to analyze this article (the resource based view).

HSBC Amanah’s performance

HSBC has been very successful in Islamic banking where it is considered to be the second largest bank in the world. The performance of this Islamic bank seems to be going pretty good businesses. In the article it talks about the performance of the Amanah in Islamic countries, it says “the significant growth experienced by HSBC Amanah” and also added “Given a total population of more than one and a half billion Muslims worldwide, and an estimated industry size of US$250-300 billion, HSBC see Islamic finance as one of the most important strategic initiatives in community banking, the Islamic financial services industry is growing at 15% per annum,” these sentences kind of give us a hint that the company has been doing very well in the Islamic banking and the promising growth of this industry (Islamic financial services).

· 3 Main Resources
There are three main resources that were extracted from the article which are the financial, physical, and human. HSBC has invested great assets from its conventional banking to expand in the filed of Islamic services as it says in the article, “HSBC Global Shariah Supervisory committee has approved the utilization of conventional capital for the purposes of Shariah compliant financing while restricting the usage of Shariah compliant funds in generating Islamic assets only”, this kind of imply that HSBC has invested amount for the assets of Amanah which is considered to be the financial resource. Also from this expansion the bank employs an advanced technology that already exists as it says in the article “HSBC provides a comprehensive range of financial services through an international network linked by advanced technology” which is considered to be the physical resource. Last but not least, the human resource is considered to be the Shariah Supervisory Committee as it says in the article “HSBC Amanah works closely with an independent Shariah Supervisory Committee of scholars to ensure that its products and transactions meet the requirements of the Shariah (Islamic law).”

· VIRO Analysis
* Valuable? So, are these resources valuable? Indeed, it is valuable because such expansion enabled the company to respond to the environmental opportunities as it says in the article, “as the industry grows and matures, Islamic finance can be expected to draw conservative Muslims who have, to date, avoided financial services as well as current customers of conventional products who may switch over.” From this we can say that these resources are valuable because they helped HSBC to respond to the opportunity which is the needs of this market segment (Muslims customers) and also has helped the company to expand its boundaries for Islamic services beyond the Middle East, as mentioned in the article “HSBC Amanah is headquartered in the UAE and has regional representatives in the UK, US, Saudi Arabia, Gulf countries, Malaysia, Bangladesh, Indonesia, Singapore and Brunei”.
* Rare? But are these resources and capabilities rare? It says in the article “With extensive operations in the Middle East, South East Asia and Northern Africa, HSBC has a greater presence in the Muslim world than any of its competitors, and are highly regarded as an imbedded institution.” This also addition to the fact that HSBC Group is the second largest banking and financial services organization in the world and the Group's international network comprises some 9,500 offices with almost 125 million customers in 76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. However, these Islamic services are provided by many financial institutions around the world and could be much accurate in terms of Islamic law than HSBC. Lastly, I can safely say that these resources and capabilities are not rare. Another reason why these resources are not rare is because Citibank also running the same business concept.
* Difficult to Imitate? As I have mentioned in the question of rareness that these resources are not rare, I can’t go further and determine whether these resources are difficult to imitate. However, lets say if these resources were rare, I would say they will not be difficult to imitate because there are banks who already serving these Islamic services from the deep of Shariah Law (Islam Law). Also I want to refer to Citibank that it has Islamic window which is also doing the same like HSBC.
* Well-organized? To address the question of organizing, I assume that HSBC is a well organized bank for the reason it is the second largest bank in the world. But it terms to exploit the full competitive potential of these physical, human, financial resources it is not well-organized because I have just mentioned previously that these resources not rare.

· Result?
Having said that these financial, physical, and human resources are valuable but not rare, HSBC will generate a competitive parity. In other words, HSBC’s economic performance at this aimed expansion will be normal.

Now, let me give my personal opinion about the whole story. I think such Islamic bank is not trusted because the assets of the bank came from the money that mixed with Interest revenues and Islam does not allow that. Although it mentioned in the article that Islam law allowed that there should be internal transactions between HSBC Group and HSBC Amanah. That means there’s again a mix of money generated from interests, and of course is not allowed by Islam. Another reason is that this bank deals with non-Muslims and theretofore, there’s money that comes from the treading of Alcoholic and such prohibited goods b y Islam. I would this bank is not an accurate Islamic bank, it just brainwash customers that it is Islamic based system.

The Marriage of Lufthansa and Swiss Airlines

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The German carrier Lufthansa and Swiss airlines have completed their merger that seek to bring benefits to their competion. Lufthansa has been known for its successful businesses with revenue of nearly 17 billion Euros in 2004, and have 50.9 million passengers from 2004 operations. The Swiss airline, on the other hand, has been struggling to go with competition but could not, so the merge was the best for it. The merge of these two airline companies will bring customers more destinations, better connections, matching frequent flyer programs and mutual lounge access, these are the resources and capabilities the companies will enable. Also Swiss airline will "bring into the Lufthansa ... 7,900 [experienced] employees and 80 aircraft, and gives Lufthansa a new hub at Zurich which will benefit its lucrative business travel services."

This marriage can be linked to Barney’s framework. In particular, the benefits that customers will enjoy from the merge (resources and capabilities) enable both companies to respond to the environmental threats and opportunities and thus making these resources and capabilities valuable. Furthermore, these resources and capabilities could also be rare because there are no any other competing firms who have done this merge, especially these two well-known airline companies that both have huge fleet and credible reputation. Thus, relating to the question of rareness. Not only that, these new benefits to customers (resources and capabilities) are also difficult to imitate at least for the short run. Competing firms might try to imitate to offer customers the benefits that are provided but will have some difficulties to do that because both companies have huge fleet of aircrafts and experienced employees who have the knowledge to operate in a competitive way. Moreover, I think that Lufthansa (the controlling company) is well-organized in order to exploit the full competitive potential from the new merge. Lufthansa is organized for its success in the airline business and its solid position that have maintained.

By this, the resources and capabilities that will be gained from the merge of both airline companies (Lufthansa and Swiss) have answered the 4 questions needed to conduct a resource based analysis of a firm’s internal strengths and weaknesses. In other words, these resources and capabilities are valuable, rare, difficult to imitate (short-run), and Lufthansa as a firm is organized to exploit full competitive advantage. Therefore, we can conclude that the merge of these two airline companies and the resources and capabilities that will enable, will have a sustained competitive advantage.

Intel and its new innovation: Sustaining Competitive Advantage

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Intel has been known for the last couple of years as ‘the world's largest microprocessor company with 76.9% of the worldwide market at the end of 2005’. In addition, Intel is still moving on and is striving to fight in this competitive global market therefore came up with new innovations. The recent innovation it came with was a processor, code-named Conroe, which delivers 40% better performance while consuming 40% less power as the article mentioned.
Intel’s new innovation can be linked to Barney’s framework. In particular, Intel’s Conroe processor (Intel’s resource) enable it to respond to the environmental threats and opportunities and thus making this resource valuable. Furthermore, Intel’s Conroe processor is also rare because there are no any other competing firms who have thought of the same innovation to be brought into existence. Thus, relating to the question of rareness. Not only that, this new processor (Intel’s resource) is also difficult to imitate at least for the short run. Competing firms might try to imitate the new processor but will have some difficulties to do that because Intel believes that it, “[its] a chance of beating the competition” since it’s the only processor firm that possesses the knowledge of developing such a chip with high performance and less power. Moreover, in my opinion, I think that Intel is organized in order to exploit the full competitive potential of its new processor innovation.
By this, Intel’s new processor innovation (resource) has answered the 4 questions needed to conduct a resource based analysis of a firm’s internal strengths and weaknesses. In other words, the new processor is valuable, rare, difficult to imitate, and Intel as a firm is organized to exploit full competitive advantage. Therefore, we can conclude that Intel will have a sustained competitive advantage when the new processor will be introduced in the market.

GM Success in China

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GM success in the Chinese market is due to the fact that it has found the perfect dealer and also the company found out how to build the right car for the right market. According to Joe in his article, he mentioned that GM has proved the company's global strategy by its success in the Chinese market. Basically, the success of GM in China is mainly due to the joint venture with Shanghai Automotive Industry Corp.

Although, the Chinese market is a massive market, many companies failed to comply with it. In general, the Chinese people are very difficult to absorb, because they are ethnocentrism, meaning that they are very proud of their products and difficult to adapt to others. Thus, according to Dunne, president of Automotive Resources Asia Ltd., GM developed vehicles that are small, fuel-efficient cars deigned for the Asia market with the image of an American product.

According to the article GM sold 665,390 vehicles in 2005, with 11.2% market share in China. These figures show the success of GM in China and how fast the company reached this level, where on the other hand, the company is struggling to keep customers in the United States. Not only that but also GM's loss in the third quarter of 2005 from North America operations was $2-billion, with comparison to the gain from China the company made $114 million within the same period.

Returning to Barney's framework, GM's unique historical condition is one reason behind the success of GM. The company was the second if not the first in the industry of automotive, which gave the company world reputation in this industry and gave the company the first mover advantage.

In Barney's framework, it says that the interaction between physical resources and socially complex organizational resources is at the heart of many of the difficulties that US firms have had imitating the manufacturing success of Japanese firms. This is the case with GM's loss back home in the United States. "Despite investment in physical technology at five hundred leading U.S. manufacturing firms of over $800 billion, quality and costs are often still not comparable to those of competing Japanese firms." (Naj, 1993)

According to the manager of Middle East operations when I asked him about the success of GM in China, during a meeting that was organized by AUS study tour to Florida, he answered GM was successful to find the perfect dealer which is Shanghai Automotive Industry Corp. That's it, GM was able to find the perfect dealer and it is not due to its brilliance.

Effect of Danish Boycott

In Saudi Arabia people responded to the controversial cartoons published in the Danish and Norwegian media by boycotting the Danish and Norwegian products.

The boycott happened by all most all supermarkets with support of consumers. According to the article that was published in Arab newspaper, in Saudi Arabia, it mentioned that the manager of a flagship supermarket in Jeddah said "imported Danish dairy products accounted for about five percent of their sales in product volume but more in terms of income."

Referring to Porter's five forces, that buyers have the power to play competitors off against each other which ending up affecting the profitability of the industry. It also mentioned that a buyer group is powerful if several characteristics are met, some of which I will be discussing that are related to the Saudi boycott of the Danish products.

First characteristic is when the buyer group is concentrated or purchases large volumes relative to seller sales. Referring to the article it says that the Danish products consist of five percent of their sales in product volume but more in terms of income. Hence, 5% as diary Danish products is not small share, these only Danish products from the diary industry.

Second characteristic is, if the products are standardized or can't be differentiated. In the article it mentioned that "supermarkets labeled the shelves indicating that Danish products have been withdrawn: and in other Shelves were fully stocked with familiar Danish products," added later that customers' feedback toward that was positive and switching to other substitutes was normal. Also considering the buyer power of wholesalers and retailers, where in our case supermarkets chains were very influential on consumers' purchasing decisions. Referring that to Porter said "retailers can gain significant bargaining power over manufactures when they can influence consumers' purchasing decisions.

According to Hamel's business concept innovation, customer interface is how the producer and consumer reach one another.

Relationship dynamic is one element of customer interface which is the relationship between producers and customer. In this case, a boycott Danish product was very effective and influential for the reason that relationship between the Danish companies and the customers was very weak. You can say there was no firm chain that interconnects them.

Another element of customer interface is fulfillment and support which are another reason behind the effective boycott in Saudi Arabia. The Danish companies were not responsive to their customers in such a way that could stop the Danish newspapers or even do anything that could survive their market shares in Saudi Arabia. The Danish companies heavily depended on agents in the Saudi market rather than establishing their main offices in the country and have better insight about the market and its customers.

Google's Barriers In China

"Forces outside the industry are significant primarily in a relative sense; since outside forces usually affect all firms in the industry, the key is whether firms have differing abilities to deal with them," Porter five forces. Therefore, Google could not deal with outside forces that make it difficult for Google to overcome the Chinese companies. Google did not have competitive advantage in order to conquer the market and beat any company stands in its way.

Barrier to entry in China is increasingly high and especially in the internet industry where there are more than one company in this industry. All of them are perfect in the market and each one has a slice of the internet pie.

The ability of other internet Chinese companies and their free offered services have helped them to compete with Google in China. Many foreign companies failed to conquer the Chinese market and Local Chinese companies. Google is one of these companies that faced many problems in China for the huge competition of the Chinese companies such as, Sohu (SOHU), Sina (SINA), and Netease (NTES).

Ethnocentrism could be one aspect that prevents Google from sharing a slice of the internet pie in China . The Chinese people are sticky to their national products and services rather than foreign produtcs and services. Also local companies been able to offer its customers what been offered by foreign companies has hepled local compaines to be superior in the market.

Google being non-Chinese company has negatively effects its ability to be solid company in China. Although Google hired former Microsoft executive, Dr. Kai-Fu and other top people from Chinese companies, the company still lack the ability or strategy to adapt with the Chinese market and be truly "Chinese Internet company".

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