Case Study Description of Ziroom: Creating Quality Rental Living
Beijing has a huge second-hand housing rental market, while the tenants are often unable to get satisfactory properties. Because the real estate brokerage companies only assist with handling procedures, the tenants' requirements for quality, furnishing and services of properties are inadequately considered. Therefore, traditional modes of leasing have been significantly out of date. In this context, Homelink launched Ziroom business in May 2011, beginning its new exploration in the rental industry. Under the leadership of Mr. Xiong Lin, general manager of Ziroom, who had rich experience in this field, Ziroom created Ziroom Friendly Home and Ziroom Apartment under the same brand of Ziroom and operated them in a B2C mode. Ziroom owns the properties and processes them into standard products before selling online at Ziroom.com and providing various follow-up services during the lease term. Ziroom focuses on product, service and O2O, covering all the key links of tenants' rental experience. By the end of 2013, Ziroom had collected a total of over 20,000 properties, including over 60,000 Ziroom Friendly Home rooms and 6 stand-alone buildings of Ziroom apartments that are distributed in more than 2,000 real estates in Beijing. With the cumulative occupancy rate remaining at 90% and the renewal rate at over 60%, Ziroom provides rental services to 10 million Ziroomers. At present, Xiong Lin is faced with a number of challenges. For example, Ziroom's rent is a little bit high for a portion of young people in need of shared leasing; the future development of Ziroom may be affected by the changes in rents, real estate purchase restrictions, and the increase of Ziroom properties. Ziroom aims to establish a super-large enterprise based on O2O platforms that integrate asset management, housing and extension services, as well as information and data services, managing tens of thousands of properties in China. Today, Ziroom is continuing its entrepreneurial efforts.
Swot Analysis of "Ziroom: Creating Quality Rental Living" written by Chunling Yu, Chuanjiang Mao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ziroom Properties facing as an external strategic factors. Some of the topics covered in Ziroom: Creating Quality Rental Living case study are - Strategic Management Strategies, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Ziroom: Creating Quality Rental Living casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, increasing commodity prices, etc
Introduction to SWOT Analysis of Ziroom: Creating Quality Rental Living
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ziroom: Creating Quality Rental Living case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ziroom Properties, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ziroom Properties operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Ziroom: Creating Quality Rental Living can be done for the following purposes –
1. Strategic planning using facts provided in Ziroom: Creating Quality Rental Living case study
2. Improving business portfolio management of Ziroom Properties
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ziroom Properties
Strengths Ziroom: Creating Quality Rental Living | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ziroom Properties in Ziroom: Creating Quality Rental Living Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ziroom Properties has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Ziroom: Creating Quality Rental Living - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Ziroom Properties has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ziroom: Creating Quality Rental Living Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– Ziroom: Creating Quality Rental Living firm has clearly differentiated products in the market place. This has enabled Ziroom Properties to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Ziroom Properties to invest into research and development (R&D) and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Ziroom Properties digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ziroom Properties has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High switching costs
– The high switching costs that Ziroom Properties has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Ziroom Properties has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Ziroom: Creating Quality Rental Living HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Ziroom Properties in the sector have low bargaining power. Ziroom: Creating Quality Rental Living has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ziroom Properties to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Ziroom Properties has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ziroom Properties to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Ziroom Properties is one of the leading recruiters in the industry. Managers in the Ziroom: Creating Quality Rental Living are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Ziroom Properties
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ziroom Properties does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Ziroom Properties is present in almost all the verticals within the industry. This has provided firm in Ziroom: Creating Quality Rental Living case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Ziroom Properties are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Ziroom: Creating Quality Rental Living | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ziroom: Creating Quality Rental Living are -
Skills based hiring
– The stress on hiring functional specialists at Ziroom Properties has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Products dominated business model
– Even though Ziroom Properties has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Ziroom: Creating Quality Rental Living should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Ziroom Properties products
– To increase the profitability and margins on the products, Ziroom Properties needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Ziroom: Creating Quality Rental Living that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Ziroom: Creating Quality Rental Living can leverage the sales team experience to cultivate customer relationships as Ziroom Properties is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ziroom Properties is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ziroom: Creating Quality Rental Living can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Ziroom Properties is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Ziroom Properties needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ziroom Properties to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Ziroom: Creating Quality Rental Living has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ziroom Properties 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Ziroom Properties supply chain. Even after few cautionary changes mentioned in the HBR case study - Ziroom: Creating Quality Rental Living, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ziroom Properties vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Ziroom Properties has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Chunling Yu, Chuanjiang Mao suggests that, Ziroom Properties is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Ziroom Properties has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Ziroom: Creating Quality Rental Living | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Ziroom: Creating Quality Rental Living are -
Developing new processes and practices
– Ziroom Properties can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Ziroom Properties has opened avenues for new revenue streams for the organization in the industry. This can help Ziroom Properties to build a more holistic ecosystem as suggested in the Ziroom: Creating Quality Rental Living case study. Ziroom Properties can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Ziroom Properties can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– Ziroom Properties has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ziroom Properties in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Ziroom Properties can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ziroom Properties to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ziroom Properties can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Ziroom Properties to increase its market reach. Ziroom Properties will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ziroom Properties is facing challenges because of the dominance of functional experts in the organization. Ziroom: Creating Quality Rental Living case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ziroom Properties can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ziroom Properties can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ziroom Properties can use these opportunities to build new business models that can help the communities that Ziroom Properties operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Learning at scale
– Online learning technologies has now opened space for Ziroom Properties to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Ziroom: Creating Quality Rental Living External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ziroom: Creating Quality Rental Living are -
Stagnating economy with rate increase
– Ziroom Properties can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Ziroom Properties demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ziroom Properties.
Increasing wage structure of Ziroom Properties
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ziroom Properties.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ziroom Properties can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ziroom Properties in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Ziroom Properties is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ziroom Properties needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ziroom Properties can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ziroom: Creating Quality Rental Living .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ziroom: Creating Quality Rental Living, Ziroom Properties may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ziroom Properties with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Ziroom Properties high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Ziroom Properties needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Weighted SWOT Analysis of Ziroom: Creating Quality Rental Living Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Ziroom: Creating Quality Rental Living needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Ziroom: Creating Quality Rental Living is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Ziroom: Creating Quality Rental Living is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Ziroom: Creating Quality Rental Living is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ziroom Properties needs to make to build a sustainable competitive advantage.