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 Therefore, traditional modes of leasing have been significantly out of date.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, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing commodity prices,
increasing energy prices, challanges to central banks by blockchain based private currencies, 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 -
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.
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.
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.
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.
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.
Analytics focus
– Ziroom Properties is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Chunling Yu, Chuanjiang Mao can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Ziroom Properties in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Ziroom Properties is one of the most innovative firm in sector. Manager in Ziroom: Creating Quality Rental Living Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Ziroom Properties is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Ziroom Properties needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ziroom: Creating Quality Rental Living, in the dynamic environment Ziroom Properties has struggled to respond to the nimble upstart competition. Ziroom Properties has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Ziroom Properties has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ziroom: Creating Quality Rental Living, is just above the industry average. Ziroom Properties needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
Slow decision making process
– As mentioned earlier in the report, Ziroom Properties has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ziroom Properties even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 strategic competitive environment developments
– As Ziroom: Creating Quality Rental Living HBR case study mentions - Ziroom Properties takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
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 -
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ziroom Properties in the consumer business. Now Ziroom Properties can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Buying journey improvements
– Ziroom Properties can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ziroom: Creating Quality Rental Living suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ziroom Properties to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ziroom Properties to hire the very best people irrespective of their geographical location.
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.
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.
Building a culture of innovation
– managers at Ziroom Properties can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ziroom Properties can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ziroom: Creating Quality Rental Living, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 .
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.
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.
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.
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.
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.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Ziroom Properties will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Ziroom Properties needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ziroom Properties can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
