Zopa.com: From a Hot Idea to an Established Market Player? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zopa.com: From a Hot Idea to an Established Market Player?
Launched in early 2005, Zopa is a peer-to-peer online brokerage that couples British residents who want to lend with those who want to borrow. The company represents a new business model in the retail financial services industry, and since Zopa is not technically a bank and does not lend money itself, the capital requirements to run the business are relatively small. Compared to a traditional full service bank Zopa concentrates on only a few steps of the value chain. This case study provides an overview of how Zopa, a value innovator, has developed a unique position in the market through an innovative business model. This case enables students to develop a good understanding of the elements of a value innovation and how technologies have the potential to shake up an established industry structure and its key players. Students also get to discuss the sustainability of competitive advantage in a business in which network effects play an important role. Finally, the case can be used to address the topic of how incumbent firms should respond to innovative new business models.
Authors :: Jamie Anderson, Martin Kupp, Michael Raith
Swot Analysis of "Zopa.com: From a Hot Idea to an Established Market Player?" written by Jamie Anderson, Martin Kupp, Michael Raith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zopa Lend facing as an external strategic factors. Some of the topics covered in Zopa.com: From a Hot Idea to an Established Market Player? case study are - Strategic Management Strategies, Disruptive innovation, Financial management, Internet, Marketing, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Zopa.com: From a Hot Idea to an Established Market Player? casestudy better are - – technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Zopa.com: From a Hot Idea to an Established Market Player?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zopa.com: From a Hot Idea to an Established Market Player? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zopa Lend, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zopa Lend 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 Zopa.com: From a Hot Idea to an Established Market Player? can be done for the following purposes –
1. Strategic planning using facts provided in Zopa.com: From a Hot Idea to an Established Market Player? case study
2. Improving business portfolio management of Zopa Lend
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Zopa Lend
Strengths Zopa.com: From a Hot Idea to an Established Market Player? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zopa Lend in Zopa.com: From a Hot Idea to an Established Market Player? Harvard Business Review case study are -
Learning organization
- Zopa Lend is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Zopa Lend is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zopa.com: From a Hot Idea to an Established Market Player? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Zopa Lend is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Zopa Lend is present in almost all the verticals within the industry. This has provided firm in Zopa.com: From a Hot Idea to an Established Market Player? 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.
Analytics focus
– Zopa Lend 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 Jamie Anderson, Martin Kupp, Michael Raith 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.
Effective Research and Development (R&D)
– Zopa Lend 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 Zopa.com: From a Hot Idea to an Established Market Player? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Zopa Lend 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 Zopa.com: From a Hot Idea to an Established Market Player? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Zopa Lend in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Zopa Lend 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.
Low bargaining power of suppliers
– Suppliers of Zopa Lend in the sector have low bargaining power. Zopa.com: From a Hot Idea to an Established Market Player? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Zopa Lend to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Zopa.com: From a Hot Idea to an Established Market Player? firm has clearly differentiated products in the market place. This has enabled Zopa Lend to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Zopa Lend to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Zopa.com: From a Hot Idea to an Established Market Player? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Organizational Resilience of Zopa Lend
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zopa Lend does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Zopa.com: From a Hot Idea to an Established Market Player? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zopa.com: From a Hot Idea to an Established Market Player? are -
High cash cycle compare to competitors
Zopa Lend 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zopa Lend is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zopa.com: From a Hot Idea to an Established Market Player? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zopa.com: From a Hot Idea to an Established Market Player?, in the dynamic environment Zopa Lend has struggled to respond to the nimble upstart competition. Zopa Lend has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zopa.com: From a Hot Idea to an Established Market Player? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Zopa Lend has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Zopa Lend 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zopa.com: From a Hot Idea to an Established Market Player?, is just above the industry average. Zopa Lend 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.
Slow to strategic competitive environment developments
– As Zopa.com: From a Hot Idea to an Established Market Player? HBR case study mentions - Zopa Lend 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.
Increasing silos among functional specialists
– The organizational structure of Zopa Lend is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Zopa Lend needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zopa Lend to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Zopa Lend has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Zopa Lend 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 - Zopa.com: From a Hot Idea to an Established Market Player? should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Zopa Lend products
– To increase the profitability and margins on the products, Zopa Lend needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Zopa.com: From a Hot Idea to an Established Market Player? | 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 Zopa.com: From a Hot Idea to an Established Market Player? are -
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 Zopa Lend in the consumer business. Now Zopa Lend can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Zopa Lend has opened avenues for new revenue streams for the organization in the industry. This can help Zopa Lend to build a more holistic ecosystem as suggested in the Zopa.com: From a Hot Idea to an Established Market Player? case study. Zopa Lend can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Zopa Lend can develop new processes and procedures in Strategy & Execution 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zopa Lend can use these opportunities to build new business models that can help the communities that Zopa Lend operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Zopa Lend can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Zopa Lend has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Zopa.com: From a Hot Idea to an Established Market Player? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zopa Lend to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Zopa Lend can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zopa.com: From a Hot Idea to an Established Market Player? 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zopa Lend can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Zopa Lend 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 Strategy & Execution segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Zopa Lend 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. Zopa Lend 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zopa Lend can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zopa Lend is facing challenges because of the dominance of functional experts in the organization. Zopa.com: From a Hot Idea to an Established Market Player? 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zopa Lend in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Threats Zopa.com: From a Hot Idea to an Established Market Player? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zopa.com: From a Hot Idea to an Established Market Player? are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zopa Lend with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Shortening product life cycle
– it is one of the major threat that Zopa Lend is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zopa.com: From a Hot Idea to an Established Market Player?, Zopa Lend may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Technology acceleration in Forth Industrial Revolution
– Zopa Lend has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Zopa Lend needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Stagnating economy with rate increase
– Zopa Lend 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.
Increasing wage structure of Zopa Lend
– 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 Zopa Lend.
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. Zopa Lend 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.
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.
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. Zopa Lend needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Zopa Lend 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.
High dependence on third party suppliers
– Zopa Lend 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.
Environmental challenges
– Zopa Lend 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. Zopa Lend can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa Lend needs to make to build a sustainable competitive advantage.