Interest Rate Regulation and Competition in the Banking Industry in Hong Kong SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Interest Rate Regulation and Competition in the Banking Industry in Hong Kong
Investigates the effects of the interest rate rules on banks in Hong Kong, as well as on depositors. With the interest rate rules, the Hong Kong Association of Banks acted as a cartel to set the maximum interest rate of certain Hong Kong dollar deposits. Charging almost uniform interest rates, banks in Hong Kong relied on nonprice competition to attract deposits. After deregulation of interest rates in the 1990s and 2000s, banks are free to set deposit rates according to market conditions and their own strategies. Despite the general expectation of banks offering higher rates to compete for deposits, the sluggish loan demand and ample liquidity after the Asian financial crisis veiled the potential price competition among banks. Identifies changes in deposit rates and deposit base as well as the profitability and risks of banks. The findings provide a factual base for analyzing competition in the banking industry.
Authors :: Yue-Chim Richard Wong, Alexandra Yiu, Jennifer Li, Jack Li
Swot Analysis of "Interest Rate Regulation and Competition in the Banking Industry in Hong Kong" written by Yue-Chim Richard Wong, Alexandra Yiu, Jennifer Li, Jack Li includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Banks Kong facing as an external strategic factors. Some of the topics covered in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong case study are - Strategic Management Strategies, Financial management, Financial markets, Regulation and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Interest Rate Regulation and Competition in the Banking Industry in Hong Kong casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Interest Rate Regulation and Competition in the Banking Industry in Hong Kong
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Banks Kong, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Banks Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong can be done for the following purposes –
1. Strategic planning using facts provided in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong case study
2. Improving business portfolio management of Banks Kong
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 Banks Kong
Strengths Interest Rate Regulation and Competition in the Banking Industry in Hong Kong | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Banks Kong in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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.
Analytics focus
– Banks Kong 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 Yue-Chim Richard Wong, Alexandra Yiu, Jennifer Li, Jack Li 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.
Highly skilled collaborators
– Banks Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Banks Kong in the sector have low bargaining power. Interest Rate Regulation and Competition in the Banking Industry in Hong Kong has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Banks Kong to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Banks Kong has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Banks Kong to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Banks Kong is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Banks Kong
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Banks Kong does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Banks Kong in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Banks Kong digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Banks Kong 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.
Successful track record of launching new products
– Banks Kong has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Banks Kong has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Banks Kong is one of the most innovative firm in sector. Manager in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Banks Kong has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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.
Weaknesses Interest Rate Regulation and Competition in the Banking Industry in Hong Kong | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Interest Rate Regulation and Competition in the Banking Industry in Hong Kong are -
High bargaining power of channel partners
– Because of the regulatory requirements, Yue-Chim Richard Wong, Alexandra Yiu, Jennifer Li, Jack Li suggests that, Banks Kong 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Interest Rate Regulation and Competition in the Banking Industry in Hong Kong, in the dynamic environment Banks Kong has struggled to respond to the nimble upstart competition. Banks Kong has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Interest Rate Regulation and Competition in the Banking Industry in Hong Kong, is just above the industry average. Banks Kong 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.
Low market penetration in new markets
– Outside its home market of Banks Kong, firm in the HBR case study Interest Rate Regulation and Competition in the Banking Industry in Hong Kong needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Banks Kong is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Banks Kong needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Banks Kong to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong can leverage the sales team experience to cultivate customer relationships as Banks Kong is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Banks Kong 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. Banks Kong 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.
Products dominated business model
– Even though Banks Kong 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 - Interest Rate Regulation and Competition in the Banking Industry in Hong Kong should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Banks Kong has relatively successful track record of launching new products.
High cash cycle compare to competitors
Banks Kong 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 strategic competitive environment developments
– As Interest Rate Regulation and Competition in the Banking Industry in Hong Kong HBR case study mentions - Banks Kong 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.
Opportunities Interest Rate Regulation and Competition in the Banking Industry in Hong Kong | 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Banks Kong 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Banks Kong can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Banks Kong 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Banks Kong is facing challenges because of the dominance of functional experts in the organization. Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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.
Building a culture of innovation
– managers at Banks Kong 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.
Developing new processes and practices
– Banks Kong 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.
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 Banks Kong in the consumer business. Now Banks Kong can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Banks Kong 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, Interest Rate Regulation and Competition in the Banking Industry in Hong Kong, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Banks Kong has opened avenues for new revenue streams for the organization in the industry. This can help Banks Kong to build a more holistic ecosystem as suggested in the Interest Rate Regulation and Competition in the Banking Industry in Hong Kong case study. Banks Kong can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Banks Kong 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 Banks Kong 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.
Buying journey improvements
– Banks Kong can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Banks Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Interest Rate Regulation and Competition in the Banking Industry in Hong Kong are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Banks Kong 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.
Shortening product life cycle
– it is one of the major threat that Banks Kong is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Banks Kong 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. Banks Kong can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Banks Kong
– 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 Banks Kong.
High dependence on third party suppliers
– Banks Kong 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.
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. Banks Kong needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Banks Kong 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Banks Kong business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Banks Kong 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 Strategy & Execution industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Banks Kong in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Banks Kong 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 Banks Kong.
Weighted SWOT Analysis of Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Interest Rate Regulation and Competition in the Banking Industry in Hong Kong 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 Banks Kong needs to make to build a sustainable competitive advantage.
