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 - – there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, increasing energy prices, challanges to central banks by blockchain based private currencies, wage bills are increasing, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy,
there is backlash against globalization, increasing commodity prices, 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 -
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.
Ability to recruit top talent
– Zopa Lend is one of the leading recruiters in the industry. Managers in the Zopa.com: From a Hot Idea to an Established Market Player? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Training and development
– Zopa Lend has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zopa.com: From a Hot Idea to an Established Market Player? 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.
High switching costs
– The high switching costs that Zopa Lend 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.
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.
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.
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.
Ability to lead change in Strategy & Execution field
– Zopa Lend is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Zopa Lend in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Zopa Lend has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zopa Lend to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Zopa Lend has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zopa Lend 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.
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 -
Aligning sales with marketing
– It come across in the case study Zopa.com: From a Hot Idea to an Established Market Player? 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 Zopa.com: From a Hot Idea to an Established Market Player? can leverage the sales team experience to cultivate customer relationships as Zopa Lend is planning to shift buying processes online.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Jamie Anderson, Martin Kupp, Michael Raith suggests that, Zopa Lend 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.
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 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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Zopa Lend 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.
Low market penetration in new markets
– Outside its home market of Zopa Lend, firm in the HBR case study Zopa.com: From a Hot Idea to an Established Market Player? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Zopa Lend supply chain. Even after few cautionary changes mentioned in the HBR case study - Zopa.com: From a Hot Idea to an Established Market Player?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zopa Lend vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Zopa.com: From a Hot Idea to an Established Market Player?, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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 -
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 Zopa Lend 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.
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.
Loyalty marketing
– Zopa Lend 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.
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.
Leveraging digital technologies
– Zopa Lend 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zopa Lend 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 Zopa Lend to hire the very best people irrespective of their geographical location.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Zopa Lend 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.
Better consumer reach
– The expansion of the 5G network will help Zopa Lend to increase its market reach. Zopa Lend 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.
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.
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.
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 -
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.
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.
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.
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.
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 Zopa Lend business can come under increasing regulations regarding data privacy, data security, 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 .
Regulatory challenges
– Zopa Lend 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zopa Lend 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 Zopa.com: From a Hot Idea to an Established Market Player? .
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.
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.
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.
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.