PayPal in 2017: Continuing to Reshape the Payments Landscape SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of PayPal in 2017: Continuing to Reshape the Payments Landscape
Supplement to case E572. Between 2013 and 2017 PayPal had grown from $8 billion to almost $11 billion in revenues and had a market cap of over $70 billion. In addition, the product and cultural transformations of the organization made the firm feel like an entirely new company from the one that existed several years prior. Outside of the company, major trends continued to impact PayPal: e-commerce conducted on mobile devices in the United States accounted for just under 12 percent of all e-commerce transactions in 2014 and were forecast to rise to almost 45 percent by 2020, thus further changing how customers conducted business and paid for goods and services. The case explores how PayPal leadership has continued to evolve the organization and product lineup in order to compete in an extremely competitive landscape.
Swot Analysis of "PayPal in 2017: Continuing to Reshape the Payments Landscape" written by Robert Siegel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Paypal E572 facing as an external strategic factors. Some of the topics covered in PayPal in 2017: Continuing to Reshape the Payments Landscape case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the PayPal in 2017: Continuing to Reshape the Payments Landscape casestudy better are - – supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
increasing transportation and logistics costs, increasing energy prices, etc
Introduction to SWOT Analysis of PayPal in 2017: Continuing to Reshape the Payments Landscape
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PayPal in 2017: Continuing to Reshape the Payments Landscape case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Paypal E572, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape can be done for the following purposes –
1. Strategic planning using facts provided in PayPal in 2017: Continuing to Reshape the Payments Landscape case study
2. Improving business portfolio management of Paypal E572
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 Paypal E572
Strengths PayPal in 2017: Continuing to Reshape the Payments Landscape | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Paypal E572 in PayPal in 2017: Continuing to Reshape the Payments Landscape Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Paypal E572 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Paypal E572 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.
Low bargaining power of suppliers
– Suppliers of Paypal E572 in the sector have low bargaining power. PayPal in 2017: Continuing to Reshape the Payments Landscape has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Paypal E572 to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Paypal E572 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Paypal E572 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Paypal E572 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Paypal E572 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 Paypal E572 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Paypal E572
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Paypal E572 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 Paypal E572 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Paypal E572 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in PayPal in 2017: Continuing to Reshape the Payments Landscape 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.
Learning organization
- Paypal E572 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 Paypal E572 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PayPal in 2017: Continuing to Reshape the Payments Landscape Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Paypal E572 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.
Diverse revenue streams
– Paypal E572 is present in almost all the verticals within the industry. This has provided firm in PayPal in 2017: Continuing to Reshape the Payments Landscape 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.
Innovation driven organization
– Paypal E572 is one of the most innovative firm in sector. Manager in PayPal in 2017: Continuing to Reshape the Payments Landscape Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses PayPal in 2017: Continuing to Reshape the Payments Landscape | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PayPal in 2017: Continuing to Reshape the Payments Landscape are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PayPal in 2017: Continuing to Reshape the Payments Landscape, in the dynamic environment Paypal E572 has struggled to respond to the nimble upstart competition. Paypal E572 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Paypal E572 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. Paypal E572 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.
Capital Spending Reduction
– Even during the low interest decade, Paypal E572 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 Paypal E572 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 - PayPal in 2017: Continuing to Reshape the Payments Landscape 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, Paypal E572 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.
High operating costs
– Compare to the competitors, firm in the HBR case study PayPal in 2017: Continuing to Reshape the Payments Landscape has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Paypal E572 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Paypal E572 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Paypal E572 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Paypal E572 to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert Siegel suggests that, Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape, is just above the industry average. Paypal E572 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the PayPal in 2017: Continuing to Reshape the Payments Landscape 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 Paypal E572 has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Paypal E572 has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities PayPal in 2017: Continuing to Reshape the Payments Landscape | 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 PayPal in 2017: Continuing to Reshape the Payments Landscape are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Paypal E572 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.
Building a culture of innovation
– managers at Paypal E572 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.
Buying journey improvements
– Paypal E572 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PayPal in 2017: Continuing to Reshape the Payments Landscape 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.
Manufacturing automation
– Paypal E572 can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Paypal E572 is facing challenges because of the dominance of functional experts in the organization. PayPal in 2017: Continuing to Reshape the Payments Landscape 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.
Using analytics as competitive advantage
– Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Paypal E572 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Paypal E572 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. Paypal E572 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Paypal E572 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Paypal E572 to increase its market reach. Paypal E572 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.
Developing new processes and practices
– Paypal E572 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Paypal E572 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 Paypal E572 to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Paypal E572 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 Paypal E572 in the consumer business. Now Paypal E572 can target international markets with far fewer capital restrictions requirements than the existing system.
Threats PayPal in 2017: Continuing to Reshape the Payments Landscape External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PayPal in 2017: Continuing to Reshape the Payments Landscape are -
Consumer confidence and its impact on Paypal E572 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.
Stagnating economy with rate increase
– Paypal E572 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Paypal E572 in the Strategy & Execution industry. The Strategy & Execution 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.
Technology acceleration in Forth Industrial Revolution
– Paypal E572 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Paypal E572 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape .
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.
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. Paypal E572 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Paypal E572 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Paypal E572 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Paypal E572 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Paypal E572 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Paypal E572 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. Paypal E572 can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Paypal E572 in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of PayPal in 2017: Continuing to Reshape the Payments Landscape 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 PayPal in 2017: Continuing to Reshape the Payments Landscape 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 PayPal in 2017: Continuing to Reshape the Payments Landscape 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 PayPal in 2017: Continuing to Reshape the Payments Landscape 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 PayPal in 2017: Continuing to Reshape the Payments Landscape 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 Paypal E572 needs to make to build a sustainable competitive advantage.