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 - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing transportation and logistics costs, increasing commodity prices,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, 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 -
Effective Research and Development (R&D)
– Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape - 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
– Paypal E572 is one of the leading recruiters in the industry. Managers in the PayPal in 2017: Continuing to Reshape the Payments Landscape are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Paypal E572 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.
Successful track record of launching new products
– Paypal E572 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Paypal E572 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.
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.
Highly skilled collaborators
– Paypal E572 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 PayPal in 2017: Continuing to Reshape the Payments Landscape HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– PayPal in 2017: Continuing to Reshape the Payments Landscape firm has clearly differentiated products in the market place. This has enabled Paypal E572 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Paypal E572 to invest into research and development (R&D) and innovation.
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.
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.
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 -
High cash cycle compare to competitors
Paypal E572 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, 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.
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.
Need for greater diversity
– Paypal E572 has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Paypal E572 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.
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.
Low market penetration in new markets
– Outside its home market of Paypal E572, firm in the HBR case study PayPal in 2017: Continuing to Reshape the Payments Landscape needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Lack of clear differentiation of Paypal E572 products
– To increase the profitability and margins on the products, Paypal E572 needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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 -
Creating value in data economy
– The success of analytics program of Paypal E572 has opened avenues for new revenue streams for the organization in the industry. This can help Paypal E572 to build a more holistic ecosystem as suggested in the PayPal in 2017: Continuing to Reshape the Payments Landscape case study. Paypal E572 can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Paypal E572 can use these opportunities to build new business models that can help the communities that Paypal E572 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. Paypal E572 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Loyalty marketing
– Paypal E572 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.
Learning at scale
– Online learning technologies has now opened space for Paypal E572 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.
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. Paypal E572 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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 -
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.
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 Paypal E572 business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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 Paypal E572.
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.
High dependence on third party suppliers
– Paypal E572 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.
Regulatory challenges
– Paypal E572 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 Paypal E572 in the Strategy & Execution sector and impact the bottomline of the organization.
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 wage structure of Paypal E572
– 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 Paypal E572.
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 .
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.
