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 - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing commodity prices, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic ,
increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
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.
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.
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.
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.
Analytics focus
– Paypal E572 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 Robert Siegel can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– 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.
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.
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.
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 -
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.
Aligning sales with marketing
– It come across in the case study PayPal in 2017: Continuing to Reshape the Payments Landscape 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 PayPal in 2017: Continuing to Reshape the Payments Landscape can leverage the sales team experience to cultivate customer relationships as Paypal E572 is planning to shift buying processes online.
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.
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 Paypal E572 supply chain. Even after few cautionary changes mentioned in the HBR case study - PayPal in 2017: Continuing to Reshape the Payments Landscape, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Paypal E572 vulnerable to further global disruptions in South East Asia.
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.
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.
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 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.
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.
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.
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.
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 -
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 Paypal E572 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.
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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Paypal E572 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.
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.
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.
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study PayPal in 2017: Continuing to Reshape the Payments Landscape, Paypal E572 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 .
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.
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.
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.
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.
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 .
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.
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.
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.
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.
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.
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.