Case Study Description of CircleLending, Inc. 2006
CircleLending, an innovative start-up, offered individuals the ability to set up and manage informal loans made between relatives and friends. The company must decide which market segment to focus on and then how much money to raise from investors. CircleLending is a pioneer in the informal lending market, a largely unstudied and little understood consumer finance segment. Asheesh Advani, the founder and CEO of CircleLending, must evaluate the relative attractiveness of various segments, including housing, small business, and other lending.
Authors :: Nabil N. El-Hage, Peter Tufano, Daniel Schneider
Swot Analysis of "CircleLending, Inc. 2006" written by Nabil N. El-Hage, Peter Tufano, Daniel Schneider includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Circlelending Informal facing as an external strategic factors. Some of the topics covered in CircleLending, Inc. 2006 case study are - Strategic Management Strategies, Market research, Strategic planning and Finance & Accounting.
Some of the macro environment factors that can be used to understand the CircleLending, Inc. 2006 casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing transportation and logistics costs, geopolitical disruptions, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of CircleLending, Inc. 2006
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CircleLending, Inc. 2006 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Circlelending Informal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Circlelending Informal 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 CircleLending, Inc. 2006 can be done for the following purposes –
1. Strategic planning using facts provided in CircleLending, Inc. 2006 case study
2. Improving business portfolio management of Circlelending Informal
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Circlelending Informal
Strengths CircleLending, Inc. 2006 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Circlelending Informal in CircleLending, Inc. 2006 Harvard Business Review case study are -
Strong track record of project management
– Circlelending Informal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Circlelending Informal in the sector have low bargaining power. CircleLending, Inc. 2006 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Circlelending Informal to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Circlelending Informal
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Circlelending Informal 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 Circlelending Informal in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Finance & Accounting field
– Circlelending Informal 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 Circlelending Informal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Circlelending Informal 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 CircleLending, Inc. 2006 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Circlelending Informal 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.
Effective Research and Development (R&D)
– Circlelending Informal 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 CircleLending, Inc. 2006 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Circlelending Informal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Circlelending Informal 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.
High brand equity
– Circlelending Informal has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Circlelending Informal to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Circlelending Informal 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 Nabil N. El-Hage, Peter Tufano, Daniel Schneider 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.
Innovation driven organization
– Circlelending Informal is one of the most innovative firm in sector. Manager in CircleLending, Inc. 2006 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses CircleLending, Inc. 2006 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CircleLending, Inc. 2006 are -
High cash cycle compare to competitors
Circlelending Informal has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As CircleLending, Inc. 2006 HBR case study mentions - Circlelending Informal takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study CircleLending, Inc. 2006 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 Circlelending Informal 's lucrative customers.
Aligning sales with marketing
– It come across in the case study CircleLending, Inc. 2006 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 CircleLending, Inc. 2006 can leverage the sales team experience to cultivate customer relationships as Circlelending Informal is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the CircleLending, Inc. 2006 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 Circlelending Informal has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Nabil N. El-Hage, Peter Tufano, Daniel Schneider suggests that, Circlelending Informal 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.
Increasing silos among functional specialists
– The organizational structure of Circlelending Informal is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Circlelending Informal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Circlelending Informal to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study CircleLending, Inc. 2006, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Slow decision making process
– As mentioned earlier in the report, Circlelending Informal 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. Circlelending Informal 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, Circlelending Informal 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.
Skills based hiring
– The stress on hiring functional specialists at Circlelending Informal 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.
Opportunities CircleLending, Inc. 2006 | 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 CircleLending, Inc. 2006 are -
Using analytics as competitive advantage
– Circlelending Informal 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 CircleLending, Inc. 2006 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Circlelending Informal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Circlelending Informal can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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, Circlelending Informal is facing challenges because of the dominance of functional experts in the organization. CircleLending, Inc. 2006 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.
Creating value in data economy
– The success of analytics program of Circlelending Informal has opened avenues for new revenue streams for the organization in the industry. This can help Circlelending Informal to build a more holistic ecosystem as suggested in the CircleLending, Inc. 2006 case study. Circlelending Informal can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Circlelending Informal in the consumer business. Now Circlelending Informal can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Circlelending Informal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CircleLending, Inc. 2006 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Circlelending Informal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Circlelending Informal 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.
Better consumer reach
– The expansion of the 5G network will help Circlelending Informal to increase its market reach. Circlelending Informal 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.
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. Circlelending Informal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Circlelending Informal 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Circlelending Informal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Circlelending Informal can use these opportunities to build new business models that can help the communities that Circlelending Informal operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats CircleLending, Inc. 2006 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CircleLending, Inc. 2006 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Circlelending Informal 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 CircleLending, Inc. 2006 .
High dependence on third party suppliers
– Circlelending Informal high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Circlelending Informal needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Circlelending Informal is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Circlelending Informal 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. Circlelending Informal can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Circlelending Informal in the Finance & Accounting industry. The Finance & Accounting 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.
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 Circlelending Informal.
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 Circlelending Informal in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Circlelending Informal
– 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 Circlelending Informal.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Circlelending Informal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CircleLending, Inc. 2006, Circlelending Informal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of CircleLending, Inc. 2006 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 CircleLending, Inc. 2006 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 CircleLending, Inc. 2006 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 CircleLending, Inc. 2006 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 CircleLending, Inc. 2006 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 Circlelending Informal needs to make to build a sustainable competitive advantage.
