Meituan-Dianping: From Startup to Tech Giant SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Meituan-Dianping: From Startup to Tech Giant
When Meituan merged with Dazhong Dianping in 2015, the company was no longer the fledgling startup it was in 2010. Founded by Tsinghua alumnus Wang Xing, the newly-formed Meituan-Dianping was valued at US$18 billion, joining an exclusive club of "decacorns," or startup "unicorns" worth at least US$10 billion. Soon, the company's first post-merger fundraising amassed US$3.3 billion, the highest amount the world had ever seen at that point. Our case describes how Meituan-Dianping grew from a simple group-buying website to a diverse online platform that offered products and services ranging from airfare to food delivery. It focuses on Wang's rationale and ethos, particularly how they informed and shaped Meituan and subsequently Meituan-Dianping's strategy. It describes the challenges of entrepreneurship and tech innovation, focusing on management and leadership in a dynamic and intensely competitive environment. It also highlights the considerations behind choosing the right business model during a firm's formative period, illustrating how the firm's positioning (e.g., "Meituan is not a Groupon clone") may influence talent recruitment and even fundraising efforts. Our case is suitable for graduate management/business and executive development programmes that include entrepreneurship, tech innovation, or strategy, as well as those with an international focus, especially on China.
Swot Analysis of "Meituan-Dianping: From Startup to Tech Giant" written by Wee Kiat Lim, Boon Siong Neo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Meituan Dianping facing as an external strategic factors. Some of the topics covered in Meituan-Dianping: From Startup to Tech Giant case study are - Strategic Management Strategies, Strategy, Technology and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Meituan-Dianping: From Startup to Tech Giant casestudy better are - – increasing commodity prices, talent flight as more people leaving formal jobs, technology disruption, increasing energy prices, there is backlash against globalization, geopolitical disruptions, there is increasing trade war between United States & China,
increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, etc
Introduction to SWOT Analysis of Meituan-Dianping: From Startup to Tech Giant
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Meituan-Dianping: From Startup to Tech Giant case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Meituan Dianping, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Meituan Dianping 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 Meituan-Dianping: From Startup to Tech Giant can be done for the following purposes –
1. Strategic planning using facts provided in Meituan-Dianping: From Startup to Tech Giant case study
2. Improving business portfolio management of Meituan Dianping
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Meituan Dianping
Strengths Meituan-Dianping: From Startup to Tech Giant | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Meituan Dianping in Meituan-Dianping: From Startup to Tech Giant Harvard Business Review case study are -
Training and development
– Meituan Dianping has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Meituan-Dianping: From Startup to Tech Giant 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
- Meituan Dianping 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 Meituan Dianping is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Meituan-Dianping: From Startup to Tech Giant Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Meituan Dianping in the sector have low bargaining power. Meituan-Dianping: From Startup to Tech Giant has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Meituan Dianping to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Meituan Dianping in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Meituan Dianping digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Meituan Dianping 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.
Analytics focus
– Meituan Dianping 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 Wee Kiat Lim, Boon Siong Neo 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.
Strong track record of project management
– Meituan Dianping is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Meituan-Dianping: From Startup to Tech Giant firm has clearly differentiated products in the market place. This has enabled Meituan Dianping to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Meituan Dianping to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Meituan Dianping 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.
Successful track record of launching new products
– Meituan Dianping has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Meituan Dianping 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.
Cross disciplinary teams
– Horizontal connected teams at the Meituan Dianping 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.
Effective Research and Development (R&D)
– Meituan Dianping 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 Meituan-Dianping: From Startup to Tech Giant - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Meituan-Dianping: From Startup to Tech Giant | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Meituan-Dianping: From Startup to Tech Giant are -
Capital Spending Reduction
– Even during the low interest decade, Meituan Dianping 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Meituan-Dianping: From Startup to Tech Giant, is just above the industry average. Meituan Dianping 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.
Low market penetration in new markets
– Outside its home market of Meituan Dianping, firm in the HBR case study Meituan-Dianping: From Startup to Tech Giant needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Meituan Dianping 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.
Skills based hiring
– The stress on hiring functional specialists at Meituan Dianping 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 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 Meituan Dianping supply chain. Even after few cautionary changes mentioned in the HBR case study - Meituan-Dianping: From Startup to Tech Giant, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Meituan Dianping vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Meituan-Dianping: From Startup to Tech Giant HBR case study mentions - Meituan Dianping 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.
Interest costs
– Compare to the competition, Meituan Dianping 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 operating costs
– Compare to the competitors, firm in the HBR case study Meituan-Dianping: From Startup to Tech Giant 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 Meituan Dianping 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Meituan Dianping 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. Meituan Dianping 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Meituan-Dianping: From Startup to Tech Giant 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 Meituan Dianping has relatively successful track record of launching new products.
Opportunities Meituan-Dianping: From Startup to Tech Giant | 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 Meituan-Dianping: From Startup to Tech Giant are -
Developing new processes and practices
– Meituan Dianping can develop new processes and procedures in Innovation & Entrepreneurship 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.
Using analytics as competitive advantage
– Meituan Dianping 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 Meituan-Dianping: From Startup to Tech Giant - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Meituan Dianping to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Meituan Dianping 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.
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. Meituan Dianping can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Meituan Dianping in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Meituan Dianping 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.
Creating value in data economy
– The success of analytics program of Meituan Dianping has opened avenues for new revenue streams for the organization in the industry. This can help Meituan Dianping to build a more holistic ecosystem as suggested in the Meituan-Dianping: From Startup to Tech Giant case study. Meituan Dianping can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Meituan Dianping 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.
Learning at scale
– Online learning technologies has now opened space for Meituan Dianping 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.
Manufacturing automation
– Meituan Dianping can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Meituan Dianping can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Meituan Dianping can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Meituan Dianping can use these opportunities to build new business models that can help the communities that Meituan Dianping operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Threats Meituan-Dianping: From Startup to Tech Giant External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Meituan-Dianping: From Startup to Tech Giant are -
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Meituan Dianping can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Meituan Dianping 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 Meituan Dianping 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Meituan-Dianping: From Startup to Tech Giant, Meituan Dianping may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Technology acceleration in Forth Industrial Revolution
– Meituan Dianping has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Meituan Dianping needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Shortening product life cycle
– it is one of the major threat that Meituan Dianping is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Meituan Dianping with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Meituan Dianping needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Meituan Dianping 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.
Regulatory challenges
– Meituan Dianping 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 Innovation & Entrepreneurship industry regulations.
Environmental challenges
– Meituan Dianping 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. Meituan Dianping can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Meituan Dianping in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Weighted SWOT Analysis of Meituan-Dianping: From Startup to Tech Giant 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 Meituan-Dianping: From Startup to Tech Giant 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 Meituan-Dianping: From Startup to Tech Giant 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 Meituan-Dianping: From Startup to Tech Giant 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 Meituan-Dianping: From Startup to Tech Giant 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 Meituan Dianping needs to make to build a sustainable competitive advantage.