Case Study Description of Jieyue: Exploring Peer-to-Peer Finance
Beijing Jieyue United Information Consulting Co., Ltd. (Jieyue), a Chinese peer-to-peer (P2P) company established in mid-2013, offered financial services to investors through wealth management stores and an online service platform-xiangshang360.com. The platform served online customers, while the stores focused on those who had no interest in managing their wealth online. For borrowers, Jieyue provided offline services only, and it also performed credit checking through offline channels. Jieyue believed that the offline channels, particularly in third-, fourth-, and fifth-tier cities, could be the foundation for its sustained development, as well as a barrier for competitors. However, China's P2P industry was facing the toughest regulatory supervision in history in 2016, and it was estimated that only 10 per cent of P2P companies could survive the increased regulatory supervision. Jieyue needed to make a decision: should it revise its business strictly according to the supervision rules or should it follow its original direction with a few minor adjustments to its business? Yan Gong and Zhu Qiong are affiliated with China Europe International Business School.
Swot Analysis of "Jieyue: Exploring Peer-to-Peer Finance" written by Yan Gong, Qiong Zhu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jieyue P2p facing as an external strategic factors. Some of the topics covered in Jieyue: Exploring Peer-to-Peer Finance case study are - Strategic Management Strategies, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Jieyue: Exploring Peer-to-Peer Finance casestudy better are - – increasing government debt because of Covid-19 spendings, wage bills are increasing, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
there is increasing trade war between United States & China, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Jieyue: Exploring Peer-to-Peer Finance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Jieyue: Exploring Peer-to-Peer Finance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jieyue P2p, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jieyue P2p 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 Jieyue: Exploring Peer-to-Peer Finance can be done for the following purposes –
1. Strategic planning using facts provided in Jieyue: Exploring Peer-to-Peer Finance case study
2. Improving business portfolio management of Jieyue P2p
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 Jieyue P2p
Strengths Jieyue: Exploring Peer-to-Peer Finance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jieyue P2p in Jieyue: Exploring Peer-to-Peer Finance Harvard Business Review case study are -
Highly skilled collaborators
– Jieyue P2p 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 Jieyue: Exploring Peer-to-Peer Finance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Finance & Accounting field
– Jieyue P2p 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 Jieyue P2p in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Jieyue P2p is one of the most innovative firm in sector. Manager in Jieyue: Exploring Peer-to-Peer Finance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Jieyue P2p in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Jieyue P2p has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jieyue P2p 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.
Organizational Resilience of Jieyue P2p
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jieyue P2p does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Jieyue P2p has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Jieyue: Exploring Peer-to-Peer Finance 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
- Jieyue P2p 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 Jieyue P2p is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Jieyue: Exploring Peer-to-Peer Finance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Jieyue P2p has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jieyue P2p to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Jieyue: Exploring Peer-to-Peer Finance firm has clearly differentiated products in the market place. This has enabled Jieyue P2p to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Jieyue P2p to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Jieyue P2p in the sector have low bargaining power. Jieyue: Exploring Peer-to-Peer Finance has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jieyue P2p to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Jieyue P2p 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.
Weaknesses Jieyue: Exploring Peer-to-Peer Finance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Jieyue: Exploring Peer-to-Peer Finance are -
High cash cycle compare to competitors
Jieyue P2p 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.
Aligning sales with marketing
– It come across in the case study Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue: Exploring Peer-to-Peer Finance can leverage the sales team experience to cultivate customer relationships as Jieyue P2p is planning to shift buying processes online.
Need for greater diversity
– Jieyue P2p 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.
Products dominated business model
– Even though Jieyue P2p 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 - Jieyue: Exploring Peer-to-Peer Finance should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Jieyue P2p 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.
Low market penetration in new markets
– Outside its home market of Jieyue P2p, firm in the HBR case study Jieyue: Exploring Peer-to-Peer Finance needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue P2p 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Jieyue: Exploring Peer-to-Peer Finance, 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.
Increasing silos among functional specialists
– The organizational structure of Jieyue P2p is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Jieyue P2p needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jieyue P2p to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Jieyue P2p 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. Jieyue P2p 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Jieyue: Exploring Peer-to-Peer Finance, in the dynamic environment Jieyue P2p has struggled to respond to the nimble upstart competition. Jieyue P2p has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Jieyue: Exploring Peer-to-Peer Finance | 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 Jieyue: Exploring Peer-to-Peer Finance are -
Using analytics as competitive advantage
– Jieyue P2p 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 Jieyue: Exploring Peer-to-Peer Finance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jieyue P2p to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jieyue P2p 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 Jieyue P2p to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jieyue P2p is facing challenges because of the dominance of functional experts in the organization. Jieyue: Exploring Peer-to-Peer Finance 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jieyue P2p 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jieyue P2p 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.
Manufacturing automation
– Jieyue P2p 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.
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. Jieyue P2p 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 Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Jieyue P2p 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. Jieyue P2p 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.
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 Jieyue P2p 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.
Loyalty marketing
– Jieyue P2p 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 Jieyue P2p 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Jieyue P2p can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jieyue P2p can use these opportunities to build new business models that can help the communities that Jieyue P2p operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Jieyue: Exploring Peer-to-Peer Finance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Jieyue: Exploring Peer-to-Peer Finance are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Jieyue P2p with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 wage structure of Jieyue P2p
– 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 Jieyue P2p.
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.
Stagnating economy with rate increase
– Jieyue P2p 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
– Jieyue P2p 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 Finance & Accounting 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 Jieyue P2p business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Jieyue P2p is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Jieyue P2p has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Jieyue P2p needs to keep up with the evolution of technology in the Finance & Accounting 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.
High dependence on third party suppliers
– Jieyue P2p 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.
Environmental challenges
– Jieyue P2p 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. Jieyue P2p can take advantage of this fund but it will also bring new competitors in the Finance & Accounting 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 Jieyue P2p.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jieyue P2p 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 Jieyue: Exploring Peer-to-Peer Finance .
Weighted SWOT Analysis of Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue: Exploring Peer-to-Peer Finance 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 Jieyue P2p needs to make to build a sustainable competitive advantage.
