Case Study Description of Ping An's Overseas Expansion: Financial Uncertainties and Risk Management
By 2007, China's Ping An Insurance Co. ("Ping An") had grown into the second-largest life insurer in China. Its goal was to become a universal financial services provider by expanding into asset management and banking. These three businesses were the foundation of Ping An's "three-pillar strategy". It had already made two domestic banking acquisitions, but none in asset management. In November 2007, Ping An acquired a 4.2% stake in Fortis, the Belgo-Dutch financial conglomerate, and planned to buy half of Fortis's asset management business, which would be a big step towards reaching its goal. Yet this ambitious overseas expansion plan was crushed by the adverse effects of the US subprime problem and the global financial crisis. The company needs to address important lessons, re-evaluate its overseas investment strategy and learn how to implement risk management in the future.
Authors :: Andrew S. Li, Gerald Yong Gao, Hung Gay Fung
Swot Analysis of "Ping An's Overseas Expansion: Financial Uncertainties and Risk Management" written by Andrew S. Li, Gerald Yong Gao, Hung Gay Fung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ping An's facing as an external strategic factors. Some of the topics covered in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management case study are - Strategic Management Strategies, Financial management, Growth strategy, Recession, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Ping An's Overseas Expansion: Financial Uncertainties and Risk Management casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, wage bills are increasing, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, increasing commodity prices, etc
Introduction to SWOT Analysis of Ping An's Overseas Expansion: Financial Uncertainties and Risk Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ping An's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ping An's 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management can be done for the following purposes –
1. Strategic planning using facts provided in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management case study
2. Improving business portfolio management of Ping An's
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 Ping An's
Strengths Ping An's Overseas Expansion: Financial Uncertainties and Risk Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ping An's in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management Harvard Business Review case study are -
Organizational Resilience of Ping An's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ping An's 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 Ping An's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Ping An's 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 Andrew S. Li, Gerald Yong Gao, Hung Gay Fung 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
– Ping An's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Ping An's 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Ping An's in the sector have low bargaining power. Ping An's Overseas Expansion: Financial Uncertainties and Risk Management has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ping An's to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Ping An's 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Ping An's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ping An's 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.
Ability to recruit top talent
– Ping An's is one of the leading recruiters in the industry. Managers in the Ping An's Overseas Expansion: Financial Uncertainties and Risk Management are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Ping An's 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
– Ping An's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ping An's 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.
Ability to lead change in Finance & Accounting field
– Ping An's 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 Ping An's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Ping An's Overseas Expansion: Financial Uncertainties and Risk Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ping An's Overseas Expansion: Financial Uncertainties and Risk Management are -
Increasing silos among functional specialists
– The organizational structure of Ping An's is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Ping An's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ping An's to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Ping An's, firm in the HBR case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Ping An's 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. Ping An's 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.
Capital Spending Reduction
– Even during the low interest decade, Ping An's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management, it seems that the employees of Ping An's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management can leverage the sales team experience to cultivate customer relationships as Ping An's is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Ping An's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management, is just above the industry average. Ping An's 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.
Products dominated business model
– Even though Ping An's 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 - Ping An's Overseas Expansion: Financial Uncertainties and Risk Management should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's 's lucrative customers.
Opportunities Ping An's Overseas Expansion: Financial Uncertainties and Risk Management | 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ping An's is facing challenges because of the dominance of functional experts in the organization. Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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.
Developing new processes and practices
– Ping An's can develop new processes and procedures in Finance & Accounting 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ping An's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Ping An's 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.
Better consumer reach
– The expansion of the 5G network will help Ping An's to increase its market reach. Ping An's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ping An's 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, Ping An's can use these opportunities to build new business models that can help the communities that Ping An's operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Buying journey improvements
– Ping An's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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.
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 Ping An's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ping An's 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.
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. Ping An's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Ping An's 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.
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. Ping An's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Ping An's Overseas Expansion: Financial Uncertainties and Risk Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management, Ping An's 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 .
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. Ping An's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ping An's 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.
Shortening product life cycle
– it is one of the major threat that Ping An's is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Ping An's 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. Ping An's can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Ping An's 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.
Stagnating economy with rate increase
– Ping An's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ping An's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Ping An's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Ping An's 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.
Increasing wage structure of Ping An's
– 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 Ping An's.
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.
Technology acceleration in Forth Industrial Revolution
– Ping An's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Ping An's 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.
Weighted SWOT Analysis of Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's Overseas Expansion: Financial Uncertainties and Risk Management 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 Ping An's needs to make to build a sustainable competitive advantage.