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 household debt because of falling income levels, geopolitical disruptions, there is backlash against globalization, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
increasing energy prices, technology disruption, 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 -
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.
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.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Ping An's Overseas Expansion: Financial Uncertainties and Risk Management Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
Innovation driven organization
– Ping An's is one of the most innovative firm in sector. Manager in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Diverse revenue streams
– Ping An's is present in almost all the verticals within the industry. This has provided firm in Ping An's Overseas Expansion: Financial Uncertainties and Risk Management case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Ping An's 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 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 -
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.
Slow to strategic competitive environment developments
– As Ping An's Overseas Expansion: Financial Uncertainties and Risk Management HBR case study mentions - Ping An's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ping An's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Ping An's 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.
Interest costs
– Compare to the competition, Ping An's 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ping An's Overseas Expansion: Financial Uncertainties and Risk Management, in the dynamic environment Ping An's has struggled to respond to the nimble upstart competition. Ping An's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew S. Li, Gerald Yong Gao, Hung Gay Fung suggests that, Ping An's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on 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.
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 -
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ping An's 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 Ping An's to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ping An's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ping An's Overseas Expansion: Financial Uncertainties and Risk Management, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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 Ping An's in the consumer business. Now Ping An's can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Ping An's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
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 -
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.
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 Ping An's.
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.
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.
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.
Regulatory challenges
– Ping An's 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.
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.
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 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.
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.
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.
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 Ping An's business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
