Financial Networks and Informal Banking in China: From Pawnshops to Private Equity SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Financial Networks and Informal Banking in China: From Pawnshops to Private Equity
Provides an analysis of why informal financial networks and institutions still play an extremely important role in China's economy in the 21st century. Although China has emerged as one of the fastest growing economies in the world, it still suffers from a weak financial system dominated by state-controlled banks and severely limited access to capital for private entrepreneurs and consumers. The case shows how the political climate, economic regulatory environment and social attitudes towards lending practices have shaped the approach to and structure of financing private enterprises over time. It also addresses the response of the Chinese government to the resilient curb market in the context of the economic reforms and policy changes for the banking and financial sector.
Swot Analysis of "Financial Networks and Informal Banking in China: From Pawnshops to Private Equity" written by Elisabeth Koll includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Informal Pawnshops facing as an external strategic factors. Some of the topics covered in Financial Networks and Informal Banking in China: From Pawnshops to Private Equity case study are - Strategic Management Strategies, Entrepreneurial finance, Government, International business, Networking and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Financial Networks and Informal Banking in China: From Pawnshops to Private Equity casestudy better are - – challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Financial Networks and Informal Banking in China: From Pawnshops to Private Equity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Financial Networks and Informal Banking in China: From Pawnshops to Private Equity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Informal Pawnshops, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity can be done for the following purposes –
1. Strategic planning using facts provided in Financial Networks and Informal Banking in China: From Pawnshops to Private Equity case study
2. Improving business portfolio management of Informal Pawnshops
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 Informal Pawnshops
Strengths Financial Networks and Informal Banking in China: From Pawnshops to Private Equity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Informal Pawnshops in Financial Networks and Informal Banking in China: From Pawnshops to Private Equity Harvard Business Review case study are -
Highly skilled collaborators
– Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Informal Pawnshops has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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.
Superior customer experience
– The customer experience strategy of Informal Pawnshops in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Financial Networks and Informal Banking in China: From Pawnshops to Private Equity firm has clearly differentiated products in the market place. This has enabled Informal Pawnshops to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Informal Pawnshops to invest into research and development (R&D) and innovation.
Analytics focus
– Informal Pawnshops 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 Elisabeth Koll 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.
Ability to lead change in Finance & Accounting field
– Informal Pawnshops 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 Informal Pawnshops in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Informal Pawnshops 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.
Strong track record of project management
– Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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.
High brand equity
– Informal Pawnshops has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Informal Pawnshops to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Informal Pawnshops has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Informal Pawnshops 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.
Weaknesses Financial Networks and Informal Banking in China: From Pawnshops to Private Equity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Financial Networks and Informal Banking in China: From Pawnshops to Private Equity are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity, is just above the industry average. Informal Pawnshops 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.
Capital Spending Reduction
– Even during the low interest decade, Informal Pawnshops 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.
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 Informal Pawnshops supply chain. Even after few cautionary changes mentioned in the HBR case study - Financial Networks and Informal Banking in China: From Pawnshops to Private Equity, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Informal Pawnshops vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity, in the dynamic environment Informal Pawnshops has struggled to respond to the nimble upstart competition. Informal Pawnshops has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Informal Pawnshops needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Informal Pawnshops 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. Informal Pawnshops 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.
Need for greater diversity
– Informal Pawnshops 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.
Aligning sales with marketing
– It come across in the case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity can leverage the sales team experience to cultivate customer relationships as Informal Pawnshops is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Financial Networks and Informal Banking in China: From Pawnshops to Private Equity HBR case study mentions - Informal Pawnshops 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.
Low market penetration in new markets
– Outside its home market of Informal Pawnshops, firm in the HBR case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Financial Networks and Informal Banking in China: From Pawnshops to Private Equity | 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity are -
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 Informal Pawnshops in the consumer business. Now Informal Pawnshops can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Informal Pawnshops 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
– Informal Pawnshops 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.
Creating value in data economy
– The success of analytics program of Informal Pawnshops has opened avenues for new revenue streams for the organization in the industry. This can help Informal Pawnshops to build a more holistic ecosystem as suggested in the Financial Networks and Informal Banking in China: From Pawnshops to Private Equity case study. Informal Pawnshops can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Informal Pawnshops to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Informal Pawnshops can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Informal Pawnshops 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.
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 Informal Pawnshops 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.
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. Informal Pawnshops can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Informal Pawnshops 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 Informal Pawnshops can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Informal Pawnshops 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.
Leveraging digital technologies
– Informal Pawnshops 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.
Threats Financial Networks and Informal Banking in China: From Pawnshops to Private Equity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Financial Networks and Informal Banking in China: From Pawnshops to Private Equity are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Informal Pawnshops 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Informal Pawnshops 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity .
Regulatory challenges
– Informal Pawnshops 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.
Technology acceleration in Forth Industrial Revolution
– Informal Pawnshops has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Informal Pawnshops 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.
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 Informal Pawnshops business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Informal Pawnshops 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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Informal Pawnshops in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Informal Pawnshops with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Informal Pawnshops 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. Informal Pawnshops can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Informal Pawnshops 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 Informal Pawnshops 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.
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 Informal Pawnshops.
Weighted SWOT Analysis of Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Financial Networks and Informal Banking in China: From Pawnshops to Private Equity 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 Informal Pawnshops needs to make to build a sustainable competitive advantage.
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