China Merchants Bank: Here Just For You SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of China Merchants Bank: Here Just For You
Founded in 1987, China Merchants Bank (CMB) is a pioneer in the use of technical innovation and IT as a competitive tool in the rapidly evolving Chinese banking sector. With a relatively small branch network when compared to its larger competitors, CMB uses an IT-driven strategy to introduce an "all-in-one" card, which integrates a suite of financial products to drive its personal banking business enabling CMB to be ranked 6th among China's commercial banks and 2nd among the other national commercial banks in terms of total assets as of June 2006. Underlying its excellence in personal banking is CMB's leadership in developing its credit card business. By April 2006, CMB had issued a total of over 5 million credit cards, capturing one-third of the Chinese credit card market. In September 2006, CMB's IPO in Hong Kong fetched about $2.4 billion and, given deregulation in the banking sector in China, CMB's President was presented with new challenges and opportunities concerning how such funds should be productively allocated to ensure CMB's competitiveness.
Authors :: F. Warren McFarlan, Chen Guoqing, Zhu Hengyuan, Bin Yang
Swot Analysis of "China Merchants Bank: Here Just For You" written by F. Warren McFarlan, Chen Guoqing, Zhu Hengyuan, Bin Yang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cmb's Cmb facing as an external strategic factors. Some of the topics covered in China Merchants Bank: Here Just For You case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the China Merchants Bank: Here Just For You casestudy better are - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, increasing transportation and logistics costs, geopolitical disruptions, wage bills are increasing, talent flight as more people leaving formal jobs,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of China Merchants Bank: Here Just For You
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China Merchants Bank: Here Just For You case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cmb's Cmb, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cmb's Cmb 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 China Merchants Bank: Here Just For You can be done for the following purposes –
1. Strategic planning using facts provided in China Merchants Bank: Here Just For You case study
2. Improving business portfolio management of Cmb's Cmb
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 Cmb's Cmb
Strengths China Merchants Bank: Here Just For You | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cmb's Cmb in China Merchants Bank: Here Just For You Harvard Business Review case study are -
Organizational Resilience of Cmb's Cmb
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cmb's Cmb does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Cmb's Cmb 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 China Merchants Bank: Here Just For You - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Cmb's Cmb 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 Cmb's Cmb is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in China Merchants Bank: Here Just For You Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Cmb's Cmb is one of the most innovative firm in sector. Manager in China Merchants Bank: Here Just For You Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Cmb's Cmb has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cmb's Cmb 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.
Low bargaining power of suppliers
– Suppliers of Cmb's Cmb in the sector have low bargaining power. China Merchants Bank: Here Just For You has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cmb's Cmb to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Cmb's Cmb is present in almost all the verticals within the industry. This has provided firm in China Merchants Bank: Here Just For You 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.
Sustainable margins compare to other players in Finance & Accounting industry
– China Merchants Bank: Here Just For You firm has clearly differentiated products in the market place. This has enabled Cmb's Cmb to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cmb's Cmb to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Cmb's Cmb is one of the leading recruiters in the industry. Managers in the China Merchants Bank: Here Just For You are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Cmb's Cmb is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Cmb's Cmb digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cmb's Cmb 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.
Highly skilled collaborators
– Cmb's Cmb 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 China Merchants Bank: Here Just For You HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses China Merchants Bank: Here Just For You | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Merchants Bank: Here Just For You are -
High cash cycle compare to competitors
Cmb's Cmb 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.
Lack of clear differentiation of Cmb's Cmb products
– To increase the profitability and margins on the products, Cmb's Cmb needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study China Merchants Bank: Here Just For You, in the dynamic environment Cmb's Cmb has struggled to respond to the nimble upstart competition. Cmb's Cmb has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As China Merchants Bank: Here Just For You HBR case study mentions - Cmb's Cmb 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.
Products dominated business model
– Even though Cmb's Cmb 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 - China Merchants Bank: Here Just For You should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Cmb's Cmb has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study China Merchants Bank: Here Just For You 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 Cmb's Cmb 's lucrative customers.
Need for greater diversity
– Cmb's Cmb 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.
Interest costs
– Compare to the competition, Cmb's Cmb 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.
Increasing silos among functional specialists
– The organizational structure of Cmb's Cmb is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cmb's Cmb needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cmb's Cmb to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Cmb's Cmb 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.
Opportunities China Merchants Bank: Here Just For You | 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 China Merchants Bank: Here Just For You are -
Leveraging digital technologies
– Cmb's Cmb 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.
Manufacturing automation
– Cmb's Cmb 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.
Building a culture of innovation
– managers at Cmb's Cmb 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.
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 Cmb's Cmb 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cmb's Cmb 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 Cmb's Cmb to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cmb's Cmb 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.
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 Cmb's Cmb in the consumer business. Now Cmb's Cmb can target international markets with far fewer capital restrictions requirements than the existing system.
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. Cmb's Cmb can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Cmb's Cmb can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. China Merchants Bank: Here Just For You 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.
Better consumer reach
– The expansion of the 5G network will help Cmb's Cmb to increase its market reach. Cmb's Cmb 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.
Creating value in data economy
– The success of analytics program of Cmb's Cmb has opened avenues for new revenue streams for the organization in the industry. This can help Cmb's Cmb to build a more holistic ecosystem as suggested in the China Merchants Bank: Here Just For You case study. Cmb's Cmb can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cmb's Cmb 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
– Cmb's Cmb 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.
Threats China Merchants Bank: Here Just For You External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China Merchants Bank: Here Just For You are -
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cmb's Cmb can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Cmb's Cmb.
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.
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. Cmb's Cmb 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.
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. Cmb's Cmb needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cmb's Cmb 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 China Merchants Bank: Here Just For You .
Increasing wage structure of Cmb's Cmb
– 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 Cmb's Cmb.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cmb's Cmb with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Cmb's Cmb 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.
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 Cmb's Cmb in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Cmb's Cmb 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
– Cmb's Cmb 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
– Cmb's Cmb has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cmb's Cmb 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 China Merchants Bank: Here Just For You 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 China Merchants Bank: Here Just For You 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 China Merchants Bank: Here Just For You 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 China Merchants Bank: Here Just For You 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 China Merchants Bank: Here Just For You 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 Cmb's Cmb needs to make to build a sustainable competitive advantage.
