Case Study Description of CreditEase: Taking Inclusive Finance Online
The world's largest peer-to-peer (P2P) lender annually disbursing over a million loans totaling $10 billion, China's CreditEase, must decide whether to IPO in the NYSE its online lending platform, Yirendai, before the year-end window closes in 2015. Yirendai sought to capture its customers and make virtually instantaneous credit decisions online. CreditEase's commercial success makes funding Yirendai's growth not an issue. P2P lending in China, after explosive growth followed by notorious frauds, is increasingly controversial. On the way to becoming a global example of financial inclusion, as a result of its original business model, CreditEase also pioneered and became a leader in the wealth management industry in China, serving the country's new mass affluent and high net worth families. With so many options, how should Ning Tang, founder and CEO, chart the future strategic direction of CreditEase?
Swot Analysis of "CreditEase: Taking Inclusive Finance Online" written by Michael Chu, John S. Ji, Nancy Hua Dai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Creditease Yirendai facing as an external strategic factors. Some of the topics covered in CreditEase: Taking Inclusive Finance Online case study are - Strategic Management Strategies, Growth strategy, Internet and Finance & Accounting.
Some of the macro environment factors that can be used to understand the CreditEase: Taking Inclusive Finance Online casestudy better are - – wage bills are increasing, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, supply chains are disrupted by pandemic , there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies,
cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of CreditEase: Taking Inclusive Finance Online
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CreditEase: Taking Inclusive Finance Online case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Creditease Yirendai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online can be done for the following purposes –
1. Strategic planning using facts provided in CreditEase: Taking Inclusive Finance Online case study
2. Improving business portfolio management of Creditease Yirendai
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 Creditease Yirendai
Strengths CreditEase: Taking Inclusive Finance Online | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Creditease Yirendai in CreditEase: Taking Inclusive Finance Online Harvard Business Review case study are -
Diverse revenue streams
– Creditease Yirendai is present in almost all the verticals within the industry. This has provided firm in CreditEase: Taking Inclusive Finance Online 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.
Training and development
– Creditease Yirendai has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CreditEase: Taking Inclusive Finance Online 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.
Sustainable margins compare to other players in Finance & Accounting industry
– CreditEase: Taking Inclusive Finance Online firm has clearly differentiated products in the market place. This has enabled Creditease Yirendai to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Creditease Yirendai to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Creditease Yirendai has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Creditease Yirendai 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
– Creditease Yirendai 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 Creditease Yirendai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the CreditEase: Taking Inclusive Finance Online 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.
Learning organization
- Creditease Yirendai 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 Creditease Yirendai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CreditEase: Taking Inclusive Finance Online Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Creditease Yirendai is one of the leading recruiters in the industry. Managers in the CreditEase: Taking Inclusive Finance Online are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Creditease Yirendai digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Creditease Yirendai 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.
High switching costs
– The high switching costs that Creditease Yirendai 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.
Superior customer experience
– The customer experience strategy of Creditease Yirendai in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Creditease Yirendai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses CreditEase: Taking Inclusive Finance Online | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CreditEase: Taking Inclusive Finance Online are -
Slow decision making process
– As mentioned earlier in the report, Creditease Yirendai 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. Creditease Yirendai 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.
High cash cycle compare to competitors
Creditease Yirendai 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.
No frontier risks strategy
– After analyzing the HBR case study CreditEase: Taking Inclusive Finance Online, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study CreditEase: Taking Inclusive Finance Online, it seems that the employees of Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online 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 CreditEase: Taking Inclusive Finance Online can leverage the sales team experience to cultivate customer relationships as Creditease Yirendai is planning to shift buying processes online.
Interest costs
– Compare to the competition, Creditease Yirendai 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.
Low market penetration in new markets
– Outside its home market of Creditease Yirendai, firm in the HBR case study CreditEase: Taking Inclusive Finance Online needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Creditease Yirendai 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.
Products dominated business model
– Even though Creditease Yirendai 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 - CreditEase: Taking Inclusive Finance Online should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Creditease Yirendai products
– To increase the profitability and margins on the products, Creditease Yirendai needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Creditease Yirendai is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study CreditEase: Taking Inclusive Finance Online can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities CreditEase: Taking Inclusive Finance Online | 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 CreditEase: Taking Inclusive Finance Online are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Creditease Yirendai 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, CreditEase: Taking Inclusive Finance Online, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Creditease Yirendai can use these opportunities to build new business models that can help the communities that Creditease Yirendai operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Creditease Yirendai 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.
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. Creditease Yirendai can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Creditease Yirendai 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 Creditease Yirendai to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Creditease Yirendai 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.
Using analytics as competitive advantage
– Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Creditease Yirendai to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Creditease Yirendai 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. Creditease Yirendai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Creditease Yirendai can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Creditease Yirendai can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Creditease Yirendai can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CreditEase: Taking Inclusive Finance Online 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Creditease Yirendai can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Creditease Yirendai has opened avenues for new revenue streams for the organization in the industry. This can help Creditease Yirendai to build a more holistic ecosystem as suggested in the CreditEase: Taking Inclusive Finance Online case study. Creditease Yirendai can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats CreditEase: Taking Inclusive Finance Online External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CreditEase: Taking Inclusive Finance Online are -
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. Creditease Yirendai 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.
Technology acceleration in Forth Industrial Revolution
– Creditease Yirendai has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Creditease Yirendai 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Creditease Yirendai 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
– Creditease Yirendai 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 dependence on third party suppliers
– Creditease Yirendai 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online .
Increasing wage structure of Creditease Yirendai
– 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 Creditease Yirendai.
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. Creditease Yirendai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Creditease Yirendai business can come under increasing regulations regarding data privacy, data security, etc.
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 Creditease Yirendai.
Stagnating economy with rate increase
– Creditease Yirendai 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CreditEase: Taking Inclusive Finance Online, Creditease Yirendai 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 .
Weighted SWOT Analysis of CreditEase: Taking Inclusive Finance Online 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 CreditEase: Taking Inclusive Finance Online 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 CreditEase: Taking Inclusive Finance Online 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 CreditEase: Taking Inclusive Finance Online 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 CreditEase: Taking Inclusive Finance Online 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 Creditease Yirendai needs to make to build a sustainable competitive advantage.
