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, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models,
geopolitical disruptions, increasing commodity prices, 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 -
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 brand equity
– Creditease Yirendai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Creditease Yirendai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Analytics focus
– Creditease Yirendai 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 Michael Chu, John S. Ji, Nancy Hua Dai 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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Creditease Yirendai in the sector have low bargaining power. CreditEase: Taking Inclusive Finance Online has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Creditease Yirendai to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Highly skilled collaborators
– Creditease Yirendai 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 CreditEase: Taking Inclusive Finance Online HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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 -
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.
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.
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.
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.
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 Creditease Yirendai supply chain. Even after few cautionary changes mentioned in the HBR case study - CreditEase: Taking Inclusive Finance Online, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Creditease Yirendai vulnerable to further global disruptions in South East Asia.
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.
Capital Spending Reduction
– Even during the low interest decade, Creditease Yirendai 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.
Increasing silos among functional specialists
– The organizational structure of Creditease Yirendai is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Creditease Yirendai needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Creditease Yirendai to focus more on services rather than just following the product oriented approach.
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.
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.
Need for greater diversity
– Creditease Yirendai 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.
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 -
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.
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.
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.
Building a culture of innovation
– managers at Creditease Yirendai 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.
Better consumer reach
– The expansion of the 5G network will help Creditease Yirendai to increase its market reach. Creditease Yirendai 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.
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 Creditease Yirendai in the consumer business. Now Creditease Yirendai can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Creditease Yirendai 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.
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.
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.
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 -
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.
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.
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.
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. Creditease Yirendai needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Creditease Yirendai is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
Environmental challenges
– Creditease Yirendai 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. Creditease Yirendai can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Creditease Yirendai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Creditease Yirendai in the Finance & Accounting sector and impact the bottomline of the organization.
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.
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.