Minsheng Bank: Penetrating The US Market Through Acquisition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Minsheng Bank: Penetrating The US Market Through Acquisition
Founded in 1996, China Minsheng Banking Corporation Limited ("Minsheng") was the first private commercial bank in China. By 2006, Minsheng had acquired almost US$130 billion in total assets and established almost 330 banking offices across the nation. The Banker magazine consistently praised Minsheng's development, ranking it number 310 in its top 1,000 business banks in the world in 2004, number 287 in 2005, and number 247 in 2006. In early March 2008, Minsheng obtained the green light from the China Banking Regulatory Commission to buy a 4.9% stake in US-based banking holding company, UCBH Holdings, Inc. ("UCBH") for US$95.7 million. The deal would eventually take Minsheng's stake in UCBH to 9.9%, totalling around US$200 million. The acquisition not only distinguished Minsheng as the first Chinese mainland institution to invest in a US bank, but was also viewed as a milestone for Chinese banks entering the US and international markets. On the flip side, UCBH would soon use this opportunity to make its own moves into China, leveraging its affiliation with Minsheng to totalingacquire other Chinese banks. This case examines the process of international expansion through acquisitions in the banking industry and the positioning of a growing bank in the global market, covering issues such as value creation, impact of government regulation and international barriers, the Chinese banking industry and its development, and the associated risks.
Swot Analysis of "Minsheng Bank: Penetrating The US Market Through Acquisition" written by Ricky Lai, Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Minsheng Ucbh facing as an external strategic factors. Some of the topics covered in Minsheng Bank: Penetrating The US Market Through Acquisition case study are - Strategic Management Strategies, Growth strategy, International business, Mergers & acquisitions, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Minsheng Bank: Penetrating The US Market Through Acquisition casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, geopolitical disruptions, technology disruption, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Minsheng Bank: Penetrating The US Market Through Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Minsheng Bank: Penetrating The US Market Through Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Minsheng Ucbh, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Minsheng Ucbh 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 Minsheng Bank: Penetrating The US Market Through Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in Minsheng Bank: Penetrating The US Market Through Acquisition case study
2. Improving business portfolio management of Minsheng Ucbh
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Minsheng Ucbh
Strengths Minsheng Bank: Penetrating The US Market Through Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Minsheng Ucbh in Minsheng Bank: Penetrating The US Market Through Acquisition Harvard Business Review case study are -
Diverse revenue streams
– Minsheng Ucbh is present in almost all the verticals within the industry. This has provided firm in Minsheng Bank: Penetrating The US Market Through Acquisition 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.
Innovation driven organization
– Minsheng Ucbh is one of the most innovative firm in sector. Manager in Minsheng Bank: Penetrating The US Market Through Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Minsheng Bank: Penetrating The US Market Through Acquisition 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.
Ability to lead change in Global Business field
– Minsheng Ucbh 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 Minsheng Ucbh in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Minsheng Ucbh is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Minsheng Ucbh 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 Minsheng Bank: Penetrating The US Market Through Acquisition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Minsheng Ucbh digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Minsheng Ucbh 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.
Training and development
– Minsheng Ucbh has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Minsheng Bank: Penetrating The US Market Through Acquisition 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.
High brand equity
– Minsheng Ucbh has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Minsheng Ucbh to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Global Business industry
– Minsheng Bank: Penetrating The US Market Through Acquisition firm has clearly differentiated products in the market place. This has enabled Minsheng Ucbh to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Minsheng Ucbh to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Minsheng Ucbh in the sector have low bargaining power. Minsheng Bank: Penetrating The US Market Through Acquisition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Minsheng Ucbh to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Minsheng Ucbh 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 Ricky Lai, Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Minsheng Bank: Penetrating The US Market Through Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Minsheng Bank: Penetrating The US Market Through Acquisition are -
Slow to strategic competitive environment developments
– As Minsheng Bank: Penetrating The US Market Through Acquisition HBR case study mentions - Minsheng Ucbh 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.
Need for greater diversity
– Minsheng Ucbh 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.
Low market penetration in new markets
– Outside its home market of Minsheng Ucbh, firm in the HBR case study Minsheng Bank: Penetrating The US Market Through Acquisition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Minsheng Bank: Penetrating The US Market Through Acquisition HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Minsheng Ucbh has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Minsheng Ucbh is dominated by functional specialists. It is not different from other players in the Global Business segment. Minsheng Ucbh needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Minsheng Ucbh to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Ricky Lai, Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung suggests that, Minsheng Ucbh is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Minsheng Ucbh 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 - Minsheng Bank: Penetrating The US Market Through Acquisition should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Bank: Penetrating The US Market Through Acquisition can leverage the sales team experience to cultivate customer relationships as Minsheng Ucbh is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Ucbh 's lucrative customers.
Interest costs
– Compare to the competition, Minsheng Ucbh 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Minsheng Bank: Penetrating The US Market Through Acquisition, is just above the industry average. Minsheng Ucbh 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.
Opportunities Minsheng Bank: Penetrating The US Market Through Acquisition | 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 Minsheng Bank: Penetrating The US Market Through Acquisition are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Minsheng Ucbh in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Manufacturing automation
– Minsheng Ucbh can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Minsheng Ucbh can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Minsheng Ucbh to increase its market reach. Minsheng Ucbh 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.
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. Minsheng Ucbh 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, Minsheng Ucbh 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.
Creating value in data economy
– The success of analytics program of Minsheng Ucbh has opened avenues for new revenue streams for the organization in the industry. This can help Minsheng Ucbh to build a more holistic ecosystem as suggested in the Minsheng Bank: Penetrating The US Market Through Acquisition case study. Minsheng Ucbh can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Minsheng Ucbh can develop new processes and procedures in Global Business 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.
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 Minsheng Ucbh in the consumer business. Now Minsheng Ucbh can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Minsheng Ucbh 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 Minsheng Ucbh to hire the very best people irrespective of their geographical location.
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 Minsheng Ucbh 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.
Building a culture of innovation
– managers at Minsheng Ucbh 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 Global Business segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Minsheng Ucbh 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. Minsheng Ucbh 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.
Threats Minsheng Bank: Penetrating The US Market Through Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Minsheng Bank: Penetrating The US Market Through Acquisition 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. Minsheng Ucbh 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 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.
Technology acceleration in Forth Industrial Revolution
– Minsheng Ucbh has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Minsheng Ucbh needs to keep up with the evolution of technology in the Global Business 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.
Shortening product life cycle
– it is one of the major threat that Minsheng Ucbh is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Minsheng Ucbh can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Minsheng Ucbh in the Global Business industry. The Global Business 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.
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. Minsheng Ucbh needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Consumer confidence and its impact on Minsheng Ucbh 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.
High dependence on third party suppliers
– Minsheng Ucbh 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 Minsheng Ucbh in the Global Business sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Minsheng Ucbh 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 Minsheng Bank: Penetrating The US Market Through Acquisition .
Stagnating economy with rate increase
– Minsheng Ucbh 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 Minsheng Ucbh business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Bank: Penetrating The US Market Through Acquisition 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 Minsheng Ucbh needs to make to build a sustainable competitive advantage.
