China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank

With its $3 billion investment in Chinese state bank China Construction Bank, Bank of America--the second U.S. bank behind Citigroup in terms of assets and market capitalization--was one of several foreign banks directly participating in China's banking sector reform. Banking sector reform was considered by some analysts to be an important complement to capital account liberalization and further changes to China's exchange rate regime.

Authors :: Laura Alfaro, Rafael Di Tella, Ingrid Vogel

Topics :: Global Business

Tags :: Economics, Strategy, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank" written by Laura Alfaro, Rafael Di Tella, Ingrid Vogel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bank Float facing as an external strategic factors. Some of the topics covered in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank case study are - Strategic Management Strategies, Economics, Strategy and Global Business.

Some of the macro environment factors that can be used to understand the China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank casestudy better are - – challanges to central banks by blockchain based private currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, etc

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Introduction to SWOT Analysis of China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bank Float, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bank Float 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank can be done for the following purposes –
1. Strategic planning using facts provided in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank case study
2. Improving business portfolio management of Bank Float
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 Bank Float

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Strengths China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Bank Float in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank Harvard Business Review case study are -

High brand equity

– Bank Float has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bank Float to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Bank Float is one of the leading recruiters in the industry. Managers in the China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Analytics focus

– Bank Float 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 Laura Alfaro, Rafael Di Tella, Ingrid Vogel 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.

Cross disciplinary teams

– Horizontal connected teams at the Bank Float are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Effective Research and Development (R&D)

– Bank Float 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank - 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 lead change in Global Business field

– Bank Float 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 Bank Float in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Sustainable margins compare to other players in Global Business industry

– China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank firm has clearly differentiated products in the market place. This has enabled Bank Float to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Bank Float to invest into research and development (R&D) and innovation.

Training and development

– Bank Float has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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.

Learning organization

- Bank Float 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 Bank Float is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Superior customer experience

– The customer experience strategy of Bank Float in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Operational resilience

– The operational resilience strategy in the China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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.

Successful track record of launching new products

– Bank Float has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bank Float 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.

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Weaknesses China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank are -

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bank Float is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

No frontier risks strategy

– After analyzing the HBR case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank, it seems that company is thinking about the frontier risks that can impact Global Business 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 operating costs

– Compare to the competitors, firm in the HBR case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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 Bank Float 's lucrative customers.

Capital Spending Reduction

– Even during the low interest decade, Bank Float has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Bank Float supply chain. Even after few cautionary changes mentioned in the HBR case study - China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bank Float vulnerable to further global disruptions in South East Asia.

Low market penetration in new markets

– Outside its home market of Bank Float, firm in the HBR case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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, Bank Float 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, Bank Float 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.

Slow to strategic competitive environment developments

– As China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank HBR case study mentions - Bank Float 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.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank, in the dynamic environment Bank Float has struggled to respond to the nimble upstart competition. Bank Float has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Aligning sales with marketing

– It come across in the case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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 China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank can leverage the sales team experience to cultivate customer relationships as Bank Float is planning to shift buying processes online.

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Opportunities China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank | 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Bank Float 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bank Float 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 Bank Float to hire the very best people irrespective of their geographical location.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Bank Float 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, China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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 Bank Float 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.

Loyalty marketing

– Bank Float 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.

Creating value in data economy

– The success of analytics program of Bank Float has opened avenues for new revenue streams for the organization in the industry. This can help Bank Float to build a more holistic ecosystem as suggested in the China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank case study. Bank Float can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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. Bank Float 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. Bank Float 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.

Developing new processes and practices

– Bank Float 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.

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. Bank Float can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bank Float can use these opportunities to build new business models that can help the communities that Bank Float operates in. Secondly it can use opportunities from government spending in Global Business sector.

Buying journey improvements

– Bank Float can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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.

Using analytics as competitive advantage

– Bank Float 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 China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bank Float to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Bank Float is facing challenges because of the dominance of functional experts in the organization. China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

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Threats China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank are -

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 Bank Float.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank, Bank Float may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .

Consumer confidence and its impact on Bank Float 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.

Shortening product life cycle

– it is one of the major threat that Bank Float is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bank Float with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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.

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.

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. Bank Float can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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. Bank Float 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.

Environmental challenges

– Bank Float 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. Bank Float can take advantage of this fund but it will also bring new competitors in the Global Business industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Bank Float 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank .

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. Bank Float needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.

High dependence on third party suppliers

– Bank Float 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.

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Weighted SWOT Analysis of China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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 Bank Float needs to make to build a sustainable competitive advantage.

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