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 - – increasing commodity prices, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, there is backlash against globalization, challanges to central banks by blockchain based private currencies, wage bills are increasing, geopolitical disruptions, technology disruption, there is increasing trade war between United States & China, 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.

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.

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.

Digital Transformation in Global Business segment

- digital transformation varies from industry to industry. For Bank Float digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bank Float 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.

Low bargaining power of suppliers

– Suppliers of Bank Float in the sector have low bargaining power. China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bank Float to manage not only supply disruptions but also source products at highly competitive prices.

High switching costs

– The high switching costs that Bank Float 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.

Diverse revenue streams

– Bank Float is present in almost all the verticals within the industry. This has provided firm in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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.

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.

Organizational Resilience of Bank Float

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bank Float does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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.

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.

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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 -

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.

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.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank 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 Bank Float has relatively successful track record of launching new products.

Increasing silos among functional specialists

– The organizational structure of Bank Float is dominated by functional specialists. It is not different from other players in the Global Business segment. Bank Float needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bank Float to focus more on services rather than just following the product oriented approach.

High cash cycle compare to competitors

Bank Float 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.

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.

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.

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.

Lack of clear differentiation of Bank Float products

– To increase the profitability and margins on the products, Bank Float needs to provide more differentiated products than what it is currently offering in the marketplace.

Skills based hiring

– The stress on hiring functional specialists at Bank Float has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

Need for greater diversity

– Bank Float 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.

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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 -

Leveraging digital technologies

– Bank Float can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Building a culture of innovation

– managers at Bank Float 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.

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.

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.

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.

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.

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.

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.

Manufacturing automation

– Bank Float 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.

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.

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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Bank Float can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

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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 -

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.

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 Bank Float in the Global Business sector and impact the bottomline of the organization.

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 Bank Float 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 Bank Float.

Regulatory challenges

– Bank Float 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 Global Business industry regulations.

Technology acceleration in Forth Industrial Revolution

– Bank Float has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Bank Float 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.

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.

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.

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.

Increasing wage structure of Bank Float

– 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 Bank Float.

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.

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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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