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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, technology disruption, 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 -

Strong track record of project management

– Bank Float is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

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.

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.

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.

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.

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.

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.

Innovation driven organization

– Bank Float is one of the most innovative firm in sector. Manager in China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

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.

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.

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.

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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 decision making process

– As mentioned earlier in the report, Bank Float 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. Bank Float 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.

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.

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.

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.

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.

Products dominated business model

– Even though Bank Float 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 - China: To Float or Not To Float? (D): Bank of American's Strategic Investment in China Construction Bank should strive to include more intangible value offerings along with its core products and services.

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.

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.

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.

High bargaining power of channel partners

– Because of the regulatory requirements, Laura Alfaro, Rafael Di Tella, Ingrid Vogel suggests that, Bank Float 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.

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 -

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.

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.

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.

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.

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.

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.

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.

Better consumer reach

– The expansion of the 5G network will help Bank Float to increase its market reach. Bank Float 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Bank Float 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.

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 Bank Float in the consumer business. Now Bank Float can target international markets with far fewer capital restrictions requirements than the existing system.

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.

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.

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.

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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 -

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.

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.

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 .

Stagnating economy with rate increase

– Bank Float 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.

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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Bank Float 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.

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.

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.

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.

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.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Bank Float business can come under increasing regulations regarding data privacy, data security, etc.

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 .

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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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