Challenging Confucius: Western banks in the Chinese Credit Card Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Challenging Confucius: Western banks in the Chinese Credit Card Market
China has commanded a great deal of interest from virtually all U.S. business sectors. The Chinese credit card market is now particularly intriguing for Western banks. This article examines the strategic minefield that Western banks must navigate as they attempt to compete in the Chinese credit card industry. As an example, Bank of America (BOA)-fresh from purchasing a 9% interest in China Construction Bank (CCB) a few years ago-is now contemplating a joint venture with CCB. The new company will be tasked with leading the Chinese credit card market. Specifically, two questions are addressed: (1) whether the Chinese banking market is a sound option at this time; and (2) whether China affords an optimal environment for credit. The analysis yields several strategic lessons, and encourages caution on the part of Western bank executives as they enter the Chinese market. In particular, BOA officials must appreciate the timing of their joint venture's evolution. Additionally, BOA officials should strongly consider financial ventures other than credit, as Chinese culture should prove particularly resistant to serving as a profitable customer base in the short- and middle-timeframes.a€‚a€‚a€‚a€‚a€‚
Swot Analysis of "Challenging Confucius: Western banks in the Chinese Credit Card Market" written by Justin W. Evans includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Boa Credit facing as an external strategic factors. Some of the topics covered in Challenging Confucius: Western banks in the Chinese Credit Card Market case study are - Strategic Management Strategies, Strategy and Global Business.
Some of the macro environment factors that can be used to understand the Challenging Confucius: Western banks in the Chinese Credit Card Market casestudy better are - – increasing energy prices, there is increasing trade war between United States & China, geopolitical disruptions, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
wage bills are increasing, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Challenging Confucius: Western banks in the Chinese Credit Card Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Challenging Confucius: Western banks in the Chinese Credit Card Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Boa Credit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Boa Credit 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 Challenging Confucius: Western banks in the Chinese Credit Card Market can be done for the following purposes –
1. Strategic planning using facts provided in Challenging Confucius: Western banks in the Chinese Credit Card Market case study
2. Improving business portfolio management of Boa Credit
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 Boa Credit
Strengths Challenging Confucius: Western banks in the Chinese Credit Card Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Boa Credit in Challenging Confucius: Western banks in the Chinese Credit Card Market Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Boa Credit 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.
Operational resilience
– The operational resilience strategy in the Challenging Confucius: Western banks in the Chinese Credit Card Market 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.
High switching costs
– The high switching costs that Boa Credit 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.
Analytics focus
– Boa Credit 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 Justin W. Evans 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.
High brand equity
– Boa Credit has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Boa Credit to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Boa Credit has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Boa Credit 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.
Ability to lead change in Global Business field
– Boa Credit 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 Boa Credit in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Boa Credit
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Boa Credit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Boa Credit 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 Challenging Confucius: Western banks in the Chinese Credit Card Market - 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 Boa Credit digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Boa Credit 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.
Diverse revenue streams
– Boa Credit is present in almost all the verticals within the industry. This has provided firm in Challenging Confucius: Western banks in the Chinese Credit Card Market 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.
Highly skilled collaborators
– Boa Credit has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Challenging Confucius: Western banks in the Chinese Credit Card Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Challenging Confucius: Western banks in the Chinese Credit Card Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Challenging Confucius: Western banks in the Chinese Credit Card Market are -
Slow decision making process
– As mentioned earlier in the report, Boa Credit 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. Boa Credit 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Justin W. Evans suggests that, Boa Credit 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 Boa Credit 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 - Challenging Confucius: Western banks in the Chinese Credit Card Market should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Boa Credit 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.
No frontier risks strategy
– After analyzing the HBR case study Challenging Confucius: Western banks in the Chinese Credit Card Market, 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 Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Boa Credit 's lucrative customers.
Slow to strategic competitive environment developments
– As Challenging Confucius: Western banks in the Chinese Credit Card Market HBR case study mentions - Boa Credit 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.
Skills based hiring
– The stress on hiring functional specialists at Boa Credit 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.
High cash cycle compare to competitors
Boa Credit 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.
Aligning sales with marketing
– It come across in the case study Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Challenging Confucius: Western banks in the Chinese Credit Card Market can leverage the sales team experience to cultivate customer relationships as Boa Credit is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Boa Credit has relatively successful track record of launching new products.
Opportunities Challenging Confucius: Western banks in the Chinese Credit Card Market | 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 Challenging Confucius: Western banks in the Chinese Credit Card Market are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Boa Credit 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, Challenging Confucius: Western banks in the Chinese Credit Card Market, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Boa Credit to increase its market reach. Boa Credit 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.
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 Boa Credit 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
– Boa Credit 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.
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. Boa Credit can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Boa Credit 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 Boa Credit to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Boa Credit 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.
Buying journey improvements
– Boa Credit can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Challenging Confucius: Western banks in the Chinese Credit Card Market 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Boa Credit can use these opportunities to build new business models that can help the communities that Boa Credit operates in. Secondly it can use opportunities from government spending in Global Business sector.
Leveraging digital technologies
– Boa Credit 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 Boa Credit 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.
Learning at scale
– Online learning technologies has now opened space for Boa Credit to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Boa Credit has opened avenues for new revenue streams for the organization in the industry. This can help Boa Credit to build a more holistic ecosystem as suggested in the Challenging Confucius: Western banks in the Chinese Credit Card Market case study. Boa Credit can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Challenging Confucius: Western banks in the Chinese Credit Card Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Challenging Confucius: Western banks in the Chinese Credit Card Market are -
Consumer confidence and its impact on Boa Credit 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Challenging Confucius: Western banks in the Chinese Credit Card Market, Boa Credit 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 .
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. Boa Credit can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Boa Credit 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. Boa Credit can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Regulatory challenges
– Boa Credit 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 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Boa Credit 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.
Increasing wage structure of Boa Credit
– 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 Boa Credit.
Technology acceleration in Forth Industrial Revolution
– Boa Credit has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Boa Credit 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.
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. Boa Credit needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Boa Credit 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 Boa Credit business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Challenging Confucius: Western banks in the Chinese Credit Card Market 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 Boa Credit needs to make to build a sustainable competitive advantage.