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 inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing energy prices, technology disruption, central banks are concerned over increasing inflation, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, 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 -
Strong track record of project management
– Boa Credit is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
Innovation driven organization
– Boa Credit is one of the most innovative firm in sector. Manager in Challenging Confucius: Western banks in the Chinese Credit Card Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Boa Credit in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Boa Credit has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Challenging Confucius: Western banks in the Chinese Credit Card Market 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.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Boa Credit in the sector have low bargaining power. Challenging Confucius: Western banks in the Chinese Credit Card Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Boa Credit to manage not only supply disruptions but also source products at highly competitive prices.
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.
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 -
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.
Capital Spending Reduction
– Even during the low interest decade, Boa Credit 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 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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Boa Credit is dominated by functional specialists. It is not different from other players in the Global Business segment. Boa Credit needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Boa Credit to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Boa Credit products
– To increase the profitability and margins on the products, Boa Credit needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
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 Boa Credit supply chain. Even after few cautionary changes mentioned in the HBR case study - Challenging Confucius: Western banks in the Chinese Credit Card Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Boa Credit vulnerable to further global disruptions in South East Asia.
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 -
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Boa Credit 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.
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.
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 Boa Credit in the consumer business. Now Boa Credit can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Boa Credit is facing challenges because of the dominance of functional experts in the organization. Challenging Confucius: Western banks in the Chinese Credit Card Market 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.
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.
Using analytics as competitive advantage
– Boa Credit 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 Challenging Confucius: Western banks in the Chinese Credit Card Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Boa Credit to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
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 -
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Boa Credit with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Boa Credit is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Boa Credit.
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.
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Boa Credit 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 Challenging Confucius: Western banks in the Chinese Credit Card Market .
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 dependence on third party suppliers
– Boa Credit 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.
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.
