Taikang Insurance: Standing Out in China's Crowded Insurance Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Taikang Insurance: Standing Out in China's Crowded Insurance Market
As a joint-stock insurance company in China, with both state-owned enterprises and foreign firms as investors, Taikang Insurance was becoming a force in the industry. It not only competed with well-entrenched state-owned rivals but it was also seen as an entrepreneurial upstart. With the insurance landscape in China growing increasingly competitive, Taikang has had to be innovative and strategic in its ability to maintain its place as the fourth largest insurer in China. Chairman Chen Dongsheng laid a strong foundation when he launched Taikang in 2006, what will he do going forward to enable Taikang to continue to stand out in a crowded field?
Swot Analysis of "Taikang Insurance: Standing Out in China's Crowded Insurance Market" written by William C. Kirby, Tracy Yuen Manty includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Taikang Insurance facing as an external strategic factors. Some of the topics covered in Taikang Insurance: Standing Out in China's Crowded Insurance Market case study are - Strategic Management Strategies, Entrepreneurial management, Government, Growth strategy, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Taikang Insurance: Standing Out in China's Crowded Insurance Market casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, technology disruption,
increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, etc
Introduction to SWOT Analysis of Taikang Insurance: Standing Out in China's Crowded Insurance Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taikang Insurance: Standing Out in China's Crowded Insurance Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Taikang Insurance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Taikang Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance Market can be done for the following purposes –
1. Strategic planning using facts provided in Taikang Insurance: Standing Out in China's Crowded Insurance Market case study
2. Improving business portfolio management of Taikang Insurance
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Taikang Insurance
Strengths Taikang Insurance: Standing Out in China's Crowded Insurance Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Taikang Insurance in Taikang Insurance: Standing Out in China's Crowded Insurance Market Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Taikang Insurance in the sector have low bargaining power. Taikang Insurance: Standing Out in China's Crowded Insurance Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Taikang Insurance to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Taikang Insurance is one of the most innovative firm in sector. Manager in Taikang Insurance: Standing Out in China's Crowded Insurance Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Taikang Insurance has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Taikang Insurance 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 recruit top talent
– Taikang Insurance is one of the leading recruiters in the industry. Managers in the Taikang Insurance: Standing Out in China's Crowded Insurance Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Leadership & Managing People industry
– Taikang Insurance: Standing Out in China's Crowded Insurance Market firm has clearly differentiated products in the market place. This has enabled Taikang Insurance to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Taikang Insurance to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Taikang Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Taikang Insurance is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Taikang Insurance
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Taikang Insurance does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Taikang Insurance 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 Taikang Insurance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Taikang Insurance: Standing Out in China's Crowded Insurance Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Taikang Insurance is present in almost all the verticals within the industry. This has provided firm in Taikang Insurance: Standing Out in China's Crowded Insurance 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.
Superior customer experience
– The customer experience strategy of Taikang Insurance in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Taikang Insurance digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Taikang Insurance 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.
Weaknesses Taikang Insurance: Standing Out in China's Crowded Insurance Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taikang Insurance: Standing Out in China's Crowded Insurance Market are -
Interest costs
– Compare to the competition, Taikang Insurance has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Taikang Insurance: Standing Out in China's Crowded Insurance Market HBR case study mentions - Taikang Insurance 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Taikang Insurance: Standing Out in China's Crowded Insurance Market, is just above the industry average. Taikang Insurance needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Taikang Insurance: Standing Out in China's Crowded Insurance Market, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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 bargaining power of channel partners
– Because of the regulatory requirements, William C. Kirby, Tracy Yuen Manty suggests that, Taikang Insurance 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.
High cash cycle compare to competitors
Taikang Insurance 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.
Skills based hiring
– The stress on hiring functional specialists at Taikang Insurance 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Taikang Insurance: Standing Out in China's Crowded Insurance Market, it seems that the employees of Taikang Insurance don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Products dominated business model
– Even though Taikang Insurance 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 - Taikang Insurance: Standing Out in China's Crowded Insurance Market should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Taikang Insurance is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Taikang Insurance: Standing Out in China's Crowded Insurance Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance has relatively successful track record of launching new products.
Opportunities Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance Market are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Taikang Insurance can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Taikang Insurance 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Taikang Insurance can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Taikang Insurance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Taikang Insurance 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, Taikang Insurance 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, Taikang Insurance: Standing Out in China's Crowded Insurance 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.
Buying journey improvements
– Taikang Insurance can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Taikang Insurance: Standing Out in China's Crowded Insurance 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.
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 Taikang Insurance in the consumer business. Now Taikang Insurance can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Taikang Insurance can use these opportunities to build new business models that can help the communities that Taikang Insurance operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Taikang Insurance 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. Taikang Insurance 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.
Better consumer reach
– The expansion of the 5G network will help Taikang Insurance to increase its market reach. Taikang Insurance 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.
Manufacturing automation
– Taikang Insurance can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Creating value in data economy
– The success of analytics program of Taikang Insurance has opened avenues for new revenue streams for the organization in the industry. This can help Taikang Insurance to build a more holistic ecosystem as suggested in the Taikang Insurance: Standing Out in China's Crowded Insurance Market case study. Taikang Insurance can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Taikang Insurance: Standing Out in China's Crowded Insurance Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taikang Insurance: Standing Out in China's Crowded Insurance Market are -
High dependence on third party suppliers
– Taikang Insurance 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Taikang Insurance in the Leadership & Managing People industry. The Leadership & Managing People 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Taikang Insurance with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Taikang Insurance 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 Leadership & Managing People industry regulations.
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 Taikang Insurance business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Taikang Insurance 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.
Increasing wage structure of Taikang Insurance
– 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 Taikang Insurance.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Taikang Insurance: Standing Out in China's Crowded Insurance Market, Taikang Insurance may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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. Taikang Insurance needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
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 Taikang Insurance in the Leadership & Managing People sector and impact the bottomline of the organization.
Environmental challenges
– Taikang Insurance 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. Taikang Insurance can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Weighted SWOT Analysis of Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance needs to make to build a sustainable competitive advantage.