CreditEase: Providing Credit and Financial Services for China's Underclass SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of CreditEase: Providing Credit and Financial Services for China's Underclass
In 2013 Ning Tang, who in 2006 founded CreditEase as a broker of P2P loans to unbanked individuals and small businesses in China, confronts the challenges of rapid growth and expansion in a changing regulatory environment. CreditEase needs to develop technology to manage its growth, address issues related to the company's expansion into products and services for China's growing high net worth (HNW) population, including questions about the suitability of its products and its vulnerability to bad debt losses and a potential leveling off of the growth in China's economy, and adjust to new and more intensive regulatory oversight. What should Tang do to position CreditEase so that it can continue to fulfill its mission of making financial products and services available to millions of underserved Chinese while branching out into other, potentially riskier lines of business and ensuring continuing compliance with evolving laws and regulations? Will its rapid growth be sustainable?
Authors :: Lena G. Goldberg, Paul M. Healy, Nancy Hua Dai
Swot Analysis of "CreditEase: Providing Credit and Financial Services for China's Underclass" written by Lena G. Goldberg, Paul M. Healy, Nancy Hua Dai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Creditease Tang facing as an external strategic factors. Some of the topics covered in CreditEase: Providing Credit and Financial Services for China's Underclass case study are - Strategic Management Strategies, Emerging markets, Entrepreneurship, Financial management, Growth strategy, Innovation, Regulation and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the CreditEase: Providing Credit and Financial Services for China's Underclass casestudy better are - – increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing commodity prices, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , there is increasing trade war between United States & China,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of CreditEase: Providing Credit and Financial Services for China's Underclass
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CreditEase: Providing Credit and Financial Services for China's Underclass case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Creditease Tang, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Creditease Tang 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 CreditEase: Providing Credit and Financial Services for China's Underclass can be done for the following purposes –
1. Strategic planning using facts provided in CreditEase: Providing Credit and Financial Services for China's Underclass case study
2. Improving business portfolio management of Creditease Tang
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 Creditease Tang
Strengths CreditEase: Providing Credit and Financial Services for China's Underclass | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Creditease Tang in CreditEase: Providing Credit and Financial Services for China's Underclass Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Creditease Tang 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 Creditease Tang in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Creditease Tang in the sector have low bargaining power. CreditEase: Providing Credit and Financial Services for China's Underclass has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Creditease Tang to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Creditease Tang has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Creditease Tang to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Creditease Tang 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 Lena G. Goldberg, Paul M. Healy, Nancy Hua Dai 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.
Superior customer experience
– The customer experience strategy of Creditease Tang in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Creditease Tang 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– CreditEase: Providing Credit and Financial Services for China's Underclass firm has clearly differentiated products in the market place. This has enabled Creditease Tang to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Creditease Tang to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Creditease Tang is one of the leading recruiters in the industry. Managers in the CreditEase: Providing Credit and Financial Services for China's Underclass are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the CreditEase: Providing Credit and Financial Services for China's Underclass 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.
Highly skilled collaborators
– Creditease Tang 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 CreditEase: Providing Credit and Financial Services for China's Underclass HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Creditease Tang 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 CreditEase: Providing Credit and Financial Services for China's Underclass - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Creditease Tang
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Creditease Tang does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses CreditEase: Providing Credit and Financial Services for China's Underclass | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CreditEase: Providing Credit and Financial Services for China's Underclass are -
Lack of clear differentiation of Creditease Tang products
– To increase the profitability and margins on the products, Creditease Tang 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, Lena G. Goldberg, Paul M. Healy, Nancy Hua Dai suggests that, Creditease Tang 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.
Interest costs
– Compare to the competition, Creditease Tang 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.
Aligning sales with marketing
– It come across in the case study CreditEase: Providing Credit and Financial Services for China's Underclass 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 CreditEase: Providing Credit and Financial Services for China's Underclass can leverage the sales team experience to cultivate customer relationships as Creditease Tang is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Creditease Tang, firm in the HBR case study CreditEase: Providing Credit and Financial Services for China's Underclass needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Creditease Tang 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Creditease Tang needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Creditease Tang 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the CreditEase: Providing Credit and Financial Services for China's Underclass 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 Creditease Tang has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study CreditEase: Providing Credit and Financial Services for China's Underclass, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CreditEase: Providing Credit and Financial Services for China's Underclass, is just above the industry average. Creditease Tang 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.
Opportunities CreditEase: Providing Credit and Financial Services for China's Underclass | 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 CreditEase: Providing Credit and Financial Services for China's Underclass are -
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 Creditease Tang 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
– Creditease Tang 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 CreditEase: Providing Credit and Financial Services for China's Underclass - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Creditease Tang to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Creditease Tang in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Buying journey improvements
– Creditease Tang can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CreditEase: Providing Credit and Financial Services for China's Underclass 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.
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. Creditease Tang can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Creditease Tang can develop new processes and procedures in Leadership & Managing People 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Creditease Tang can use these opportunities to build new business models that can help the communities that Creditease Tang operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Loyalty marketing
– Creditease Tang 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.
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 Creditease Tang in the consumer business. Now Creditease Tang can target international markets with far fewer capital restrictions requirements than the existing system.
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. Creditease Tang 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. Creditease Tang 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Creditease Tang can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Creditease Tang 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Creditease Tang 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 Creditease Tang to hire the very best people irrespective of their geographical location.
Threats CreditEase: Providing Credit and Financial Services for China's Underclass External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CreditEase: Providing Credit and Financial Services for China's Underclass are -
Technology acceleration in Forth Industrial Revolution
– Creditease Tang has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Creditease Tang needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Increasing wage structure of Creditease Tang
– 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 Creditease Tang.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CreditEase: Providing Credit and Financial Services for China's Underclass, Creditease Tang 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 .
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 Creditease Tang in the Leadership & Managing People sector and impact the bottomline of the organization.
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 Creditease Tang.
Consumer confidence and its impact on Creditease Tang 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Creditease Tang can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Creditease Tang with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Creditease Tang 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. Creditease Tang can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Creditease Tang 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.
Regulatory challenges
– Creditease Tang 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.
High dependence on third party suppliers
– Creditease Tang 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 CreditEase: Providing Credit and Financial Services for China's Underclass 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 CreditEase: Providing Credit and Financial Services for China's Underclass 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 CreditEase: Providing Credit and Financial Services for China's Underclass 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 CreditEase: Providing Credit and Financial Services for China's Underclass 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 CreditEase: Providing Credit and Financial Services for China's Underclass 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 Creditease Tang needs to make to build a sustainable competitive advantage.
