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 - – talent flight as more people leaving formal jobs, there is backlash against globalization, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing commodity prices,
technology disruption, challanges to central banks by blockchain based private currencies, 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 -
Learning organization
- Creditease Tang 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 Creditease Tang is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CreditEase: Providing Credit and Financial Services for China's Underclass Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Innovation driven organization
– Creditease Tang is one of the most innovative firm in sector. Manager in CreditEase: Providing Credit and Financial Services for China's Underclass Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Creditease Tang is present in almost all the verticals within the industry. This has provided firm in CreditEase: Providing Credit and Financial Services for China's Underclass 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.
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.
Training and development
– Creditease Tang has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CreditEase: Providing Credit and Financial Services for China's Underclass 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Creditease Tang digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Creditease Tang 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.
Successful track record of launching new products
– Creditease Tang has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Creditease Tang 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.
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.
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.
Strong track record of project management
– Creditease Tang is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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 -
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study CreditEase: Providing Credit and Financial Services for China's Underclass 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 Creditease Tang 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Creditease Tang 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. Creditease Tang 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.
Products dominated business model
– Even though Creditease Tang 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 - CreditEase: Providing Credit and Financial Services for China's Underclass 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, Creditease Tang is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study CreditEase: Providing Credit and Financial Services for China's Underclass can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study CreditEase: Providing Credit and Financial Services for China's Underclass, in the dynamic environment Creditease Tang has struggled to respond to the nimble upstart competition. Creditease Tang has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 Creditease Tang supply chain. Even after few cautionary changes mentioned in the HBR case study - CreditEase: Providing Credit and Financial Services for China's Underclass, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Creditease Tang vulnerable to further global disruptions in South East Asia.
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 -
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Creditease Tang to increase its market reach. Creditease Tang 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Creditease Tang is facing challenges because of the dominance of functional experts in the organization. CreditEase: Providing Credit and Financial Services for China's Underclass 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Creditease Tang can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Creditease Tang in the consumer business. Now Creditease Tang can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Creditease Tang 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, CreditEase: Providing Credit and Financial Services for China's Underclass, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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.
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.
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 -
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. Creditease Tang needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 .
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 Creditease Tang business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Creditease Tang 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.
Shortening product life cycle
– it is one of the major threat that Creditease Tang is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. 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.
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.
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.
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.
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.
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.
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.