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 - – geopolitical disruptions, wage bills are increasing, cloud computing is disrupting traditional business models, there is backlash against globalization, increasing commodity prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , 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 -
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.
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.
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.
Effective Research and Development (R&D)
– Taikang Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance 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.
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.
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.
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.
Analytics focus
– Taikang Insurance 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 William C. Kirby, Tracy Yuen Manty 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.
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.
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.
Ability to lead change in Leadership & Managing People field
– Taikang Insurance 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 Taikang Insurance in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Taikang Insurance: Standing Out in China's Crowded Insurance 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.
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 -
High operating costs
– Compare to the competitors, firm in the HBR case study Taikang Insurance: Standing Out in China's Crowded Insurance 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 Taikang Insurance '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 Taikang Insurance supply chain. Even after few cautionary changes mentioned in the HBR case study - Taikang Insurance: Standing Out in China's Crowded Insurance Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Taikang Insurance vulnerable to further global disruptions in South East Asia.
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 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.
Lack of clear differentiation of Taikang Insurance products
– To increase the profitability and margins on the products, Taikang Insurance 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, 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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Taikang Insurance 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.
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.
Increasing silos among functional specialists
– The organizational structure of Taikang Insurance is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Taikang Insurance needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Taikang Insurance to focus more on services rather than just following the product oriented approach.
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 -
Developing new processes and practices
– Taikang Insurance 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.
Using analytics as competitive advantage
– Taikang Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Taikang Insurance 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 Taikang Insurance 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Taikang Insurance is facing challenges because of the dominance of functional experts in the organization. Taikang Insurance: Standing Out in China's Crowded Insurance 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.
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.
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.
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.
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.
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.
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.
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 Taikang Insurance 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.
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 -
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.
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.
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 .
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.
Shortening product life cycle
– it is one of the major threat that Taikang Insurance is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
Technology acceleration in Forth Industrial Revolution
– Taikang Insurance has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Taikang Insurance 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.
Stagnating economy with rate increase
– Taikang Insurance can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Taikang Insurance 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 Taikang Insurance: Standing Out in China's Crowded Insurance Market .
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.
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. Taikang Insurance can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 Taikang Insurance.
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.