Bank of Shanghai (601229) SWOT Analysis / TOWS Matrix / MBA Resources
Regional Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Bank of Shanghai (China)
Based on various researches at Oak Spring University , Bank of Shanghai is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, geopolitical disruptions,
increasing commodity prices, technology disruption, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Bank of Shanghai can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bank of Shanghai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bank of Shanghai 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 Bank of Shanghai can be done for the following purposes –
1. Strategic planning of Bank of Shanghai
2. Improving business portfolio management of Bank of Shanghai
3. Assessing feasibility of the new initiative in China
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bank of Shanghai
Strengths of Bank of Shanghai | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bank of Shanghai are -
Sustainable margins compare to other players in Regional Banks industry
– Bank of Shanghai has clearly differentiated products in the market place. This has enabled Bank of Shanghai to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped Bank of Shanghai to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Bank of Shanghai in Regional Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Bank of Shanghai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bank of Shanghai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management in the Regional Banks industry
– Bank of Shanghai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Bank of Shanghai 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 Bank of Shanghai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Bank of Shanghai emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Bank of Shanghai is present in almost all the verticals within the Regional Banks industry. This has provided Bank of Shanghai 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.
High switching costs
– The high switching costs that Bank of Shanghai 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.
Ability to lead change in Regional Banks
– Bank of Shanghai is one of the leading players in the Regional Banks industry in China. Over the years it has not only transformed the business landscape in the Regional Banks industry in China but also across the existing markets. The ability to lead change has enabled Bank of Shanghai 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 Bank of Shanghai in the Financial sector have low bargaining power. Bank of Shanghai has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bank of Shanghai to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Bank of Shanghai has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Regional Banks industry. Secondly the value chain collaborators of Bank of Shanghai have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Bank of Shanghai is one of the leading players in the Regional Banks industry in China. It is in a position to attract the best talent available in China. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Bank of Shanghai is one of the most innovative firm in Regional Banks sector.
Weaknesses of Bank of Shanghai | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bank of Shanghai are -
Skills based hiring in Regional Banks industry
– The stress on hiring functional specialists at Bank of Shanghai 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 at Bank of Shanghai, in the dynamic environment of Regional Banks industry it has struggled to respond to the nimble upstart competition. Bank of Shanghai has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Bank of Shanghai has a high cash cycle compare to other players in the Regional Banks industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, Bank of Shanghai has high operating costs in the Regional Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Bank of Shanghai 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 Bank of Shanghai supply chain. Even after few cautionary changes, Bank of Shanghai is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bank of Shanghai vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee of Bank of Shanghai is just above the Regional Banks industry average. It 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.
Employees’ less understanding of Bank of Shanghai strategy
– From the outside it seems that the employees of Bank of Shanghai 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.
Low market penetration in new markets
– Outside its home market of China, Bank of Shanghai needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Bank of Shanghai ‘s star products
– The top 2 products and services of Bank of Shanghai still accounts for major business revenue. This dependence on star products in Regional Banks industry has resulted into insufficient focus on developing new products, even though Bank of Shanghai has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Bank of Shanghai is dominated by functional specialists. It is not different from other players in the Regional Banks industry, but Bank of Shanghai needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bank of Shanghai to focus more on services in the Regional Banks industry rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the Regional Banks industry, Bank of Shanghai 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.
Bank of Shanghai Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Bank of Shanghai are -
Creating value in data economy
– The success of analytics program of Bank of Shanghai has opened avenues for new revenue streams for the organization in Regional Banks industry. This can help Bank of Shanghai to build a more holistic ecosystem for Bank of Shanghai products in the Regional Banks industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Bank of Shanghai 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.
Learning at scale
– Online learning technologies has now opened space for Bank of Shanghai to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Regional Banks industry, but it has also influenced the consumer preferences. Bank of Shanghai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Bank of Shanghai to increase its market reach. Bank of Shanghai 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bank of Shanghai in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Regional Banks industry, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions in Regional Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Bank of Shanghai in the Regional Banks industry. Now Bank of Shanghai can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bank of Shanghai is facing challenges because of the dominance of functional experts in the organization. Bank of Shanghai can utilize new technology in the field of Regional Banks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Bank of Shanghai can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Regional Banks industry.
Leveraging digital technologies
– Bank of Shanghai can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bank of Shanghai 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 Bank of Shanghai to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bank of Shanghai 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 Bank of Shanghai to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Bank of Shanghai can develop new processes and procedures in Regional Banks 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.
Threats Bank of Shanghai External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Bank of Shanghai are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Bank of Shanghai may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Regional Banks sector.
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 Bank of Shanghai business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Bank of Shanghai 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 Regional Banks industry regulations.
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.
Consumer confidence and its impact on Bank of Shanghai 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 Regional Banks industry and other sectors.
Easy access to finance
– Easy access to finance in Regional Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Bank of Shanghai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Bank of Shanghai 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 Regional Banks industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Bank of Shanghai in the Regional Banks sector and impact the bottomline of the organization.
Environmental challenges
– Bank of Shanghai 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. Bank of Shanghai can take advantage of this fund but it will also bring new competitors in the Regional Banks 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bank of Shanghai 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 Bank of Shanghai prominent markets.
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. Bank of Shanghai needs to understand the core reasons impacting the Regional Banks industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Bank of Shanghai has witnessed rapid integration of technology during Covid-19 in the Regional Banks industry. As one of the leading players in the industry, Bank of Shanghai needs to keep up with the evolution of technology in the Regional Banks 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.
Weighted SWOT Analysis of Bank of Shanghai Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Bank of Shanghai 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 Bank of Shanghai 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 Bank of Shanghai 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 Bank of Shanghai 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 Bank of Shanghai needs to make to build a sustainable competitive advantage.