ICBC (1398) SWOT Analysis / TOWS Matrix / MBA Resources
Money Center Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for ICBC (Hong Kong)
Based on various researches at Oak Spring University , ICBC is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that ICBC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the ICBC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which ICBC 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 ICBC can be done for the following purposes –
1. Strategic planning of ICBC
2. Improving business portfolio management of ICBC
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Money Center Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of ICBC
Strengths of ICBC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of ICBC are -
High brand equity
– ICBC has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled ICBC to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– ICBC is one of the most innovative firm in Money Center Banks sector.
Operational resilience
– The operational resilience strategy of ICBC comprises – understanding the underlying the factors in the Money Center Banks 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.
Successful track record of launching new products
– ICBC has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. ICBC 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.
Learning organization
- ICBC 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 ICBC is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at ICBC emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– ICBC is present in almost all the verticals within the Money Center Banks industry. This has provided ICBC 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.
Strong track record of project management in the Money Center Banks industry
– ICBC is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– ICBC has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Money Center Banks industry. Secondly the value chain collaborators of ICBC have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of ICBC in the Financial sector have low bargaining power. ICBC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps ICBC to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– ICBC has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – ICBC staying ahead in the Money Center Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Money Center Banks industry
- digital transformation varies from industry to industry. For ICBC digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. ICBC 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.
Cross disciplinary teams
– Horizontal connected teams at the ICBC are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses of ICBC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ICBC are -
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 ICBC supply chain. Even after few cautionary changes, ICBC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left ICBC vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the Money Center Banks industry, ICBC 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 decision making process
– As mentioned earlier in the report, ICBC has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Money Center Banks industry over the last five years. ICBC 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.
Employees’ less understanding of ICBC strategy
– From the outside it seems that the employees of ICBC 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 Hong Kong, ICBC needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, ICBC has high operating costs in the Money Center Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract ICBC lucrative customers.
High dependence on ICBC ‘s star products
– The top 2 products and services of ICBC still accounts for major business revenue. This dependence on star products in Money Center Banks industry has resulted into insufficient focus on developing new products, even though ICBC has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As ICBC is one of the leading players in the Money Center Banks industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Money Center Banks industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, ICBC is slow explore the new channels of communication. These new channels of communication can help ICBC to provide better information regarding Money Center Banks products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of ICBC products
– To increase the profitability and margins on the products, ICBC needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though ICBC has some of the most successful models in the Money Center Banks industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. ICBC should strive to include more intangible value offerings along with its core products and services.
ICBC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of ICBC are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Money Center Banks industry, but it has also influenced the consumer preferences. ICBC can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– ICBC has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Money Center Banks sector. This continuous investment in analytics has enabled ICBC to build a competitive advantage using analytics. The analytics driven competitive advantage can help ICBC to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 ICBC 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.
Building a culture of innovation
– managers at ICBC 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 Money Center Banks industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, ICBC 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.
Buying journey improvements
– ICBC can improve the customer journey of consumers in the Money Center Banks industry by using analytics and artificial intelligence. It 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.
Creating value in data economy
– The success of analytics program of ICBC has opened avenues for new revenue streams for the organization in Money Center Banks industry. This can help ICBC to build a more holistic ecosystem for ICBC products in the Money Center Banks industry by providing – data insight services, data privacy related products, data based consulting services, 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, ICBC can use these opportunities to build new business models that can help the communities that ICBC operates in. Secondly it can use opportunities from government spending in Money Center Banks sector.
Loyalty marketing
– ICBC 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, ICBC is facing challenges because of the dominance of functional experts in the organization. ICBC can utilize new technology in the field of Money Center Banks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for ICBC in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Money Center Banks industry, and it will provide faster access to the consumers.
Manufacturing automation
– ICBC can use the latest technology developments to improve its manufacturing and designing process in Money Center Banks sector. 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.
Use of Bitcoin and other crypto currencies for transactions in Money Center Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for ICBC in the Money Center Banks industry. Now ICBC can target international markets with far fewer capital restrictions requirements than the existing system.
Threats ICBC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of ICBC are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, ICBC may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Money Center Banks sector.
Stagnating economy with rate increase
– ICBC 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 Money Center Banks industry.
Consumer confidence and its impact on ICBC 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 Money Center Banks industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, ICBC 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 ICBC prominent markets.
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.
Easy access to finance
– Easy access to finance in Money Center Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. ICBC 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 to Money Center Banks industry are lowering. It can presents ICBC with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Money Center Banks sector.
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. ICBC 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
– ICBC 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 Money Center Banks industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for ICBC in Money Center Banks industry. The Money Center Banks 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.
High dependence on third party suppliers
– ICBC 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.
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.
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 ICBC.
Weighted SWOT Analysis of ICBC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at ICBC 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 ICBC 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 ICBC 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 ICBC 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 ICBC needs to make to build a sustainable competitive advantage.
