China Minsheng Banking (1988) SWOT Analysis / TOWS Matrix / MBA Resources
Regional Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Minsheng Banking (Hong Kong)
Based on various researches at Oak Spring University , China Minsheng Banking is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of China Minsheng Banking
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Minsheng Banking can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Minsheng Banking, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Minsheng Banking 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 China Minsheng Banking can be done for the following purposes –
1. Strategic planning of China Minsheng Banking
2. Improving business portfolio management of China Minsheng Banking
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Minsheng Banking
Strengths of China Minsheng Banking | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Minsheng Banking are -
Sustainable margins compare to other players in Regional Banks industry
– China Minsheng Banking has clearly differentiated products in the market place. This has enabled China Minsheng Banking to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped China Minsheng Banking to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of China Minsheng Banking in the Financial sector have low bargaining power. China Minsheng Banking has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps China Minsheng Banking to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Regional Banks industry
- digital transformation varies from industry to industry. For China Minsheng Banking digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Minsheng Banking 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.
Ability to recruit top talent
– China Minsheng Banking is one of the leading players in the Regional Banks industry in Hong Kong. It is in a position to attract the best talent available in Hong Kong. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Regional Banks
– China Minsheng Banking is one of the leading players in the Regional Banks industry in Hong Kong. Over the years it has not only transformed the business landscape in the Regional Banks industry in Hong Kong but also across the existing markets. The ability to lead change has enabled China Minsheng Banking in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– China Minsheng Banking has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– China Minsheng Banking is one of the most innovative firm in Regional Banks sector.
Learning organization
- China Minsheng Banking 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 China Minsheng Banking is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Minsheng Banking emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the China Minsheng Banking 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.
Effective Research and Development (R&D)
– China Minsheng Banking has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – China Minsheng Banking staying ahead in the Regional Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of China Minsheng Banking comprises – understanding the underlying the factors in the Regional 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.
Superior customer experience
– The customer experience strategy of China Minsheng Banking in Regional Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of China Minsheng Banking | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Minsheng Banking 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 China Minsheng Banking supply chain. Even after few cautionary changes, China Minsheng Banking is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China Minsheng Banking vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of China Minsheng Banking is dominated by functional specialists. It is not different from other players in the Regional Banks industry, but China Minsheng Banking needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help China Minsheng Banking to focus more on services in the Regional Banks industry rather than just following the product oriented approach.
No frontier risks strategy
– From the 10K / annual statement of China Minsheng Banking, it seems that company is thinking out the frontier risks that can impact Regional Banks industry. 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
China Minsheng Banking 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.
Employees’ less understanding of China Minsheng Banking strategy
– From the outside it seems that the employees of China Minsheng Banking 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, China Minsheng Banking needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, China Minsheng Banking is slow explore the new channels of communication. These new channels of communication can help China Minsheng Banking to provide better information regarding Regional Banks products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative at China Minsheng Banking, in the dynamic environment of Regional Banks industry it has struggled to respond to the nimble upstart competition. China Minsheng Banking 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
– From the outside it seems that China Minsheng Banking needs to have more collaboration between its sales team and marketing team. Sales professionals in the Regional Banks industry have deep experience in developing customer relationships. Marketing department at China Minsheng Banking can leverage the sales team experience to cultivate customer relationships as China Minsheng Banking is planning to shift buying processes online.
High bargaining power of channel partners in Regional Banks industry
– because of the regulatory requirements in Hong Kong, China Minsheng Banking 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 Regional Banks industry.
Interest costs
– Compare to the competition, China Minsheng Banking 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.
China Minsheng Banking Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Minsheng Banking are -
Building a culture of innovation
– managers at China Minsheng Banking 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.
Developing new processes and practices
– China Minsheng Banking 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.
Using analytics as competitive advantage
– China Minsheng Banking has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Regional Banks sector. This continuous investment in analytics has enabled China Minsheng Banking to build a competitive advantage using analytics. The analytics driven competitive advantage can help China Minsheng Banking to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– China Minsheng Banking can use the latest technology developments to improve its manufacturing and designing process in Regional 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, China Minsheng Banking 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, China Minsheng Banking is facing challenges because of the dominance of functional experts in the organization. China Minsheng Banking 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects China Minsheng Banking 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 China Minsheng Banking to increase its market reach. China Minsheng Banking 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.
Learning at scale
– Online learning technologies has now opened space for China Minsheng Banking 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.
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 China Minsheng Banking 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.
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 China Minsheng Banking in the Regional Banks industry. Now China Minsheng Banking can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for China Minsheng Banking 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 China Minsheng Banking to hire the very best people irrespective of their geographical location.
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. China Minsheng Banking can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats China Minsheng Banking External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Minsheng Banking are -
Environmental challenges
– China Minsheng Banking 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. China Minsheng Banking can take advantage of this fund but it will also bring new competitors in the Regional Banks industry.
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. China Minsheng Banking can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 China Minsheng Banking.
Shortening product life cycle
– it is one of the major threat that China Minsheng Banking is facing in Regional Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on China Minsheng Banking 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.
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. China Minsheng Banking 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
– China Minsheng Banking has witnessed rapid integration of technology during Covid-19 in the Regional Banks industry. As one of the leading players in the industry, China Minsheng Banking 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, China Minsheng Banking 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.
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. China Minsheng Banking 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for China Minsheng Banking in Regional Banks industry. The Regional 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.
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 China Minsheng Banking in the Regional Banks sector and impact the bottomline of the organization.
High dependence on third party suppliers
– China Minsheng Banking 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.
Regulatory challenges
– China Minsheng Banking 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.
Weighted SWOT Analysis of China Minsheng Banking Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Minsheng Banking 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 China Minsheng Banking 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 China Minsheng Banking 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 China Minsheng Banking 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 China Minsheng Banking needs to make to build a sustainable competitive advantage.