SWOT Analysis / TOWS Matrix for ZhongAn Online (Hong Kong)
Based on various researches at Oak Spring University , ZhongAn Online is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing commodity prices, wage bills are increasing, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion,
customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that ZhongAn Online can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the ZhongAn Online, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which ZhongAn Online 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 ZhongAn Online can be done for the following purposes –
1. Strategic planning of ZhongAn Online
2. Improving business portfolio management of ZhongAn Online
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Insurance (Miscellaneous) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of ZhongAn Online
Strengths of ZhongAn Online | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of ZhongAn Online are -
Innovation driven organization
– ZhongAn Online is one of the most innovative firm in Insurance (Miscellaneous) sector.
Superior customer experience
– The customer experience strategy of ZhongAn Online in Insurance (Miscellaneous) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– ZhongAn Online has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Insurance (Miscellaneous) industry. Secondly the value chain collaborators of ZhongAn Online have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– ZhongAn Online has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – ZhongAn Online staying ahead in the Insurance (Miscellaneous) 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 Insurance (Miscellaneous) industry
– ZhongAn Online has clearly differentiated products in the market place. This has enabled ZhongAn Online to fetch slight price premium compare to the competitors in the Insurance (Miscellaneous) industry. The sustainable margins have also helped ZhongAn Online to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the ZhongAn Online 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.
High switching costs
– The high switching costs that ZhongAn Online 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.
Operational resilience
– The operational resilience strategy of ZhongAn Online comprises – understanding the underlying the factors in the Insurance (Miscellaneous) 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.
Training and development
– ZhongAn Online 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.
Learning organization
- ZhongAn Online 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 ZhongAn Online is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at ZhongAn Online emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– ZhongAn Online is one of the leading players in the Insurance (Miscellaneous) 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.
Successful track record of launching new products
– ZhongAn Online has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. ZhongAn Online 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.
Weaknesses of ZhongAn Online | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ZhongAn Online are -
Low market penetration in new markets
– Outside its home market of Hong Kong, ZhongAn Online needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, ZhongAn Online has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Insurance (Miscellaneous) industry over the last five years. ZhongAn Online 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.
Increasing silos among functional specialists
– The organizational structure of ZhongAn Online is dominated by functional specialists. It is not different from other players in the Insurance (Miscellaneous) industry, but ZhongAn Online needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help ZhongAn Online to focus more on services in the Insurance (Miscellaneous) industry rather than just following the product oriented approach.
High cash cycle compare to competitors
ZhongAn Online has a high cash cycle compare to other players in the Insurance (Miscellaneous) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Insurance (Miscellaneous) industry
– The stress on hiring functional specialists at ZhongAn Online 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.
High dependence on ZhongAn Online ‘s star products
– The top 2 products and services of ZhongAn Online still accounts for major business revenue. This dependence on star products in Insurance (Miscellaneous) industry has resulted into insufficient focus on developing new products, even though ZhongAn Online has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As ZhongAn Online is one of the leading players in the Insurance (Miscellaneous) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Insurance (Miscellaneous) industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, ZhongAn Online has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Insurance (Miscellaneous) industry using digital technology.
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 ZhongAn Online supply chain. Even after few cautionary changes, ZhongAn Online is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left ZhongAn Online vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, ZhongAn Online has high operating costs in the Insurance (Miscellaneous) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract ZhongAn Online lucrative customers.
Need for greater diversity
– ZhongAn Online has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
ZhongAn Online Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of ZhongAn Online are -
Buying journey improvements
– ZhongAn Online can improve the customer journey of consumers in the Insurance (Miscellaneous) 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.
Using analytics as competitive advantage
– ZhongAn Online has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Insurance (Miscellaneous) sector. This continuous investment in analytics has enabled ZhongAn Online to build a competitive advantage using analytics. The analytics driven competitive advantage can help ZhongAn Online 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 ZhongAn Online 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.
Manufacturing automation
– ZhongAn Online can use the latest technology developments to improve its manufacturing and designing process in Insurance (Miscellaneous) 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for ZhongAn Online 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 ZhongAn Online to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, ZhongAn Online is facing challenges because of the dominance of functional experts in the organization. ZhongAn Online can utilize new technology in the field of Insurance (Miscellaneous) 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 ZhongAn Online 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 Insurance (Miscellaneous) industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Insurance (Miscellaneous) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. ZhongAn Online 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. ZhongAn Online 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.
Leveraging digital technologies
– ZhongAn Online 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.
Learning at scale
– Online learning technologies has now opened space for ZhongAn Online 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.
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. ZhongAn Online can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help ZhongAn Online to increase its market reach. ZhongAn Online 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.
Creating value in data economy
– The success of analytics program of ZhongAn Online has opened avenues for new revenue streams for the organization in Insurance (Miscellaneous) industry. This can help ZhongAn Online to build a more holistic ecosystem for ZhongAn Online products in the Insurance (Miscellaneous) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats ZhongAn Online External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of ZhongAn Online are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. ZhongAn Online needs to understand the core reasons impacting the Insurance (Miscellaneous) industry. This will help it in building a better workplace.
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 ZhongAn Online.
High dependence on third party suppliers
– ZhongAn Online 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.
Consumer confidence and its impact on ZhongAn Online 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 Insurance (Miscellaneous) industry and other sectors.
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.
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 ZhongAn Online business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. ZhongAn Online 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, ZhongAn Online 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 ZhongAn Online prominent markets.
Shortening product life cycle
– it is one of the major threat that ZhongAn Online is facing in Insurance (Miscellaneous) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 ZhongAn Online in the Insurance (Miscellaneous) sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for ZhongAn Online in Insurance (Miscellaneous) industry. The Insurance (Miscellaneous) 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, ZhongAn Online may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Insurance (Miscellaneous) sector.
Weighted SWOT Analysis of ZhongAn Online Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at ZhongAn Online 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 ZhongAn Online 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 ZhongAn Online 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 ZhongAn Online 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 ZhongAn Online needs to make to build a sustainable competitive advantage.
