Abstract
Square contains the good business condition. However, analyzing the business situation of the company through using different strategic tools has expressed some key business insights. Based on these insights, some strategic recommendations are presented to the company. SWOT analysis depicted the strengths, weakness, opportunities, and threats of the company in the current business situation. Good brand image, financial capital, and a good service line are some prominent strength of this company. Lacking advertisement and promotions on different media channels is a big weakness. Of course, the international business expansion is a great opportunity for the company. For eliminating the threat, the management has to come up with some technology savvy service segments. Also, Porter five forces analysis has helped to derive some competitive insights such as customer power, supplier power, substitutes, rivalry, and new entrants. Moreover, relative to square, the strategic factor analysis summary has been presented along with the best elaborations. Some key strategic recommendations, which are presented, are targeted online advertisement, designed oriented & technology savvy segment, test automation, embracing the agile development, business partnership, engaging online platforms, and collaborative decision making. Square is looking to execute these strategies with some improvisations. In an intense rivalry, the company has to contain the adaptability and versatility to identify some key strategic moves and implementation plans. In the presence of different competitors in the industry, the strategic moves must be the difference, which can create the good impact on both, the market development and business performance. Global Presence Profitability, Brand recognition, Value, Pricing, Sustainability, New markets, New Services, Partnerships, New Entrants, and Customer Trends are several strategic factors, which have been considered to obtain some insights and impose some strategic recommendations. Based on these strategic recommendations, the square company must have to create value for customers. As far as the online payment system is concerned, the intentions to differentiate the process and get an edge over the competitors.
Introduction
Every organization needs some strategic changes to improve the business performance and enable the business sustainability. Different strategic tools can be used by the management of the company to derive different insights and make decisions accordingly. Based on the current business situation of the company, there is some strategic recommendation, which can be proposed to gain results according to expectations. Strategic recommendations are based on strategic tools, which help the management to analyze the business situations. These strategic recommendations are good for the business to gain and sustain the competitive advantage. SWOT analysis, Pestle analysis and porter five forces analysis, and strategic factor analysis is some strategic tools, which can be used by the company to make some important business decision. Thus, these are some platforms, which provide direction to make effective strategic recommendations.
Company Background
Square was founded in 2009. The company was in the limelight in the Silicon Valley. The company processed transactions for more than ten billion dollars annually in debit and credit card payments for businesses. The company has streamlined the mobile payment processing. Thus, some new entrants are looking to enter the market along with some differentiated traits to gain the competitive advantage. Therefore, the management is looking to focus on different strategies, which can sustain the business growth and competitive advantage in the competitive market (Markovich, Malkani, Tseng, & Meagher, 2016).
Mobile web payments, direct mobile billing, premium SMS-based payments, and contactless NFC (Near Field Communication) payments are some payment models, which have been streamlined in the industry. In the presence of different competitors such as the master card, Google, Visa, and Isis, MCX, and pay pal are using the differentiated payment systems. Square owns the charged fee and merchant accounts. Lower cost and transparent fee structure of entry are two main aspects, which created the value for customers. In 2012, the company contained the partnership with Starbucks. The company integrated with QR code of the company. Customers used square pay applications in different stores, which depicted the success of this partnership. Square went public on November 19, 2015, along with its initial offering $9 a share (Markovich, Malkani, Tseng, & Meagher, 2016).
Strategic Analysis
Now, it seems pertinent to come up with different strategic analysis tools to analyze the business situation of the company and derive some insight.
SWOT Analysis
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Strengths
Square contains the good brand image, and it has been considered as a big strength of the company. It is a fact that the company has come up with some differentiated payment methods or services for customers, which attracted customers and different business stakeholders. Also, the strong financial position of the company has enabled the high return to all shareholders, and it seems the prominent strength of the company. It has been revealed that the company management has gained the advantage of the strong financial condition. For Instance, the business expansion of the company is remarkable, and it seems possible due to good financial capital. The partnership with prominent or well-known companies is also the strength of the company, and it helps the company to increase the market share and position better in the minds of customers. Furthermore, relative to the services, the company depicts the reasonable service line, which provides different options to customers when paying online. The initial penetration in the United States provides the roadmap to enhance the visibility of the international expansion. The prominent growth of the transaction, the volume is also a big strength, which is quite visible in the market. Thus, these are some strengths of the company, and these can be utilized by the company to gain the competitive advantage. Comparatively, the company is depicting low rates as compared to other competitors. Device capability and first mover advantage are some additional strengths of this company (Markovich, Malkani, Tseng, & Meagher, 2016).
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Weakness
The biggest weakness of this company is the minimum customer support. In an intense rivalry, it seems tough for this company to convert customers and shape their behavior regarding square payment services. It is a fact that the company’s ranking is quite below as compared to its competitors. The company, having the best financial capital, has not invested in advertising and promotions on different traditional and modern media channels. Thus, it creates the negative impact on the competitive positioning, which ultimately creates an impact on the business performance (Markovich, Malkani, Tseng, & Meagher, 2016).
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Opportunities
The growing demand in the industry is a great opportunity for this company. It seems a great chance for the company to enhance the visibility of the advertising and promotions on modern and traditional media channels to increase the competitive positioning. The integration with some companies can be the best approach of the company. For Instance, the integration with Starbucks and bitcoin are some key opportunities, which are to be utilized in an effective and lucrative manner. Relative to the growing demand, the international expansion is a great opportunity for the management to make the difference. For instance, after penetrating the United States market, the company has to explore those markets, which are undone by competitors (Markovich, Malkani, Tseng, & Meagher, 2016).
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Threats
The online payment system is quite vulnerable, and it seems a huge threat to this company. People are losing trust due to different security breaches, and it seems tough to contain the business sustainability. It has been seen that the company exists in the high competition, and competitors are coming up with some differentiated services for customers. Thus, the customer can be converted by other companies. Furthermore, it seems usual to experience the technology errors when making online payments. Thus, accordingly, people are using an alternative method, which is also a big threat to the company (Markovich, Malkani, Tseng, & Meagher, 2016).
Porter Five Forces
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Bargaining Power of Buyers
The bargaining power of buyers is high in this industry. It is due to the availability of many substitutes in the market. Customers demand different things from the company, and they have different options to use different services. The bargaining power of the customer is high due to an intense rivalry as well. Due to good competitive intelligence, different substitutes or alternatives have been developed by competitors (Cao, Yu, Liu, Gong, & Adeel, 2018).
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Bargaining Power of Suppliers
Interestingly, the bargaining power of supplier is also high. It is a fact that suppliers are looking to negotiate with companies to set the price. The higher supplier’s power in the technology and software market is causing low-profit margins (Dastan & Gürler, 2016).
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Threats of Substitutes
Despite having different services for customers, the threat of substitutes looks high. Companies are looking to dominate the market through new and attractive payment processing systems. The most important thing is to come up with the easy and low-cost mobile payment system, and this approach has helped competitors to develop some substitutes (Harasim & Klimontowicz, 2013).
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Threats of New Entrants
New companies are coming to the market with new credit card payment processing. However, it has been revealed that the entry in this market is moderate, as there is a need for heavy investment in the technology market to make the difference. For Instance, different organizations which have sustained the business operations in the market can emerge with the new credit payment process. Thus, a firm, which already has a good financial capital, can enter this market effectively and create the brand image (Loke, Yen, Tan, & Lai, 2013).
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Competitive Rivalry
Master card, Google, Visa and Isis, MCX, and pay pal are some prominent competitors, which have differentiated the process of mobile payment. It makes the intense competitive rivalry. Companies are offering low-cost payment processes to customers. Also, a less complicated system of payment has also emerged as the main preference of these competitors. Square exists in this competitive environment, and the intention is to gain the advantage these competitors (Shin, Lee, & Odom, 2014).
Strategic Factors Analysis Summary (SFAS)
Internal Factors
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Global Presence
The international development funding is in the limelight. Square can expand the business in different regions like other competitors. Interestingly, the biggest barrier to the international expansion or global presence is the development of different mobile platforms (Yan, Ai, & Tang, 2011).
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Profitability
Square has processed more ten-billion-dollar transactions annually in debit and credit card payments. These transactions increased its profitability. However, due to the availability of different substitutes and high bargaining power of suppliers, the profitability can be declined (Teoh, Chong, Lin, & Chua, 2013).
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Brand recognition
Square wants to present the less complicated and low-cost mobile payment system for customers. Due to some strategic partnerships with different companies such as Starbucks, the company is intending to sustain its brand recognition. For enhancing the visibility of the brand recognition, these partnerships are to be sustained (Sumanjeet, 2009).
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Value
The management of the company has created the value for customers through high-quality online payment processing. Due to different service lines regarding online payments, the value has been streamlined by the management team in an effective and lucrative manner.
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Pricing
Obviously, the pricing strategy of the company is the penetration pricing strategy. The company intends to present the low-cost service to an immense range of online users. The penetration pricing is the best approach to make the service difference from competitors (Song, Huang, Yang, & Zhang, 2013).
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Sustainability
Normally, customers are triggered by the direct mobile payments and mobile web payments. Thus, these are two key areas for the management to sustain the business in the competitive market. The company has sustained the business through the consistency and growth in the United States and some other regions (Shin, Lee, & Odom, 2014).
External Factors
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New markets
The company management is looking to expand the business in different enraging markets. Along with the United States of America, the company is looking to explore its high quality online mobile payment systems. The most important thing is to target the Android mobile users.
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New Services
Square capital, square cash, and Square Instant Deposits are some new services, which have been developed with the passage of the time. The biggest change was moving funds from square account to debit card through the instant deposit.
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Partnerships
The partnership with Starbucks is in the limelight, which depicted the growth and expansion of the company. The square wallet was developed by the company to initiate the combined operations with the company. Starbucks invested $25 million in the company (Markovich, Malkani, Tseng, & Meagher, 2016).
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New Entrants
The new entrant is the threat to this company, and the pertinent solution for the company is to keep the differentiation process. However, this threat is moderate, as there is a need for heavy investment and sustainable brand image.
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Customer Trends
The perception of the customer can be changed regarding the online payment system. People usually intend to adopt new online payment methods. Thus, it seems the new trend in the competitive market (Loke, Yen, Tan, & Lai, 2013).
Strategic Recommendations
Targeted Online Advertisement
It is necessary for the company to enhance the visibility of the targeted online advertising. Relative to the low profitability and customer support, the company management has to design some new segments and target customers accordingly. Through online advertisement, there is a good chance for the company management to streamline the online mobile payment system through an attractive visualization and simulation. Online advertisement can help the company to attract customers at the large scale. Also, it helps the company to position better in the minds of customers. Thus, integrating or engaging the online users on different social media channels is the best approach, which can express the dominance of the company (Cao, Yu, Liu, Gong, & Adeel, 2018).
Designed Oriented &Technology Savvy Segment
There is a lack of customer support due to the availability of different substitutes and competitors. Thus, the strategic recommendation for this company is to demonstrate the design-oriented process. For Instance, first, the company has to investigate the competitor’s actions regarding payment systems and predict some result. Furthermore, after investigating competitive actions, the firm can effectively redesign the online payment process. Considering or focusing on the team of experts to redesign the process, which is less complicated, is highly recommended to make some results predictable. Moreover, the technology savvy segment can be initiated by Square, which can increase the attraction and usability (Dastan & Gürler, 2016).
Test Automation
For enhancing the visibility of the high-quality mobile payment system, the management has to develop an effective app. Thus, accordingly, the strategic recommendation for square is to adopt the test automation. Technically, the firm has to improve the process through rationalizing the devices. For Instance, the technical team may limit the number of operating systems, which are to be instated with the device, especially when making mobile payments. It will help the company to reduce the technical errors. With the perspective of customers, they can make risk free payments. Thus, in short, it seems innovation and creativity in the technology, which is highly recommended (Harasim & Klimontowicz, 2013).
Embracing the Agile Development
Embracing the agile development is a good approach for Square. With the passage of the time, it seems worthy to make some changes to integrate with some modern business trends. The agile methodology can help the company to identify different errors or issues at the right time and improve the system. It can assist the management to keep the mobile payment process up to date. Especially, when tracking the transactions, customers usually face many issues. Therefore, the agile methodology is a roadmap to track errors and shape the process, which is customer oriented. Through adopting this strategy, the sustainable competitive advantage can be attained (Loke, Yen, Tan, & Lai, 2013).
Business Partnership
Partnership with Starbucks is a good decision by the company. However, when it comes to the international expansion, some effective strategic alliances are recommended. It is important to integrate with a firm, which has already shown its excellence in the online payment systems. Sharing the culture, technology, strategies, market share and goals is the best strategy, which can justify the global presence (Shin, Lee, & Odom, 2014).
Engaging Online Platforms
Square management has to identify some important or prominent online business platform to integrate with them in a lucrative manner. Importantly, the management can work with some other businesses, which are new in the market, to design their online payment systems. The strategic recommendation is quite visible, as there are many firms, which are working with some new firms, which are conducting the online businesses. It is a good chance to explore some new markets as well.
Collaborative Decision Making
Internally, the role of the culture of the company can be streamlined to depict some changes to secure the future of the company. The organic growth can be gained through technological advancements and some appropriate market considerations. However, the collaborative decision-making process in the company can create the culture, which can lift all these processes to gain the advantage in the market. Brainstorming different ideas and combining different efforts in the company can help to produce something new and unique, and it can also justify the differentiation (Song, Huang, Yang, & Zhang, 2013).
Conclusion
In the end, it is to conclude that the Square Company can implement all these strategies effectively. The firm is quite capable of executing these strategies. Some strategic recommendations have been streamlined. However, the strategic considerations of the company can be changed or evolved with the passage of the time. The online payment system is a modern business trend, and square can dominate in the market through the perfect execution of these strategic recommendations. In an intense rivalry, the square company must look for some change interventions. It seems the pertinent evolvement of the strategic planning process of the company. All these strategic recommendations must be triggered by the strategic planning process of the company. Interestingly, to make some strategic changes, the management has to streamline or combine different efforts of all key stakeholders. Implementing the strategic recommendations is a change intervention for this company, and it has to be sustained for a long run.
References
Cao, X., Yu, L., Liu, Z., Gong, M., & Adeel, L. (2018). Understanding mobile payment users’ continuance intention: a trust transfer perspective. Internet Research, 28(2), 456-476.
Dastan, I., & Gürler, E. (2016). Factors Affecting the Adoption of Mobile Payment Systems: An Empirical Analysis. Emerging Markets Journal, 6(1), 17-24.
Harasim, J., & Klimontowicz, M. (2013). Payment Habits as a Determinant of Retail Payment Innovations Diffusion: the Case of Poland. Journal of Innovation Management, 1(2), 86-102.
Loke, Y. J., Yen, S. H., Tan, A. K., & Lai, Y. W. (2013). Do Businesses Exhibit Payment Preferences as Payors? Evidence from Malaysia*. Malaysian Journal of Economic Studies, 50(1), 37-52.
Markovich, S., Malkani, A. P., Tseng, A., & Meagher, E. (2016, December 19). Hip to be Square: Disruption in the U.S. Mobile Payment Market. Retrieved from https://hbr.org/product/hip-to-be-square-disruption-in-the-us-mobile-payment-market/KEL792-PDF-ENG
Shin, S., Lee, W.-j., & Odom, D. O. (2014). A Comparative Study Of Smartphone User’s Perception And Preference Towards Mobile Payment Methods In The U.S. And Korea. Journal of Applied Business Research, 30(5), 1365-1376.
Song, P., Huang, D., Yang, Q., & Zhang, Y. (2013). Research on financial coordinated supervision platform and supervision strategy for online payment under paperless trade. International Journal of Services Technology and Management, 19(4-5-6), 219.
Sumanjeet, S. (2009). Emergence Of Payment Systems In The Age Of Electronic Commerce: The State Of Art. Asia Pacific Journal of Finance and Banking Research, 3(3), 18-40.
Teoh, W. M.-Y., Chong, S. C., Lin, B., & Chua, J. W. (2013). Factors affecting consumers’ perception of electronic payment: an empirical analysis. Internet Research, 23(4), 465-485.
Yan, L., Ai, L., & Tang, J. (2011). Risk-based AML regulation on internet payment services in China. Journal of Money Laundering Control, 14(1), 93-101.
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