WeChat-payment-Five-Forces-Analysis

WeChatPay’sFiveForcesAnalysisWeChatPay’sFiveForcesanalysisgivesinsightsaboutthecompany’sstrategicdirection.WeChatPay’sstrategiesmustaligntotheexternalfactorsintheglobalpaymentsindustry’senvironment.Overview:WeChatPay’sFiveForcesAnalysisInthisFiveForcesanalysis,WeChatPay’sexperiencestheeffectsofexternalfactorsatvaryingintensities.Thecompanymustimplementstrategiestomeettheseexternalfactorsandminimizenegativeimpact.Insummary,WeChatPay’sFiveForcesanalysisyieldsthefollowingintensitiesofthefiveforces:1.Competitiverivalryorcompetition(strongforce)2.Bargainingpowerofbuyersorcustomers(strongforce)3.Bargainingpowerofsuppliers(weakforce)4.Threatofsubstitutesorsubstitution(strongforce)5.Threatofnewentrantsornewentry(strongforce)TheresultsoftheFiveForcesanalysisshowsthatWeChatPayneedstoprioritizetheissuesrelatedtocompetition,consumers,andsubstitutes,allofwhichexertastrongforceonthecompany.ApossiblecourseofactionforWeChatPaymenttoaddresstheseissuesisimprovement.Forexample,the0.1%commissionforwithdrawingover1,000shouldbeabolished,withtheserviceareasexpanding.Inaddition,promotionisanotherwaytomaintainlong-termdevelopment.Discountofpaymentwouldbeefficient.Also,thisFiveForcesanalysisshowsthatWeChatPaymentcanimplementimprovementandpromotiontoaddresscompetitionandsubstitutioninthissaturatedmarket.CompetitiveRivalryorCompetitionwithWeChatPayment(StrongForce)WeChatPaymentfacestoughcompetitionbecausetheon-linepaymentmarketisalreadysaturated.ThiselementoftheFiveForcesanalysistacklestheeffectofcompetingfirmsintheindustryenvironment.InWeChatPaymentcase,thestrongforceofcompetitiverivalryisbasedonthefollowingexternalfactors:Highnumberoffirms(strongforce)Newentrants(strongforce)Lowswitchingcosts(strongforce)Asthepopulationofon-linepayment,itismorelikelythatpeoplenowadayscannotlivewithouttheinstrumentsofon-linepaymentforitsconvenienceandrapidity.Becauseofthis,theincreasingnumberofon-linepaymentoperatorspringup.Inaddition,becausethemoresecurepaymentmethodsoccur,manyconsumersmaychooseanewwaytopay.Furthermore,duetothelowswitchingcost,it’sdifficulttomaintainthecustomerloyalty.Soit’smorelikelyforthemtoshifttoanotherpeercompetitorwheneversuchasAlipay.Thus,thiselementoftheFiveForcesanalysisofWeChatpaymentshowsthatcompetitionisamongthemostsignificantexternalforcesonthebusiness.BargainingPowerofWeChatPayment’sCustomers/Buyers(ModerateForce)WeChatPaymentmustaddressthesignificantpowerofcustomers.ThiselementoftheFiveForcesanalysisdealswiththeinfluenceanddemandsofconsumers.InWeChatPayment’scase,thefollowingaretheexternalfactorsthatcontributetothemoderatebargainingpowerofbuyers:Highavailabilityofsubstitutes(strongforce)Largenumberofproviders(strongforce)Lowswitchingcosts(moderateforce)TherearemanysubstitutestomethodofpaymentlikeWeChatPayment.ThesesubstitutesincludeAlipay,Gopay,Yeepay,aswellasmethodofpaymentthatonecouldpayincash.(highavailabilityofsubstitutes).Inaddition,becauseoftheeaseofchangingfromonepaymentmethodtoanother(lowswitchingcosts),andtherearemanypaymentsoftwareinthemarket,soconsumerscanchoosefrommanyotherthanWeChatPayment.However,somestoriesonlyrequireWeChatPaymentastheirpaymentmethod,sotheconsumerscan’tchooseotherpaymentmethods.BasedonthiselementoftheFiveForcesanalysis,WeChatPaymentmustdevelopstrategiestoincreasecustomerloyalty.BargainingPowerofWeChatPay’sSuppliers(WeakForce)AsthiselementoftheFiveForcesanalysisshows,thebargainingpowerofsuppliershasaslightimpactonWeChatPay.InWeChatPay’scase,theweakbargainingpowerofsuppliersisbasedonthefollowingexternalfactors:Largenumberofsuppliers(weakforce)Highoverallsupply(weakforce)Strongsupportsfrompublicandheadquarter(weakforce)Asthepopulationofon-linepayment,itismorelikelythatpeoplenowadayscannotlivewithouttheinstrumentsofon-linepaymentforitsconvenienceandrapidity.Sothat’swhyalmosteverybusinesseshavemadeitavailableforon-linepayment.ThelargenumberofthesesuppliersweakensthethreattoWeChatPay.Also,thishighneedofon-linepaymentprovideWeChatPaywithahighoverallsupply.Ifthebusinessesdonotadoptthistermofpayment,theywillabsolutelysufferfromlossesandinconvenience.Lastbutnotleast,thefactthatWeChatalwaysenjoysagoodreputationwithalargecommunityofusers,andalsohaveagiantbacking,Tecent,enablesWeChatPaytobeoneofthemostpopularon-linepaymentinstruments.Thus,thiselementoftheFiveForcesanalysisshowsthatsupplierpowerisaminimalissueforWeChatPay.ThreatofSubstitutesorSubstitution(StrongForce)SubstitutesareasignificantconcernforWeChatPayment.ThiselementoftheFiveForcesanalysisdealswiththepotentialeffectsofsubstitutesonthedevelopmentofWeChatPayment.InWeChatPayment’scase,thefollowingexternalfactorsmakethethreatofsubstitutionastrongforce:Highsubstituteavailability(strongforce)Lowswitchingcosts(strongforce)Notfullycover(strongforce)TherearemanysubstitutestoWechatofpayment,suchaspaymentfromAlipayandMobilepayment.Consumerscanalsopayincashandtransferthroughbank.ItisalsoeasytoshiftfromWeChatPaymenttothosesubstitutes(lowswitchingcosts).Inaddition,thesesubstitutesarecompetitiveintermsofconvenienceandconsumersatisfaction.Besi