The Chinese-developed CredEx Fintech is a technology thrived organization which has taken micro-credit into many levels in the microfinance industry. The CEO Tang Xia has established the business of microcredits in 2010, firstly designed to target the SMEs and individuals moving within various innovative business models. This case study seeks to look at how the company can overcome the challenges of resource shortage, resource occupation, human and technological resources, and to manage the dual business model.
Miao Cui, Xiaoxue Zhou, Qianjin Fang, Ziyi Wang, Xia Tang
Ivey Publishing (9B20M105)
Case questions answered:
- How should the company overcome the challenge and manage the dual business model?
- How should the company view the relationships between the two business models?
- How should the company select between two business models?
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CredEx Fintech: Managing Dual Business Models Case Answers
Introduction – CredEx Fintech Technology
The Chinese-developed CredEx Fintech is a technology-driven organization that has taken micro-credit to many levels in the microfinance industry. The CEO Tang Xia established the business of microcredits in 2010, firstly designed to target SMEs and individuals moving within various innovative business models.
The introduced groundbreaking financial product was consumer-centric and creative. It allows a person and SMEs to borrow money up to the limit of 300,000 Chinese Yuan.
The team of CredEx Fintech has established the product model connecting banks and consumers with small businesses with a model of repayment-as-you-want features. This enables consumers to adjust the periods, dates, etc.
CredEx Fintech has developed a unique model to control the risk of fraud, etc., and delivers IT services to the banks. Through the vast banking system in China, when the banks couldn’t reach the SMEs and the consumers, Credex has come forward, connecting them and securing the businesses of banks without risk.
Question 01. How should the company overcome the challenge and manage the dual business model?
In reference to the case study, to overcome the challenges of resource shortage, resource occupation, human and technological resources, and to manage the model, there are certain strategies that they can implement.
Additionally, one of the other challenges of this scenario to Credex Fintech is that, as per Michael Porter, in an attempt to manage two models at the same time in the same market, there could be a possibility of having conflicts with one another along the underlying value chain of each model (Markides & Charitou, 2004).
The important aspect of this scenario is that the two models cater to two different markets, which are B2C to individuals and SMEs and B2B to financial institutions. In order to face the challenges of strategic change, the most applicable option is to embrace the new model of B2B as the market of this model, the financial institutions are very similar to the B2C market (Markides & Charitou, 2004).
However, in relevance to resource scarcity, CredEx Fintech can go for a separation strategy, where the two models are separated from one another and continue the business. Nevertheless, as the two models are very similar, the synergies shared between them can be further developed into business opportunities in the future.
As for the challenges for the resource occupation, CredEx can focus on the two models from separate points of view and can divide the work procedures, technological and human resources accordingly.
Yet, Credex Fintech cannot hire fresh employees as they also need to have background knowledge and experience of the company processes. As to experience, Credex Fintech can educate the existing employees about the new business model and, at the same time, continue recruiting people.
As for the new recruitments, Credex Fintech needs to hire local talent with an understanding of the market.
Additionally, local talents will be easier to train on compliance and educate regarding the company processes. The existing employees are already well experienced in delivering the service to the individuals and SMEs.
Compared to this market, the service to provide financial institutions is not very much complex.
In terms of the B2B risk control and the IT system, it should be further secured as the financial institutions come with a huge responsibility similar to a large number of customers consisting of one institution.
Apart from the B2C model risk control support and the technology development, Credex Fintech can…
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