STRIPE The case solution
Economic
The employment rate is vital because this create more number of customers and also it would be difficult for stripe to hire new talent. As stripe is planning to enter into emerging market, so it should consider the inflation factor because that would affect the prices.
Social
The social factors in emerging market India is different as compare to USA market. In emerging market consumer’sattitude are different towards non-cash payments. People in India have the fear of frauds and due to lake of knowledge, majority people do not opt for non-cash transaction. Their buying behavior and saving patterns are different.
Technological
In USA consumers have enough knowledge of technology and are comfortable with the changing technology. But people in India are in initial level. It is a challenge for Stripe to carefully analyze the emerging market and make wise decisions for the transfer of licensing and IPR issues to avoid any theft issues in future. Technologically India is developing country and have enough technological resources.
Environmental
The environmental and climate change is essential globally and along with those factors. In India there is the influence of environmental agencies that look after this issues and also focus on the business activities.
Legal
Stripe have to comply with the basic consumer protection laws because there are business laws as well as consumers privacy laws are there for companies to comply with. There are legal bodies that take care of these issues.
Porter’s Five Forces
·Bargaining Power of Customers
The bargaining power of customers is high, as there are many competitors in the market, providing the payment services to different types of customers. The customers prefer to choose the company, providing quality services at lower costs. The customers switching costs are low, as a result of which, the customers hold a high bargaining power.
·Bargaining Power of Suppliers
The bargaining power of suppliers is moderate, as Stripe has made different alliances and agreement with several vendors including credit card companies, banks etc. There are many vendors available in the market, so the companies can switch easily, which keeps the power of suppliers as moderate.
·Existing Rivalry
The existing rivalry is quite high, as there are large industry players including conglomerates, banks, online payment services providers (PayPal) etc., grabbing large market share with a huge global presence.
·Threat of New Entrants
The threat of new entrants is high, as the market is very attractive and has a potential to grow. The entry barriers are quite low and the business model can be easily copied by other players, so the threat is high.
·Threat of Substitutes
The threat of substitutes is moderate, as there are multiple vendors available in the market, who can provide these payment processing services at their end, which leads to the availability of substitutes in the market.
Proposed Alternatives
In order to maintain the company’s competitive advantage and to increase the global market share; the company has two key alternatives which could possibly resolve the challenges and competitive threats from large industry players. Stripe can either choose one of the given alternatives or both for maintaining its profitability and market position.
.New Geographic Location
First alternative is to enter into a new and potential geographic locations. According to the given information Asian countries such as India and China are considered as the potential target market for Stripe’s services. It is because both the economies are very large and create a market opportunity for Stripe’s services. The Indian and the Chinese economies are growing rapidly with rapid developments of non-cash and online transactions especially in the middle class segment of the economies. The internet and mobile phone usage has grown tremendously in India, which makes India a potential target market for Stripe.
.Targeting Largest Retailers in United States
The other available option is to target the largest wholesalers in the United States of America, which would ultimately enable the company to reach a wider target audience, thereby increasing the sales volume, market share and the company’s profitability for the long term. The company’s sales volume was quite lower as compared to large payment processors, which used a low price strategy by utilizing large sales volume. So, Stripe had the opportunity to expand its sales volume by targeting the largest retailers of the USA.
Alternatives’ Evaluation
The both alternatives are feasible for the Stripe Company, but the best option would be preferred. As we can see that the company has big players in the industry as its competitors and target segment within the same market would not be a feasible option for Stripe. Due to high competition Stripe will can lose its market and also there are chances that the company might lose its differentiation point. Ultimately, the profits of Stripe would be affected by this decision if it does not work out for the company. Whereas, if we see at the positive side; consumer reach may increase in the United States, which can add more value for the business but currently these things are not enough.
The competitors are strong players and mostly the companies do not prefer Stripe over other major market players. So to reach out huge consumers base company have to change its region. India is an emerging market for Stripe. The e-commerce business and non-cash transaction will increase in future, which will allow Stripe to increase its consumer base and it will help Stripe to maintain its differentiation point. This option will allow Stripe to capture the huge consumer’s base and increase the profitability. It will allow the company to maintain the differentiation point for itself. . The Indian consumers have less knowledge about the non-cash transactions so it would require stripe to invest in advertisement to make consumers aware of the process and product. Refer Appendix 1 and 2.
Recommendation & Conclusion
According to the alternatives and its analysis, we can see that there is huge competition for Stripe in the USA and due to having a differentiation point still company is able to capture 1% of the consumer’s base. The technology is also getting new and easy solutions so, to maintain the differentiation point and also compete in the industry it is important for stripe to make the take decision to move in anther region and capture an emerging markets. Currently,China and India are two emerging markets. In future, the business in India and China is expected to be more successful. So Stripe should move to India and offer its services for the companies in India.......................
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