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STRIPE Case Solution & Answer

STRIPE Case Solution 

Introduction

Stripe, a financial technology company, was developed by John Collison and Patrick in 2011. The key objective of the company was to provide online payments processing solutions to help the startups. Earlier, startups had to deal with multiple vendors to get the payments processed online, which was quite difficult and consumed extensive amount of time in getting the payments processed. However, Stripe made the online payments process very convenient and much faster by providing different integrations and software, which enabled the small businesses’ websites to accept the online payments within a few minutes.

With such differentiated services; the company started operating in 26 countries by 2016. However, the industry within which Stripe was competing, comprised of larger industry players like banks, conglomerates, credit card companies etc. which posed threat towards the company’s long term position in the market and the company’s profitability. The company’s management had to devise key strategies about sustaining it competitive advantage and  increasing its market share by either entering into new potential geographic locations  or by the targeting the largest retailers in Unites States in order to generate higher sales volume or to adopt both the options.

Problem Statement

Despite being a successful player in the industry with payments processing of approximately $20 billion per year, for more than 100,000 companies, based in 25 countries, Stripe Company was facing a great challenge in regards to its future profitability and market position. The company was dominated by large industry players, which posed a great threat towards the maintenance of sustainable competitive advantage, business, growth, profitability and the company’s market positions. John Collison and Patrick had two strategic options to choose from in order to cater up to the competitive threat from the industry peers. The owners could either choose entrance into a different geographic location or they couldtarget the largest retailers in the United States, or may be both.

Company Background

John Collison and PatrickCollison started their first business,which they named Smashup. It was aimed at offering sales platform for online companies and auction management services in 2007 in Ireland. However, in 2008, the two brothers moved to North America and sold the business in millions of dollars. As the brothers felt significant challenges in initiating the startup and accepting the online payments, which led the Collison brothers to decide on providing the online payment services to startup firms to get payments accepted quickly and conveniently. In 2011, Stripe was launched by John and Patrick Collison and the company became famous within the e-commerce sector, as the startup required immediate help in getting high quality payment processing system. The company started making its alliances with different vendors, such as: credit card companies, banks and other players like Facebook and Twitter, in order to get the most convenient and quick services available for its customers. Within few years, Stripe was used by candidates of presidential elections in 2016 and by the Fortune 500 companies. By 2016, the company’s annual revenue reached at $450 million and almost 27% American had an aces to Stripe’s services, as the product was purchased form a retailer.

Internal Analysis

SWOT Analysis

A SWOT analysis has been performed over the company in order to know about its key strengths, weaknesses, opportunities and threats, which are described as below

Strengths

  • Stripes’ key strength relies in its differentiated services, which enables it to process the payments quickly and conveniently for the clients.
  • Stripe use advanced technology such as cloud based data processing, in order to provide quick payment processing services.
  • Stripe has developed alliances with different vendors including banks, credit card companies etc.
  • Stripe’s market share has grown over the time with huge revenue reaching up to $20 billion payments processing with a total of 100,000 companies in almost 35 countries.

Weaknesses

  • Stripe has less international presence as compared to other industry players i.e. PayPal, a key competitor is offering its services in more than 200 countries.
  • Strip has put huge fixed costs in investments initially, as a result of which the company is charging higher price for its services, as compared to other competitors, providing the services at lower prices, thereby grabbing the market share.

Opportunities

  • Stripe has an opportunity to explore new and potential geographic locations, in order to grow its market share, revenues and profitability.
  • Stripe can expand its product portfolio, other than just offering payments services.
  • Stripe can target largest retailer in the United States in order to increase its sales volume and market share.

Threats

  • Stripe has only covered the 1% global market share, which poses a threat towards long term viability of the business, as giant players and conglomerates exists in the market with larger market share.
  • Threat towards the imitation of Stripe’s strategy and business model by other industry players.

Industry Overview

Stripe Company is providing its financial services to the e-commerce companies. Stripe provides e-commerce businesses an interface to process their financial transactions through software and processing interface. It provides the programming interface for e-commerce businesses and mobile application, so the industry we will define here is the e-commerce industry and how its trendsare expected to increase in the near future. The consumer’s buying behavior and patterns are changing. The online shopping trend is increasing with time because it is feasible for the consumers, along with that, businesses are offering lower prices for the online shopping.  Physically it is not possible for consumers to review every available products but online shopping provides more options and verities to the consumer. Now, if we talk about the e-commerce industry; the increasing demand of online shipping is creating the growth opportunities for e-commerce industry. The online shopping patterns will be beneficial for e-commerce. (Rooney, 2020) After USA there are other emerging markets, where e-commerce is expected to increase in near future so there is a best opportunity for Stripe to geographically move to other emerging markets and capture the competitive edge in the industry.

PESTEL ANALYSIS

Political

Stripe currently operating in a health political environment, where judiciary is independent and it comes between when the there is any conflict between public interest. Country have civil community and stripe work through collaborating with them for smooth civil operations. Government play vital role in making the policies and also monitor the action of the company…………………

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