Strategies And Innovative Models Of Paypal And Subway †Free Samples

Question: Discuss about the Strategies And Innovative Models Of Paypal And Subway. Answer: Introduction The term strategy is often misinterpreted and misrepresented in the world of business to mean virtually any idea or tactic involved in the relatively peripheral processes of business. Similar is the case with the expression Business Model Innovation, which is nowadays perceived to be some ground-breaking cerebral discovery or invention that was unheard of. However, in reality, innovation is basically the process of updating and modifying the companys business operations in compliance to supply, demand and what strategies the competitors are using. The following report tries to create a comprehensive analysis of the strategies and innovative models of PayPal and Subway, two of the worlds prominent companies who changed the face of their respective fields of business forever. Discussion PayPal:Overview PayPal Holdings Inc. is a US-based money-transfer company which has a global online-payment platform that virtually caters to the entire world. Established in 1998 under the name Confinity, PayPal processes payments for online sellers, e-commerce, auctions via internet and other forms of business, through which it earns its profits (paypal.com 2017). At present, PayPal is functional in 202 countries, with 197 million registered and active user accounts (Neshe 2017). The platform enables its users to transact funds seamlessly across the world with exchange options I twenty-five currencies. PayPal has been chosen in this report for its innovative business strategy, responsible for its meteoric rise. Strategic Analysis Initially in 1998, PayPal, then called Confinity, operated merely as a money-transfer and security-software company, funded by BlueRun Ventures. The company merged with X.com, an online banking organisation in 2000, and X.com was renamed PayPal in 2001, before the company went public in 2002, at $13 a share (Regan 2017). Prior to this, PayPal served just fund-transfers between two Palm Pilots, with people having access to both wallets and PDAs; and this was just a peripheral stream of revenue. But come 2002, all that was to change, owing to PayPals farsighted strategies and enhanced business model. As stated, the first step to making a business successful is to develop a sound business strategy; addressing key issues like identifying the area of business, unique values one can offer, the resources and capabilities at disposal, and the ability to sustain this unique potential. Considering such parameters, expanding the fund-transfer operations across the entire nation was a sensible s trategy for PayPal, given the growing demand for online trading. In July 2002, PayPal was acquired by eBay for an estimated $1.5 billion, valued at about $23 per share, meaning, 77% over the IPO expense (Kane 2017). This is a significant example of Business Model Innovation by PayPal, whereby they addressed their key issue of lower profit rates by restructuring their offerings to target customers and hence, creating an enhanced value proposition for increased revenues (Massa and Tucci 2013). This was a definite win-win situation for PayPal as eBay already had an expansive customer base in the US which was sure to spread globally. Consequently, over 70% of all eBay orders and auctions took payments via PayPal; and went on to become the default payment mode of eBay, used by most customers. In the process, PayPal could successfully lowball their competition in online payments, namely, eBays own Billpoint, PayDirect from Yahoo, BidPay by Western Union, Google Checkpoint and Citibanks c2 it; all of which were shut down in coming years. This is an archetypal example of competitive strategy, where a company identifies its own strengths in correlation to its rivals policies in order to emerge victorious in the modern battlefield of business. The process of Business Model Innovation is a dynamic one and a company needs to keep enhancing and updating its operations in order to thrive in a competitive market. True to this dictum, PayPal kept acquiring smaller companies to expand its field of operations and subsequent revenues. In 2007, it entered a strategic partnership with MasterCard, which incepted the PayPal Secure Card Service which aids customers to use PayPal even on non-compliant platforms with their MasterCard cards (Auchard 2017). By that year, PayPal generated staggering $1.8 billion revenue. Subway: Overview Subway, the trading name of Doctors Associates Inc., is an American chain of fast-food outlets which is known mainly for the sale of submarine sandwiches and salads. It was founded in 1965 when Fred DeLuca opened Petes Super Submarines in Bridgeport, Connecticut, with a capital of just $1000 borrowed from a friend. Today, headquartered in Milford, Subway has about 45,000 outlets in over 100 countries across the world, with half of the stores in the US (subway.com 2017). The reason for including Subway in this report is their usage of tactically sound policies and ever-recurring innovations in the global restaurant market. Strategic Analysis From a strategic point of view, the most prominent aspect of Subways business policy was to understand the concurrent market-trend in the US regarding easily available fast-food. Through psychographic analysis of the food-market, Subway could target young adults, that is, the 16-39 age group as their principal target market. Subway realized that in a fast and hectic lifestyle, people crave fresh and nutritious food as opposed to burgers, pizzas and fries, which were widely prevalent then. Realising their target profile as Demanding People Who Know Their Minds (Lesser et al. 2013), Subway identified their fresh and wholesome food as their unique potential that would give them an edge over competitors; hence their caption : Eat Fresh. Up next lay the more difficult steps of creating a value proposition and the subsequent yield of higher revenues. This needed a foolproof business model that would stand the test of time with recurrent innovations. The major step towards innovation was to not imitate the already successful McDonalds and KFC who, by then, had hefty funds at their disposal. Therefore, Subway utilized this relative financial weakness and emphasized on combo-stores in optimum locations like downtown office areas, near schools and colleges, airports, railway stations and so on, which were easily accessible to people looking for quick, yet nutritious food. Another effective step of innovation was Subways focus on franchise ownerships instead of private proprietary, as the latter was much easier to secure and augmented their global appeal and reach. In 2011, Subway overtook McDonalds as the worlds largest restaurant-chain with 33,749 outlets, compared to the latters 33,737 (Bates 2017). Like any other successful company, Subway does not rest on its laurels and keeps innovating its operations and coming up with new ideas. Subway occupies about 60% of the American fast-food sandwich market, and has a staggering social-media presence with over 25 million fans on Facebook. As of May, 2017, the brand is valued at US$ 7.1 billion (Forbes 2017). References: Auchard, E. 2017. PayPal offers secure way to shop non-PayPal sites.Reuters. [online] Available at: https://www.reuters.com/article/us-ebay-paypal-ecommerce-idUSN1840572920071119 [Accessed 19 Aug. 2017]. Bates, D. 2017. Move over Ronald: Subway officially overtakes McDonald's to become biggest restaurant chain in the WORLD.Daily Mail. [online] Available at: https://www.dailymail.co.uk/news/article-1364037/Subway-overtakes-McDonalds-worlds-biggest-restaurant-chain.html [Accessed 19 Aug. 2017]. Forbes (2017). Subway on the World's Most Valuable Brands.Forbes Magazine. [online] Available at: https://www.forbes.com/companies/subway/ [Accessed 19 Aug. 2017]. Kane, M. 2017. https://www.cnet.com/news/ebay-picks-up-paypal-for-1-5-billion/.cnet.com. [online] Available at: https://www.cnet.com/news/ebay-picks-up-paypal-for-1-5-billion/ [Accessed 19 Aug. 2017]. Lesser, L. I., Kayekjian, K. C., Velasquez, P., Tseng, C. H., Brook, R. H., Cohen, D. A. 2013. Adolescent purchasing behavior at McDonald's and Subway.Journal of Adolescent Health,53(4), 441-445. Massa, L. and Tucci, C.L., 2013. Business model innovation.The Oxford handbook of innovation management,20, p.18. Nsehe, M. 2017. PayPal Extends Payment Services To Nigeria, 9 Other Countries.Forbes Magazine. [online] Available at: https://www.forbes.com/sites/mfonobongnsehe/2014/06/17/paypal-extends-payment-services-to-nigeria-9-other-countries/#70d74e39649b [Accessed 19 Aug. 2017]. Paypal.com. 2017.PayPal About - Home. [online] Available at: https://www.paypal.com/us/webapps/mpp/about [Accessed 19 Aug. 2017]. Regan, K. 2017. PayPal IPO Off to Spectacular Start.Commerce Times. [online] Available at: https://www.ecommercetimes.com/story/16368.html [Accessed 19 Aug. 2017]. subway.com. 2017.Explore Our World. [online] Available at: https://www.subway.com/en-au/exploreourworld [Accessed 19 Aug. 2017].