In 2009, Square Inc. was established out of a need to provide financial solutions to Small Medium, and Large Enterprises. It provides its customers with financial services, mobile payment services, and merchant accounts among others.
In this article, we cover the SWOT analysis of Square Inc. which includes the internal strategic factors of strengths and weaknesses as well as external strategic factors such as opportunities and threats. Here is an overview of the company as well as its SWOT analysis
Square Inc. – At a Glance
| Name | Square, Inc. |
| Website | https://squareup.com/us/en |
| Founders | Jack Dorsey, Jim McKelvey, Tristan O’Tierney |
| Chief Executive Officer (C.E.O.) | Jack Dorsey |
| Tagline | Fashion and quality at the best price |
| Headquarters | San Francisco, CA, USA |
| Type of Corporation | Public |
| Year Founded | 2009 |
| Revenues (2020) | $9.498B |
| Key Products/Services | Square Reader, Square Stand, Square register, gift cards, online booking tools, Square Capital services, payroll system, Cash App, debit cards, |
| Key Competitors | PayPal, Chase Bank, Braintree, Payment Depot, Shopify, Intuit, Stax, PaymentCloud, Helcim, TSYS |
Square’s Strengths
Huge Portfolio of Products
Square Inc. has a wide variety of products under its umbrella. Its major market niche is the merchant accounts aggregator market. Its payment system is an all-in-one payment service that has multiple managed offerings. Their service platform is user-friendly; it is quick and easy thereby ensuring that customers can onboard much faster. Once this is done, the customers are able to accept payments online, through a stored card, by tapping or dipping a to enable for processing of all major card payments options. Other services offered by square include cloud-based software solutions that are integrated to enable sellers to manage well their businesses. The products also have tools on offering like APIs and SDKs which allow for users to access the square card with their websites, apps, and back-office systems. Square even caters to restaurants and has a differentiated service for ordering food items. Square Capital, through a partnership with an industrial bank, is able to offer its customers loans depending on their current payments and their data at the point of sale.
Additionally, the company has also invested in the financial markets and mobile payment markets where it has diversified its portfolio of products and services; it has also integrated the services to provide flexibility in the use of its services.
Rapid Growth
Square has experienced rapid growth over the years of operation. Given it was an elegant software and hardware solution that re-invented the payment processing spaces, customers were quick to appreciate it. It made payment options available to Small Medium and Large Enterprises who previously were shut out because of the costs of transactions as well as the application processes that were lengthy and tiresome. Square, therefore, offered a solution to the real pain in the SME sector. Other factors that championed its growth over the years include the company’s use of strategic partnerships that drove distribution and credibility. And lastly, early tech excitement spurred its growth. But with the advent of COVID 19, Square’s growth worriedly went south with the abrupt and mandatory closure of a majority of its businesses as well as its core seller customers. But surprisingly, the company’s growth turned upward on a wild rise. Key growth was witnessed in Square’s consumer cash app business as it handled bitcoin purchases and transactions that were huge out of the skyrocketed growth in bitcoins in 2021. Analysts perceive that the company has leveraged its strong balance sheet, strong brand, differentiated product portfolio, and innovative team to achieve the rebound in growth.
Strong Fraud Detection
Square’s fraud detection and prediction system are much better than that of its peers since its systems are based on transaction data purposed for fraud detection. With Square’s systems, payments to merchants can be done with far fewer waiting times typically the next day. When compared to the several days that are required as waiting times for typical card or credit transactions. It is with this capability that square is able to approve any new merchants immediately, new users are able to use Square’s services as soon as they activate their Square gadget. Fraud detection has given Square a competitive edge over its competitors.
Expansion Policies
The company has a rapid expansionary policy at its core. The company has expanded into different new markets with great success. With every success, the company has realized more income streams almost instantly from the time of execution.
Innovation
Innovation is at Square’s core. Square re-invented the payments processing space of credit cards and made credit card processing more accessible and affordable. The company continues to innovate a strategy that is enabling the company to enter into new markets. The company’s hardware is beautifully designed; unique, attractive, and modern in its usage which becomes a marketing point as many people ask about it.
Financial Performance
With the company’s strong financial performance out of offering real solutions, quality products, top-notch security, and innovation, the company’s strong financial position is a competitive strength. This has enabled expansion into new markets.
Square’s Weaknesses
Gaps in the Services Offered
Even with the wide range of product portfolios, their services still have a huge gap that needs to be filled. Several competitors have identified these gaps and have come up with products that bridge these gaps. Unfortunately, these gaps are some of the reasons that prevent other customers from choosing the brand.
High Employee Turnover
The company has experienced high turnover rates when compared to its competitors. This means high costs in attracting, training, and retain employees. Analysts attribute these high turnover rates to low worker morale as well as heavy workloads.
Poor Inventory Management
Square has had instances where the company has high inventory at hand. This inept inventory management policy negatively impacts the working management policy of the company. Additionally, this inventory management policy has in the past forced the company to go into debt. Square needs to adjust its inventory management policy to ensure its inventory management policy is of strategic advantage to the general profitability of the company.
Stiff Competition
Because of the nature of the company’s services and products, the company has attracted huge competition from companies like PayPal and Intuit among others. This high competition is one of the key reasons for the high turnover rates among employees and had created a shortage of employees in this industry.
Square’s Opportunities
Growth in Online Businesses
The increase in online sales with particular reference to COVID 19 has given rise to an increased number of potential users for Square. Additionally, with the internet and social media becoming ubiquitous, there are increased opportunities for Square products and services.
Technological Advances
Technology has advanced greatly and is not the same as when the company started in 2009. The company has previously taken advantage of technological advancement to inspire innovation. With more technological advancement coming in, the company has more opportunities for innovation.
Government Policies and Subsidies
Some of the changes that the government has implemented with regards to subsidies and policies present opportunities for the Square company. These subsidies relate to environmentally friendly services and products which Square Inc. was already providing. Customers are also becoming more supportive of products that have a positive impact on the environment. Changes in the tax policies are also favorable and offer opportunities for growth for the company.
Customer Preferences
Customers are becoming more particular about their tastes and preferences. Square Inc. has already invested in data systems that would enhance the company’s opportunities in studying customer’s needs and preferences and develop products that suit the customer’s requirements.
Thus far, the company has collected huge amounts of data that the company can analyze and use insights to develop creative, unique, and personalized products that will provide customers with value for their money.
Square’s Threats
Cybercrimes
With the increased adoption of the internet, the rates of cybercrime have gone up. Square Inc. faces the inherent risk of cybercrimes given the nature of its products. Any lapse in security would significantly damage the company’s reputation.
Substitute Products
Square faces the threat of market takeover by companies offering substitute products.
Substitute products are those which can offer the same utility that is derived from a particular product. These pose a threat to Square since the company is already dealing with stiff competition.
Low Barriers to Entry
The industry in which Square operates has low barriers to entry. Flooding in of new entrants not only reduces the market share of Square but also drives down the prices and therefore the profit margins of Square.
Conclusion
While Square achieved faster market growth through innovation and offering much-needed solutions to the market, the company needs to address its weaknesses in inventory management, staff turnover and also address its threats to boost its earnings and remain competitive in the market.
