Strategic Management Case Study - Crypto curriences
Added on 2020-05-11
12 Pages2878 Words69 Views
Running head: STRATEGIC MANAGEMENTStrategic managementName of the UniversityName of the studentAuthors note
1STRATEGIC MANAGEMENTTable of ContentsIntroduction:....................................................................................................................................2Strategic background:......................................................................................................................2Strategic environment:.....................................................................................................................2Competitive environment:...............................................................................................................5Strategic analysis:............................................................................................................................6Comparison of capabilities and resources required to mine crypto currency by small home usersand large commercial factories:.......................................................................................................6Cost and viability of mining bitcoin:...............................................................................................7Criminal usage of crypto currencies:...............................................................................................8Threat of Crypto currencies to hard currency banks:......................................................................8Chinese government interest in crypto currency and implication of worldwide interest:...............9Conclusions:....................................................................................................................................9References:....................................................................................................................................10
2STRATEGIC MANAGEMENTIntroduction:The case study demonstrates the growing use of crypto currencies along with its reasonfor evolution. There are three types of crypto currencies that comprise of Bitcoin, darkcoin andEthereum. In this current study, resources and capabilities of small home users are comparedwith than of large commercial factories. Cost and viability of Bitcoin along with threat of cryptocurrencies are depicted. Later part of report deals with discussion of Chinese government effortsin crypto currencies and their implication in world wide. Strategic background:Financial institutions serves as the trusted third parties for processing electronicpayments. However, this trust-based model suffers from some inherent weakness for sometransactions. There were payment and cost uncertainties that limited the transaction size andreducing the small transactions possibilities (Zhang and Song 2014). In such scenario, it wasrequired to avoid payment and cost uncertainties by using a communication channel that does notrequire any trusted party. This called for the development of electronic payment system that wasbased on cryptographic proof that facilitates transaction between two parties directly instead ofcreating trust. This has led to the evaluation of crypto currency and one of the most famousexample of an emerging technology network for improving banking is Bitcoin. Crypto currenciescan be defined as a financial animal that leads to secured money storage, decentralized andtransferring of money that is enables by internet facility (zerohedge.com 2017). This results ininstance of money between two parties without any cost. Strategic environment:Strategic environment of crypto currencies using PESTLE analysis of the case:
3STRATEGIC MANAGEMENTPolitical factors- There is not any government body controlling crypto currencies and they are usually allocated between private entities. Ability of federal government to conduct monetary policy becomes limited by crypto currencies. The competitive behavior of Crypto currencies market would be enhanced through regulatory bodies. Regulatory effort can be hindered due to decentralized nature of coin hinders. Environmental factors- Market of Crypto currencies requires computational power withincrease in demand. An alternative sources of energy is required for reducing the emission ofcarbon. The larger monetary environment is considerably different from crypto currency andcompared to conventional currencies, there are several advantages of crypto currencies that hasresulted grown in usage and utility. Sustainability of network of Bitcoin is affected by theenvironment factor that influence legacy of wealth and monetary system. It is required byBitcoin miners to have efficient equipment for reducing environmental impact. Electricity cost ofBitcoin mining is estimated at $ 70712000 per year. Miners are required to ascertain analternative source of energy that would minimize costs. Social factors- The social-cultural factor is one of the driving forces of crypto currenciesmarket that involves reach, anonymity and savings. There is low level of awareness and usage ofsuch currencies among people. However, there can be adoption of using such currencies amongcustomers if such payment technology is adopted by more merchant. Operations of Cryptocurrencies is supported by the political environment of respective countries (Vitáris et al. 2017).Nonetheless, the effectiveness of business in the industry is threatened as the regulations is notintensive their war on cybercrime.
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