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Meituan's Strategy Optimization Plan for Sustainable Growth
1
Meituan's Strategy Optimization Plan for Sustainable Growth:
A PESTLE and SWOT Analysis
Fan Pang
School of Professional Studies, Columbia University
APAN 5600: Strategy and Analytics
Instructor: Panagiotis Tarhanidis
April 25, 2023
Meituan's Strategy Optimization Plan for Sustainable Growth
2
Introduction
Meituan is a Chinese technology conglomerate that offers an array of on-demand services
encompassing food delivery, hotel reservations, cinema tickets, ride-hailing, and more. With its
comprehensive ecosystem spanning from service to physical retail, Meituan has become a major
player in the food, housing, and transportation sectors since its establishment in 2010 with
headquarters in Beijing, China. Although Meituan started as a food delivery business, it expanded
its operations around all aspects of food delivery services, including its service side, business side,
and customer side. Leveraging its cutting-edge technology platform and logistics network, Meituan
ensures the efficient delivery of its services and delivers a seamless user experience. Apart from
food delivery, Meituan has diversified its offerings, leading to multiple revenue streams. Through
data, traffic, and organizational empowerment, Meituan aims to grow in the long term by penetrating
further into the supply chain arena, generating value that enhances efficiency. Since 2015, the
company has been developing its catering supply-chain domain through self-built and investment
strategies (Meituan,2022). Meituan operates in the burgeoning on-demand services sector within
the broader technology industry.
Although Meituan has diversified its services, food delivery remains its most significant and
critical revenue stream, accounting for over 60% of its total earnings (Lee, 2021). Therefore,
analyzing Meituan's food delivery segment is crucial to understanding the company's overall
performance and growth potential. Moreover, Meituan contends with formidable competition in
China's food delivery sector from Ele.me, a subsidiary of Alibaba Group. Boasting a commanding
presence within major metropolises and having doubled down on logistics and delivery technology,
the platform was established in 2008 and acquired by Alibaba in 2018. As of 2021, it has amassed
over 260 million users across more than 2,000 cities, catering not solely to food delivery but also
Meituan's Strategy Optimization Plan for Sustainable Growth
3
providing other services such as grocery and alcohol delivery (Jason, 2019). Despite Meituan
edging out Ele.me marginally in terms of market share, the latter remains an influential contender
within the Chinese food delivery industry. Both entities rely upon localized delivery partners to
transport meals from partnered restaurants. They engage in cutthroat competition by furnishing
generous discounts and incentives to entice customers and restaurateurs alike. However, like its
arch-rival Meituan, Ele.me's food delivery activities engender notable environmental repercussions,
particularly with regard to packaging waste and carbon emissions resulting from delivery vehicles.
Both companies have encountered pressure from customers and governmental entities to address
these apprehensions. As the rivalry between Meituan and Ele.me intensifies, redressing
environmental issues and augmenting sustainability practices could represent an instrumental facet
in securing a competitive edge. By dissecting Meituan's food delivery business segment and its
competitors, we can elucidate the competitive dynamics of the sector and identify domains where
Meituan may improve its operations and better compete with its adversaries.
The purpose of this paper is to use PESTLE and SWOT to analyze Meituan's current situation
and provide an actionable strategy optimization plan based on the company's strengths and
opportunities, weaknesses and external threats. The paper also discusses the opportunities and
challenges that may arise during the strategy implementation.
Evaluation of the Current Situation
The PESTLE framework is well-suited for analyzing Meituan's current situation and
environment as it identifies macro-environmental factors affecting the company, such as political,
economic, social, technological, legal, and environmental factors.
Meituan's operations are significantly impacted by the policies and regulations set forth by the
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Meituan's Strategy Optimization Plan for Sustainable Growth
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Chinese government, particularly with regards to the regulation of the tech industry in areas such as
data privacy and security. In order to continue its operations, Meituan must comply with these
regulatory measures. Furthermore, as one of the largest and fastest-growing economies in the
world, China has established ambitious objectives to combat climate change, which include a
variety of policies and regulations aimed at promoting sustainable practices in the food industry,
such as the endorsement of low-carbon and eco-friendly packaging materials. Additionally, China's
"dual carbon" goals, which aim to reach peak carbon dioxide emissions by 2030 and achieve carbon
neutrality by 2060, will have a significant influence on Meituan's sustainability strategy (Kaminski,
2023). To ensure compliance and maintain competitiveness in the industry, Meituan must remain
vigilant in monitoring changes to government policies and regulations. It is worth noting that the
Chinese government has urged restaurants to reduce portion sizes and eliminate excessive
discounts and promotions, which could potentially impact demand for Meituan's delivery services
(Westcott & Gan, 2020).
Meituan operates within a thriving and rapidly growing economy, although it is not without its
challenges, including the escalating labor costs and economic inequality. In 2020, Meituan's labor
costs surged by 26.2%, primarily due to rising minimum wages and several other contributing
factors (Hinata, 2022). Moreover, Meituan's growth has been blamed for exacerbating economic
inequality in China, as the company allegedly suppresses wages and working conditions for delivery
drivers. While the COVID-19 pandemic has amplified demand for food delivery services, it has also
disrupted supply chains and magnified costs for delivery companies like Meituan.
Meituan's food delivery business is highly influenced by the prevailing social trends in China,
especially the growing dependence on technology platforms for daily conveniences. The recent
Meituan's Strategy Optimization Plan for Sustainable Growth
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surge of on-demand food delivery services can be attributed to the increased prevalence of
smartphones and the ease of ordering food online. Meanwhile, consumers have become more
conscious about the environmental impact of food delivery services, as well as the safety and
quality of their delivered meals. Meituan has acknowledged these concerns and implemented
measures to mitigate them, such as promoting low-carbon delivery and reducing packaging waste.
Nonetheless, the company may need to further adapt to evolving social trends and consumer
preferences to maintain its competitiveness.
Meituan's technological platform is a significant competitive advantage for the company.
Meituan has made substantial investments in developing its app, which facilitates easy and speedy
ordering of food, booking services, and payment processes. Beyond empowering users through
Meituan's takeaway and Dianping group purchase options, Meituan also empowers merchants via
their comprehensive merchant operations backend, SaaS platform, supply chain, and other
products (Lin, 2020). This encompasses not only user and order acquisition, but also business data
provision, user operation, business training, supply chain management, and other aspects that can
help merchants enhance their operational efficiency. By supporting digital transformation among
merchants, Meituan enables the use of scientific management tools for both offline front line and
backline operations through data, training, and methodology. However, technological advancements
and entry of new market competitors may jeopardize Meituan's competitive edge. Thus, Meituan
must continue to innovate and develop novel technologies to maintain its position as an industry
leader.
Meituan must adhere to Chinese regulations pertaining to data privacy, intellectual property,
and consumer protection. In recent years, Chinese regulators have intensified their scrutiny of the
Meituan's Strategy Optimization Plan for Sustainable Growth
6
tech industry, including Meituan, amidst concerns about monopolistic practices. Furthermore, in
2021, China's antitrust regulator initiated a probe into Meituan's policies that compelled merchants
to either solely utilize its platform or not at all (Hu, 2021). To sustain its operations in China, Meituan
will need to effectively manage these regulations.
Meituan's food delivery business has a significant environmental impact, primarily associated
with packaging waste and carbon emissions from delivery vehicles. The company acknowledges the
need to address these concerns and is taking measures such as promoting biodegradable
packaging and utilizing electric delivery vehicles to reduce its environmental footprint (Meituan,
2021). However, Meituan could face mounting pressure from consumers and regulators to take
further action towards addressing environmental issues. By developing a comprehensive and
transparent sustainability program that sets it apart from competitors, Meituan can demonstrate its
commitment to environmental responsibility. By infusing sustainability throughout its operations,
Meituan could potentially identify new business opportunities while also building a stronger
reputation among environmentally conscious consumers.
In totality, Meituan navigates a dynamic and formidable milieu. Utilizing the PESTLE framework,
we have identified numerous external factors that could exert an impact on Meituan's operations,
including regulatory constraints, escalating labor expenses, and environmental misgivings.
Concurrently, Meituan boasts several areas of proficiency, such as a substantial user base, an
expansive delivery infrastructure, and pioneering technological platforms. To acquire a deeper
comprehension of Meituan's internal and external environs, we shall undertake a SWOT analysis.
This examination will enable us to pinpoint Meituan's fundamental strengths and weaknesses, as
well as opportunities and threats in the competitive arena.
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Meituan commands numerous strengths that have bolstered its triumph and robust market
standing in China's food delivery and online services sector. One of the company's principal
strengths is its extensive and burgeoning user base, which establishes a firm basis for continued
growth and expansion into novel markets and services. Another forte of Meituan is its
comprehensive delivery network and formidable logistics acumen, which has been fostered through
considerable investments in technology and infrastructure. The firm has erected an extensive
network of delivery partners, comprising both human and electric vehicles, to facilitate efficient and
dependable conveyance of goods and services. Furthermore, Meituan has established its
proprietary logistics system, incorporating warehouses and delivery hubs to streamline the delivery
process (Yang et al., 2021). Meituan's pioneering technological platforms also represent a
significant strength of the enterprise. The corporation utilizes AI-enabled recommendation
mechanisms to personalize its user experience, distinguishing it from its competitors. These
systems are tailored to comprehend each user's inclinations and furnish personalized
recommendations for restaurants, services, and products. Consequently, these fosters heightened
user engagement and retention while consolidating Meituan's competitive position in the market.
Meituan's pervasive environmental impact, particularly with regard to packaging waste and
carbon emissions stemming from delivery vehicles, may result in reputational harm and regulatory
constraints. According to the Chinese Academy of Sciences, China's food delivery sector generated
1.6 million tons of packaging waste in 2017, with plastic containers and bags constituting the bulk of
it (Zhong & Zhang, 2019). Meituan's labor concerns, comprising worker exploitation and inadequate
working conditions, may provoke reputational harm and regulatory strictures. In recent years, there
have been accounts of delivery personnel being overburdened, underpaid, and exposed to perilous
Meituan's Strategy Optimization Plan for Sustainable Growth
8
working conditions. The Chinese government has intensified its crackdown on labor malpractices in
the gig economy, with Meituan facing fines and regulatory inspection over its labor practices (Borak,
2022). Meituan has answered by ameliorating conditions for its delivery staff, encompassing
providing insurance and dispensing protective gear. Meituan's reliance on the Chinese market may
circumscribe growth opportunities and render the enterprise susceptible to political and economic
hazards. Meituan derives the majority of its revenue from the Chinese market, and any political or
economic instability in China could adversely affect the company's growth prospects.
Meituan can leverage several opportunities, including devising a more comprehensive
sustainability program to mitigate the substantial environmental impact of its food delivery business.
This could enhance Meituan's differentiation from competitors and improve its reputation among
environment-conscious consumers. According to Plastic Action Centre, 88% of respondents
expressed concerns over the environmental impact of food delivery packaging waste. Meituan has
already taken some strides to address this quandary, such as promoting reusable containers and
urging restaurants to curtail packaging waste, but there is still scope for improvement. Another
opportunity for Meituan is to harness partnerships and collaborations with other companies to
augment its market share and expand into novel markets. For instance, in 2020, Meituan forged a
partnership with Chinese automaker SAIC Motor to develop delivery vehicles and logistics
infrastructure. This liaison may aid Meituan in refining its logistics capabilities and reducing its
carbon footprint.
Meituan confronts several threats that could exert a significant impact on its operations and
profitability. One of the most salient threats is intense competition in the food delivery market,
particularly from major players such as Ele.me, which may engender price wars and erode profit
Meituan's Strategy Optimization Plan for Sustainable Growth
9
margins. According to a report by Reuters, Meituan and Ele.me are the two principal participants in
China's food delivery sector, with a cumulative market share exceeding 80% as of 2021 (Hall et al.,
2023). This fierce competition has precipitated deep discounts and incentives tendered by both
companies to attract users and partnered eateries, which could impart pressure on profit margins.
Another noteworthy threat that Meituan encounters is escalating regulatory pressures and scrutiny,
particularly concerning labor practices and environmental impact. Meituan has taken measures to
alleviate these concerns. Nonetheless, the corporation could face fines, legal challenges, and
reputational harm if it fails to address these issues adequately.
Meituan's food delivery business segment possesses several strengths, including a robust
market position and substantial data analytics capabilities. However, it also encounters significant
weaknesses associated with its environmental impact along with concerns regarding food safety
and quality. While there are promising opportunities for Meituan to leverage the burgeoning food
delivery market in China, it must contend with rivalries from competitors and government
regulations. Therefore, it is imperative for Meituan to address its shortcomings and leverage its
strengths to sustain its status as a top industry player. The implementation of a more
comprehensive and transparent sustainability program could potentially serve as a crucial occasion
for Meituan to tackle environmental issues while distinguishing itself from competitors.
Recommended Strategy and Implementation
Currently, Meituan provides a selection on their order page allowing users to indicate whether
they require utensils. Opting for "no" results in a certain allocation of carbon credits. Three methods
are available to gain carbon credits on the Meituan app: capturing an image of the emptied plate via
the phone's camera, selecting a smaller meal when ordering, and refraining from requesting utensils
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10
for takeout. The sole mode of utilizing carbon credits is via contribution towards the construction of
Meituan's "Rural Children's Playground." Despite the current sustainability initiatives, there remains
a dearth of opportunities to obtain credits, and the redemption incentives remain insufficient in
enticing users.
Here is a screenshot and translation of the introduction of Meituan Carbon Account, the existing
sustainability programs.
Meituan Carbon Account
How to earn carbon credits
There are many actions in our daily life that
inadvertently reduce the burden of the earth.
Ordering take-out from Meituan App without
utensils, ordering small portions, and scanning
the finished dinner plate are all green and low-
carbon behaviors that can earn carbon credits to
be used for building an environmental corner in a
rural children's playground.
“The carbon points corresponding to each low-
carbon behavior have been scientifically
measured by the China Environment Joint
Certification Center, so let's reduce carbon
together~
Use Meituan App to empty your plate
: All
aspects of food production and consumption
produce carbon emissions. Scanning an empty
plate to record CD behavior can earn 160.7g
carbon credits.
Choose small portions when ordering
: Smaller
portions produce lower carbon emissions
compared to regular portions. 164g carbon
credits can be earned for each small portion
ordered.
No utensils option when ordering takeaway
:
38g of carbon credits per order when choosing
the no utensils option.
To enhance its sustainability initiatives, Meituan could expand the range of methods for earning
carbon credits. One potential strategy is to incorporate an option for "paper bag packaging" on the
Meituan's Strategy Optimization Plan for Sustainable Growth
11
order page, accompanied by corresponding carbon credit rewards. Additionally, they could offer
carbon credits for users who participate in offline environmental activities organized by the company
or purchase surplus unsold food. Furthermore, some merchants have expressed concerns that
certain users overlook the "no utensils" option when placing their orders, resulting in complaints
when the meal is delivered without utensils. To address this issue, Meituan might optimize the "no
utensils" product feature with a more prominently displayed green font to indicate the option and
introduce users as overseers. If users choose "no utensils" but the merchant still provides utensils,
user may rate and provide feedback to Meituan. Additional points can be credited to incentivize
users to oversee. Moreover, if a merchant adheres to "no utensils" guidelines for 30 consecutive
days, they could earn the "Help low-carbon consumption" badge of honor on the user's end.
Furthermore, users who spend at this store may receive double carbon points.
Secondly, to attract more users to participate in their sustainability programs, Meituan could
increase the rewards for redeemable points. One approach would be to collaborate with popular
third-party intellectual property rights holders on social media to create eco-friendly co-branded
tableware, dinner plates, lunch boxes, environmental bags, and other recyclable items. Additionally,
they could recycle take-out lunch boxes into bicycle fenders, cell phone cases, keychains, and other
products. With new technology available for large-scale recycling, these recycled products can be
"reborn" and used as carbon credit rewards by Meituan. By implementing these strategies, Meituan
can optimize its sustainability programs and showcase its commitment to environmental protection.
In turn, this could differentiate the company from its competitors and appeal to environmentally
conscious customers.
Here is a comprehensive visual representation of the entire implementation process, as well as
Meituan's Strategy Optimization Plan for Sustainable Growth
12
each individual phase and its corresponding timeline, which will ensure a seamless and organized
introduction of the optimized sustainability programs within the Meituan application.
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Changes to Strategy Implementation
While implementing an optimized sustainability program within their application, Meituan might
encounter several obstacles. Firstly, some users may resist changing their ordering behavior to earn
carbon credits due to a lack of motivation related to environmental issues or not seeing the value in
earning credits for charitable donations and environmentally friendly objects redeeming. Secondly,
Meituan may encounter difficulties coordinating with restaurant partners to ensure proper
implementation of the "no cutlery" option and accurate tracking of carbon credits. This could require
additional resources and training for both Meituan and their restaurant partners. Thirdly, Meituan
may need to invest in new technology and infrastructure to support new features and sustainability
initiatives. For instance, establishing recycling programs for take-out containers and packaging
materials may necessitate new partnerships and logistics solutions to maintain service quality as
usual.
Several external factors could also cause changes to some of its elements, including
competition, environment, and economics. Firstly, competition is a significant determinant that may
impact the implementation of the sustainability program. Meituan operates in an incredibly
competitive market, and other players could potentially develop comparable initiatives or offer
diverse incentives that could diminish the attractiveness of Meituan's program. Secondly,
environmental factors could also influence the execution of the sustainability program. For instance,
alterations in regulations and policies associated with sustainability, such as carbon levies or
prohibitions on disposable plastics, could affect Meituan's program's facets. Lastly, economics could
also affect the execution of the sustainability program. Shifts in consumer behavior and preferences,
such as a heightened demand for environmentally-friendly packaging or a willingness to pay more
Meituan's Strategy Optimization Plan for Sustainable Growth
14
for sustainable commodities, could significantly impact the program's triumph.
Analytics can play a pivotal role in addressing the challenges that may arise during the
implementation of Meituan's optimized sustainability program. Firstly, concerning competition,
Meituan can leverage analytics to monitor and evaluate its sustainability program's efficacy and
juxtapose it with that of its rivals. By utilizing data analytics tools, Meituan can gain profound insights
into consumer preferences and pinpoint areas where its program can be enhanced to maintain
competitiveness. For instance, by scrutinizing customer feedback and aspirations, Meituan can
identify which incentives or rewards are most appealing to customers and adjust its program's
constituents accordingly. Secondly, Meituan can deploy analytics to monitor shifts in environmental
factors that might impact its sustainability program. For instance, by tracking alterations in
sustainability-related regulations, Meituan can adapt its program to ensure conformity and capitalize
on opportunities to enhance its sustainability initiatives. By scrutinizing data related to sustainability
trends and best practices, Meituan can remain ahead of the curve and position itself as a
frontrunner in the industry. Lastly, economics can also be evaluated through data analytics to
assess the performance of Meituan's sustainability program. For example, by analyzing customer
spending patterns, Meituan can ascertain the financial impact of its sustainability program on the
business. By monitoring changes in consumer behavior and preferences related to sustainability,
Meituan can modify its program's constituents to remain relevant and financially viable.
Conclusion
In conclusion, Meituan as a Chinese technology conglomerate, must address ecological
apprehensions and comply with Chinese statutes whilst simultaneously grappling with escalating
labor costs and economic inequality. After analysis of Meituan's current situation utilizing the
Meituan's Strategy Optimization Plan for Sustainable Growth
15
PESTLE and SWOT frameworks we propose an actionable strategy optimization plan based on its
strengths, weaknesses, opportunities, and external threats. To enhance its sustainability initiatives,
Meituan could broaden the range of methodologies for earning carbon credits, augment the rewards
for redeemable points, and forge alliances with third-party IP rights holders on social media to
create environmentally friendly co-branded items. By implementing these strategies, Meituan can
differentiate itself from its competitors and appeal to customers concerned about environmental
issues.
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16
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