Visa Inc. and the Global Payments Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Visa Inc. and the Global Payments Industry
A manager, preparing for an interview with Visa Inc., seeks to understand the nature of the global payments industry and Visa Inc.'s position within it. The case outlines the industry's history and current practice through extensive use of publicly reported information. The public information allows answers to some important questions. What does Visa Inc. do? How competitive is the industry? And what is the source of Visa Inc.'s competitive advantage? Student spreadsheet is available, see 7B14A018.
Swot Analysis of "Visa Inc. and the Global Payments Industry" written by Neil Bendle, Dan Horne includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Visa Payments facing as an external strategic factors. Some of the topics covered in Visa Inc. and the Global Payments Industry case study are - Strategic Management Strategies, Strategy and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Visa Inc. and the Global Payments Industry casestudy better are - – wage bills are increasing, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google,
central banks are concerned over increasing inflation, increasing energy prices, etc
Introduction to SWOT Analysis of Visa Inc. and the Global Payments Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Visa Inc. and the Global Payments Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Visa Payments, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Visa Payments operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Visa Inc. and the Global Payments Industry can be done for the following purposes –
1. Strategic planning using facts provided in Visa Inc. and the Global Payments Industry case study
2. Improving business portfolio management of Visa Payments
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Visa Payments
Strengths Visa Inc. and the Global Payments Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Visa Payments in Visa Inc. and the Global Payments Industry Harvard Business Review case study are -
Strong track record of project management
– Visa Payments is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Visa Payments is one of the leading recruiters in the industry. Managers in the Visa Inc. and the Global Payments Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Visa Payments has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Visa Inc. and the Global Payments Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Visa Payments has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Sales & Marketing industry
– Visa Inc. and the Global Payments Industry firm has clearly differentiated products in the market place. This has enabled Visa Payments to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Visa Payments to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Visa Payments has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Visa Payments has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Visa Payments is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Neil Bendle, Dan Horne can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Visa Payments in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Visa Payments has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Visa Payments to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Visa Payments has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Visa Inc. and the Global Payments Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Visa Payments digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Visa Payments has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Visa Payments is one of the most innovative firm in sector. Manager in Visa Inc. and the Global Payments Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Visa Inc. and the Global Payments Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Visa Inc. and the Global Payments Industry are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Visa Payments supply chain. Even after few cautionary changes mentioned in the HBR case study - Visa Inc. and the Global Payments Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Visa Payments vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Visa Payments has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Visa Payments is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Visa Inc. and the Global Payments Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Visa Inc. and the Global Payments Industry has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Visa Payments 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Visa Payments has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Visa Payments, firm in the HBR case study Visa Inc. and the Global Payments Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Visa Inc. and the Global Payments Industry, it seems that the employees of Visa Payments don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Visa Inc. and the Global Payments Industry that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Visa Inc. and the Global Payments Industry can leverage the sales team experience to cultivate customer relationships as Visa Payments is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Visa Payments has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Visa Payments needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Increasing silos among functional specialists
– The organizational structure of Visa Payments is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Visa Payments needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Visa Payments to focus more on services rather than just following the product oriented approach.
Opportunities Visa Inc. and the Global Payments Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Visa Inc. and the Global Payments Industry are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Visa Payments is facing challenges because of the dominance of functional experts in the organization. Visa Inc. and the Global Payments Industry case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Visa Payments can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Visa Inc. and the Global Payments Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Visa Payments to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Visa Payments to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Visa Payments can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Visa Payments can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Visa Payments can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Visa Payments can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Visa Payments can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Learning at scale
– Online learning technologies has now opened space for Visa Payments to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Visa Payments can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Visa Payments to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Visa Payments to increase its market reach. Visa Payments will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Visa Payments has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Visa Inc. and the Global Payments Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Visa Payments to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Visa Inc. and the Global Payments Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Visa Inc. and the Global Payments Industry are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Visa Inc. and the Global Payments Industry, Visa Payments may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Stagnating economy with rate increase
– Visa Payments can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Visa Payments with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Visa Payments in the Sales & Marketing sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Visa Payments business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Visa Payments
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Visa Payments.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Visa Payments needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Visa Payments demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Visa Payments can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Visa Payments needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Visa Payments can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Visa Payments.
Weighted SWOT Analysis of Visa Inc. and the Global Payments Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Visa Inc. and the Global Payments Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Visa Inc. and the Global Payments Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Visa Inc. and the Global Payments Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Visa Inc. and the Global Payments Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Visa Payments needs to make to build a sustainable competitive advantage.
