Retail Credit Scoring for Auto Finance Limited SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Retail Credit Scoring for Auto Finance Limited
Auto Finance Ltd. was a part of one of India's large conglomerates. The conglomerate was a major player in the two-wheeler business in India. Many of the people buying two-wheelers belonged to the lower middle class of India and did not have access to enough capital to buy the two-wheelers outright - typically costing between twenty-five to hundred thousand Indian Rupees (at the time of the setting of this case, i.e., January 2007, 1 USD ~ 50 INR). For this reason, Auto Finance used to extend loans, typically on a fixed interest rate for 3 5 years, to enable cash-strapped customers to buy the vehicles. The loan facility enabled the two-wheeler division to reach out to a section of consumers that had hitherto not been able to purchase two-wheelers. However, the increased penetration was being achieved at a cost as there were a significant number of people defaulting on their loans. Auto Finance Ltd. was interested in developing and implementing a credit scoring approach to screen out risky consumers from the pool of applicants and improve profitability.
Swot Analysis of "Retail Credit Scoring for Auto Finance Limited" written by Sujoy Roychowdhury, Srinivas Prakhya includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wheelers Auto facing as an external strategic factors. Some of the topics covered in Retail Credit Scoring for Auto Finance Limited case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Retail Credit Scoring for Auto Finance Limited casestudy better are - – supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is backlash against globalization, increasing government debt because of Covid-19 spendings, wage bills are increasing, cloud computing is disrupting traditional business models,
there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Retail Credit Scoring for Auto Finance Limited
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Retail Credit Scoring for Auto Finance Limited case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wheelers Auto, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wheelers Auto 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 Retail Credit Scoring for Auto Finance Limited can be done for the following purposes –
1. Strategic planning using facts provided in Retail Credit Scoring for Auto Finance Limited case study
2. Improving business portfolio management of Wheelers Auto
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 Wheelers Auto
Strengths Retail Credit Scoring for Auto Finance Limited | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wheelers Auto in Retail Credit Scoring for Auto Finance Limited Harvard Business Review case study are -
Successful track record of launching new products
– Wheelers Auto has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wheelers Auto 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.
Innovation driven organization
– Wheelers Auto is one of the most innovative firm in sector. Manager in Retail Credit Scoring for Auto Finance Limited Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Wheelers Auto 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 Retail Credit Scoring for Auto Finance Limited HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Wheelers Auto are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Sales & Marketing field
– Wheelers Auto is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Wheelers Auto in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Wheelers Auto in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Wheelers Auto is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Wheelers Auto 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.
Learning organization
- Wheelers Auto is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Wheelers Auto is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Retail Credit Scoring for Auto Finance Limited Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Retail Credit Scoring for Auto Finance Limited Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Wheelers Auto has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wheelers Auto to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Wheelers Auto is one of the leading recruiters in the industry. Managers in the Retail Credit Scoring for Auto Finance Limited are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Retail Credit Scoring for Auto Finance Limited | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Retail Credit Scoring for Auto Finance Limited are -
Increasing silos among functional specialists
– The organizational structure of Wheelers Auto is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Wheelers Auto needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wheelers Auto to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Sujoy Roychowdhury, Srinivas Prakhya suggests that, Wheelers Auto is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Wheelers Auto 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.
Skills based hiring
– The stress on hiring functional specialists at Wheelers Auto 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.
Aligning sales with marketing
– It come across in the case study Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited can leverage the sales team experience to cultivate customer relationships as Wheelers Auto is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Retail Credit Scoring for Auto Finance Limited 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 Wheelers Auto 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Retail Credit Scoring for Auto Finance Limited, in the dynamic environment Wheelers Auto has struggled to respond to the nimble upstart competition. Wheelers Auto has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Wheelers Auto 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.
High cash cycle compare to competitors
Wheelers Auto has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Wheelers Auto products
– To increase the profitability and margins on the products, Wheelers Auto needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Wheelers Auto has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Wheelers Auto even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Retail Credit Scoring for Auto Finance Limited | 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 Retail Credit Scoring for Auto Finance Limited are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wheelers Auto 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, Retail Credit Scoring for Auto Finance Limited, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wheelers Auto is facing challenges because of the dominance of functional experts in the organization. Retail Credit Scoring for Auto Finance Limited 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Wheelers Auto in the consumer business. Now Wheelers Auto can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wheelers Auto 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 Wheelers Auto to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wheelers Auto can use these opportunities to build new business models that can help the communities that Wheelers Auto operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Wheelers Auto has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Creating value in data economy
– The success of analytics program of Wheelers Auto has opened avenues for new revenue streams for the organization in the industry. This can help Wheelers Auto to build a more holistic ecosystem as suggested in the Retail Credit Scoring for Auto Finance Limited case study. Wheelers Auto can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Wheelers Auto can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Wheelers Auto can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wheelers Auto 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.
Better consumer reach
– The expansion of the 5G network will help Wheelers Auto to increase its market reach. Wheelers Auto 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wheelers Auto in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Wheelers Auto 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 Retail Credit Scoring for Auto Finance Limited - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wheelers Auto to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Retail Credit Scoring for Auto Finance Limited External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited, Wheelers Auto 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wheelers Auto in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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. Wheelers Auto needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Consumer confidence and its impact on Wheelers Auto 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.
High dependence on third party suppliers
– Wheelers Auto high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Wheelers Auto will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Wheelers Auto has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Wheelers Auto needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Wheelers Auto needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Environmental challenges
– Wheelers Auto 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. Wheelers Auto 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 Wheelers Auto.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wheelers Auto with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Wheelers Auto is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited 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 Retail Credit Scoring for Auto Finance Limited 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 Wheelers Auto needs to make to build a sustainable competitive advantage.