Bandhan (B): Sustainable Banking in India SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bandhan (B): Sustainable Banking in India
Supplement to case IMD805. The case is set at a time when Bandhan, the largest microfinance institution (MFI) in India and the largest non-deposit taking MFI in the world, was about to embark on an organizational transformation that would convert it into a mainstream bank. In July 2013, supported by a Geneva-based investor, Bandhan had applied for a banking license to expand its operations by leveraging its network. And in May 2014 the Reserve Bank of India (RBI) had granted the license to Bandhan, making it the first MFI in the country to win a bank license, and also the youngest entity to be allowed to enter the banking space in India. Established in 2001 by Chandra Shekhar Ghosh to address the dual objective of poverty alleviation and empowerment of women, Bandhan had grown by 2013 to 2,016 branches across 22 states and union territories within India. With over 5 million borrowers and total outstanding loans of INR 57 billion (~US$1 billion), it had zero non-performing loans. Ghosh had ambitious growth plans focused on the rural sector. Bandhan seemed to have built the right capabilities to be successful as an MFI. The case allows for a rich discussion about the new capabilities that Bandhan would require as it shifted from pure MFI to banking entity and how it should go about acquiring those capabilities. Was it preparing well to deal with the challenge of entering, surviving and growing in the banking industry while continuing to serve and grow in the MFI space? Could it develop a unique and innovative model to help it straddle both worlds? With this license, Bandhan had been offered an opportunity to re-create the entire banking edifice in India. Participants have the opportunity to analyse the key issues in the case and attempt to answer the question playing on everyone's mind - how would Bandhan deliver on the goals of financial inclusion?
Swot Analysis of "Bandhan (B): Sustainable Banking in India" written by Charles Dhanaraj, Geetika Shah includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bandhan Mfi facing as an external strategic factors. Some of the topics covered in Bandhan (B): Sustainable Banking in India case study are - Strategic Management Strategies, Change management, Emerging markets, Entrepreneurial finance and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Bandhan (B): Sustainable Banking in India casestudy better are - – challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, wage bills are increasing, increasing commodity prices, increasing energy prices, technology disruption,
increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Bandhan (B): Sustainable Banking in India
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bandhan (B): Sustainable Banking in India case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bandhan Mfi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bandhan Mfi 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 Bandhan (B): Sustainable Banking in India can be done for the following purposes –
1. Strategic planning using facts provided in Bandhan (B): Sustainable Banking in India case study
2. Improving business portfolio management of Bandhan Mfi
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bandhan Mfi
Strengths Bandhan (B): Sustainable Banking in India | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bandhan Mfi in Bandhan (B): Sustainable Banking in India Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Bandhan Mfi in the sector have low bargaining power. Bandhan (B): Sustainable Banking in India has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bandhan Mfi to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Bandhan (B): Sustainable Banking in India 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.
Diverse revenue streams
– Bandhan Mfi is present in almost all the verticals within the industry. This has provided firm in Bandhan (B): Sustainable Banking in India case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Bandhan Mfi 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.
Ability to lead change in Strategy & Execution field
– Bandhan Mfi 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 Bandhan Mfi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Bandhan Mfi 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 Bandhan (B): Sustainable Banking in India - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Bandhan Mfi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bandhan Mfi 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.
Training and development
– Bandhan Mfi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bandhan (B): Sustainable Banking in India Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Bandhan Mfi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bandhan Mfi 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.
Ability to recruit top talent
– Bandhan Mfi is one of the leading recruiters in the industry. Managers in the Bandhan (B): Sustainable Banking in India are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Bandhan Mfi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Bandhan Mfi 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 Bandhan (B): Sustainable Banking in India HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Bandhan (B): Sustainable Banking in India | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bandhan (B): Sustainable Banking in India are -
Capital Spending Reduction
– Even during the low interest decade, Bandhan Mfi 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.
Slow decision making process
– As mentioned earlier in the report, Bandhan Mfi 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. Bandhan Mfi 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bandhan (B): Sustainable Banking in India, it seems that the employees of Bandhan Mfi 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Bandhan (B): Sustainable Banking in India 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 Bandhan Mfi 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bandhan Mfi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bandhan (B): Sustainable Banking in India can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Bandhan (B): Sustainable Banking in India HBR case study mentions - Bandhan Mfi takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Bandhan Mfi, firm in the HBR case study Bandhan (B): Sustainable Banking in India needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Bandhan Mfi supply chain. Even after few cautionary changes mentioned in the HBR case study - Bandhan (B): Sustainable Banking in India, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bandhan Mfi vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Bandhan Mfi 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.
No frontier risks strategy
– After analyzing the HBR case study Bandhan (B): Sustainable Banking in India, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Bandhan Mfi is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Bandhan Mfi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bandhan Mfi to focus more on services rather than just following the product oriented approach.
Opportunities Bandhan (B): Sustainable Banking in India | 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 Bandhan (B): Sustainable Banking in India are -
Leveraging digital technologies
– Bandhan Mfi 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bandhan Mfi 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Bandhan Mfi can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Bandhan Mfi can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Manufacturing automation
– Bandhan Mfi can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bandhan Mfi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bandhan Mfi 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, Bandhan (B): Sustainable Banking in India, 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, Bandhan Mfi is facing challenges because of the dominance of functional experts in the organization. Bandhan (B): Sustainable Banking in India 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bandhan Mfi in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Bandhan Mfi can develop new processes and procedures in Strategy & Execution 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bandhan Mfi can use these opportunities to build new business models that can help the communities that Bandhan Mfi operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Bandhan Mfi 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.
Using analytics as competitive advantage
– Bandhan Mfi 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 Bandhan (B): Sustainable Banking in India - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bandhan Mfi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Bandhan Mfi 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.
Threats Bandhan (B): Sustainable Banking in India External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bandhan (B): Sustainable Banking in India are -
Technology acceleration in Forth Industrial Revolution
– Bandhan Mfi has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Bandhan Mfi needs to keep up with the evolution of technology in the Strategy & Execution 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.
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. Bandhan Mfi 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.
Shortening product life cycle
– it is one of the major threat that Bandhan Mfi is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Bandhan Mfi.
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.
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 Bandhan Mfi in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bandhan Mfi in the Strategy & Execution industry. The Strategy & Execution 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.
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.
Consumer confidence and its impact on Bandhan Mfi 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.
Increasing wage structure of Bandhan Mfi
– 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 Bandhan Mfi.
High dependence on third party suppliers
– Bandhan Mfi 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.
Environmental challenges
– Bandhan Mfi 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. Bandhan Mfi can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Bandhan Mfi 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 Strategy & Execution industry regulations.
Weighted SWOT Analysis of Bandhan (B): Sustainable Banking in India 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 Bandhan (B): Sustainable Banking in India 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 Bandhan (B): Sustainable Banking in India 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 Bandhan (B): Sustainable Banking in India 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 Bandhan (B): Sustainable Banking in India 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 Bandhan Mfi needs to make to build a sustainable competitive advantage.
