Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya)
This case study investigates the phenomenal development of M-PESA in Kenya, the world's most successful mobile phone-based financial service, and the way it transformed its parent company, Safaricom from being an incumbent telecommunications operator to also becoming a digital platform working across different industries and sectors through an extensive business ecosystem. Safaricom, Kenya's incumbent telecom operator, developed M-PESA in partnership with Vodafone. The service was launched in March 2007 and has since been used by more than 23 million people in Kenya! It started off as a mere person-to-person remittance service and now provides a wide array of financial services for retail customers, businesses and government. Nearly a decade after its launch, M-PESA has drastically transformed the daily life of its users as well as Kenya's economic landscape, where it impacted the banking and telecom landscape, boosted the development of e-commerce and facilitated operations for thousands of small businesses, online and offline. Internationally, M-PESA has become a role model for mobile financial services and payment platforms as well as inclusive business practices. Learning objective: The case provides insights about the digital business transformation (DBT) of an incumbent telecom operator through the offering of mobile financial services. It helps to: Comprehend the why, what, and how of DBT; Assess the different dimensions of DBT; Appreciate the crucial role in DBT of leadership, lean management, talent development and organizational alignment; Understand the business opportunities enabled by leveraging breakthrough innovation, digital platforms, and big data.
Swot Analysis of "Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya)" written by Tawfik Jelassi, Stephanie Ludwig includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pesa Dbt facing as an external strategic factors. Some of the topics covered in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) case study are - Strategic Management Strategies, Data, Innovation, IT and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) casestudy better are - – central banks are concerned over increasing inflation, geopolitical disruptions, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing commodity prices, talent flight as more people leaving formal jobs,
digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pesa Dbt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pesa Dbt 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) can be done for the following purposes –
1. Strategic planning using facts provided in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) case study
2. Improving business portfolio management of Pesa Dbt
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 Pesa Dbt
Strengths Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pesa Dbt in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Pesa Dbt 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Pesa Dbt 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Pesa Dbt has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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.
Operational resilience
– The operational resilience strategy in the Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Pesa Dbt digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pesa Dbt 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.
Learning organization
- Pesa Dbt 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 Pesa Dbt is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Pesa Dbt in the sector have low bargaining power. Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pesa Dbt to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Pesa Dbt is present in almost all the verticals within the industry. This has provided firm in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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.
Analytics focus
– Pesa Dbt 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 Tawfik Jelassi, Stephanie Ludwig 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.
Organizational Resilience of Pesa Dbt
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pesa Dbt does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Pesa Dbt in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Pesa Dbt is one of the leading recruiters in the industry. Managers in the Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), is just above the industry average. Pesa Dbt needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Pesa Dbt 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.
No frontier risks strategy
– After analyzing the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), 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.
High cash cycle compare to competitors
Pesa Dbt 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 Pesa Dbt products
– To increase the profitability and margins on the products, Pesa Dbt needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Pesa Dbt 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 bargaining power of channel partners
– Because of the regulatory requirements, Tawfik Jelassi, Stephanie Ludwig suggests that, Pesa Dbt 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.
Slow decision making process
– As mentioned earlier in the report, Pesa Dbt 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. Pesa Dbt 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Pesa Dbt 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), it seems that the employees of Pesa Dbt 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), in the dynamic environment Pesa Dbt has struggled to respond to the nimble upstart competition. Pesa Dbt has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) | 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) are -
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. Pesa Dbt can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Pesa Dbt has opened avenues for new revenue streams for the organization in the industry. This can help Pesa Dbt to build a more holistic ecosystem as suggested in the Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) case study. Pesa Dbt can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Pesa Dbt 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pesa Dbt to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Pesa Dbt 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pesa Dbt 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, Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Pesa Dbt to increase its market reach. Pesa Dbt 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pesa Dbt 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.
Building a culture of innovation
– managers at Pesa Dbt 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 Strategy & Execution segment.
Developing new processes and practices
– Pesa Dbt 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, Pesa Dbt can use these opportunities to build new business models that can help the communities that Pesa Dbt operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Pesa Dbt 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pesa Dbt 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 Pesa Dbt to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pesa Dbt 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.
Threats Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) are -
Stagnating economy with rate increase
– Pesa Dbt 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pesa Dbt 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.
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. Pesa Dbt 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.
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 Pesa Dbt business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pesa Dbt can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Pesa Dbt has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Pesa Dbt 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.
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 Pesa Dbt.
Regulatory challenges
– Pesa Dbt 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.
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.
Increasing wage structure of Pesa Dbt
– 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 Pesa Dbt.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya), Pesa Dbt may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Pesa Dbt in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) 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 Pesa Dbt needs to make to build a sustainable competitive advantage.
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