Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, there is backlash against globalization, there is increasing trade war between United States & China, increasing household debt because of falling income levels,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
Innovation driven organization
– Pesa Dbt is one of the most innovative firm in sector. Manager in Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) firm has clearly differentiated products in the market place. This has enabled Pesa Dbt to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pesa Dbt to invest into research and development (R&D) and innovation.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Pesa Dbt 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.
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.
Ability to lead change in Strategy & Execution field
– Pesa Dbt 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 Pesa Dbt in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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 -
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.
Low market penetration in new markets
– Outside its home market of Pesa Dbt, firm in the HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pesa Dbt 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 Pesa Dbt 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.
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.
Products dominated business model
– Even though Pesa Dbt has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Pesa Dbt is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pesa Dbt needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pesa Dbt to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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.
Leveraging digital technologies
– Pesa Dbt 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.
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.
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 Pesa Dbt in the consumer business. Now Pesa Dbt can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Pesa Dbt 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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pesa Dbt can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Pesa Dbt 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.
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.
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 -
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. Pesa Dbt needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Pesa Dbt 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.
Shortening product life cycle
– it is one of the major threat that Pesa Dbt is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
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.
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.
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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pesa Dbt with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pesa Dbt can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Digital Business Transformation in Silicon Savannah: How M-PESA Changed Safaricom (Kenya) .
High dependence on third party suppliers
– Pesa Dbt 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.
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.
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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