M-Pesa and Mobile Money in Kenya: Pricing for Success SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of M-Pesa and Mobile Money in Kenya: Pricing for Success
The Kenyan government's announcement of a new 10 percent tax in March 2013 threatened the future prospects of M-Pesa, Safaricom's mobile money transfer service, which had revolutionized the way money moved in Kenya. The new tax would be levied on all cash transfers but was largely targeted at M-Pesa, which controlled around 80 percent of the cash transfer market. In response to the new tax, Safaricom, the mobile communications market leader, announced a 10 percent price increase. The case presents the structure Safaricom established in order to develop a mobile money transfer service in Kenya. As a concept, M-Pesa was unprecedented in Kenya: prospective customers had to get comfortable with the idea that a mobile communications company could provide a payment system, that transactions could be initiated through a mobile phone, and that nonbank outlets could provide cash-in/cash-out services. Even when the concept was accepted, however, customers needed a convenient network of agents to handle transactions, and stores needed to see demand from customers in order to be motivated to become agent outlets. Thus, in order to grow, M-Pesa needed to aggressively pursue and acquire both customers and agents in this two-sided market.
Swot Analysis of "M-Pesa and Mobile Money in Kenya: Pricing for Success" written by Sarit Markovich, Charlotte Snyder includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pesa Kenya facing as an external strategic factors. Some of the topics covered in M-Pesa and Mobile Money in Kenya: Pricing for Success case study are - Strategic Management Strategies, Growth strategy, Innovation, Marketing, Pricing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the M-Pesa and Mobile Money in Kenya: Pricing for Success casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of M-Pesa and Mobile Money in Kenya: Pricing for Success
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in M-Pesa and Mobile Money in Kenya: Pricing for Success case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pesa Kenya, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pesa Kenya 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 M-Pesa and Mobile Money in Kenya: Pricing for Success can be done for the following purposes –
1. Strategic planning using facts provided in M-Pesa and Mobile Money in Kenya: Pricing for Success case study
2. Improving business portfolio management of Pesa Kenya
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 Kenya
Strengths M-Pesa and Mobile Money in Kenya: Pricing for Success | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pesa Kenya in M-Pesa and Mobile Money in Kenya: Pricing for Success Harvard Business Review case study are -
Successful track record of launching new products
– Pesa Kenya has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pesa Kenya 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
– Pesa Kenya has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in M-Pesa and Mobile Money in Kenya: Pricing for Success 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.
Sustainable margins compare to other players in Strategy & Execution industry
– M-Pesa and Mobile Money in Kenya: Pricing for Success firm has clearly differentiated products in the market place. This has enabled Pesa Kenya to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pesa Kenya to invest into research and development (R&D) and innovation.
Analytics focus
– Pesa Kenya 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 Sarit Markovich, Charlotte Snyder 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.
Low bargaining power of suppliers
– Suppliers of Pesa Kenya in the sector have low bargaining power. M-Pesa and Mobile Money in Kenya: Pricing for Success has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pesa Kenya to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the M-Pesa and Mobile Money in Kenya: Pricing for Success 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.
Strong track record of project management
– Pesa Kenya is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Pesa Kenya 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 Kenya is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in M-Pesa and Mobile Money in Kenya: Pricing for Success Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Pesa Kenya digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pesa Kenya 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.
Highly skilled collaborators
– Pesa Kenya 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 M-Pesa and Mobile Money in Kenya: Pricing for Success HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Pesa Kenya
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pesa Kenya does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Pesa Kenya is present in almost all the verticals within the industry. This has provided firm in M-Pesa and Mobile Money in Kenya: Pricing for Success 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.
Weaknesses M-Pesa and Mobile Money in Kenya: Pricing for Success | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of M-Pesa and Mobile Money in Kenya: Pricing for Success are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the M-Pesa and Mobile Money in Kenya: Pricing for Success HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Pesa Kenya has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pesa Kenya is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study M-Pesa and Mobile Money in Kenya: Pricing for Success can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study M-Pesa and Mobile Money in Kenya: Pricing for Success 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 M-Pesa and Mobile Money in Kenya: Pricing for Success can leverage the sales team experience to cultivate customer relationships as Pesa Kenya is planning to shift buying processes online.
Need for greater diversity
– Pesa Kenya 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Sarit Markovich, Charlotte Snyder suggests that, Pesa Kenya 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study M-Pesa and Mobile Money in Kenya: Pricing for Success, in the dynamic environment Pesa Kenya has struggled to respond to the nimble upstart competition. Pesa Kenya has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Pesa Kenya 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 - M-Pesa and Mobile Money in Kenya: Pricing for Success should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study M-Pesa and Mobile Money in Kenya: Pricing for Success, it seems that the employees of Pesa Kenya 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.
Skills based hiring
– The stress on hiring functional specialists at Pesa Kenya has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Pesa Kenya, firm in the HBR case study M-Pesa and Mobile Money in Kenya: Pricing for Success needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Pesa Kenya products
– To increase the profitability and margins on the products, Pesa Kenya needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities M-Pesa and Mobile Money in Kenya: Pricing for Success | 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 M-Pesa and Mobile Money in Kenya: Pricing for Success are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pesa Kenya 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, M-Pesa and Mobile Money in Kenya: Pricing for Success, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Pesa Kenya 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.
Manufacturing automation
– Pesa Kenya 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.
Buying journey improvements
– Pesa Kenya can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. M-Pesa and Mobile Money in Kenya: Pricing for Success suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Kenya can use these opportunities to build new business models that can help the communities that Pesa Kenya operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pesa Kenya is facing challenges because of the dominance of functional experts in the organization. M-Pesa and Mobile Money in Kenya: Pricing for Success 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pesa Kenya can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Pesa Kenya 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.
Leveraging digital technologies
– Pesa Kenya 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pesa Kenya 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.
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 Kenya in the consumer business. Now Pesa Kenya can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Pesa Kenya to increase its market reach. Pesa Kenya 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.
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 Kenya 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.
Threats M-Pesa and Mobile Money in Kenya: Pricing for Success External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study M-Pesa and Mobile Money in Kenya: Pricing for Success are -
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 Kenya in the Strategy & Execution sector and impact the bottomline of the organization.
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 Kenya can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Kenya needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Pesa Kenya
– 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 Kenya.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pesa Kenya with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Kenya 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.
Environmental challenges
– Pesa Kenya 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. Pesa Kenya can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Kenya business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pesa Kenya 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 M-Pesa and Mobile Money in Kenya: Pricing for Success .
Consumer confidence and its impact on Pesa Kenya 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study M-Pesa and Mobile Money in Kenya: Pricing for Success, Pesa Kenya 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 .
Regulatory challenges
– Pesa Kenya 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.
Weighted SWOT Analysis of M-Pesa and Mobile Money in Kenya: Pricing for Success 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 M-Pesa and Mobile Money in Kenya: Pricing for Success 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 M-Pesa and Mobile Money in Kenya: Pricing for Success 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 M-Pesa and Mobile Money in Kenya: Pricing for Success 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 M-Pesa and Mobile Money in Kenya: Pricing for Success 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 Kenya needs to make to build a sustainable competitive advantage.