Case Study Description of CARD Group: Mutually Reinforcing Institutions
CARD (Center for Agricultural and Rural Development) is a Philippines-based microfinance organization that began as an NGO and has since expanded into eight related entities providing services to the poor. Under Founding Director Dr. Aristotle Alip's leadership, CARD has become one of the top microfinance institutions in the world. More recently, larger commercial and financial institutions are seeking a slice of the microfinance market. The main dilemma Dr. Alip faces is: Should he partner with commercial institutions to reap benefits from their larger sources of capital and technology expertise? Would that mean compromising his original mission of elevating people from the base of the pyramid?
Authors :: Cynthia A. Montgomery, Michael Shih-ta Chen, Dawn Lau
Swot Analysis of "CARD Group: Mutually Reinforcing Institutions" written by Cynthia A. Montgomery, Michael Shih-ta Chen, Dawn Lau includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Institutions Microfinance facing as an external strategic factors. Some of the topics covered in CARD Group: Mutually Reinforcing Institutions case study are - Strategic Management Strategies, Entrepreneurial finance and Strategy & Execution.
Some of the macro environment factors that can be used to understand the CARD Group: Mutually Reinforcing Institutions casestudy better are - – increasing household debt because of falling income levels, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, cloud computing is disrupting traditional business models, wage bills are increasing, increasing commodity prices,
there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of CARD Group: Mutually Reinforcing Institutions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CARD Group: Mutually Reinforcing Institutions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Institutions Microfinance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Institutions Microfinance 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 CARD Group: Mutually Reinforcing Institutions can be done for the following purposes –
1. Strategic planning using facts provided in CARD Group: Mutually Reinforcing Institutions case study
2. Improving business portfolio management of Institutions Microfinance
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 Institutions Microfinance
Strengths CARD Group: Mutually Reinforcing Institutions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Institutions Microfinance in CARD Group: Mutually Reinforcing Institutions Harvard Business Review case study are -
Ability to recruit top talent
– Institutions Microfinance is one of the leading recruiters in the industry. Managers in the CARD Group: Mutually Reinforcing Institutions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Institutions Microfinance has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Institutions Microfinance 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.
High brand equity
– Institutions Microfinance has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Institutions Microfinance to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Institutions Microfinance 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.
Organizational Resilience of Institutions Microfinance
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Institutions Microfinance does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Institutions Microfinance is one of the most innovative firm in sector. Manager in CARD Group: Mutually Reinforcing Institutions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Institutions Microfinance 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 CARD Group: Mutually Reinforcing Institutions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the CARD Group: Mutually Reinforcing Institutions 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 Institutions Microfinance digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Institutions Microfinance 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.
Low bargaining power of suppliers
– Suppliers of Institutions Microfinance in the sector have low bargaining power. CARD Group: Mutually Reinforcing Institutions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Institutions Microfinance to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Institutions Microfinance in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Institutions Microfinance 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 CARD Group: Mutually Reinforcing Institutions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses CARD Group: Mutually Reinforcing Institutions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CARD Group: Mutually Reinforcing Institutions are -
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 Institutions Microfinance supply chain. Even after few cautionary changes mentioned in the HBR case study - CARD Group: Mutually Reinforcing Institutions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Institutions Microfinance vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CARD Group: Mutually Reinforcing Institutions, is just above the industry average. Institutions Microfinance 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.
Products dominated business model
– Even though Institutions Microfinance 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 - CARD Group: Mutually Reinforcing Institutions should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Institutions Microfinance, firm in the HBR case study CARD Group: Mutually Reinforcing Institutions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Institutions Microfinance 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.
Increasing silos among functional specialists
– The organizational structure of Institutions Microfinance is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Institutions Microfinance needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Institutions Microfinance to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Institutions Microfinance 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.
Skills based hiring
– The stress on hiring functional specialists at Institutions Microfinance 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study CARD Group: Mutually Reinforcing Institutions, in the dynamic environment Institutions Microfinance has struggled to respond to the nimble upstart competition. Institutions Microfinance has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Institutions Microfinance products
– To increase the profitability and margins on the products, Institutions Microfinance needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Institutions Microfinance 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.
Opportunities CARD Group: Mutually Reinforcing Institutions | 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 CARD Group: Mutually Reinforcing Institutions are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Institutions Microfinance 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 Institutions Microfinance 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.
Buying journey improvements
– Institutions Microfinance can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CARD Group: Mutually Reinforcing Institutions 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.
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 Institutions Microfinance in the consumer business. Now Institutions Microfinance can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Institutions Microfinance 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, CARD Group: Mutually Reinforcing Institutions, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Institutions Microfinance 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 CARD Group: Mutually Reinforcing Institutions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Institutions Microfinance to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Institutions Microfinance 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 Institutions Microfinance to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Institutions Microfinance 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Institutions Microfinance is facing challenges because of the dominance of functional experts in the organization. CARD Group: Mutually Reinforcing Institutions 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.
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. Institutions Microfinance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Institutions Microfinance 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.
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 Institutions Microfinance 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.
Manufacturing automation
– Institutions Microfinance 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.
Threats CARD Group: Mutually Reinforcing Institutions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CARD Group: Mutually Reinforcing Institutions are -
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. Institutions Microfinance can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Institutions Microfinance 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.
Regulatory challenges
– Institutions Microfinance 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Institutions Microfinance 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
– Institutions Microfinance has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Institutions Microfinance 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.
Increasing wage structure of Institutions Microfinance
– 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 Institutions Microfinance.
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 Institutions Microfinance 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 Institutions Microfinance 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.
Stagnating economy with rate increase
– Institutions Microfinance 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.
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 Institutions Microfinance business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Institutions Microfinance is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Institutions Microfinance.
Weighted SWOT Analysis of CARD Group: Mutually Reinforcing Institutions 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 CARD Group: Mutually Reinforcing Institutions 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 CARD Group: Mutually Reinforcing Institutions 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 CARD Group: Mutually Reinforcing Institutions 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 CARD Group: Mutually Reinforcing Institutions 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 Institutions Microfinance needs to make to build a sustainable competitive advantage.