Bandhan (A): Advancing Financial Inclusion in India SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bandhan (A): Advancing Financial Inclusion in India
The case is set at a time when Bandhan, the largest microfinance institution (MFI) in India and the largest non-deposit taking MFI in the world, was about to embark on an organizational transformation that would convert it into a mainstream bank. In July 2013, supported by a Geneva-based investor, Bandhan had applied for a banking license to expand its operations by leveraging its network. And in May 2014 the Reserve Bank of India (RBI) had granted the license to Bandhan, making it the first MFI in the country to win a bank license, and also the youngest entity to be allowed to enter the banking space in India. Established in 2001 by Chandra Shekhar Ghosh to address the dual objective of poverty alleviation and empowerment of women, Bandhan had grown by 2013 to 2,016 branches across 22 states and union territories within India. With over 5 million borrowers and total outstanding loans of INR 57 billion (~US$1 billion), it had zero non-performing loans. Ghosh had ambitious growth plans focused on the rural sector. Bandhan seemed to have built the right capabilities to be successful as an MFI. The case allows for a rich discussion about the new capabilities that Bandhan would require as it shifted from pure MFI to banking entity and how it should go about acquiring those capabilities. Was it preparing well to deal with the challenge of entering, surviving and growing in the banking industry while continuing to serve and grow in the MFI space? Could it develop a unique and innovative model to help it straddle both worlds? With this license, Bandhan had been offered an opportunity to re-create the entire banking edifice in India. Participants have the opportunity to analyse the key issues in the case and attempt to answer the question playing on everyone's mind - how would Bandhan deliver on the goals of financial inclusion?
Swot Analysis of "Bandhan (A): Advancing Financial Inclusion in India" written by Charles Dhanaraj, Geetika Shah includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bandhan Mfi facing as an external strategic factors. Some of the topics covered in Bandhan (A): Advancing Financial Inclusion in India case study are - Strategic Management Strategies, Change management, Emerging markets, Entrepreneurial finance and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Bandhan (A): Advancing Financial Inclusion in India casestudy better are - – increasing household debt because of falling income levels, technology disruption, challanges to central banks by blockchain based private currencies, wage bills are increasing, geopolitical disruptions, increasing energy prices, central banks are concerned over increasing inflation,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Bandhan (A): Advancing Financial Inclusion in India
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bandhan (A): Advancing Financial Inclusion in India case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bandhan Mfi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bandhan Mfi operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Bandhan (A): Advancing Financial Inclusion in India can be done for the following purposes –
1. Strategic planning using facts provided in Bandhan (A): Advancing Financial Inclusion in India case study
2. Improving business portfolio management of Bandhan Mfi
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bandhan Mfi
Strengths Bandhan (A): Advancing Financial Inclusion in India | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bandhan Mfi in Bandhan (A): Advancing Financial Inclusion in India Harvard Business Review case study are -
Organizational Resilience of Bandhan Mfi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bandhan Mfi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Bandhan Mfi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bandhan (A): Advancing Financial Inclusion in India Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Bandhan Mfi 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 Charles Dhanaraj, Geetika Shah 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.
Learning organization
- Bandhan Mfi 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 Bandhan Mfi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bandhan (A): Advancing Financial Inclusion in India Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Bandhan Mfi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bandhan Mfi has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Bandhan Mfi has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Bandhan (A): Advancing Financial Inclusion in India Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Bandhan Mfi in the sector have low bargaining power. Bandhan (A): Advancing Financial Inclusion in India has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bandhan Mfi to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Bandhan Mfi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Bandhan Mfi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Bandhan Mfi has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Bandhan (A): Advancing Financial Inclusion in India HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Bandhan Mfi is present in almost all the verticals within the industry. This has provided firm in Bandhan (A): Advancing Financial Inclusion in India case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Bandhan (A): Advancing Financial Inclusion in India | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bandhan (A): Advancing Financial Inclusion in India are -
Increasing silos among functional specialists
– The organizational structure of Bandhan Mfi is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Bandhan Mfi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bandhan Mfi to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Bandhan Mfi 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.
Lack of clear differentiation of Bandhan Mfi products
– To increase the profitability and margins on the products, Bandhan Mfi needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bandhan Mfi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bandhan (A): Advancing Financial Inclusion in India can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bandhan (A): Advancing Financial Inclusion in India, is just above the industry average. Bandhan Mfi 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Bandhan Mfi supply chain. Even after few cautionary changes mentioned in the HBR case study - Bandhan (A): Advancing Financial Inclusion in India, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bandhan Mfi vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Bandhan (A): Advancing Financial Inclusion in India, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Need for greater diversity
– Bandhan Mfi 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 operating costs
– Compare to the competitors, firm in the HBR case study Bandhan (A): Advancing Financial Inclusion in India has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Bandhan Mfi 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Charles Dhanaraj, Geetika Shah suggests that, Bandhan Mfi 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.
Aligning sales with marketing
– It come across in the case study Bandhan (A): Advancing Financial Inclusion in India 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 Bandhan (A): Advancing Financial Inclusion in India can leverage the sales team experience to cultivate customer relationships as Bandhan Mfi is planning to shift buying processes online.
Opportunities Bandhan (A): Advancing Financial Inclusion in India | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Bandhan (A): Advancing Financial Inclusion in India are -
Creating value in data economy
– The success of analytics program of Bandhan Mfi has opened avenues for new revenue streams for the organization in the industry. This can help Bandhan Mfi to build a more holistic ecosystem as suggested in the Bandhan (A): Advancing Financial Inclusion in India case study. Bandhan Mfi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Bandhan Mfi 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.
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 Bandhan Mfi in the consumer business. Now Bandhan Mfi can target international markets with far fewer capital restrictions requirements than the existing system.
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. Bandhan Mfi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Bandhan Mfi to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Bandhan Mfi can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bandhan Mfi can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Bandhan Mfi can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Bandhan Mfi can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bandhan Mfi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bandhan Mfi 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 Bandhan Mfi to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Bandhan Mfi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bandhan (A): Advancing Financial Inclusion in India 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bandhan Mfi is facing challenges because of the dominance of functional experts in the organization. Bandhan (A): Advancing Financial Inclusion in India case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Bandhan (A): Advancing Financial Inclusion in India External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bandhan (A): Advancing Financial Inclusion in India are -
Environmental challenges
– Bandhan Mfi needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Bandhan Mfi can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Bandhan Mfi high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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. Bandhan Mfi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Bandhan Mfi
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Bandhan Mfi.
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.
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.
Stagnating economy with rate increase
– Bandhan Mfi 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bandhan Mfi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Bandhan Mfi needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Bandhan Mfi.
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 Bandhan Mfi business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bandhan Mfi in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Bandhan Mfi in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Bandhan (A): Advancing Financial Inclusion in India Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Bandhan (A): Advancing Financial Inclusion in India needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Bandhan (A): Advancing Financial Inclusion in India is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Bandhan (A): Advancing Financial Inclusion in India is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Bandhan (A): Advancing Financial Inclusion in India is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Bandhan Mfi needs to make to build a sustainable competitive advantage.
