Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities

The greatly improved economic fundamentals of the major emerging economies over the last decade have propelled several emerging banks into the ranks of the world's largest. Despite their importance in the global economy, the internationalization of emerging market banks remains an understudied phenomenon. This article examines factors that may influence the internationalization strategies of emerging market banks in the private banking sector, both when going abroad (take-off) and upon arrival in a host country (landing). The private banking sector is of significant interest given its importance in many leading financial centers around the world while undergoing major transformation due to the worldwide financial crisis, several recent scandals, and a fast-changing regulatory environment. We highlight the internationalization strategies of two banks from emerging countries, China and Brazil, and their experience in Switzerland's traditional private banking sector. These two cases highlight factors that may influence successful internationalization such as prior industry experience, existing client base, entry strategy, ownership type, and the liability of foreignness. Our findings offer valuable implications for managers from other emerging economies by providing a better understanding of how emerging market banks expand internationally.

Authors :: Joseph C. Marques, Anna Lupina-Wegener, Susan Schneider

Topics :: Global Business

Tags :: Emerging markets, Strategy, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities" written by Joseph C. Marques, Anna Lupina-Wegener, Susan Schneider includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Emerging Internationalization facing as an external strategic factors. Some of the topics covered in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities case study are - Strategic Management Strategies, Emerging markets, Strategy and Global Business.

Some of the macro environment factors that can be used to understand the Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, wage bills are increasing, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, geopolitical disruptions, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Emerging Internationalization, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Emerging Internationalization 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities can be done for the following purposes –
1. Strategic planning using facts provided in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities case study
2. Improving business portfolio management of Emerging Internationalization
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Emerging Internationalization

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Strengths Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Emerging Internationalization in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities Harvard Business Review case study are -

Diverse revenue streams

– Emerging Internationalization is present in almost all the verticals within the industry. This has provided firm in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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.

Cross disciplinary teams

– Horizontal connected teams at the Emerging Internationalization 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.

Sustainable margins compare to other players in Global Business industry

– Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities firm has clearly differentiated products in the market place. This has enabled Emerging Internationalization to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Emerging Internationalization to invest into research and development (R&D) and innovation.

Strong track record of project management

– Emerging Internationalization is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Highly skilled collaborators

– Emerging Internationalization 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Analytics focus

– Emerging Internationalization 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 Joseph C. Marques, Anna Lupina-Wegener, Susan Schneider 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.

High brand equity

– Emerging Internationalization has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Emerging Internationalization to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Effective Research and Development (R&D)

– Emerging Internationalization 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities - 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 Global Business field

– Emerging Internationalization 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 Emerging Internationalization in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Learning organization

- Emerging Internationalization 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 Emerging Internationalization is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Digital Transformation in Global Business segment

- digital transformation varies from industry to industry. For Emerging Internationalization digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Emerging Internationalization 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.

Operational resilience

– The operational resilience strategy in the Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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.

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Weaknesses Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities are -

High operating costs

– Compare to the competitors, firm in the HBR case study Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Emerging Internationalization 's lucrative customers.

Workers concerns about automation

– As automation is fast increasing in the segment, Emerging Internationalization 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Emerging Internationalization is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Slow decision making process

– As mentioned earlier in the report, Emerging Internationalization 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. Emerging Internationalization 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.

Increasing silos among functional specialists

– The organizational structure of Emerging Internationalization is dominated by functional specialists. It is not different from other players in the Global Business segment. Emerging Internationalization needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Emerging Internationalization to focus more on services rather than just following the product oriented approach.

Skills based hiring

– The stress on hiring functional specialists at Emerging Internationalization 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 Emerging Internationalization products

– To increase the profitability and margins on the products, Emerging Internationalization needs to provide more differentiated products than what it is currently offering in the marketplace.

Products dominated business model

– Even though Emerging Internationalization 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 - Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Emerging Internationalization, firm in the HBR case study Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Slow to strategic competitive environment developments

– As Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities HBR case study mentions - Emerging Internationalization takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.

Capital Spending Reduction

– Even during the low interest decade, Emerging Internationalization has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

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Opportunities Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities | 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities are -

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Emerging Internationalization can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Emerging Internationalization can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Buying journey improvements

– Emerging Internationalization can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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.

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 Emerging Internationalization 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.

Creating value in data economy

– The success of analytics program of Emerging Internationalization has opened avenues for new revenue streams for the organization in the industry. This can help Emerging Internationalization to build a more holistic ecosystem as suggested in the Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities case study. Emerging Internationalization can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Emerging Internationalization can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Emerging Internationalization 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, Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Better consumer reach

– The expansion of the 5G network will help Emerging Internationalization to increase its market reach. Emerging Internationalization 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.

Leveraging digital technologies

– Emerging Internationalization 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 Emerging Internationalization in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business 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 Emerging Internationalization in the consumer business. Now Emerging Internationalization can target international markets with far fewer capital restrictions requirements than the existing system.

Developing new processes and practices

– Emerging Internationalization can develop new processes and procedures in Global Business 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.

Learning at scale

– Online learning technologies has now opened space for Emerging Internationalization 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Emerging Internationalization can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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Threats Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities are -

Technology acceleration in Forth Industrial Revolution

– Emerging Internationalization has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Emerging Internationalization needs to keep up with the evolution of technology in the Global Business 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.

Regulatory challenges

– Emerging Internationalization 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 Global Business industry regulations.

Stagnating economy with rate increase

– Emerging Internationalization 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.

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 Emerging Internationalization in the Global Business sector and impact the bottomline of the organization.

Increasing wage structure of Emerging Internationalization

– 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 Emerging Internationalization.

Shortening product life cycle

– it is one of the major threat that Emerging Internationalization is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities, Emerging Internationalization may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Emerging Internationalization 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities .

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 Emerging Internationalization business can come under increasing regulations regarding data privacy, data security, etc.

Easy access to finance

– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Emerging Internationalization can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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.

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. Emerging Internationalization needs to understand the core reasons impacting the Global Business 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 Emerging Internationalization.

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Weighted SWOT Analysis of Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Internationalization Strategies of Emerging Market Banks: Challenges and Opportunities 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 Emerging Internationalization needs to make to build a sustainable competitive advantage.

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