Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market
According to a World Bank report written in 2001, "in a modern, globally integrated Mexican economy, it is hard to argue for the continued existence of an institution such as INFONAVIT." The report went on to argue that the first-best option was "closing INFONAVIT." In the same year Victor Borras and a new team of managers took control of INFONAVIT under the new PAN government of Vicente Fox. In 2005 the fund issued 376,444 mortgage loans, one and a half times the number issued by INFONAVIT in 2000. During this same period of expansion INFONAVIT had: reduced its defaulted loan rate from 21.7 percent in 2000 to 6.6 percent in 2005; increased its productivity from 51 loans granted per employee to 98 per employee through outsourcing and the modernization and streamlining of operations; launched a new vivienda economica (affordable housing) program to target the majority of its members who earned less than four times the minimum wage (TMW); helped jump-start a nascent housing development industry; increased the real return to the pensioners' funds from 2 percent to 3.5 percent per year; and issued approximately $4.5 billion in mortgage-backed bonds. The case can be used to teach about government innovation, privatization, strategic management, and the public provision of financial services. It would also be appropriate for a course in international development or international housing. It raises questions about the appropriate role of government in the provision of financial services, as well as the role outsourcing and privatization can play in promoting the efficiency and effectiveness of public services, especially when the government is a major purchaser in a market of relatively small suppliers. HKS Case Number 1878.0`
Authors :: Paulina Campos, Marco Lopez, Guy Stuart
Swot Analysis of "Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market" written by Paulina Campos, Marco Lopez, Guy Stuart includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Infonavit Percent facing as an external strategic factors. Some of the topics covered in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market case study are - Strategic Management Strategies, Economics, Financial management, Innovation, Social enterprise, Strategic planning and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market casestudy better are - – challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , wage bills are increasing, geopolitical disruptions,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Infonavit Percent, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Infonavit Percent 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market can be done for the following purposes –
1. Strategic planning using facts provided in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market case study
2. Improving business portfolio management of Infonavit Percent
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Infonavit Percent
Strengths Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Infonavit Percent in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Infonavit Percent 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.
Operational resilience
– The operational resilience strategy in the Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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.
Learning organization
- Infonavit Percent 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 Infonavit Percent is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market firm has clearly differentiated products in the market place. This has enabled Infonavit Percent to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Infonavit Percent to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Infonavit Percent is one of the leading recruiters in the industry. Managers in the Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Infonavit Percent is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Infonavit Percent 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.
Superior customer experience
– The customer experience strategy of Infonavit Percent in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Infonavit Percent
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Infonavit Percent does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Infonavit Percent is one of the most innovative firm in sector. Manager in Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Infonavit Percent has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Infonavit Percent to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Infonavit Percent digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Infonavit Percent 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.
Weaknesses Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market are -
No frontier risks strategy
– After analyzing the HBR case study Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Infonavit Percent has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Infonavit Percent has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Infonavit Percent 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 - Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Infonavit Percent, firm in the HBR case study Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Infonavit Percent 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Paulina Campos, Marco Lopez, Guy Stuart suggests that, Infonavit Percent 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market, in the dynamic environment Infonavit Percent has struggled to respond to the nimble upstart competition. Infonavit Percent has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Infonavit Percent is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Infonavit Percent needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Infonavit Percent to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market HBR case study mentions - Infonavit Percent 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Infonavit Percent 's lucrative customers.
Opportunities Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market | 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Infonavit Percent 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 Infonavit Percent to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Infonavit Percent has opened avenues for new revenue streams for the organization in the industry. This can help Infonavit Percent to build a more holistic ecosystem as suggested in the Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market case study. Infonavit Percent can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Infonavit Percent 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Infonavit Percent can use these opportunities to build new business models that can help the communities that Infonavit Percent operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Infonavit Percent in the consumer business. Now Infonavit Percent 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. Infonavit Percent can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Infonavit Percent 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. Infonavit Percent 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.
Better consumer reach
– The expansion of the 5G network will help Infonavit Percent to increase its market reach. Infonavit Percent 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Infonavit Percent 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Infonavit Percent can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Infonavit Percent in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Infonavit Percent 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.
Building a culture of innovation
– managers at Infonavit Percent 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 Finance & Accounting segment.
Threats Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market are -
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.
High dependence on third party suppliers
– Infonavit Percent 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.
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. Infonavit Percent needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Environmental challenges
– Infonavit Percent 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. Infonavit Percent can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Infonavit Percent 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.
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 Infonavit Percent in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Infonavit Percent 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Infonavit Percent 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market .
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 Infonavit Percent.
Consumer confidence and its impact on Infonavit Percent demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Infonavit Percent is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Infonavit Percent
– 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 Infonavit Percent.
Weighted SWOT Analysis of Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Scale without Growth: INFONAVIT's Expansion in the Mexican Mortgage Market 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 Infonavit Percent needs to make to build a sustainable competitive advantage.