Case Study Description of Credit Guarantee Corporation: Accommodating an Expansion Strategy
In September 2011, the chief risk officer of Credit Guarantee Corporation Malaysia Berhad (CGC) was mulling over a pressing problem. CGC was looking to expand its business in Malaysia from just giving guarantees to small and medium enterprises to also providing direct loans (direct-lending products). The change required a major overhaul in business strategy and an increase in eligibility criteria. Previously, most criteria were checked manually by CGC for each of its clients-a slow and unreliable process. Given the recent developments, how could CGC revise its business rules in order to accommodate its expansion strategy? Tuhin Sengupta is affiliated with Indian Institute of Management Indore.
Swot Analysis of "Credit Guarantee Corporation: Accommodating an Expansion Strategy" written by Shrestha Pratik, Tuhin Sengupta includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cgc Malaysia facing as an external strategic factors. Some of the topics covered in Credit Guarantee Corporation: Accommodating an Expansion Strategy case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the Credit Guarantee Corporation: Accommodating an Expansion Strategy casestudy better are - – talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, central banks are concerned over increasing inflation, there is backlash against globalization, increasing household debt because of falling income levels, wage bills are increasing,
customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Credit Guarantee Corporation: Accommodating an Expansion Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Credit Guarantee Corporation: Accommodating an Expansion Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cgc Malaysia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cgc Malaysia 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Credit Guarantee Corporation: Accommodating an Expansion Strategy case study
2. Improving business portfolio management of Cgc Malaysia
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 Cgc Malaysia
Strengths Credit Guarantee Corporation: Accommodating an Expansion Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cgc Malaysia in Credit Guarantee Corporation: Accommodating an Expansion Strategy Harvard Business Review case study are -
High switching costs
– The high switching costs that Cgc Malaysia 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.
Analytics focus
– Cgc Malaysia 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 Shrestha Pratik, Tuhin Sengupta 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.
Highly skilled collaborators
– Cgc Malaysia 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Cgc Malaysia 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.
Learning organization
- Cgc Malaysia 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 Cgc Malaysia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Credit Guarantee Corporation: Accommodating an Expansion Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Cgc Malaysia digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cgc Malaysia 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.
Organizational Resilience of Cgc Malaysia
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cgc Malaysia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Global Business industry
– Credit Guarantee Corporation: Accommodating an Expansion Strategy firm has clearly differentiated products in the market place. This has enabled Cgc Malaysia to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Cgc Malaysia to invest into research and development (R&D) and innovation.
Innovation driven organization
– Cgc Malaysia is one of the most innovative firm in sector. Manager in Credit Guarantee Corporation: Accommodating an Expansion Strategy 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)
– Cgc Malaysia 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Cgc Malaysia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cgc Malaysia 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.
Superior customer experience
– The customer experience strategy of Cgc Malaysia in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Credit Guarantee Corporation: Accommodating an Expansion Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Credit Guarantee Corporation: Accommodating an Expansion Strategy are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Credit Guarantee Corporation: Accommodating an Expansion Strategy, is just above the industry average. Cgc Malaysia 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Credit Guarantee Corporation: Accommodating an Expansion Strategy, in the dynamic environment Cgc Malaysia has struggled to respond to the nimble upstart competition. Cgc Malaysia has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Cgc Malaysia 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 cash cycle compare to competitors
Cgc Malaysia 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cgc Malaysia is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 to strategic competitive environment developments
– As Credit Guarantee Corporation: Accommodating an Expansion Strategy HBR case study mentions - Cgc Malaysia 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, Cgc Malaysia 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.
Interest costs
– Compare to the competition, Cgc Malaysia 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.
Lack of clear differentiation of Cgc Malaysia products
– To increase the profitability and margins on the products, Cgc Malaysia needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Cgc Malaysia supply chain. Even after few cautionary changes mentioned in the HBR case study - Credit Guarantee Corporation: Accommodating an Expansion Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cgc Malaysia vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Cgc Malaysia has relatively successful track record of launching new products.
Opportunities Credit Guarantee Corporation: Accommodating an Expansion Strategy | 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy are -
Loyalty marketing
– Cgc Malaysia has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Cgc Malaysia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Credit Guarantee Corporation: Accommodating an Expansion Strategy 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.
Manufacturing automation
– Cgc Malaysia can use the latest technology developments to improve its manufacturing and designing process in Global Business 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, Cgc Malaysia 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, Cgc Malaysia is facing challenges because of the dominance of functional experts in the organization. Credit Guarantee Corporation: Accommodating an Expansion Strategy 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.
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. Cgc Malaysia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Cgc Malaysia to increase its market reach. Cgc Malaysia 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.
Using analytics as competitive advantage
– Cgc Malaysia 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cgc Malaysia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cgc Malaysia can use these opportunities to build new business models that can help the communities that Cgc Malaysia operates in. Secondly it can use opportunities from government spending in Global Business sector.
Learning at scale
– Online learning technologies has now opened space for Cgc Malaysia 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cgc Malaysia 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, Credit Guarantee Corporation: Accommodating an Expansion Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cgc Malaysia 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 Cgc Malaysia to hire the very best people irrespective of their geographical location.
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 Cgc Malaysia in the consumer business. Now Cgc Malaysia can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Credit Guarantee Corporation: Accommodating an Expansion Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Credit Guarantee Corporation: Accommodating an Expansion Strategy are -
High dependence on third party suppliers
– Cgc Malaysia 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cgc Malaysia 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy .
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. Cgc Malaysia will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Cgc Malaysia 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. Cgc Malaysia can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Shortening product life cycle
– it is one of the major threat that Cgc Malaysia is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Cgc Malaysia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Cgc Malaysia 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Credit Guarantee Corporation: Accommodating an Expansion Strategy, Cgc Malaysia 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 .
Consumer confidence and its impact on Cgc Malaysia 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.
Stagnating economy with rate increase
– Cgc Malaysia 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cgc Malaysia in the Global Business industry. The Global Business 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.
Technology acceleration in Forth Industrial Revolution
– Cgc Malaysia has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Cgc Malaysia 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.
Weighted SWOT Analysis of Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Credit Guarantee Corporation: Accommodating an Expansion Strategy 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 Cgc Malaysia needs to make to build a sustainable competitive advantage.
