ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa
In 2010, ACTIS embarked on an ambitious project to build a pan-Middle East and Africa (MEA) payments platform. It had purchased Mediterranean Smart Cards Company (MSCC), a bankcard issuer with operations across Africa, and had identified a follow-on target, Visa Jordan Card Services (VJCS) as part of its buy-and-build strategy, and another potential acquisition in South Africa. These could enable the ACTIS platform to capture the entire value chain in the payments business in the MEA region. However, not long after the purchase of MSCC, political turmoil engulfed the Arab world, prompting the ACTIS investment committee in London to question the viability of creating a payments platform in MEA.
Swot Analysis of "ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa" written by Claudia Zeisberger, Jean Wee includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Actis Mea facing as an external strategic factors. Some of the topics covered in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa case study are - Strategic Management Strategies, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa casestudy better are - – geopolitical disruptions, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing commodity prices, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Actis Mea, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Actis Mea 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa can be done for the following purposes –
1. Strategic planning using facts provided in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa case study
2. Improving business portfolio management of Actis Mea
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 Actis Mea
Strengths ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Actis Mea in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Actis Mea in the sector have low bargaining power. ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Actis Mea to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Actis Mea 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 Actis Mea is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa firm has clearly differentiated products in the market place. This has enabled Actis Mea to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Actis Mea to invest into research and development (R&D) and innovation.
Innovation driven organization
– Actis Mea is one of the most innovative firm in sector. Manager in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Actis Mea has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Actis Mea 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Actis Mea digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Actis Mea 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.
Effective Research and Development (R&D)
– Actis Mea 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Actis Mea
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Actis Mea does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Actis Mea 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Actis Mea 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 Actis Mea in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Actis Mea is present in almost all the verticals within the industry. This has provided firm in ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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.
Superior customer experience
– The customer experience strategy of Actis Mea in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 Actis Mea has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Actis Mea 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 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 Actis Mea supply chain. Even after few cautionary changes mentioned in the HBR case study - ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Actis Mea vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Actis Mea products
– To increase the profitability and margins on the products, Actis Mea needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa, is just above the industry average. Actis Mea 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Actis Mea is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 Actis Mea 's lucrative customers.
Interest costs
– Compare to the competition, Actis Mea 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.
High cash cycle compare to competitors
Actis Mea 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 decision making process
– As mentioned earlier in the report, Actis Mea 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. Actis Mea 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa, in the dynamic environment Actis Mea has struggled to respond to the nimble upstart competition. Actis Mea has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa | 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa are -
Buying journey improvements
– Actis Mea can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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
– Actis Mea 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.
Leveraging digital technologies
– Actis Mea 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 Actis Mea in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Actis Mea to increase its market reach. Actis Mea 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Actis Mea can use these opportunities to build new business models that can help the communities that Actis Mea operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Actis Mea 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Actis Mea 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 Actis Mea to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Actis Mea 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Actis Mea 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, ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Actis Mea has opened avenues for new revenue streams for the organization in the industry. This can help Actis Mea to build a more holistic ecosystem as suggested in the ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa case study. Actis Mea 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 Actis Mea 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Actis Mea 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. Actis Mea 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.
Threats ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa are -
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. Actis Mea 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.
Consumer confidence and its impact on Actis Mea 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.
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 Actis Mea.
Environmental challenges
– Actis Mea 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. Actis Mea can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Actis Mea 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.
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 Actis Mea business can come under increasing regulations regarding data privacy, data security, etc.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Actis Mea 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.
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. Actis Mea can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Actis Mea with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa, Actis Mea may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Actis Mea in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Actis Mea 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.
Weighted SWOT Analysis of ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa 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 Actis Mea needs to make to build a sustainable competitive advantage.
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You can download Excel Template of Case Study Solution & Analysis of ACTIS' Pan-Regional Payments Platform: Private Equity Buy-and-build Strategy in the Middle East and Africa