How Does Digital Transformation Happen? The Mastercard Case SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of How Does Digital Transformation Happen? The Mastercard Case
The case discusses different steps which Mastercard has followed in its digital transformation journey. They involve opportunity framing, creating innovation pathways, finding digital transformation opportunities, and innovation with partners within adaptive ecosystems. With the objective to stop competing with other payment processing firms (like Visa or Amex) and start competing with cash, Mastercard has moved from an undifferentiated processor of payments to a builder of unique technological platforms.
Authors :: Antoine Duvauchelle, Nathan Furr, Andrew Shipilov
Swot Analysis of "How Does Digital Transformation Happen? The Mastercard Case" written by Antoine Duvauchelle, Nathan Furr, Andrew Shipilov includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mastercard Transformation facing as an external strategic factors. Some of the topics covered in How Does Digital Transformation Happen? The Mastercard Case case study are - Strategic Management Strategies, Innovation, International business, IT, Joint ventures and Strategy & Execution.
Some of the macro environment factors that can be used to understand the How Does Digital Transformation Happen? The Mastercard Case casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, supply chains are disrupted by pandemic , increasing transportation and logistics costs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing energy prices, there is backlash against globalization, etc
Introduction to SWOT Analysis of How Does Digital Transformation Happen? The Mastercard Case
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in How Does Digital Transformation Happen? The Mastercard Case case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mastercard Transformation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mastercard Transformation 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 How Does Digital Transformation Happen? The Mastercard Case can be done for the following purposes –
1. Strategic planning using facts provided in How Does Digital Transformation Happen? The Mastercard Case case study
2. Improving business portfolio management of Mastercard Transformation
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 Mastercard Transformation
Strengths How Does Digital Transformation Happen? The Mastercard Case | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mastercard Transformation in How Does Digital Transformation Happen? The Mastercard Case Harvard Business Review case study are -
Successful track record of launching new products
– Mastercard Transformation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mastercard Transformation 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 Mastercard Transformation in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Mastercard Transformation 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 Antoine Duvauchelle, Nathan Furr, Andrew Shipilov 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.
Ability to recruit top talent
– Mastercard Transformation is one of the leading recruiters in the industry. Managers in the How Does Digital Transformation Happen? The Mastercard Case are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Mastercard Transformation in the sector have low bargaining power. How Does Digital Transformation Happen? The Mastercard Case has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mastercard Transformation to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– How Does Digital Transformation Happen? The Mastercard Case firm has clearly differentiated products in the market place. This has enabled Mastercard Transformation to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Mastercard Transformation to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Mastercard Transformation 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.
Innovation driven organization
– Mastercard Transformation is one of the most innovative firm in sector. Manager in How Does Digital Transformation Happen? The Mastercard Case 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
– Mastercard Transformation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mastercard Transformation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Mastercard Transformation is present in almost all the verticals within the industry. This has provided firm in How Does Digital Transformation Happen? The Mastercard Case 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.
Organizational Resilience of Mastercard Transformation
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mastercard Transformation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Mastercard Transformation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mastercard Transformation 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 How Does Digital Transformation Happen? The Mastercard Case | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of How Does Digital Transformation Happen? The Mastercard Case are -
Workers concerns about automation
– As automation is fast increasing in the segment, Mastercard Transformation 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.
Lack of clear differentiation of Mastercard Transformation products
– To increase the profitability and margins on the products, Mastercard Transformation needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Mastercard Transformation 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.
Need for greater diversity
– Mastercard Transformation has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study How Does Digital Transformation Happen? The Mastercard Case that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case How Does Digital Transformation Happen? The Mastercard Case can leverage the sales team experience to cultivate customer relationships as Mastercard Transformation is planning to shift buying processes online.
High cash cycle compare to competitors
Mastercard Transformation 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.
Low market penetration in new markets
– Outside its home market of Mastercard Transformation, firm in the HBR case study How Does Digital Transformation Happen? The Mastercard Case needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Mastercard Transformation supply chain. Even after few cautionary changes mentioned in the HBR case study - How Does Digital Transformation Happen? The Mastercard Case, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mastercard Transformation vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Mastercard Transformation 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the How Does Digital Transformation Happen? The Mastercard Case 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 Mastercard Transformation has relatively successful track record of launching new products.
Products dominated business model
– Even though Mastercard Transformation 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 - How Does Digital Transformation Happen? The Mastercard Case should strive to include more intangible value offerings along with its core products and services.
Opportunities How Does Digital Transformation Happen? The Mastercard Case | 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 How Does Digital Transformation Happen? The Mastercard Case are -
Building a culture of innovation
– managers at Mastercard Transformation 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.
Better consumer reach
– The expansion of the 5G network will help Mastercard Transformation to increase its market reach. Mastercard Transformation 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.
Learning at scale
– Online learning technologies has now opened space for Mastercard Transformation 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, Mastercard Transformation 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, How Does Digital Transformation Happen? The Mastercard Case, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mastercard Transformation 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.
Developing new processes and practices
– Mastercard Transformation can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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. Mastercard Transformation 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. Mastercard Transformation 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mastercard Transformation can use these opportunities to build new business models that can help the communities that Mastercard Transformation operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Mastercard Transformation 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 Mastercard Transformation 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.
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 Mastercard Transformation in the consumer business. Now Mastercard Transformation can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Mastercard Transformation has opened avenues for new revenue streams for the organization in the industry. This can help Mastercard Transformation to build a more holistic ecosystem as suggested in the How Does Digital Transformation Happen? The Mastercard Case case study. Mastercard Transformation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mastercard Transformation is facing challenges because of the dominance of functional experts in the organization. How Does Digital Transformation Happen? The Mastercard Case case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats How Does Digital Transformation Happen? The Mastercard Case External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study How Does Digital Transformation Happen? The Mastercard Case are -
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 Mastercard Transformation in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Mastercard Transformation 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 wage structure of Mastercard Transformation
– 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 Mastercard Transformation.
Regulatory challenges
– Mastercard Transformation 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 Strategy & Execution 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 How Does Digital Transformation Happen? The Mastercard Case, Mastercard Transformation 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 .
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 Mastercard Transformation.
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.
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. Mastercard Transformation 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mastercard Transformation 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 How Does Digital Transformation Happen? The Mastercard Case .
Shortening product life cycle
– it is one of the major threat that Mastercard Transformation is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Mastercard Transformation 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 acceleration in Forth Industrial Revolution
– Mastercard Transformation has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Mastercard Transformation needs to keep up with the evolution of technology in the Strategy & Execution 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.
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 Mastercard Transformation business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of How Does Digital Transformation Happen? The Mastercard Case 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 How Does Digital Transformation Happen? The Mastercard Case 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 How Does Digital Transformation Happen? The Mastercard Case 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 How Does Digital Transformation Happen? The Mastercard Case 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 How Does Digital Transformation Happen? The Mastercard Case 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 Mastercard Transformation needs to make to build a sustainable competitive advantage.
