Infrastructure in Nigeria: Unlocking Pension Fund Investments SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Infrastructure in Nigeria: Unlocking Pension Fund Investments
The so-called "infrastructure finance gap" was a problem in Nigeria as in many parts of the world. Infrastructure projects like power plants and dams were very large capital investments that could generate long term consistent cash flows, but their financing and delivery involved multiple risks and uncertainties. If funds for infrastructure development came from traditional international sources like the World Bank or African Development Bank, those lenders would worry about foreign exchange, interest rates, and political risk and would almost always seek sovereign guarantees (payment guarantees from the federal government). Such assurances and guarantees were hard to come by, difficult to negotiate, and project inception could take decades. In this context could pension funds or private equity-type structures be viable alternative sources of financing for infrastructure? By 2017 Nigeria had reformed its pension administration system so that pension funds could both accept significant amounts of retirement funds from workers and, manage and invest those funds in a transparent and safe structure. One of the asset classes in addition to government bonds, equities, and corporate bonds that was authorized for investment by pension funds was infrastructure debt securities. Until recently, few Nigerian infrastructure securities had strong enough credit ratings to be investable by cautious pension funds. Infrastructure Credit Guarantee Company (InfraCredit) hoped to break that logjam by supporting infrastructure issues denominated in local currency with credit assurances taking the place of sovereign guarantees. Other entities took different approaches to raising capital for infrastructure in this market. Africa Plus Partners (Africa Plus), for example, proposed a fund structure with features of American private equity. It was not yet clear if this type of fund arrangement would be as attractive as debt for pension fund investors. Could InfraCredit become a very large player? If the model was proven, could it be replicated in other nations? What would be the conditions precedent to make other nations attractive for an InfraCredit model?
Authors :: John D. Macomber, Pippa Tubman Armerding
Swot Analysis of "Infrastructure in Nigeria: Unlocking Pension Fund Investments" written by John D. Macomber, Pippa Tubman Armerding includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Infrastructure Pension facing as an external strategic factors. Some of the topics covered in Infrastructure in Nigeria: Unlocking Pension Fund Investments case study are - Strategic Management Strategies, Financial management, Government, Social enterprise and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Infrastructure in Nigeria: Unlocking Pension Fund Investments casestudy better are - – increasing transportation and logistics costs, wage bills are increasing, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Infrastructure in Nigeria: Unlocking Pension Fund Investments
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Infrastructure in Nigeria: Unlocking Pension Fund Investments case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Infrastructure Pension, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments can be done for the following purposes –
1. Strategic planning using facts provided in Infrastructure in Nigeria: Unlocking Pension Fund Investments case study
2. Improving business portfolio management of Infrastructure Pension
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 Infrastructure Pension
Strengths Infrastructure in Nigeria: Unlocking Pension Fund Investments | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Infrastructure Pension in Infrastructure in Nigeria: Unlocking Pension Fund Investments Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Infrastructure Pension in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Infrastructure Pension in the sector have low bargaining power. Infrastructure in Nigeria: Unlocking Pension Fund Investments has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Infrastructure Pension to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Infrastructure Pension 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.
Learning organization
- Infrastructure Pension 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 Infrastructure Pension is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Infrastructure in Nigeria: Unlocking Pension Fund Investments Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Infrastructure in Nigeria: Unlocking Pension Fund Investments firm has clearly differentiated products in the market place. This has enabled Infrastructure Pension to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Infrastructure Pension to invest into research and development (R&D) and innovation.
Strong track record of project management
– Infrastructure Pension 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 brand equity
– Infrastructure Pension has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Infrastructure Pension to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Infrastructure Pension is one of the most innovative firm in sector. Manager in Infrastructure in Nigeria: Unlocking Pension Fund Investments Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Infrastructure Pension 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.
Effective Research and Development (R&D)
– Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Infrastructure Pension is present in almost all the verticals within the industry. This has provided firm in Infrastructure in Nigeria: Unlocking Pension Fund Investments 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.
Highly skilled collaborators
– Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Infrastructure in Nigeria: Unlocking Pension Fund Investments | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Infrastructure in Nigeria: Unlocking Pension Fund Investments are -
Lack of clear differentiation of Infrastructure Pension products
– To increase the profitability and margins on the products, Infrastructure Pension needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments can leverage the sales team experience to cultivate customer relationships as Infrastructure Pension is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Infrastructure Pension is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Infrastructure Pension needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Infrastructure Pension to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Infrastructure Pension 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.
Skills based hiring
– The stress on hiring functional specialists at Infrastructure Pension 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.
Products dominated business model
– Even though Infrastructure Pension 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 - Infrastructure in Nigeria: Unlocking Pension Fund Investments should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure Pension has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Infrastructure in Nigeria: Unlocking Pension Fund Investments, is just above the industry average. Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments, in the dynamic environment Infrastructure Pension has struggled to respond to the nimble upstart competition. Infrastructure Pension has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Infrastructure Pension needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Infrastructure Pension is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Infrastructure in Nigeria: Unlocking Pension Fund Investments can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Infrastructure in Nigeria: Unlocking Pension Fund Investments | 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Infrastructure Pension can use these opportunities to build new business models that can help the communities that Infrastructure Pension operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Infrastructure Pension 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.
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. Infrastructure Pension 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. Infrastructure Pension 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.
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 Infrastructure Pension in the consumer business. Now Infrastructure Pension can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Infrastructure Pension can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Infrastructure Pension can develop new processes and procedures in Finance & Accounting 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.
Creating value in data economy
– The success of analytics program of Infrastructure Pension has opened avenues for new revenue streams for the organization in the industry. This can help Infrastructure Pension to build a more holistic ecosystem as suggested in the Infrastructure in Nigeria: Unlocking Pension Fund Investments case study. Infrastructure Pension can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Infrastructure Pension can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Infrastructure in Nigeria: Unlocking Pension Fund Investments 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.
Better consumer reach
– The expansion of the 5G network will help Infrastructure Pension to increase its market reach. Infrastructure Pension will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Infrastructure Pension 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Infrastructure Pension 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, Infrastructure in Nigeria: Unlocking Pension Fund Investments, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Infrastructure Pension 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.
Using analytics as competitive advantage
– Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Infrastructure Pension to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Infrastructure in Nigeria: Unlocking Pension Fund Investments External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Infrastructure in Nigeria: Unlocking Pension Fund Investments are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Infrastructure in Nigeria: Unlocking Pension Fund Investments, Infrastructure Pension may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Environmental challenges
– Infrastructure Pension 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. Infrastructure Pension can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
Consumer confidence and its impact on Infrastructure Pension 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 Infrastructure Pension.
Stagnating economy with rate increase
– Infrastructure Pension 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Infrastructure Pension 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
– Infrastructure Pension 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 Finance & Accounting industry regulations.
Technology acceleration in Forth Industrial Revolution
– Infrastructure Pension has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Infrastructure Pension needs to keep up with the evolution of technology in the Finance & Accounting 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.
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. Infrastructure Pension 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, Infrastructure Pension 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments .
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. Infrastructure Pension needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Infrastructure Pension with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure in Nigeria: Unlocking Pension Fund Investments 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 Infrastructure Pension needs to make to build a sustainable competitive advantage.