Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty
University of California, Berkeley-Haas collectionThe Valuing a Microfinance Institution (Or Private Growth Enterprise) case study provides students with a scenario where they can learn how to evaluate and value a microfinance investment target in Africa amidst high uncertainty, limited information, and few (if any) usable comparable companies. Even though the case study focuses on an MFI, it can easily be applied to all private growth enterprises. Given high forecast growth, an uncertain exit, diverse competition, and no standard methodology, the protagonist of the case must choose between five different valuation techniques. The case explores the pros and cons of each methodology; students will choose a methodology, derive a valuation, discuss how the techniques lead to a wide range of values, and finally understand the difference between calculating a valuation and making an offer during a negotiation.
Swot Analysis of "Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty" written by Sean Foote, Brian Busch includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Microfinance Methodology facing as an external strategic factors. Some of the topics covered in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty case study are - Strategic Management Strategies, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, technology disruption, wage bills are increasing, increasing government debt because of Covid-19 spendings,
central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Microfinance Methodology, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Microfinance Methodology 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty can be done for the following purposes –
1. Strategic planning using facts provided in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty case study
2. Improving business portfolio management of Microfinance Methodology
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 Microfinance Methodology
Strengths Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Microfinance Methodology in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty Harvard Business Review case study are -
Effective Research and Development (R&D)
– Microfinance Methodology 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Microfinance Methodology 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 Microfinance Methodology in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Microfinance Methodology is one of the leading recruiters in the industry. Managers in the Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Microfinance Methodology 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 Microfinance Methodology is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Microfinance Methodology is present in almost all the verticals within the industry. This has provided firm in Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Microfinance Methodology
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Microfinance Methodology does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Microfinance Methodology 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.
Superior customer experience
– The customer experience strategy of Microfinance Methodology in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Microfinance Methodology 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Microfinance Methodology has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Microfinance Methodology 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.
Strong track record of project management
– Microfinance Methodology is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty, in the dynamic environment Microfinance Methodology has struggled to respond to the nimble upstart competition. Microfinance Methodology has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Microfinance Methodology 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.
Increasing silos among functional specialists
– The organizational structure of Microfinance Methodology is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Microfinance Methodology needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Microfinance Methodology to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Microfinance Methodology 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Microfinance Methodology 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty, is just above the industry average. Microfinance Methodology 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.
Products dominated business model
– Even though Microfinance Methodology 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 - Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Microfinance Methodology is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Microfinance Methodology 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty, it seems that the employees of Microfinance Methodology don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Sean Foote, Brian Busch suggests that, Microfinance Methodology is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty | 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty are -
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 Microfinance Methodology 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Microfinance Methodology in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Manufacturing automation
– Microfinance Methodology can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Buying journey improvements
– Microfinance Methodology can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Microfinance Methodology 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 Microfinance Methodology to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Microfinance Methodology 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.
Leveraging digital technologies
– Microfinance Methodology 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.
Creating value in data economy
– The success of analytics program of Microfinance Methodology has opened avenues for new revenue streams for the organization in the industry. This can help Microfinance Methodology to build a more holistic ecosystem as suggested in the Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty case study. Microfinance Methodology 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, Microfinance Methodology is facing challenges because of the dominance of functional experts in the organization. Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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.
Better consumer reach
– The expansion of the 5G network will help Microfinance Methodology to increase its market reach. Microfinance Methodology 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Microfinance Methodology can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Microfinance Methodology can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Microfinance Methodology 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.
Threats Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty are -
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. Microfinance Methodology can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Microfinance Methodology 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty, Microfinance Methodology 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 .
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.
Stagnating economy with rate increase
– Microfinance Methodology 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.
Environmental challenges
– Microfinance Methodology 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. Microfinance Methodology can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Microfinance Methodology with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Microfinance Methodology 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.
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. Microfinance Methodology 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.
Regulatory challenges
– Microfinance Methodology 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.
High dependence on third party suppliers
– Microfinance Methodology 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 Microfinance Methodology
– 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 Microfinance Methodology.
Shortening product life cycle
– it is one of the major threat that Microfinance Methodology is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Valuing a Microfinance Institution (Or Private Growth Enterprise): Dealing with Uncertainty 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 Microfinance Methodology needs to make to build a sustainable competitive advantage.
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