Corporate Values and Transformation: The Micro lender Compartamos SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Corporate Values and Transformation: The Micro lender Compartamos
Microlending, defined as very small loans advanced to very low-income entrepreneurs, has attracted wide attention as a potentially effective means to aid the economic development of impoverished nations. This case focuses on one of the largest and most successful of such microlenders, Mexico's Compartamos ("we share") organization, and raises questions about the most effective business model and scale of microlenders. Specifically, the case tells the story of how Compartamos, which had found great success making small loans in villages and rural areas, fared when it sought to expand into Mexico City. A series of reverses--higher default rates, personnel problems, and unexpected competition and regulatory issues--implicitly pose the question of whether Compartamos and microlenders of its type, which historically have relied on peer group pressure to ensure repayment of otherwise unsecured loans to small start-up businesses, can expand and adapt to an urban setting. HKS Case Number 1761.0
Swot Analysis of "Corporate Values and Transformation: The Micro lender Compartamos" written by Jonathan Schlefer, Guy Stuart includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Compartamos Microlenders facing as an external strategic factors. Some of the topics covered in Corporate Values and Transformation: The Micro lender Compartamos case study are - Strategic Management Strategies, Economy, Entrepreneurial finance, Financial management, Government, International business, Project management, Social enterprise and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Corporate Values and Transformation: The Micro lender Compartamos casestudy better are - – challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing energy prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Corporate Values and Transformation: The Micro lender Compartamos
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Corporate Values and Transformation: The Micro lender Compartamos case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Compartamos Microlenders, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos can be done for the following purposes –
1. Strategic planning using facts provided in Corporate Values and Transformation: The Micro lender Compartamos case study
2. Improving business portfolio management of Compartamos Microlenders
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 Compartamos Microlenders
Strengths Corporate Values and Transformation: The Micro lender Compartamos | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Compartamos Microlenders in Corporate Values and Transformation: The Micro lender Compartamos Harvard Business Review case study are -
Strong track record of project management
– Compartamos Microlenders is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Compartamos Microlenders is present in almost all the verticals within the industry. This has provided firm in Corporate Values and Transformation: The Micro lender Compartamos 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.
Operational resilience
– The operational resilience strategy in the Corporate Values and Transformation: The Micro lender Compartamos 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.
Analytics focus
– Compartamos Microlenders 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 Jonathan Schlefer, Guy Stuart 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
– Compartamos Microlenders is one of the leading recruiters in the industry. Managers in the Corporate Values and Transformation: The Micro lender Compartamos 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 Compartamos Microlenders in the sector have low bargaining power. Corporate Values and Transformation: The Micro lender Compartamos has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Compartamos Microlenders to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Compartamos Microlenders digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Compartamos Microlenders 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.
Training and development
– Compartamos Microlenders has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Corporate Values and Transformation: The Micro lender Compartamos Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Compartamos Microlenders in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Compartamos Microlenders 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Corporate Values and Transformation: The Micro lender Compartamos firm has clearly differentiated products in the market place. This has enabled Compartamos Microlenders to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Compartamos Microlenders to invest into research and development (R&D) and innovation.
Weaknesses Corporate Values and Transformation: The Micro lender Compartamos | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Corporate Values and Transformation: The Micro lender Compartamos are -
Increasing silos among functional specialists
– The organizational structure of Compartamos Microlenders is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Compartamos Microlenders needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Compartamos Microlenders to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Corporate Values and Transformation: The Micro lender Compartamos, is just above the industry average. Compartamos Microlenders 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.
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 Compartamos Microlenders supply chain. Even after few cautionary changes mentioned in the HBR case study - Corporate Values and Transformation: The Micro lender Compartamos, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Compartamos Microlenders vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Corporate Values and Transformation: The Micro lender Compartamos 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 Corporate Values and Transformation: The Micro lender Compartamos can leverage the sales team experience to cultivate customer relationships as Compartamos Microlenders is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Corporate Values and Transformation: The Micro lender Compartamos HBR case study mentions - Compartamos Microlenders takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Corporate Values and Transformation: The Micro lender Compartamos 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 Compartamos Microlenders 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Compartamos Microlenders 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.
Slow decision making process
– As mentioned earlier in the report, Compartamos Microlenders 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. Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos, in the dynamic environment Compartamos Microlenders has struggled to respond to the nimble upstart competition. Compartamos Microlenders has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Compartamos Microlenders products
– To increase the profitability and margins on the products, Compartamos Microlenders needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Compartamos Microlenders, firm in the HBR case study Corporate Values and Transformation: The Micro lender Compartamos needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Corporate Values and Transformation: The Micro lender Compartamos | 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 Corporate Values and Transformation: The Micro lender Compartamos are -
Building a culture of innovation
– managers at Compartamos Microlenders 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Compartamos Microlenders 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Compartamos Microlenders is facing challenges because of the dominance of functional experts in the organization. Corporate Values and Transformation: The Micro lender Compartamos 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.
Learning at scale
– Online learning technologies has now opened space for Compartamos Microlenders 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.
Buying journey improvements
– Compartamos Microlenders can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Corporate Values and Transformation: The Micro lender Compartamos 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Compartamos Microlenders can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Compartamos Microlenders 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.
Better consumer reach
– The expansion of the 5G network will help Compartamos Microlenders to increase its market reach. Compartamos Microlenders 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 Compartamos Microlenders can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Compartamos Microlenders 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, Corporate Values and Transformation: The Micro lender Compartamos, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Compartamos Microlenders 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.
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 Compartamos Microlenders in the consumer business. Now Compartamos Microlenders can target international markets with far fewer capital restrictions requirements than the existing system.
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. Compartamos Microlenders 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. Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Corporate Values and Transformation: The Micro lender Compartamos 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 Compartamos Microlenders in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Corporate Values and Transformation: The Micro lender Compartamos, Compartamos Microlenders 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Compartamos Microlenders in the Finance & Accounting industry. The Finance & Accounting 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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Compartamos Microlenders has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Compartamos Microlenders 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos .
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. Compartamos Microlenders 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.
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. Compartamos Microlenders needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Compartamos Microlenders 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 Compartamos Microlenders
– 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 Compartamos Microlenders.
Regulatory challenges
– Compartamos Microlenders 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.
Environmental challenges
– Compartamos Microlenders 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. Compartamos Microlenders can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Corporate Values and Transformation: The Micro lender Compartamos 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 Corporate Values and Transformation: The Micro lender Compartamos 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 Corporate Values and Transformation: The Micro lender Compartamos 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 Corporate Values and Transformation: The Micro lender Compartamos 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 Corporate Values and Transformation: The Micro lender Compartamos 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 Compartamos Microlenders needs to make to build a sustainable competitive advantage.
