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 - – there is increasing trade war between United States & China, wage bills are increasing, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies,
increasing energy prices, increasing household debt because of falling income levels, 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.
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.
High brand equity
– Compartamos Microlenders has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Compartamos Microlenders to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Effective Research and Development (R&D)
– Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Compartamos Microlenders is one of the most innovative firm in sector. Manager in Corporate Values and Transformation: The Micro lender Compartamos Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Successful track record of launching new products
– Compartamos Microlenders has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Compartamos Microlenders has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in 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.
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.
High switching costs
– The high switching costs that Compartamos Microlenders 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.
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.
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 -
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Corporate Values and Transformation: The Micro lender Compartamos 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 Compartamos Microlenders has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Compartamos Microlenders is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Corporate Values and Transformation: The Micro lender Compartamos can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Compartamos Microlenders 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
– Compartamos Microlenders 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.
Products dominated business model
– Even though Compartamos Microlenders 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 - Corporate Values and Transformation: The Micro lender Compartamos should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
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.
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.
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 -
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.
Manufacturing automation
– Compartamos Microlenders 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.
Using analytics as competitive advantage
– Compartamos Microlenders 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 Corporate Values and Transformation: The Micro lender Compartamos - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Compartamos Microlenders to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Loyalty marketing
– Compartamos Microlenders 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.
Leveraging digital technologies
– Compartamos Microlenders 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.
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.
Creating value in data economy
– The success of analytics program of Compartamos Microlenders has opened avenues for new revenue streams for the organization in the industry. This can help Compartamos Microlenders to build a more holistic ecosystem as suggested in the Corporate Values and Transformation: The Micro lender Compartamos case study. Compartamos Microlenders 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, 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.
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.
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 Compartamos Microlenders to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Compartamos Microlenders 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 Compartamos Microlenders to hire the very best people irrespective of their geographical location.
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.
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 -
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.
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. Compartamos Microlenders can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. 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.
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.
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 Compartamos Microlenders business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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 .
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.
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.
Stagnating economy with rate increase
– Compartamos Microlenders 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.
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.
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.