Case Study Description of Akbank: Credit Card Division
The Turkish financial sector has been developing rapidly and often unpredictably, offering an ideal backdrop to carry out an industry analysis in the dynamic environment of an emerging market. Akbank, one of the leading private Turkish banks, has been successful in taking advantage of the new opportunities that appeared in the credit card sector as a result of post-crisis restructuring of the financial services industry in the early 2000s. Launched in late 2001, Akbank's Axess credit card quickly gained a significant market share of 15 per cent and was popular with both customers and merchants. At the same time, the attractive margins in this sector have sparked many local and foreign competitor entries. Setting a sustainable strategy for the next few years is complicated by the change in the political, macro-economic and competitive environment. The new government leading the country since 2002 has improved overall stability in Turkey, which created both opportunities and threats for Akbank's business. The opportunities included an improved banking system and increasing customer disposable income, while the market for credit cards was not yet saturated. However, threats may come from unpredictable actions that banking authorities could implement and increasing competition from both local and international players. The dynamic nature of the banking industry in an emerging market provides a comprehensive case to anchor a discussion about developing flexible strategy in a changing environment. The purpose of the Akbank case is to help students develop environmental analysis skills. It is designed to be used in a strategy course at an undergraduate or graduate level. Additionally, it may be used in a marketing course to illustrate issues related to loyalty programs or in an international business course to illustrate the impact of environmental uncertainty on managerial decision-making.
Swot Analysis of "Akbank: Credit Card Division" written by Mary M. Crossan, Marina Apaydin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Akbank Akbank's facing as an external strategic factors. Some of the topics covered in Akbank: Credit Card Division case study are - Strategic Management Strategies, Growth strategy, Organizational structure and Global Business.
Some of the macro environment factors that can be used to understand the Akbank: Credit Card Division casestudy better are - – challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, there is backlash against globalization, talent flight as more people leaving formal jobs,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of Akbank: Credit Card Division
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Akbank: Credit Card Division case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Akbank Akbank's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Akbank Akbank's 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 Akbank: Credit Card Division can be done for the following purposes –
1. Strategic planning using facts provided in Akbank: Credit Card Division case study
2. Improving business portfolio management of Akbank Akbank's
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Akbank Akbank's
Strengths Akbank: Credit Card Division | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Akbank Akbank's in Akbank: Credit Card Division Harvard Business Review case study are -
Successful track record of launching new products
– Akbank Akbank's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Akbank Akbank's 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
– Akbank Akbank's 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 lead change in Global Business field
– Akbank Akbank's 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 Akbank Akbank's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Akbank Akbank's 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.
Ability to recruit top talent
– Akbank Akbank's is one of the leading recruiters in the industry. Managers in the Akbank: Credit Card Division are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Akbank Akbank's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Akbank: Credit Card Division 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 Akbank Akbank's 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 Akbank Akbank's in the sector have low bargaining power. Akbank: Credit Card Division has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Akbank Akbank's to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Global Business industry
– Akbank: Credit Card Division firm has clearly differentiated products in the market place. This has enabled Akbank Akbank's to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Akbank Akbank's to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Akbank Akbank's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Akbank Akbank's 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.
Highly skilled collaborators
– Akbank Akbank's 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 Akbank: Credit Card Division HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Akbank: Credit Card Division 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.
Weaknesses Akbank: Credit Card Division | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Akbank: Credit Card Division are -
Workers concerns about automation
– As automation is fast increasing in the segment, Akbank Akbank's 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.
Products dominated business model
– Even though Akbank Akbank's 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 - Akbank: Credit Card Division should strive to include more intangible value offerings along with its core products and services.
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 Akbank Akbank's supply chain. Even after few cautionary changes mentioned in the HBR case study - Akbank: Credit Card Division, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Akbank Akbank's vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Akbank Akbank's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study Akbank: Credit Card Division 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 Akbank: Credit Card Division can leverage the sales team experience to cultivate customer relationships as Akbank Akbank's is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Akbank Akbank's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Akbank: Credit Card Division can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Akbank: Credit Card Division 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 Akbank Akbank's has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Akbank Akbank's 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. Akbank Akbank's 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.
Skills based hiring
– The stress on hiring functional specialists at Akbank Akbank's 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.
Interest costs
– Compare to the competition, Akbank Akbank's 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.
No frontier risks strategy
– After analyzing the HBR case study Akbank: Credit Card Division, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Akbank: Credit Card Division | 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 Akbank: Credit Card Division are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Akbank Akbank's 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, Akbank Akbank's 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Akbank Akbank's 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. Akbank Akbank's 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.
Using analytics as competitive advantage
– Akbank Akbank's 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 Akbank: Credit Card Division - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Akbank Akbank's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Akbank Akbank's has opened avenues for new revenue streams for the organization in the industry. This can help Akbank Akbank's to build a more holistic ecosystem as suggested in the Akbank: Credit Card Division case study. Akbank Akbank's can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Akbank Akbank's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Akbank Akbank's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Akbank Akbank's 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.
Leveraging digital technologies
– Akbank Akbank's 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.
Buying journey improvements
– Akbank Akbank's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Akbank: Credit Card Division 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Akbank Akbank's can use these opportunities to build new business models that can help the communities that Akbank Akbank's operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Akbank Akbank's 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 Global Business segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Akbank Akbank's 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 Akbank Akbank's to hire the very best people irrespective of their geographical location.
Threats Akbank: Credit Card Division External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Akbank: Credit Card Division are -
Consumer confidence and its impact on Akbank Akbank's 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.
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 Akbank Akbank's business can come under increasing regulations regarding data privacy, data security, etc.
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. Akbank Akbank's needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Akbank: Credit Card Division, Akbank Akbank's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Environmental challenges
– Akbank Akbank's 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. Akbank Akbank's can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Akbank Akbank's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Akbank Akbank's 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 Akbank: Credit Card Division .
Stagnating economy with rate increase
– Akbank Akbank's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Akbank Akbank's in the Global Business industry. The Global Business 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.
Technology acceleration in Forth Industrial Revolution
– Akbank Akbank's has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Akbank Akbank's needs to keep up with the evolution of technology in the Global Business 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.
Shortening product life cycle
– it is one of the major threat that Akbank Akbank's is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Akbank Akbank's 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 Akbank: Credit Card Division 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 Akbank: Credit Card Division 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 Akbank: Credit Card Division 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 Akbank: Credit Card Division 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 Akbank: Credit Card Division 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 Akbank Akbank's needs to make to build a sustainable competitive advantage.