Case Study Description of Indonesia's OJK: Building Financial Stability
In 2013, a new financial services authority, the Otoritas Jasa Keuangan (OJK), took over responsibility for regulating capital markets and non-bank financial institutions in Indonesia. OJK was scheduled to take over bank regulation and supervision from the central bank, Bank Indonesia, in 2014. At a time when there was no global consensus on the optimality of separating monetary policy from bank supervision, the creation of the OJK raised many questions. Would the OJK better prepare Indonesia to deal with financial crises? Could an organization whose leaders came from Indonesia's existing economic bureaucracies remain independent of those organizations and from political pressures? Was the creation of the OJK the correct response to public dissatisfaction with Bank Indonesia's handling of the Asian financial crisis and subsequent corruption scandals?
Swot Analysis of "Indonesia's OJK: Building Financial Stability" written by Lakshmi Iyer, David Lane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ojk Indonesia's facing as an external strategic factors. Some of the topics covered in Indonesia's OJK: Building Financial Stability case study are - Strategic Management Strategies, Corporate governance, Emerging markets, Ethics, Financial management, Financial markets, Policy, Recession, Strategy and Global Business.
Some of the macro environment factors that can be used to understand the Indonesia's OJK: Building Financial Stability casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Indonesia's OJK: Building Financial Stability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Indonesia's OJK: Building Financial Stability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ojk Indonesia's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ojk Indonesia'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 Indonesia's OJK: Building Financial Stability can be done for the following purposes –
1. Strategic planning using facts provided in Indonesia's OJK: Building Financial Stability case study
2. Improving business portfolio management of Ojk Indonesia'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 Ojk Indonesia's
Strengths Indonesia's OJK: Building Financial Stability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ojk Indonesia's in Indonesia's OJK: Building Financial Stability Harvard Business Review case study are -
Innovation driven organization
– Ojk Indonesia's is one of the most innovative firm in sector. Manager in Indonesia's OJK: Building Financial Stability 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 Global Business industry
– Indonesia's OJK: Building Financial Stability firm has clearly differentiated products in the market place. This has enabled Ojk Indonesia's to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Ojk Indonesia'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 Ojk Indonesia's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ojk Indonesia'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.
Ability to recruit top talent
– Ojk Indonesia's is one of the leading recruiters in the industry. Managers in the Indonesia's OJK: Building Financial Stability 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 switching costs
– The high switching costs that Ojk Indonesia's 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.
Organizational Resilience of Ojk Indonesia's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ojk Indonesia's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Ojk Indonesia's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Indonesia's OJK: Building Financial Stability 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.
Cross disciplinary teams
– Horizontal connected teams at the Ojk Indonesia'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.
Superior customer experience
– The customer experience strategy of Ojk Indonesia'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 Ojk Indonesia's in the sector have low bargaining power. Indonesia's OJK: Building Financial Stability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ojk Indonesia's to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Ojk Indonesia's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ojk Indonesia's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Ojk Indonesia's is present in almost all the verticals within the industry. This has provided firm in Indonesia's OJK: Building Financial Stability 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.
Weaknesses Indonesia's OJK: Building Financial Stability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indonesia's OJK: Building Financial Stability are -
High bargaining power of channel partners
– Because of the regulatory requirements, Lakshmi Iyer, David Lane suggests that, Ojk Indonesia's 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.
Slow decision making process
– As mentioned earlier in the report, Ojk Indonesia'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. Ojk Indonesia'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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Indonesia's OJK: Building Financial Stability, in the dynamic environment Ojk Indonesia's has struggled to respond to the nimble upstart competition. Ojk Indonesia's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Indonesia's OJK: Building Financial Stability, it seems that the employees of Ojk Indonesia's 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.
Products dominated business model
– Even though Ojk Indonesia'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 - Indonesia's OJK: Building Financial Stability should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Ojk Indonesia's products
– To increase the profitability and margins on the products, Ojk Indonesia's needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Indonesia's OJK: Building Financial Stability, 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.
Aligning sales with marketing
– It come across in the case study Indonesia's OJK: Building Financial Stability 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 Indonesia's OJK: Building Financial Stability can leverage the sales team experience to cultivate customer relationships as Ojk Indonesia's is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Indonesia's OJK: Building Financial Stability HBR case study mentions - Ojk Indonesia's 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.
Interest costs
– Compare to the competition, Ojk Indonesia'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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Indonesia's OJK: Building Financial Stability, is just above the industry average. Ojk Indonesia's 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.
Opportunities Indonesia's OJK: Building Financial Stability | 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 Indonesia's OJK: Building Financial Stability are -
Loyalty marketing
– Ojk Indonesia's 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.
Learning at scale
– Online learning technologies has now opened space for Ojk Indonesia'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.
Developing new processes and practices
– Ojk Indonesia's can develop new processes and procedures in Global Business 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ojk Indonesia'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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ojk Indonesia's 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, Indonesia's OJK: Building Financial Stability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ojk Indonesia's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Manufacturing automation
– Ojk Indonesia's can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Leveraging digital technologies
– Ojk Indonesia'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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ojk Indonesia's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Ojk Indonesia's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Ojk Indonesia's has opened avenues for new revenue streams for the organization in the industry. This can help Ojk Indonesia's to build a more holistic ecosystem as suggested in the Indonesia's OJK: Building Financial Stability case study. Ojk Indonesia'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 Ojk Indonesia'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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ojk Indonesia's is facing challenges because of the dominance of functional experts in the organization. Indonesia's OJK: Building Financial Stability 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.
Threats Indonesia's OJK: Building Financial Stability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Indonesia's OJK: Building Financial Stability are -
Shortening product life cycle
– it is one of the major threat that Ojk Indonesia's is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Ojk Indonesia's
– 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 Ojk Indonesia's.
High dependence on third party suppliers
– Ojk Indonesia'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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ojk Indonesia'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 Indonesia's OJK: Building Financial Stability .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ojk Indonesia's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Ojk Indonesia's in the Global Business sector and impact the bottomline of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ojk Indonesia's.
Environmental challenges
– Ojk Indonesia'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. Ojk Indonesia's can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ojk Indonesia'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.
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. Ojk Indonesia's 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. Ojk Indonesia's needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Ojk Indonesia'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.
Regulatory challenges
– Ojk Indonesia's 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 Global Business industry regulations.
Weighted SWOT Analysis of Indonesia's OJK: Building Financial Stability 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 Indonesia's OJK: Building Financial Stability 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 Indonesia's OJK: Building Financial Stability 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 Indonesia's OJK: Building Financial Stability 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 Indonesia's OJK: Building Financial Stability 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 Ojk Indonesia's needs to make to build a sustainable competitive advantage.
