Case Study Description of IFMR Capital: Securitizing Microloans for Non-Bank Investors
In 2009 IFMR Capital sought to create new funding options for microfinance institutions by using a structured finance approach to attract a new class of capital market investors, including pension funds, bank treasury desks, mutual funds, and private wealth financiers. But what financial structure would be most attractive to these nonbank funders? Would the existing market infrastructure be sufficient to support the new financial structure? How would IFMR Capital ensure that the interests of all participants were aligned correctly? Would microloan securitization be scalable? In this case, students analyze the components of the launch of IFMR Trust Pioneer II to answer these questions.
Swot Analysis of "IFMR Capital: Securitizing Microloans for Non-Bank Investors" written by M. Suresh Sundaresan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ifmr Capital facing as an external strategic factors. Some of the topics covered in IFMR Capital: Securitizing Microloans for Non-Bank Investors case study are - Strategic Management Strategies, Entrepreneurial finance, Financial management, Financial markets and Global Business.
Some of the macro environment factors that can be used to understand the IFMR Capital: Securitizing Microloans for Non-Bank Investors casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, technology disruption,
there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of IFMR Capital: Securitizing Microloans for Non-Bank Investors
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in IFMR Capital: Securitizing Microloans for Non-Bank Investors case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ifmr Capital, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ifmr Capital 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors can be done for the following purposes –
1. Strategic planning using facts provided in IFMR Capital: Securitizing Microloans for Non-Bank Investors case study
2. Improving business portfolio management of Ifmr Capital
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 Ifmr Capital
Strengths IFMR Capital: Securitizing Microloans for Non-Bank Investors | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ifmr Capital in IFMR Capital: Securitizing Microloans for Non-Bank Investors Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Ifmr Capital 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.
Operational resilience
– The operational resilience strategy in the IFMR Capital: Securitizing Microloans for Non-Bank Investors 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.
Highly skilled collaborators
– Ifmr Capital 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Ifmr Capital has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in IFMR Capital: Securitizing Microloans for Non-Bank Investors 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.
Successful track record of launching new products
– Ifmr Capital has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ifmr Capital 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.
High switching costs
– The high switching costs that Ifmr Capital 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 Ifmr Capital
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ifmr Capital does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Ifmr Capital 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Ifmr Capital is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Ifmr Capital digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ifmr Capital 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.
Analytics focus
– Ifmr Capital 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 M. Suresh Sundaresan 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.
Sustainable margins compare to other players in Global Business industry
– IFMR Capital: Securitizing Microloans for Non-Bank Investors firm has clearly differentiated products in the market place. This has enabled Ifmr Capital to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Ifmr Capital to invest into research and development (R&D) and innovation.
Weaknesses IFMR Capital: Securitizing Microloans for Non-Bank Investors | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of IFMR Capital: Securitizing Microloans for Non-Bank Investors are -
High cash cycle compare to competitors
Ifmr Capital has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Ifmr Capital 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. Ifmr Capital 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.
Capital Spending Reduction
– Even during the low interest decade, Ifmr Capital 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.
Lack of clear differentiation of Ifmr Capital products
– To increase the profitability and margins on the products, Ifmr Capital needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study IFMR Capital: Securitizing Microloans for Non-Bank Investors, in the dynamic environment Ifmr Capital has struggled to respond to the nimble upstart competition. Ifmr Capital has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, M. Suresh Sundaresan suggests that, Ifmr Capital 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.
Products dominated business model
– Even though Ifmr Capital 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 - IFMR Capital: Securitizing Microloans for Non-Bank Investors should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study IFMR Capital: Securitizing Microloans for Non-Bank Investors, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study IFMR Capital: Securitizing Microloans for Non-Bank Investors, is just above the industry average. Ifmr Capital 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.
Aligning sales with marketing
– It come across in the case study IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors can leverage the sales team experience to cultivate customer relationships as Ifmr Capital is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As IFMR Capital: Securitizing Microloans for Non-Bank Investors HBR case study mentions - Ifmr Capital 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.
Opportunities IFMR Capital: Securitizing Microloans for Non-Bank Investors | 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ifmr Capital can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Ifmr Capital to increase its market reach. Ifmr Capital 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.
Buying journey improvements
– Ifmr Capital can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. IFMR Capital: Securitizing Microloans for Non-Bank Investors 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.
Leveraging digital technologies
– Ifmr Capital 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ifmr Capital 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 Ifmr Capital to hire the very best people irrespective of their geographical location.
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 Ifmr Capital in the consumer business. Now Ifmr Capital can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Ifmr Capital 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.
Loyalty marketing
– Ifmr Capital 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.
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. Ifmr Capital 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. Ifmr Capital 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.
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 Ifmr Capital 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.
Using analytics as competitive advantage
– Ifmr Capital 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ifmr Capital to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Ifmr Capital 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.
Learning at scale
– Online learning technologies has now opened space for Ifmr Capital 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.
Threats IFMR Capital: Securitizing Microloans for Non-Bank Investors External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study IFMR Capital: Securitizing Microloans for Non-Bank Investors are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ifmr Capital 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study IFMR Capital: Securitizing Microloans for Non-Bank Investors, Ifmr Capital 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 .
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.
Regulatory challenges
– Ifmr Capital 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.
Increasing wage structure of Ifmr Capital
– 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 Ifmr Capital.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ifmr Capital with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Ifmr Capital 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.
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 Ifmr Capital.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ifmr Capital 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors .
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. Ifmr Capital 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.
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 Ifmr Capital in the Global Business sector and impact the bottomline of the organization.
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 Ifmr Capital business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Ifmr Capital 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. Ifmr Capital can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 Ifmr Capital needs to make to build a sustainable competitive advantage.