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 - – digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing commodity prices, there is increasing trade war between United States & China, technology disruption,
wage bills are increasing, increasing energy prices, 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 -
Innovation driven organization
– Ifmr Capital is one of the most innovative firm in sector. Manager in IFMR Capital: Securitizing Microloans for Non-Bank Investors Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Learning organization
- Ifmr Capital is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Ifmr Capital is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in IFMR Capital: Securitizing Microloans for Non-Bank Investors Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Ability to lead change in Global Business field
– Ifmr Capital 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 Ifmr Capital in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
Superior customer experience
– The customer experience strategy of Ifmr Capital in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the 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.
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.
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.
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 -
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 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ifmr Capital is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study IFMR Capital: Securitizing Microloans for Non-Bank Investors can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Need for greater diversity
– Ifmr Capital 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.
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.
Low market penetration in new markets
– Outside its home market of Ifmr Capital, firm in the HBR case study IFMR Capital: Securitizing Microloans for Non-Bank Investors needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Ifmr Capital 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the IFMR Capital: Securitizing Microloans for Non-Bank Investors 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 Ifmr Capital has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Ifmr Capital 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.
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.
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 -
Developing new processes and practices
– Ifmr Capital 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.
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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ifmr Capital 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, IFMR Capital: Securitizing Microloans for Non-Bank Investors, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ifmr Capital is facing challenges because of the dominance of functional experts in the organization. IFMR Capital: Securitizing Microloans for Non-Bank Investors 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ifmr Capital can use these opportunities to build new business models that can help the communities that Ifmr Capital operates in. Secondly it can use opportunities from government spending in Global Business sector.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ifmr Capital 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.
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 .
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 .
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. Ifmr Capital can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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. Ifmr Capital needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Ifmr Capital 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.
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.
Shortening product life cycle
– it is one of the major threat that Ifmr Capital is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
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.
