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 - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies,
increasing energy prices, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
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.
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.
Learning organization
- Ojk Indonesia's 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 Ojk Indonesia's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Indonesia's OJK: Building Financial Stability Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
Successful track record of launching new products
– Ojk Indonesia's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ojk Indonesia'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.
Ability to lead change in Global Business field
– Ojk Indonesia'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 Ojk Indonesia's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Strong track record of project management
– Ojk Indonesia'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.
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 -
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Ojk Indonesia'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 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Indonesia's OJK: Building Financial Stability has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ojk Indonesia's 's lucrative customers.
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.
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.
Low market penetration in new markets
– Outside its home market of Ojk Indonesia's, firm in the HBR case study Indonesia's OJK: Building Financial Stability needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Indonesia's OJK: Building Financial Stability 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 Ojk Indonesia's has relatively successful track record of launching new products.
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.
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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ojk Indonesia's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Indonesia's OJK: Building Financial Stability can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 -
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ojk Indonesia'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 Ojk Indonesia's to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
Using analytics as competitive advantage
– Ojk Indonesia'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 Indonesia's OJK: Building Financial Stability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ojk Indonesia'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 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.
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.
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 Ojk Indonesia's in the consumer business. Now Ojk Indonesia's can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Ojk Indonesia's to increase its market reach. Ojk Indonesia's 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.
Building a culture of innovation
– managers at Ojk Indonesia'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.
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 -
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.
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 Ojk Indonesia's business can come under increasing regulations regarding data privacy, data security, etc.
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. Ojk Indonesia's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Ojk Indonesia'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.
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Indonesia's OJK: Building Financial Stability, Ojk Indonesia'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 .
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.
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.
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.