Unitus (A): Microfinance 2.0--Reinventing an Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Unitus (A): Microfinance 2.0--Reinventing an Industry

Established in the mid-1970s, microfinance provided tiny loans to poor families to help them start and/or expand small businesses. Thirty years later, the practice had helped more than 80 million people to lift themselves out of extreme poverty and grown into a global industry comprised of more than 3,000 microfinance institutions. Early pioneers of microfinance, such as Muhmmad Yunnus of Grameen Bank, had become celebrities of sorts, receiving scores of humanitarian awards, including the 2006 Nobel Peace Prize. Similarly, the microfinance movement itself had become so well known that it invited comments from mainstream cultural icons such as Bono, lead singer of the band U2, who said: "Give a man a fish, he'll eat for a day. Give a women microcredit, she, her husband, her children, and her extended family will eat for a lifetime." Despite these accolades, Geoff Davis and Mike Murray believed that while microfinance was an important social innovation, it was dramatically underperforming relative to its potential because it had yet to achieve adequate scale. They pointed out less than 20% of the world's demand for microfinance was being met. Murray observed, "Usually, an industry that had those dynamics would have been closed down." Prompted by their vision of microfinance's potential, they founded Unitus, Inc., a nonprofit focused on accelerating the growth of the microfinance industry so that vastly larger numbers of people could gain access to the capital they needed to generate an income, raise their standard of living, and fulfill their basic needs. Explores dynamics in the microfinance industry, describes the Unitus business model, and sets up an important decision facing the company: whether to expand the amount of capital it can provide to its microfinance partners through the creation of a debt or equity fund.

Authors :: James A. Phills

Topics :: Finance & Accounting

Tags :: International business, Social enterprise, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Unitus (A): Microfinance 2.0--Reinventing an Industry" written by James A. Phills includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Microfinance Unitus facing as an external strategic factors. Some of the topics covered in Unitus (A): Microfinance 2.0--Reinventing an Industry case study are - Strategic Management Strategies, International business, Social enterprise and Finance & Accounting.

Some of the macro environment factors that can be used to understand the Unitus (A): Microfinance 2.0--Reinventing an Industry casestudy better are - – there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , geopolitical disruptions, technology disruption, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, etc

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Introduction to SWOT Analysis of Unitus (A): Microfinance 2.0--Reinventing an Industry

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Unitus (A): Microfinance 2.0--Reinventing an Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Microfinance Unitus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Microfinance Unitus 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Unitus (A): Microfinance 2.0--Reinventing an Industry can be done for the following purposes –
1. Strategic planning using facts provided in Unitus (A): Microfinance 2.0--Reinventing an Industry case study
2. Improving business portfolio management of Microfinance Unitus
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Microfinance Unitus

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Strengths Unitus (A): Microfinance 2.0--Reinventing an Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Microfinance Unitus in Unitus (A): Microfinance 2.0--Reinventing an Industry Harvard Business Review case study are -

Effective Research and Development (R&D)

– Microfinance Unitus 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 Unitus (A): Microfinance 2.0--Reinventing an Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High switching costs

– The high switching costs that Microfinance Unitus 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.

Ability to lead change in Finance & Accounting field

– Microfinance Unitus 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 Microfinance Unitus in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Superior customer experience

– The customer experience strategy of Microfinance Unitus in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Sustainable margins compare to other players in Finance & Accounting industry

– Unitus (A): Microfinance 2.0--Reinventing an Industry firm has clearly differentiated products in the market place. This has enabled Microfinance Unitus to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Microfinance Unitus to invest into research and development (R&D) and innovation.

Successful track record of launching new products

– Microfinance Unitus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Microfinance Unitus 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.

Analytics focus

– Microfinance Unitus 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 James A. Phills 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.

Strong track record of project management

– Microfinance Unitus is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Highly skilled collaborators

– Microfinance Unitus 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 Unitus (A): Microfinance 2.0--Reinventing an Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Cross disciplinary teams

– Horizontal connected teams at the Microfinance Unitus 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.

Digital Transformation in Finance & Accounting segment

- digital transformation varies from industry to industry. For Microfinance Unitus digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Microfinance Unitus 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.

Training and development

– Microfinance Unitus has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Unitus (A): Microfinance 2.0--Reinventing an Industry 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.

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Weaknesses Unitus (A): Microfinance 2.0--Reinventing an Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Unitus (A): Microfinance 2.0--Reinventing an Industry are -

Slow decision making process

– As mentioned earlier in the report, Microfinance Unitus 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. Microfinance Unitus 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.

Lack of clear differentiation of Microfinance Unitus products

– To increase the profitability and margins on the products, Microfinance Unitus needs to provide more differentiated products than what it is currently offering in the marketplace.

Low market penetration in new markets

– Outside its home market of Microfinance Unitus, firm in the HBR case study Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Microfinance Unitus 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 Unitus (A): Microfinance 2.0--Reinventing an Industry, in the dynamic environment Microfinance Unitus has struggled to respond to the nimble upstart competition. Microfinance Unitus has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

High cash cycle compare to competitors

Microfinance Unitus 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.

Workers concerns about automation

– As automation is fast increasing in the segment, Microfinance Unitus 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 Microfinance Unitus 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 - Unitus (A): Microfinance 2.0--Reinventing an Industry should strive to include more intangible value offerings along with its core products and services.

High bargaining power of channel partners

– Because of the regulatory requirements, James A. Phills suggests that, Microfinance Unitus 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.

Need for greater diversity

– Microfinance Unitus 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.

Interest costs

– Compare to the competition, Microfinance Unitus 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.

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Opportunities Unitus (A): Microfinance 2.0--Reinventing an Industry | 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 Unitus (A): Microfinance 2.0--Reinventing an Industry are -

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Microfinance Unitus can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Microfinance Unitus can use these opportunities to build new business models that can help the communities that Microfinance Unitus operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.

Manufacturing automation

– Microfinance Unitus can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.

Better consumer reach

– The expansion of the 5G network will help Microfinance Unitus to increase its market reach. Microfinance Unitus 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Microfinance Unitus 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Microfinance Unitus can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

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 Microfinance Unitus in the consumer business. Now Microfinance Unitus can target international markets with far fewer capital restrictions requirements than the existing system.

Building a culture of innovation

– managers at Microfinance Unitus 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 Finance & Accounting segment.

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 Microfinance Unitus 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.

Buying journey improvements

– Microfinance Unitus can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Unitus (A): Microfinance 2.0--Reinventing an Industry 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

– Microfinance Unitus 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.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Microfinance Unitus 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. Microfinance Unitus 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Microfinance Unitus 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 Microfinance Unitus to hire the very best people irrespective of their geographical location.

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Threats Unitus (A): Microfinance 2.0--Reinventing an Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Unitus (A): Microfinance 2.0--Reinventing an Industry are -

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Unitus (A): Microfinance 2.0--Reinventing an Industry, Microfinance Unitus may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .

High dependence on third party suppliers

– Microfinance Unitus 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.

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. Microfinance Unitus needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.

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 Microfinance Unitus in the Finance & Accounting 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 Microfinance Unitus business can come under increasing regulations regarding data privacy, data security, etc.

Technology acceleration in Forth Industrial Revolution

– Microfinance Unitus has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Microfinance Unitus needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Microfinance Unitus in the Finance & Accounting industry. The Finance & Accounting 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.

Increasing wage structure of Microfinance Unitus

– 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 Microfinance Unitus.

Stagnating economy with rate increase

– Microfinance Unitus 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.

Consumer confidence and its impact on Microfinance Unitus 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.

Shortening product life cycle

– it is one of the major threat that Microfinance Unitus is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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 Microfinance Unitus.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Microfinance Unitus with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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Weighted SWOT Analysis of Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Unitus (A): Microfinance 2.0--Reinventing an Industry 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 Microfinance Unitus needs to make to build a sustainable competitive advantage.

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