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 - – cloud computing is disrupting traditional business models, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, increasing government debt because of Covid-19 spendings, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, talent flight as more people leaving formal jobs, 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 -

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.

Diverse revenue streams

– Microfinance Unitus is present in almost all the verticals within the industry. This has provided firm in Unitus (A): Microfinance 2.0--Reinventing an Industry case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Learning organization

- Microfinance Unitus 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 Microfinance Unitus is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Unitus (A): Microfinance 2.0--Reinventing an Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

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.

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.

High brand equity

– Microfinance Unitus has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Microfinance Unitus to keep acquiring new customers and building profitable relationship with both the new and loyal 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.

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.

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.

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.

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.

Operational resilience

– The operational resilience strategy in the Unitus (A): Microfinance 2.0--Reinventing an Industry 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.

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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 -

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.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Unitus (A): Microfinance 2.0--Reinventing an Industry, it seems that the employees of Microfinance Unitus 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.

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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Microfinance Unitus is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Unitus (A): Microfinance 2.0--Reinventing an Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Unitus (A): Microfinance 2.0--Reinventing an Industry, is just above the industry average. Microfinance Unitus 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.

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.

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.

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.

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.

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.

No frontier risks strategy

– After analyzing the HBR case study Unitus (A): Microfinance 2.0--Reinventing an Industry, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.

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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 -

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.

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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Microfinance Unitus 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, Unitus (A): Microfinance 2.0--Reinventing an Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. Microfinance Unitus can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Microfinance Unitus is facing challenges because of the dominance of functional experts in the organization. Unitus (A): Microfinance 2.0--Reinventing an Industry 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, 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.

Using analytics as competitive advantage

– Microfinance Unitus 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 Unitus (A): Microfinance 2.0--Reinventing an Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Microfinance Unitus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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.

Developing new processes and practices

– Microfinance Unitus can develop new processes and procedures in Finance & Accounting 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.

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.

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.

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.

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.

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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 -

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.

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.

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.

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.

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.

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.

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.

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. Microfinance Unitus 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 Microfinance Unitus in the Finance & Accounting sector and impact the bottomline of the organization.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Microfinance Unitus.

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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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