Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance
The Mexican microfinance bank Compartamos Banco took the industry by surprise in 2007 with a successful IPO that valued the bank at more than US$ 1 billion. Although it was not the first listing of a microfinance organisation, the 10,000% rate of return for the initial investors and managers created controversy as many believed that these returns were possible because of the high interest rates charged to poor borrowers. This controversy divided the microfinance industry and still rages today. The case tells the story of Compartamos and its IPO, and outlines the different arguments from both sides, setting the scene for a lively debate-style session..
Swot Analysis of "Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance" written by Anne-Marie Carrick, Filipe Santos includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Compartamos Microfinance facing as an external strategic factors. Some of the topics covered in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance case study are - Strategic Management Strategies, Social responsibility and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance casestudy better are - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, geopolitical disruptions, technology disruption,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Compartamos Microfinance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance can be done for the following purposes –
1. Strategic planning using facts provided in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance case study
2. Improving business portfolio management of Compartamos Microfinance
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Compartamos Microfinance
Strengths Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Compartamos Microfinance in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance Harvard Business Review case study are -
Strong track record of project management
– Compartamos Microfinance 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
– Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Compartamos Microfinance 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 Anne-Marie Carrick, Filipe Santos 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 recruit top talent
– Compartamos Microfinance is one of the leading recruiters in the industry. Managers in the Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Compartamos Microfinance 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 Compartamos Microfinance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
High switching costs
– The high switching costs that Compartamos Microfinance 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.
Innovation driven organization
– Compartamos Microfinance is one of the most innovative firm in sector. Manager in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Compartamos Microfinance is present in almost all the verticals within the industry. This has provided firm in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Compartamos Microfinance digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Compartamos Microfinance 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 brand equity
– Compartamos Microfinance has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Compartamos Microfinance to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance are -
Products dominated business model
– Even though Compartamos Microfinance 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 - Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Compartamos Microfinance 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Compartamos Microfinance 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.
Lack of clear differentiation of Compartamos Microfinance products
– To increase the profitability and margins on the products, Compartamos Microfinance needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance can leverage the sales team experience to cultivate customer relationships as Compartamos Microfinance is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, in the dynamic environment Compartamos Microfinance has struggled to respond to the nimble upstart competition. Compartamos Microfinance has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Compartamos Microfinance 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 to strategic competitive environment developments
– As Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance HBR case study mentions - Compartamos Microfinance 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.
High cash cycle compare to competitors
Compartamos Microfinance 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, it seems that the employees of Compartamos Microfinance 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.
Opportunities Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance | 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance are -
Building a culture of innovation
– managers at Compartamos Microfinance 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 Leadership & Managing People segment.
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 Compartamos Microfinance in the consumer business. Now Compartamos Microfinance can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Compartamos Microfinance 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. Compartamos Microfinance 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.
Better consumer reach
– The expansion of the 5G network will help Compartamos Microfinance to increase its market reach. Compartamos Microfinance 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.
Learning at scale
– Online learning technologies has now opened space for Compartamos Microfinance 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Compartamos Microfinance in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Compartamos Microfinance is facing challenges because of the dominance of functional experts in the organization. Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
Loyalty marketing
– Compartamos Microfinance 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.
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 Compartamos Microfinance 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Compartamos Microfinance can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Compartamos Microfinance can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Compartamos Microfinance 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, Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Compartamos Microfinance 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.
Threats Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
Environmental challenges
– Compartamos Microfinance 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. Compartamos Microfinance can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Compartamos Microfinance can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Compartamos Microfinance
– 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 Compartamos Microfinance.
High dependence on third party suppliers
– Compartamos Microfinance 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Compartamos Microfinance in the Leadership & Managing People industry. The Leadership & Managing People 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.
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 Compartamos Microfinance.
Regulatory challenges
– Compartamos Microfinance 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 Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance .
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.
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. Compartamos Microfinance needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Compartamos Microfinance 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Compartamos Microfinance needs to make to build a sustainable competitive advantage.
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