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 , technology disruption, increasing energy prices, central banks are concerned over increasing inflation, geopolitical disruptions, there is backlash against globalization, cloud computing is disrupting traditional business models,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
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.
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.
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.
Successful track record of launching new products
– Compartamos Microfinance has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Compartamos Microfinance 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.
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.
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.
Training and development
– Compartamos Microfinance has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance firm has clearly differentiated products in the market place. This has enabled Compartamos Microfinance to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Compartamos Microfinance to invest into research and development (R&D) 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.
Superior customer experience
– The customer experience strategy of Compartamos Microfinance in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Ability to lead change in Leadership & Managing People field
– Compartamos Microfinance 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 Compartamos Microfinance in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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 -
Low market penetration in new markets
– Outside its home market of Compartamos Microfinance, firm in the HBR case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Compartamos Microfinance supply chain. Even after few cautionary changes mentioned in the HBR case study - Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Compartamos Microfinance vulnerable to further global disruptions in South East Asia.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance 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 Compartamos Microfinance has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Compartamos Microfinance is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Anne-Marie Carrick, Filipe Santos suggests that, Compartamos Microfinance 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.
Slow decision making process
– As mentioned earlier in the report, Compartamos Microfinance 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. Compartamos Microfinance 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.
Increasing silos among functional specialists
– The organizational structure of Compartamos Microfinance is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Compartamos Microfinance needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Compartamos Microfinance to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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 -
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Compartamos Microfinance 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 Compartamos Microfinance to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Compartamos Microfinance has opened avenues for new revenue streams for the organization in the industry. This can help Compartamos Microfinance to build a more holistic ecosystem as suggested in the Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance case study. Compartamos Microfinance can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Compartamos Microfinance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
Using analytics as competitive advantage
– Compartamos Microfinance 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 Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Compartamos Microfinance 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, 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.
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.
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 -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance, Compartamos Microfinance may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 .
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. Compartamos Microfinance 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.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Compartamos Microfinance is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Compartamos Microfinance business can come under increasing regulations regarding data privacy, data security, etc.
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 Compartamos Microfinance in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
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 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.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Social vs. Commercial Enterprise: The Compartamos Debate and the Battle for the Soul of Microfinance