Growing Financial Services in India: Aditya Birla Financial Services Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Growing Financial Services in India: Aditya Birla Financial Services Group
To maximize their effectiveness, color cases should be printed in color.Aditya Birla Financial Services Group is a large, broad-based, Indian financial services institution offering products ranging from life insurance and mutual funds to private equity. The company has witnessed a turnaround in recent years and regained lost market share. However, in recent years, concerns about investor protection has increased financial sector regulatory oversight specifically in the asset management and life insurance space and changed the rules of the game. Additionally, the central bank has invited new banks to apply for licenses to operate in the country. In the face of these changes, the company has to figure out what its strategy should be to realize its vision of becoming a leading integrated financial services player offering customers a menu of products that support their needs at different stages of their life.
Swot Analysis of "Growing Financial Services in India: Aditya Birla Financial Services Group" written by Paul M. Healy, Rachna Tahilyani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Birla Financial facing as an external strategic factors. Some of the topics covered in Growing Financial Services in India: Aditya Birla Financial Services Group case study are - Strategic Management Strategies, Change management, Collaboration, Demographics, Entrepreneurship, Financial management, Growth strategy, Leadership, Leadership development, Marketing, Organizational structure, Risk management, Strategy execution and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Growing Financial Services in India: Aditya Birla Financial Services Group casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Growing Financial Services in India: Aditya Birla Financial Services Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Growing Financial Services in India: Aditya Birla Financial Services Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Birla Financial, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Birla Financial 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 Growing Financial Services in India: Aditya Birla Financial Services Group can be done for the following purposes –
1. Strategic planning using facts provided in Growing Financial Services in India: Aditya Birla Financial Services Group case study
2. Improving business portfolio management of Birla Financial
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 Birla Financial
Strengths Growing Financial Services in India: Aditya Birla Financial Services Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Birla Financial in Growing Financial Services in India: Aditya Birla Financial Services Group Harvard Business Review case study are -
Successful track record of launching new products
– Birla Financial has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Birla Financial 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Growing Financial Services in India: Aditya Birla Financial Services Group firm has clearly differentiated products in the market place. This has enabled Birla Financial to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Birla Financial to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Growing Financial Services in India: Aditya Birla Financial Services Group 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.
Highly skilled collaborators
– Birla Financial 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 Growing Financial Services in India: Aditya Birla Financial Services Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Birla Financial is one of the most innovative firm in sector. Manager in Growing Financial Services in India: Aditya Birla Financial Services Group Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Birla Financial 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.
Training and development
– Birla Financial has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Growing Financial Services in India: Aditya Birla Financial Services Group 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.
Ability to recruit top talent
– Birla Financial is one of the leading recruiters in the industry. Managers in the Growing Financial Services in India: Aditya Birla Financial Services Group are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Birla Financial has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Birla Financial to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Birla Financial 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 Birla Financial in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Birla Financial digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Birla Financial 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.
Organizational Resilience of Birla Financial
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Birla Financial does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Growing Financial Services in India: Aditya Birla Financial Services Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Growing Financial Services in India: Aditya Birla Financial Services Group are -
High cash cycle compare to competitors
Birla Financial 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.
Skills based hiring
– The stress on hiring functional specialists at Birla Financial has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul M. Healy, Rachna Tahilyani suggests that, Birla Financial 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.
No frontier risks strategy
– After analyzing the HBR case study Growing Financial Services in India: Aditya Birla Financial Services Group, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Growing Financial Services in India: Aditya Birla Financial Services Group, it seems that the employees of Birla Financial 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.
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 Birla Financial supply chain. Even after few cautionary changes mentioned in the HBR case study - Growing Financial Services in India: Aditya Birla Financial Services Group, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Birla Financial vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Birla Financial 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 Birla Financial 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 - Growing Financial Services in India: Aditya Birla Financial Services Group should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Growing Financial Services in India: Aditya Birla Financial Services Group, in the dynamic environment Birla Financial has struggled to respond to the nimble upstart competition. Birla Financial has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Birla Financial is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Birla Financial needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Birla Financial to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Growing Financial Services in India: Aditya Birla Financial Services Group 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 Birla Financial has relatively successful track record of launching new products.
Opportunities Growing Financial Services in India: Aditya Birla Financial Services Group | 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 Growing Financial Services in India: Aditya Birla Financial Services Group are -
Creating value in data economy
– The success of analytics program of Birla Financial has opened avenues for new revenue streams for the organization in the industry. This can help Birla Financial to build a more holistic ecosystem as suggested in the Growing Financial Services in India: Aditya Birla Financial Services Group case study. Birla Financial 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. Birla Financial can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Birla Financial 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 Birla Financial to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Birla Financial 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 Growing Financial Services in India: Aditya Birla Financial Services Group - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Birla Financial 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, Birla Financial 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.
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 Birla Financial 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.
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 Birla Financial in the consumer business. Now Birla Financial can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Birla Financial can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Growing Financial Services in India: Aditya Birla Financial Services Group 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.
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. Birla Financial 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, Birla Financial can use these opportunities to build new business models that can help the communities that Birla Financial operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Birla Financial 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, Growing Financial Services in India: Aditya Birla Financial Services Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Birla Financial in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Birla Financial 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.
Threats Growing Financial Services in India: Aditya Birla Financial Services Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Growing Financial Services in India: Aditya Birla Financial Services Group are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Birla Financial 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.
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 Birla Financial in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Birla Financial can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Birla Financial 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.
Regulatory challenges
– Birla Financial 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 Finance & Accounting industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Birla Financial 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 Growing Financial Services in India: Aditya Birla Financial Services Group .
Stagnating economy with rate increase
– Birla Financial 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.
High dependence on third party suppliers
– Birla Financial 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.
Shortening product life cycle
– it is one of the major threat that Birla Financial is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Birla Financial has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Birla Financial 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.
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 Birla Financial.
Environmental challenges
– Birla Financial 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. Birla Financial can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Growing Financial Services in India: Aditya Birla Financial Services Group 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 Growing Financial Services in India: Aditya Birla Financial Services Group 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 Growing Financial Services in India: Aditya Birla Financial Services Group 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 Growing Financial Services in India: Aditya Birla Financial Services Group 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 Growing Financial Services in India: Aditya Birla Financial Services Group 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 Birla Financial needs to make to build a sustainable competitive advantage.