HDFC Standard (HDFS) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for HDFC Standard (India)

Based on various researches at Oak Spring University , HDFC Standard is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing commodity prices, increasing transportation and logistics costs, increasing energy prices, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, etc

---

---

---

---

Introduction to SWOT Analysis of HDFC Standard

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that HDFC Standard can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the HDFC Standard, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which HDFC Standard 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 HDFC Standard can be done for the following purposes –
1. Strategic planning of HDFC Standard
2. Improving business portfolio management of HDFC Standard
3. Assessing feasibility of the new initiative in India
4. Making a Insurance (Life) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of HDFC Standard

---

Strengths of HDFC Standard | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of HDFC Standard are -

Strong track record of project management in the Insurance (Life) industry

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

Low bargaining power of suppliers

– Suppliers of HDFC Standard in the Financial sector have low bargaining power. HDFC Standard has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps HDFC Standard to manage not only supply disruptions but also source products at highly competitive prices.

Training and development

– HDFC Standard has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Learning organization

- HDFC Standard 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 HDFC Standard is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at HDFC Standard emphasize – knowledge, initiative, and innovation.

Ability to recruit top talent

– HDFC Standard is one of the leading players in the Insurance (Life) industry in India. It is in a position to attract the best talent available in India. The firm has a robust talent identification program that helps in identifying the brightest.

High brand equity

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

Digital Transformation in Insurance (Life) industry

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

– The covid-19 pandemic has put organizational resilience at the centre of everthing HDFC Standard does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Ability to lead change in Insurance (Life)

– HDFC Standard is one of the leading players in the Insurance (Life) industry in India. Over the years it has not only transformed the business landscape in the Insurance (Life) industry in India but also across the existing markets. The ability to lead change has enabled HDFC Standard in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Cross disciplinary teams

– Horizontal connected teams at the HDFC Standard 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.

Sustainable margins compare to other players in Insurance (Life) industry

– HDFC Standard has clearly differentiated products in the market place. This has enabled HDFC Standard to fetch slight price premium compare to the competitors in the Insurance (Life) industry. The sustainable margins have also helped HDFC Standard to invest into research and development (R&D) and innovation.

Analytics focus

– HDFC Standard 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 Insurance (Life) industry. The technology infrastructure of India is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

---

---

Weaknesses of HDFC Standard | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of HDFC Standard are -

Ability to respond to the competition

– As the decision making is very deliberative at HDFC Standard, in the dynamic environment of Insurance (Life) industry it has struggled to respond to the nimble upstart competition. HDFC Standard has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Skills based hiring in Insurance (Life) industry

– The stress on hiring functional specialists at HDFC Standard 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.

Slow to strategic competitive environment developments

– As HDFC Standard is one of the leading players in the Insurance (Life) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Insurance (Life) industry in last five years.

Workers concerns about automation

– As automation is fast increasing in the Insurance (Life) industry, HDFC Standard 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.

Capital Spending Reduction

– Even during the low interest decade, HDFC Standard has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Insurance (Life) industry using digital technology.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, HDFC Standard is slow explore the new channels of communication. These new channels of communication can help HDFC Standard to provide better information regarding Insurance (Life) products and services. It can also build an online community to further reach out to potential customers.

Products dominated business model

– Even though HDFC Standard has some of the most successful models in the Insurance (Life) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. HDFC Standard should strive to include more intangible value offerings along with its core products and services.

High dependence on HDFC Standard ‘s star products

– The top 2 products and services of HDFC Standard still accounts for major business revenue. This dependence on star products in Insurance (Life) industry has resulted into insufficient focus on developing new products, even though HDFC Standard has relatively successful track record of launching new products.

No frontier risks strategy

– From the 10K / annual statement of HDFC Standard, it seems that company is thinking out the frontier risks that can impact Insurance (Life) industry. 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.

Interest costs

– Compare to the competition, HDFC Standard 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.

Lack of clear differentiation of HDFC Standard products

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

---

HDFC Standard Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of HDFC Standard are -

Building a culture of innovation

– managers at HDFC Standard 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 Insurance (Life) industry.

Buying journey improvements

– HDFC Standard can improve the customer journey of consumers in the Insurance (Life) industry by using analytics and artificial intelligence. It 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.

Developing new processes and practices

– HDFC Standard can develop new processes and procedures in Insurance (Life) 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.

Use of Bitcoin and other crypto currencies for transactions in Insurance (Life) industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for HDFC Standard in the Insurance (Life) industry. Now HDFC Standard can target international markets with far fewer capital restrictions requirements than the existing system.

Low interest rates

– Even though inflation is raising its head in most developed economies, HDFC Standard 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, HDFC Standard is facing challenges because of the dominance of functional experts in the organization. HDFC Standard can utilize new technology in the field of Insurance (Life) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Learning at scale

– Online learning technologies has now opened space for HDFC Standard 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.

Loyalty marketing

– HDFC Standard 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.

Better consumer reach

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

Manufacturing automation

– HDFC Standard can use the latest technology developments to improve its manufacturing and designing process in Insurance (Life) sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

Lowering marketing communication costs

– 5G expansion will open new opportunities for HDFC Standard in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Insurance (Life) industry, and it will provide faster access to the consumers.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Insurance (Life) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. HDFC Standard 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. HDFC Standard 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.

Reforming the budgeting process

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

---

Threats HDFC Standard External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of HDFC Standard are -

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, HDFC Standard may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Insurance (Life) sector.

Shortening product life cycle

– it is one of the major threat that HDFC Standard is facing in Insurance (Life) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Increasing wage structure of HDFC Standard

– 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 HDFC Standard.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, HDFC Standard 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 HDFC Standard prominent markets.

Regulatory challenges

– HDFC Standard 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 Insurance (Life) industry regulations.

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 HDFC Standard.

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.

Consumer confidence and its impact on HDFC Standard 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 Insurance (Life) industry and other sectors.

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. HDFC Standard 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.

High dependence on third party suppliers

– HDFC Standard 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.

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 HDFC Standard in the Insurance (Life) sector and impact the bottomline of the organization.

Environmental challenges

– HDFC Standard 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. HDFC Standard can take advantage of this fund but it will also bring new competitors in the Insurance (Life) industry.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for HDFC Standard in Insurance (Life) industry. The Insurance (Life) 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.

---

Weighted SWOT Analysis of HDFC Standard Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at HDFC Standard 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 HDFC Standard 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 HDFC Standard 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 HDFC Standard 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 HDFC Standard needs to make to build a sustainable competitive advantage.

--- ---