PayPoint (PAYP) SWOT Analysis / TOWS Matrix / MBA Resources
Consumer Financial Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for PayPoint (United Kingdom)
Based on various researches at Oak Spring University , PayPoint is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google,
central banks are concerned over increasing inflation, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that PayPoint can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the PayPoint, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which PayPoint 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 PayPoint can be done for the following purposes –
1. Strategic planning of PayPoint
2. Improving business portfolio management of PayPoint
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Consumer Financial Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of PayPoint
Strengths of PayPoint | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of PayPoint are -
High brand equity
– PayPoint has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled PayPoint to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– PayPoint is present in almost all the verticals within the Consumer Financial Services industry. This has provided PayPoint 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.
Sustainable margins compare to other players in Consumer Financial Services industry
– PayPoint has clearly differentiated products in the market place. This has enabled PayPoint to fetch slight price premium compare to the competitors in the Consumer Financial Services industry. The sustainable margins have also helped PayPoint to invest into research and development (R&D) and innovation.
Ability to lead change in Consumer Financial Services
– PayPoint is one of the leading players in the Consumer Financial Services industry in United Kingdom. Over the years it has not only transformed the business landscape in the Consumer Financial Services industry in United Kingdom but also across the existing markets. The ability to lead change has enabled PayPoint 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 PayPoint 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.
Superior customer experience
– The customer experience strategy of PayPoint in Consumer Financial Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– PayPoint is one of the most innovative firm in Consumer Financial Services sector.
Learning organization
- PayPoint 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 PayPoint is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at PayPoint emphasize – knowledge, initiative, and innovation.
Digital Transformation in Consumer Financial Services industry
- digital transformation varies from industry to industry. For PayPoint digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. PayPoint 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
– PayPoint has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. PayPoint 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.
Operational resilience
– The operational resilience strategy of PayPoint comprises – understanding the underlying the factors in the Consumer Financial Services 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.
Low bargaining power of suppliers
– Suppliers of PayPoint in the Financial sector have low bargaining power. PayPoint has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps PayPoint to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of PayPoint | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PayPoint are -
Slow to strategic competitive environment developments
– As PayPoint is one of the leading players in the Consumer Financial Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Consumer Financial Services industry in last five years.
Need for greater diversity
– PayPoint has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
PayPoint has a high cash cycle compare to other players in the Consumer Financial Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, PayPoint is slow explore the new channels of communication. These new channels of communication can help PayPoint to provide better information regarding Consumer Financial Services products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of PayPoint strategy
– From the outside it seems that the employees of PayPoint 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 PayPoint supply chain. Even after few cautionary changes, PayPoint is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left PayPoint vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, PayPoint has high operating costs in the Consumer Financial Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract PayPoint lucrative customers.
Lack of clear differentiation of PayPoint products
– To increase the profitability and margins on the products, PayPoint needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of PayPoint is dominated by functional specialists. It is not different from other players in the Consumer Financial Services industry, but PayPoint needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help PayPoint to focus more on services in the Consumer Financial Services industry rather than just following the product oriented approach.
High dependence on PayPoint ‘s star products
– The top 2 products and services of PayPoint still accounts for major business revenue. This dependence on star products in Consumer Financial Services industry has resulted into insufficient focus on developing new products, even though PayPoint has relatively successful track record of launching new products.
Products dominated business model
– Even though PayPoint has some of the most successful models in the Consumer Financial Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. PayPoint should strive to include more intangible value offerings along with its core products and services.
PayPoint Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of PayPoint are -
Using analytics as competitive advantage
– PayPoint has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Consumer Financial Services sector. This continuous investment in analytics has enabled PayPoint to build a competitive advantage using analytics. The analytics driven competitive advantage can help PayPoint to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for PayPoint 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 PayPoint to hire the very best people irrespective of their geographical location.
Buying journey improvements
– PayPoint can improve the customer journey of consumers in the Consumer Financial Services 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.
Building a culture of innovation
– managers at PayPoint 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 Consumer Financial Services industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, PayPoint can use these opportunities to build new business models that can help the communities that PayPoint operates in. Secondly it can use opportunities from government spending in Consumer Financial Services sector.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Consumer Financial Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. PayPoint 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. PayPoint 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.
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. PayPoint can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 PayPoint 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects PayPoint can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for PayPoint 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.
Better consumer reach
– The expansion of the 5G network will help PayPoint to increase its market reach. PayPoint 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.
Use of Bitcoin and other crypto currencies for transactions in Consumer Financial Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for PayPoint in the Consumer Financial Services industry. Now PayPoint can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of PayPoint has opened avenues for new revenue streams for the organization in Consumer Financial Services industry. This can help PayPoint to build a more holistic ecosystem for PayPoint products in the Consumer Financial Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats PayPoint External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of PayPoint are -
Environmental challenges
– PayPoint 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. PayPoint can take advantage of this fund but it will also bring new competitors in the Consumer Financial Services industry.
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 PayPoint.
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. PayPoint needs to understand the core reasons impacting the Consumer Financial Services industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– PayPoint 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 Consumer Financial Services industry.
Regulatory challenges
– PayPoint 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 Consumer Financial Services industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Consumer Financial Services industry are lowering. It can presents PayPoint with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Consumer Financial Services sector.
Easy access to finance
– Easy access to finance in Consumer Financial Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. PayPoint can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for PayPoint in Consumer Financial Services industry. The Consumer Financial Services 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.
Shortening product life cycle
– it is one of the major threat that PayPoint is facing in Consumer Financial Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 PayPoint in the Consumer Financial Services sector and impact the bottomline of the organization.
Increasing wage structure of PayPoint
– 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 PayPoint.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, PayPoint may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Consumer Financial Services sector.
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.
Weighted SWOT Analysis of PayPoint Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at PayPoint 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 PayPoint 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 PayPoint 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 PayPoint 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 PayPoint needs to make to build a sustainable competitive advantage.