Banco do Estado de Sergipe (BGIP3) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Banco do Estado de Sergipe (Brazil)

Based on various researches at Oak Spring University , Banco do Estado de Sergipe is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, geopolitical disruptions, increasing energy prices, supply chains are disrupted by pandemic , increasing transportation and logistics costs, technology disruption, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, etc

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Introduction to SWOT Analysis of Banco do Estado de Sergipe

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Banco do Estado de Sergipe can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Banco do Estado de Sergipe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Banco do Estado de Sergipe 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Banco do Estado de Sergipe can be done for the following purposes –
1. Strategic planning of Banco do Estado de Sergipe
2. Improving business portfolio management of Banco do Estado de Sergipe
3. Assessing feasibility of the new initiative in Brazil
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Banco do Estado de Sergipe

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Strengths of Banco do Estado de Sergipe | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Banco do Estado de Sergipe are -

High brand equity

– Banco do Estado de Sergipe has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Banco do Estado de Sergipe to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Learning organization

- Banco do Estado de Sergipe 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 Banco do Estado de Sergipe is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Banco do Estado de Sergipe emphasize – knowledge, initiative, and innovation.

Operational resilience

– The operational resilience strategy of Banco do Estado de Sergipe comprises – understanding the underlying the factors in the Regional Banks 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.

Diverse revenue streams

– Banco do Estado de Sergipe is present in almost all the verticals within the Regional Banks industry. This has provided Banco do Estado de Sergipe 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.

Superior customer experience

– The customer experience strategy of Banco do Estado de Sergipe in Regional Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

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

Strong track record of project management in the Regional Banks industry

– Banco do Estado de Sergipe is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

High switching costs

– The high switching costs that Banco do Estado de Sergipe 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.

Ability to recruit top talent

– Banco do Estado de Sergipe is one of the leading players in the Regional Banks industry in Brazil. It is in a position to attract the best talent available in Brazil. The firm has a robust talent identification program that helps in identifying the brightest.

Ability to lead change in Regional Banks

– Banco do Estado de Sergipe is one of the leading players in the Regional Banks industry in Brazil. Over the years it has not only transformed the business landscape in the Regional Banks industry in Brazil but also across the existing markets. The ability to lead change has enabled Banco do Estado de Sergipe in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Effective Research and Development (R&D)

– Banco do Estado de Sergipe has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Banco do Estado de Sergipe staying ahead in the Regional Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Sustainable margins compare to other players in Regional Banks industry

– Banco do Estado de Sergipe has clearly differentiated products in the market place. This has enabled Banco do Estado de Sergipe to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped Banco do Estado de Sergipe to invest into research and development (R&D) and innovation.

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Weaknesses of Banco do Estado de Sergipe | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Banco do Estado de Sergipe are -

Employees’ less understanding of Banco do Estado de Sergipe strategy

– From the outside it seems that the employees of Banco do Estado de Sergipe 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.

Workers concerns about automation

– As automation is fast increasing in the Regional Banks industry, Banco do Estado de Sergipe 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.

Compensation and incentives

– The revenue per employee of Banco do Estado de Sergipe is just above the Regional Banks industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.

High operating costs

– Compare to the competitors, Banco do Estado de Sergipe has high operating costs in the Regional Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Banco do Estado de Sergipe lucrative customers.

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 Banco do Estado de Sergipe supply chain. Even after few cautionary changes, Banco do Estado de Sergipe is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Banco do Estado de Sergipe vulnerable to further global disruptions in South East Asia.

High dependence on Banco do Estado de Sergipe ‘s star products

– The top 2 products and services of Banco do Estado de Sergipe still accounts for major business revenue. This dependence on star products in Regional Banks industry has resulted into insufficient focus on developing new products, even though Banco do Estado de Sergipe 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, Banco do Estado de Sergipe is slow explore the new channels of communication. These new channels of communication can help Banco do Estado de Sergipe to provide better information regarding Regional Banks products and services. It can also build an online community to further reach out to potential customers.

Low market penetration in new markets

– Outside its home market of Brazil, Banco do Estado de Sergipe needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Need for greater diversity

– Banco do Estado de Sergipe 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 bargaining power of channel partners in Regional Banks industry

– because of the regulatory requirements in Brazil, Banco do Estado de Sergipe 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 Regional Banks industry.

High cash cycle compare to competitors

Banco do Estado de Sergipe has a high cash cycle compare to other players in the Regional Banks industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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Banco do Estado de Sergipe Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Banco do Estado de Sergipe are -

Using analytics as competitive advantage

– Banco do Estado de Sergipe has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Regional Banks sector. This continuous investment in analytics has enabled Banco do Estado de Sergipe to build a competitive advantage using analytics. The analytics driven competitive advantage can help Banco do Estado de Sergipe to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Use of Bitcoin and other crypto currencies for transactions in Regional Banks industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Banco do Estado de Sergipe in the Regional Banks industry. Now Banco do Estado de Sergipe 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, Banco do Estado de Sergipe 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 Banco do Estado de Sergipe 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 Banco do Estado de Sergipe can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Manufacturing automation

– Banco do Estado de Sergipe can use the latest technology developments to improve its manufacturing and designing process in Regional Banks 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Regional Banks industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Banco do Estado de Sergipe 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. Banco do Estado de Sergipe can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Better consumer reach

– The expansion of the 5G network will help Banco do Estado de Sergipe to increase its market reach. Banco do Estado de Sergipe 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Banco do Estado de Sergipe is facing challenges because of the dominance of functional experts in the organization. Banco do Estado de Sergipe can utilize new technology in the field of Regional Banks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Banco do Estado de Sergipe in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Regional Banks industry, and it will provide faster access to the consumers.

Building a culture of innovation

– managers at Banco do Estado de Sergipe 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 Regional Banks 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, Banco do Estado de Sergipe can use these opportunities to build new business models that can help the communities that Banco do Estado de Sergipe operates in. Secondly it can use opportunities from government spending in Regional Banks sector.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Banco do Estado de Sergipe 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 Banco do Estado de Sergipe to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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Threats Banco do Estado de Sergipe External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Banco do Estado de Sergipe are -

Technology acceleration in Forth Industrial Revolution

– Banco do Estado de Sergipe has witnessed rapid integration of technology during Covid-19 in the Regional Banks industry. As one of the leading players in the industry, Banco do Estado de Sergipe needs to keep up with the evolution of technology in the Regional Banks 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.

High dependence on third party suppliers

– Banco do Estado de Sergipe 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Regional Banks industry are lowering. It can presents Banco do Estado de Sergipe with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Regional Banks sector.

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 Banco do Estado de Sergipe in the Regional Banks sector and impact the bottomline of the organization.

Easy access to finance

– Easy access to finance in Regional Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Banco do Estado de Sergipe can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Banco do Estado de Sergipe 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 Regional Banks industry and other sectors.

Increasing wage structure of Banco do Estado de Sergipe

– 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 Banco do Estado de Sergipe.

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. Banco do Estado de Sergipe 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 Banco do Estado de Sergipe in Regional Banks industry. The Regional Banks 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Banco do Estado de Sergipe may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Regional Banks sector.

Stagnating economy with rate increase

– Banco do Estado de Sergipe 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 Regional Banks industry.

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 Banco do Estado de Sergipe business can come under increasing regulations regarding data privacy, data security, etc.

Regulatory challenges

– Banco do Estado de Sergipe 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 Regional Banks industry regulations.

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Weighted SWOT Analysis of Banco do Estado de Sergipe Template, Example

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

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