7/30/2021 MBA SWOT : Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers SWOT Analysis & Matrix

Capitec Bank: Leveraging Banking Innovations to Attract

Wealthier Customers SWOT Analysis & Matrix / MBA Resources
Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers / Strategy & Execution / MBA Resources

Definition of SWOT Analysis

What is SWOT Analysis & Matrix? How you can use SWOT Analysis for Capitec
Bank: Leveraging Banking Innovations to Attract Wealthier Customers
At EMBA PRO , we specialize at analyzing & providing comprehensive, corporate SWOT Analysis of Capitec Bank: Leveraging Banking
Innovations to Attract Wealthier Customers case study. Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers
"referred as Capitec Income in this analysis " is a Harvard Business Review (HBR) case study used for MBA & EMBA programs. It is
written by Helena Barnard, Gwen Ansell and deals with topics in areas such as Strategy & Execution

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that Capitec Income encounters both internally and in
macro environment that it operates in. Strengths and Weaknesses are often restricted to company’s internal - resources, skills and
limitations.

Opportunities and Threats are factors that are analyzed in view of the prevalent market forces and other factors such as political,
economic , technological, social, health & safety, and legal & environmental.

According to global executive survey done by Harvard Business Review & Brightline Initiative – Only 20% of the strategic targets set by
organizations are realized. Rest 80% of the strategic targets are not achieved because of incomprehensive planning, limited resource
allocation, and poor execution.

The successful organizations such as Capitec Income are the one who able to predict market trends better than others, provide
resources to develop products and services to leverage those trends, able to counter competitors’ threats, and meet customers’
expected value proposition.

Case Description of Capitec Bank: Leveraging Banking Innovations to Attract

Wealthier Customers Case Study

Capitec Bank was a new bank established at the end of apartheid to offer banking services and loans to the large numbers of low-
income potential customers newly opened to economic progress and aspiration by the end of the discriminatory system. The banking
context was dominated by four major and long-established banks characterized by conservative legacy practices. Capitec planned to
create an innovative offering to serve the low-income market and to migrate this offering into higher income groups. At the same time,
the competitive context began to change, as other banks sought to attract lower-income clients as well. The case examines Capitec's
strategic options for survival and expansion in this context.

Case Authors : Helena Barnard, Gwen Ansell

Topic : Strategy & Execution

Related Areas :

Case Study Solution & Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier
Customers

PESTEL / PEST / STEP Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier
Customers Case Study

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What are the Four Elements of SWOT Analysis? How to use them for Capitec
Bank: Leveraging Banking Innovations to Attract Wealthier Customers case
study?

The four key elements of SWOT analysis are - Strengths, Weaknesses, Opportunities & Threats. Capitec Income can use strengths to
create niche positioning in the market, can strive to reduce & remove weaknesses so that it can better compete with competitors, look
out to leverage opportunities provided by industry structure, regulations and other development in external environment, and finally
make provisions and develop strategies to mitigate threats that can undermine the business model of Capitec Income.

Opportunities Threats

Strengths
Strength Opportunities (SO) Strategies
Strength Threats (ST) Strategies

Using Capitec Income strengths to Capitec Income can use two approaches - building on present
consolidate and expand the market strengths, or analyze the trend and build processes to two pronged
position. market penetration approach.

Weaknesses
Weakness Opportunities (WO) Weaknesses Threats (WT) Strategies

Strategies
Capitec Income should just get out of these business areas and focus
Building strategies based on consumer on strength and threats box , or on weakness and opportunities box.
oriented product development and
marketing approach.

For more detailed SWOT Matrix strategy please go through the detailed analysis of strengths, weaknesses, opportunities, and threats in
next section.

What are Strengths in SWOT Analysis

Strengths - Capitec Bank: Leveraging Banking Innovations to Attract

Wealthier Customers

Strengths are the Capitec Income capabilities and resources that it can leverage to build a sustainable competitive advantage in the
marketplace. Strengths come from positive aspects of five key resources & capabilities - financial resources, physical resources such as
land, building, human resources, activities & processes, and past experiences and successes .

- Robust Domestic Market that Capitec Income Operates in - The domestic market in which Capitec Income is operating is both a source
of strength and roadblock to the growth and innovation of the company. Based on details provided in the Capitec Bank: Leveraging
Banking Innovations to Attract Wealthier Customers case study – Capitec Income can easily grow in its domestic market without much
innovation but will require further investment into research and development to enter international market. The temptation so far for
the managers at Capitec Income is to focus on the domestic market only.

- Successful Go To Market Track Record – Capitec Income has a highly successful track record of both launching new products in the
domestic market but also catering to the various market based on the insights from local consumers. According to Helena Barnard,
Gwen Ansell , Capitec Income has tested various concepts in different markets and come up with successful Strategy & Execution
solutions.

- First Mover Advantage – Capitec Income has first mover advantage in number of segments. It has experimented in various areas . The
Strategy & Execution solutions & strategies has helped Capitec Income in coming up with unique solution to tap the un-catered
markets.

- Managing Regulations and Business Environment – Capitec Income operates in an environment where it faces numerous regulations
and government diktats. In areas, the firm needs to navigate environment by building strong relationship with lobby groups and
political network.

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- Intellectual Property Rights – Capitec Income has garnered a wide array of patents and copyrights through innovation and buying
those rights from the creators. This can help Capitec Income in thwarting the challenges of competitors in various industries .

- Strong relationship with existing suppliers – As an incumbent in the industry, Capitec Income has strong relationship with its suppliers
and other members of the supply chain. According to Helena Barnard, Gwen Ansell , the organization can increase products and services
by leveraging the skills of its suppliers and supply chain partners.

- Diverse Product Portfolio of Capitec Income – The products and brand portfolio of Capitec Income is enabling it to target various
segments in the domestic market at the same time. This has enabled Capitec Income to build diverse revenue source and profit mix.

What are Weakness in SWOT Analysis

Weakness- Capitec Bank: Leveraging Banking Innovations to Attract Wealthier

Customers

Weaknesses are the areas, capabilities or skills in which Capitec Income lacks. It limits the ability of the firm to build a sustainable
competitive advantage. Weaknesses come from lack or absence of five key resources & capabilities - past experiences and successes,
financial resources, human resources, activities & processes, and physical resources such as land, building .

- Low Return on Investment – Even though Capitec Income is having a stable balance sheet, one metrics that needs reflection is “Return
on Invested Capital”. According to Helena Barnard, Gwen Ansell in areas that Capitec Income operates in the most reliable measure of
profitability is Return on Invested Capital rather than one favored by financial analysts such as – Return on Equity & Return on Assets.

- Implementation of Technology in Processes – Even though Capitec Income has integrated technology in the backend processes it has
still not able to harness the power of technology in the front end processes.

- Organization Culture – It seems that organization culture of Capitec Income is still dominated by turf wars within various divisions,
leading to managers keeping information close to their chests. According to Helena Barnard, Gwen Ansell of Capitec Bank: Leveraging
Banking Innovations to Attract Wealthier Customers case study, this can lead to serious road blocks in future growth as information in
silos can result can lead to missed opportunities in market place.

- Track record on environment consideration is not very encouraging – Capitec Income track record on environmental issues is not very
encouraging. According to Helena Barnard, Gwen Ansell , this can lead to consumer backlash as customers are now considering
environmental protections as integral to part of doing business.

- Capitec Income business model can be easily replicated even with the number of patents and copyrights the company possess. The
intellectual property rights are very difficult to implement in the industry that Capitec Income operates in. According to Helena Barnard,
Gwen Ansell , Intellectual Property Rights are effective in thwarting same size competition but it is difficult to stop start ups disrupting
markets at various other levels.

- Project Management is too focused on internal delivery rather than considering all the interests of external stakeholders. This approach
can lead to poor public relation and customer backlash.

What are Opportunities in SWOT Analysis

Opportunities- Capitec Bank: Leveraging Banking Innovations to Attract

Wealthier Customers

Opportunities are macro environment factors and developments that Capitec Income can leverage either to consolidate existing market
position or use them for further expansion. Opportunities can emerge from various factors such as - increase in consumer disposable
income, economic growth, changes in consumer preferences, technological innovations, and political developments & policy changes .

- Increasing Standardization – Capitec Income can leverage this trend to reduce the number of offerings in the market and focus the
marketing efforts on only the most successful products.
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- Reducing Cost of Market Entry and Marketing into International Markets – According to Helena Barnard, Gwen Ansell, globalization
along with boom in digital marketing and social media has considerably reduced the risks of market entry and marketing in
international market.

- E-Commerce and Social Media Oriented Business Models – E-commerce business model can help Capitec Income to tie up with local
suppliers and logistics provider in international market. Social media growth can help Capitec Income to reduce the cost of entering new
market and reaching to customers at a significantly lower marketing budget. It can also lead to crowd sourcing various services and
consumer oriented marketing based on the data and purchase behavior.

- Changing Technology Landscape – Machine learning and Artificial Intelligence boom is transforming the technology landscape that
Capitec Income operates in. According to Helena Barnard, Gwen Ansell , Capitec Income can use these developments in improving
efficiencies, lowering costs, and transforming processes.

- Opportunities in Adjacent Markets – Capitec Income can explore adjacent industries to further market growth especially by extending
the features of present products and services.

- Increase in Consumer Disposable Income – Capitec Income can use the increasing disposable income to build a new business model
where customers start paying progressively for using its products. According to Helena Barnard, Gwen Ansell of Capitec Bank:
Leveraging Banking Innovations to Attract Wealthier Customers case study, Capitec Income can use this trend to expand in adjacent
areas .

What are Threats in SWOT Analysis

Threats- Capitec Bank: Leveraging Banking Innovations to Attract Wealthier

Customers

Threats are macro environment factors and developments that can derail business model of Capitec Income. Threats can emerge from
various factors such as - technological innovations, increase in consumer disposable income, political developments & policy changes,
changes in consumer preferences, and economic growth .

- Squeezing Middle Class in Developed and Developing World – The growing inequality is one of the biggest threat to not only
globalization but also to capitalism. Capitec Income first hand witnessed the impact of it where it has seen lower demand of its products
from middle class customers in US and EU market.

- Culture of sticky prices in the industry – Capitec Income operates in an industry where there is a culture of sticky prices. According to
Helena Barnard, Gwen Ansell of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers case study, this can lead
to inability on part of the organization to increase prices that its premium prices deserve.

- Threats of New Entrants because of Reducing Costs and Increasing Efficiencies – As Capitec Income can leverage low cost of reaching
customers using social media and e-commerce, so can the competitors – both local and international competitors.

- Credit Binge post 2008 Recession – Easy access to credit can be over any time, so Capitec Income should focus on reducing its
dependence on debt to expand. The party has lasted for more than a decade and rollback from Fed can result in huge interest costs for
Capitec Income.

- Growing Protectionism - Capitec Income should hedge the risk against growing protectionism ranging from – storing data into
international market to diversifying risk by operating into countries at different economic cycle.

- Increasing bargaining power of buyers – Over the years the bargaining power of customers of Capitec Income has increased
significantly that is putting downward pressure on prices. The company can pursue horizontal integration to consolidate and bring
efficiencies but I believe it will be a short term relief. According to Helena Barnard, Gwen Ansell , Capitec Income needs fundamental
changes to business model rather than cosmetic changes.

5C Marketing Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

4P Marketing Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Porter Five Forces Analysis and Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

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Porter Value Chain Analysis and Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Case Memo & Recommendation Memo of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Blue Ocean Analysis and Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Marketing Strategy and Analysis Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

VRIO /VRIN Analysis & Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

PESTEL / STEP / PEST Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Case Study Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

SWOT Analysis and Solution of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

References & Further Readings

Helena Barnard, Gwen Ansell (2018), "Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers Harvard Business
Review Case Study. Published by HBR Publications.

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