Académique Documents
Professionnel Documents
Culture Documents
ABSTRACT:
Since 2013, Mastercard CMO M.V. Rajamannar (Raja) had transformed the firm's marketing
by using unique experiences, digital technology, and social media to intensify linkages not
only with cardholders, but also with Mastercard's direct bank and merchant stakeholders.
Building on its influential but dated "Priceless" advertising campaign, Raja refocused
Mastercard on four "Priceless Possibilities" that engaged cardholders directly in
unexpected and sometimes unique opportunities reflecting their passions. The result was
increased brand differentiation and deeper collaborative ties between Mastercard and its
bank and merchant partners.
Priceless was founded on the core insight that experiences matter more than things and one
of the reasons why it has had such longevity is because it has stayed relevant
Establish your institution as a partner in helping customers build and use credit wisely by
providing credit-building and budgeting apps and tools. Budgeting capabilities should be
included in mobile apps to reach millennials through their desired channel. As an example,
you can:
The needs of millennials vary depending on their ages and life stages, as their needs change
over time. Your product portfolio should offer a variety of products to meet their needs as
they mature.
Consider offering:
Prepaid products (i.e., teen cards) to younger millennials starting in their mid-teens
Prepaid cards and DDA accounts with debit cards in their late teens
Credit cards to those in their early to mid-20s, as students head off to college and
enter the work force
Companion prepaid cards for older millennials
You need to understand the motivations and behaviors of this generation to capture their
interest, because millennials are more fickle than other consumers. They are five times
more likely to close primary bank accounts4 because:
Account fees are too high
Negative experiences with bank representatives
Too few ATM locations exist
You need to understand the motivations and behaviors of this generation to capture their
interest, because millennials are more fickle than other consumers. They are five times
more likely to close primary bank accounts4 because:
Vision
Core Values
Trust
Safety
Partnership
Agility
Payment Innovation
Financial Literacy
Core Competencies
Technological Adaptability
Simplicity
Finance
Strategic Business Units(SBUs)
Advisors
Core Products
Global Network Products
3. Supplier Power
Supplier Diversity Program focusing on women,minorities and veterans
How to tackle?
By building efficient supply chain with multiple suppliers.
By experimenting with product designs using different materials so that if the prices go up
of one raw material then company can shift to another.
Developing dedicated suppliers whose business depends upon the firm. One of the lessons
Mastercard Incorporated can learn from Wal-Mart and Nike is how these companies
developed third party manufacturers whose business solely depends on them thus creating
a scenario where these third party manufacturers have significantly less bargaining power
compare to Wal-Mart and Nike.
4. Buyer Power
Mastercard itself is an intermediary between financial services & Merchants
How to tackle?
By building a large base of customers. This will be helpful in two ways. It will reduce the
bargaining power of the buyers plus it will provide an opportunity to the firm to streamline
its sales and production process.
By rapidly innovating new products. Customers often seek discounts and offerings on
established products so if Mastercard Incorporated keep on coming up with new products
then it can limit the bargaining power of buyers.
New products will also reduce the defection of existing customers of Mastercard
Incorporated to its competitors.
5. Threat of Substitutes
Cash,Cheques,Money Orders,Gift Cards,Travel Cheques
By being service oriented rather than just product oriented.
By understanding the core need of the customer rather than what the customer is buying.
By increasing the switching cost for the customers.
SWOT ANALYSIS
STRENGTHS
Superb Performance in New Markets – MasterCard has built expertise at entering new
markets and making success of them. The expansion has helped the organization to build
new revenue stream and diversify the economic cycle risk in the markets it operates in.
Strong Brand Portfolio – Over the years MasterCard has invested in building a strong brand
portfolio. The SWOT analysis of MasterCard just underlines this fact. This brand portfolio
can be extremely useful if the organization wants to expand into new product categories.
Good Returns on Capital Expenditure – MasterCard is relatively successful at execution of
new projects and generated good returns on capital expenditure by building new revenue
streams.
Automation of activities brought consistency of quality to MasterCard products and has
enabled the company to scale up and scale down based on the demand conditions in the
market.
Strong dealer community – It has built a culture among distributor & dealers where the
dealers not only promote company’s products but also invest in training the sales team to
explain to the customer how he/she can extract the maximum benefits out of the products.
Highly successful at Go To Market strategies for its products.
Successful track record of integrating complimentary firms through mergers & acquisition.
It has successfully integrated number of technology companies in the past few years to
streamline its operations and to build a reliable supply chain.
Strong distribution network – Over the years MasterCard has built a reliable distribution
network that can reach majority of its potential market.
WEAKNESSES
Need more investment in new technologies. Given the scale of expansion and different
geographies the company is planning to expand into, MasterCard needs to put more money
in technology to integrate the processes across the board. Right now the investment in
technologies is not at par with the vision of the company.
Financial planning is not done properly and efficiently. The current asset ratio and liquid
asset ratios suggest that the company can use the cash more efficiently than what it is doing
at present.
Not very good at product demand forecasting leading to higher rate of missed
opportunities compare to its competitors. One of the reason why the days inventory is high
compare to its competitors is that MasterCard is not very good at demand forecasting thus
end up keeping higher inventory both in-house and in channel.
High attrition rate in work force – compare to other organizations in the industry
MasterCard has a higher attrition rate and have to spend a lot more compare to its
competitors on training and development of its employees.
There are gaps in the product range sold by the company. This lack of choice can give a new
competitor a foothold in the market.
Not highly successful at integrating firms with different work culture. As mentioned earlier
even though MasterCard is successful at integrating small companies it has its share of
failure to merge firms that have different work culture.
Days inventory is high compare to the competitors – making the company raise more
capital to invest in the channel. This can impact the long term growth of MasterCard
OPPORTUNITIES
Stable free cash flow provides opportunities to invest in adjacent product segments. With
more cash in bank the company can invest in new technologies as well as in new products
segments. This should open a window of opportunity for MasterCard in other product
categories.
New trends in the consumer behavior can open up new market for the MasterCard . It
provides a great opportunity for the organization to build new revenue streams and
diversify into new product categories too.
Decreasing cost of transportation because of lower shipping prices can also bring down the
cost of MasterCard’s products thus providing an opportunity to the company - either to
boost its profitability or pass on the benefits to the customers to gain market share.
The new taxation policy can significantly impact the way of doing business and can open
new opportunity for established players such as MasterCard to increase its profitability.
Government green drive also opens an opportunity for procurement of MasterCard
products by the state as well as federal government contractors.
Opening up of new markets because of government agreement – the adoption of new
technology standard and government free trade agreement has provided MasterCard an
opportunity to enter a new emerging market.
Lower inflation rate – The low inflation rate bring more stability in the market, enable
credit at lower interest rate to the customers of MasterCard.
The new technology provides an opportunity to MasterCard to practices differentiated
pricing strategy in the new market. It will enable the firm to maintain its loyal customers
with great service and lure new customers through other value oriented propositions.
THREATS
Political factors play a significant role in determining the factors that can impact
Mastercard Incorporated's long term profitability in a certain country or market.
Mastercard Incorporated is operating in Credit Services in more than dozen countries and
expose itself to different types of political environment and political system risks. The
achieve success in such a dynamic Credit Services industry across various countries is to
diversify the systematic risks of political environment. Mastercard Incorporated can closely
analyze the following factors before entering or investing in a certain market-
Political stability and importance of Credit Services sector in the country's economy.
Risk of military invasion
Level of corruption - especially levels of regulation in Financial sector.
Bureaucracy and interference in Credit Services industry by government.
Legal framework for contract enforcement
Intellectual property protection
Trade regulations & tariffs related to Financial
Favored trading partners
Anti-trust laws related to Credit Services
Pricing regulations – Are there any pricing regulatory mechanism for Financial
Taxation - tax rates and incentives
Wage legislation - minimum wage and overtime
Work week regulations in Credit Services
Mandatory employee benefits
Industrial safety regulations in the Financial sector.
Product labeling and other requirements in Credit Services
The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate
investment in an economy. While micro environment factors such as competition norms
impact the competitive advantage of the firm. Mastercard Incorporated can use country’s
economic factor such as growth rate, inflation & industry’s economic indicators such as
Credit Services industry growth rate, consumer spending etc to forecast the growth
trajectory of not only --sectoryname-- sector but also that of the organization. Economic
factors that Mastercard Incorporated should consider while conducting PESTEL analysis
are -
Type of economic system in countries of operation – what type of economic system there is
and how stable it is.
Government intervention in the free market and related Financial
Exchange rates & stability of host country currency.
Efficiency of financial markets – Does Mastercard Incorporated needs to raise capital in
local market?
Infrastructure quality in Credit Services industry
Comparative advantages of host country and Financial sector in the particular country.
Skill level of workforce in Credit Services industry.
Education level in the economy
Labor costs and productivity in the economy
Business cycle stage (e.g. prosperity, recession, recovery)
Economic growth rate
Discretionary income
Unemployment rate
Inflation rate
Interest rates
Society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how
marketers at Mastercard Incorporated will understand the customers of a given market
and how they design the marketing message for Credit Services industry consumers. Social
factors that leadership of Mastercard Incorporated should analyze for PESTEL analysis are
-
A firm should not only do technological analysis of the industry but also the speed at which
technology disrupts that industry. Slow speed will give more time while fast speed of
technological disruption may give a firm little time to cope and be profitable. Technology
analysis involves understanding the following impacts -
Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can
have different environmental laws and liability laws. For example in United States – Texas
and Florida have different liability clauses in case of mishaps or environmental disaster.
Similarly a lot of European countries give healthy tax breaks to companies that operate in
the renewable sector.
Before entering new markets or starting a new business in existing market the firm should
carefully evaluate the environmental standards that are required to operate in those
markets. Some of the environmental factors that a firm should consider beforehand are -
Weather
Climate change
Laws regulating environment pollution
Air and water pollution regulations in Credit Services industry
Recycling
Waste management in Financial sector
Attitudes toward “green” or ecological products
Endangered species
Attitudes toward and support for renewable energy
In number of countries, the legal framework and institutions are not robust enough to
protect the intellectual property rights of an organization. A firm should carefully evaluate
before entering such markets as it can lead to theft of organization’s secret sauce thus the
overall competitive edge. Some of the legal factors that Mastercard Incorporated leadership
should consider while entering a new market are -
Mastercard’s marketing was firing on all cylinders in 2017. It’s been a successful 12 months
when its three pillars - a strong brand, proven benefits to the business and platforms that
provide a sustainable competitive advantage - were all delivering.
For Raja Rajamannar, this success represents the culmination of efforts over a four-year
period since he joined the company in 2013.
Firstly, he notes the "brand has grown considerably and out-performed our category".
Mastercard is now a top 20 brand in the BrandZ Global Top 100 Ranking with a value of
$49.9bn.
Secondly, the proof that marketing is adding to the business has been well delivered.
"We’ve been successfully proving the return on investment consistently on our campaigns.
For the first time, our CFO has gone in front of the analysts saying he is increasing money in
marketing. There’s a clear perception – based on reality – that marketing is driving
business," he says.
Finally, the "Priceless" platform has fully evolved beyond a simple creative message into a
marketing programme designed to create a "priceless experience" for cardholders across
four areas; Priceless Cities, Priceless Surprises, Priceless Causes and Priceless Specials. The
use of this framework has dramatically reduced the number of campaigns running globally
at any one time, making the message more targeted and more manageable.
Meaningful schemes
Rajamannar singles out the success of Priceless Causes, which has helped consumers and
business customers make a real contribution to solving challenges such as cancer and
hunger.
For example, this has led to the development of new drugs for breast and prostate cancer
while in Eastern Europe a campaign to help feed children in Rwanda has ensured that
300,000 kids benefit, boosting school attendance by double digit numbers. Next year’s
target is to feed 1m children.
"Employees feel very proud of these schemes and business is growing as well. Banks and
merchants see these campaigns and they want to join the gang. It’s extremely meaningful,"
he says.
The work that’s gone into this success is less than straightforward, however. Mastercard
has merged its marketing and communications into one team – "It’s not two different areas
but a continuum," he says.
There’s been huge effort to ensure all team members are being used to their potential,
training to ensure a digital-first approach across its marketing and automation of mundane
tasks where required. Even the company’s executive committee is being trained to be
digital first.
Rajamannar says 15 of his 17 direct reports have only taken up their posts in the last six
months, many are new to the company and a third are new in their roles. "It feels like it’s a
new start-up," he says, reflecting his belief that Mastercard is as much a tech company as it
is a financial one (this year it also launched Masterpass, a digital wallet alternative to
similar services offered by Google and Apple).
Rajamannar, who has also worked at CitiGroup, Diners Club North America and Hindustan
Lever, describes the switch from local roles to regional or global roles as moving from an
insight and operation focus to becoming an advocate for marketing. It’s much more of a
general manager approach. "55% to 60% of my interactions are not marketing. I do not
behave as a marketer at all, I behave as a businessman," he says.
Taking that approach means being able to answer the question "how does it impact on the
bottom line" as well as being able to distribute marketing budgets wisely around the world
– "you need to understand the growth priorities and the ROI for each country".
Externally, it means becoming a brand ambassador for both the company and also for the
industry and the power of marketing. This year, Rajamannar has worked with Harvard
Business School and Singapore Management University to create a case study for the
marketing transformation at Mastercard.
He wants his fellow CMOs to invite the academics in. To bring business studies professors
into their offices to shadow the role that today’s CMO really plays and boost perceptions in
critical career-decision environments such as MBA programmes.
Such work is vital if the industry is to continue to attract the best talent, he argues. Today’s
marketing landscape demands huge ability, the need to be creative but also be digital, data
and tech-savvy.
Being good in all these areas makes great talent equally attractive to an investment bank or
Silicon Valley and marketing needs to make its case much more strongly, he says.
GRAMEEN KOOTA
Grameen Koota had escaped any direct impact of the crisis faced by the microfinance
industry due to new legislations introduced by the Indian state of Andhra Pradesh in 2010.
External sources of funds had dried up for the microfinance sector thus impacting growth.
While evaluating his organization's performance during the last two years, Suresh Krishna,
Managing Director of Grameen Koota was concerned about the imminent shortfall in the
growth envisioned in 2010. The tumultuous industry condition was accompanied by an
uncertain regulatory environment. While exploring options for growth, Krishna wanted to
assess whether to expand operations to new districts and new states or consolidate and
grow in the existing regions of operations. Concentrating operations implied risking too
much in too few states in a shaky regulatory environment while expansion to nascent
geographies could potentially erode the low margins. It was a difficult choice, so Krishna
wanted to make sure that he arrived at the decision after a thorough evaluation of the
opportunities, costs, and risks associated with expanding the distribution reach.
Learning Objective
The case forces students to make hard choices by considering the top management's
perspective while evaluating options to grow the distribution of microfinance service. The
options include expanding geographically by starting offices in new states or consolidate
and penetrate deeper into the current areas of operations spread over three states. The key
objective of the case is to stimulate understanding of challenges associated with
distribution of services in a turbulent environment. It also helps students appreciate the
need for a systematic evaluation of existing operations and to set up robust and holistic
distribution system and processes.
SWOT:
Strengths: Transparent process, well trained employees, adaptable tech, reasonable pricing
Weakness: High Debts, decrease in portfolio and increase in cost due to regulations,
underutilised infrastructure, due to AP entire image of industry was tarnished
Opportunities: Micro-credit need for India 3300 bn – high potential, large potential for
penetration in Karnataka and TN(low penetration index), leverage technology to improve
operations and reduce costs.
Threats: Political regulations- AP MFI Act 2010, Regulations by RBI, reduction in gross
lending portfolio, drop in equity investments in MFIs
Porter’s:
Competitors: Tier 1,2,3 MFIs eg given in case. Very competitive with large number of
players. Price is important determinant of competitive adv. GK has competitive adv because
of reasonable pricing. Threat – Medium to High
New entrants: Less threat due to various legal regulations to be followed and large capital
requirement. But as the market is lucrative and potential and also technology favour big
cash rich players can enter but its less likely. Threat – Low
Substitutes: Banks, Financial institutions, Individual lenders. As the image of MFI is affected
and also due to new regulations chances of customers moving to these substitutes is very
likely. Threat – Medium
Supplier: Investors, Commercial Banks, FIs. Bargain power of suppliers is high as they are
the sources of funds. If they back out, cash flow could dry out. Threat- High
Buyer: Individuals, SHG, JLG (poor and mid income households). Bargain power of buyers
is high due to competition and customers look for low interest rate and good services.
Threat – Medium to High
Pestle:
Political: Political amendments, state laws – AP MFI Act 2010, Uncertainty in regulations
directly effects the industry image.
Technology: can be leveraged to improve operations, efficient use of manpower and bring
down cost.
Legal: Regulatory laws directly effect the costs and effects pricing. More number of
procedures to be followed. Also, limits the customers. Eg customer having two loans could
not be given other loan.
Environmental- No effect.
Recommendations:
From the above analysis we see that there is a potential market for MF in India but due to
uncertainties in certain states the entire image of industry is tarnished. So it would be
better if GK penetrates first into the states in which it is already existing like Karnataka and
Tamil Nadu bcz they have potential for penetration as pentration index is low for both this
states. They should focus on leveraging technology to improve operations and reduce costs.
This would improve their profitability. To enter into a new market would require huge
investments But, they can’t rely heavily on only few states as there is lot of competition
which may penetrate into potential market and block the doors for GK. Also, if regulations
of existing states change it may adversely affect their business and shut it. So, it’s better to
have options. GK could start to enter new states which are similar to existing markets and
which are politically stable and whose regulations are less complicated.
So GK initially should concentrate on penetration into existing states and later on try to
enter new states to increase outreach.
Imp Points:
Borrowers in AP commit suicide because of over indebtedness → Govt passes law that shuts
down MFIs, so all borrows default, this was 40% of all loans by MFIs in India → lead to fund
shortage for all MFIs
MFIs funded by banks → After they stopped giving loans, NBFCs raised money through DEBT
FINANCING or private equity
Strength:
SHG Model – attracts loans at lower rates from banks like NABARD (Grameen follows JLG
model)
Could start Marriage loan if not already included in Festival loans
Huge untapped potential for micro credit all over the country
Competitors are weak because of setback from AP crisis
Threats:
TV and newspaper advertisements- The message is generally small and lack details
required for permanent behavior change
Training of micro enterprises-develop their confidence and increase consumption of
banking services
Performance evaluation
collecting information via structured surveys from a random sample of the audience
selected from each territory
level of poverty change
Following are the type of performance indicators that should interest us:
Evaluate audience preference for Microfinance Bank services against other borrowing
and saving options.
Number of successful promotional events conducted in targeted clusters.
Number of valid participants attended promotional events.
Number of follow-ups done with event participants either through phone or in person.
Percentage of event participants who have acquired Microfinance Bank services.
Percentage of audience that feels their information needs were fully met by the Bank.
BLUE HAVEN
This case examines Blue Haven Initiative (BHI), an impact investing fund and family office,
and one of its investments, PEGAfrica (PEG). BHI founder Liesel Pritzker Simmons’
motivations for using her family wealth to start a family office focused on impact investing,
as well as BHI’s approach and strategy, including direct and indirect investments, fund
manager selection, total returns, sourcing and due diligence of direct investments, and
other aspects. The case explores a specific investment decision in depth. In May 2017,
Pritzker Simmons and BHI Director of Private Investments Lauren Cochran were
considering whether to invest an additional $1 million in PEG’s upcoming $5 million Series
B round, at a $20 million pre-money valuation. PEG offered pay-as-you-go (PAYG) financing
plans that allowed customers to make small payments via mobile money to pay off
financing for the solar equipment over time. The case details PEG’s business model, growth
strategy, financial structure, and the landscape of investment capital in West Africa during
the time of the case.
About PEG
PEG is a leading pay-as-you-go financing company in West Africa, and the largest in
Ghana. PEG Africa’s subsidiaries provide solar home systems to low-income and rural households on a
pay-as-you-go basis. PEG Africa’s subsidiaries mainly serve customers in peri-urban and rural
communities with a typical daily income of between US$ 1 and US$ 6. Many clients are smallholder
farmers or fishermen. PEG is focused on providing credit for useful and productive assets to
off-grid customers, and by doing this, we seek to enable customers to gain ownership of
assets that they wouldn’t otherwise be able to afford. Importantly, as customers pay off
their loan to PEG, we start to understand their credit history, which is a valuable tool we
can then use to provide for additional loans for products and services.
Impact investments are investments made into companies, organizations, and funds with
the intention to generate social and environmental impact alongside a financial return
PERCEIVED OPPORTUNITIES
POTENTIAL MKTs: Nigeria is and will continue to be the primary market of interest, while Senegal
and Cote d’Ivoire are gaining investors’ attention due to high levels of political stability and strong
growth
gaps in areas such as energy, agricultural production, and infrastructure are creating large demands
for investment and innovation
Linking local and foreign actors.- For foreign investors, partnerships with local investors can
expand the reach of impact investments and lower transaction costs associated with sourcing deals
Two research organizations were identified: the Ghana Institute of Management and Public
Administration (GIMPA) Center for Impact Investing and the Enterprise Development Center (EDC)
at Pan Atlantic University in Nigeria. The GIMPA Center aims to provide information on, drive
awareness of, and advocate for impact investors in Ghana
INVESTMENT SCENARIO
Nearly all direct DFI investments in the West African region are in the form of debt
They comprise 84% of all capital deployed, and primarily reflect large loans in the energy,
manufacturing, and infrastructure sectors.
Expected rates of return tend to fall between at-market and slightly below market, usually in the
13%-17% range
CONCLUSION:
Given this context, it is important that impact investors and supporting organizations be proactive
in building the impact investing industry
• Raise awareness of impact investment
• Capitalize on African high net-worth individuals and corporations.
• Strengthen the ecosystem of incubators and accelerators.
Educate and engage enterprises on the value of equity through local partnerships
Develop a track record of success through more consistent measurement.