STR404

Individual home exam

KANDIDATNUMMER: 290
Kandidatnr: 290

Innholdsfortegnelse
1. ............................................................................................................................................................... 2

2. ............................................................................................................................................................... 2

3) ............................................................................................................................................................... 5

References: ................................................................................................................................................ 6

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1.
“Strategic planning is the ongoing organizational process of using available knowledge to
document a business's intended direction.” (Cote, 2020). But why do we need such a planned
strategy you say? Well, the core element of a strategy is to define and express a clear and
motivating purpose for the organization. It helps the organization going forward. Kiva´s
purpose is that they “envision a financially inclusive world where all people hold the power to
improve their lives.” (Kiva, u.å.). This purpose cannot just be motivational for the employees,
it can also be motivating for the stakeholders. And strategic decisions within an organization
are significantly shaped by the expectations and interests of its stakeholders (Whittington et
al., 2021, s. 87). Stakeholders are individuals or groups with some kind of stake in the
organization's future success and outcomes.

A strategic plan allows the organization to look into the future and make assumptions about
things that could likely happen. This foresight allows the organization to proactively prepare
for these possibilities. Contrary to the belief that it may impede learning, a strategic plan
facilitates a more informed and prepared approach to future challenges and opportunities.
When we have a strategic plan, we can allocate our resources to where they are needed the
most.

2.
As a non-profit organization in microfinance, they can use many of the same market analysing
tools as a for-profit organization. In this task, I will give Kiva some advice on which specific
analytical tools would be most beneficial for their market analysis needs.

To have a clear unit of analysis the market must be clearly defined. To do so the organization
could do a market delination, where they detect rivals, substitutes, and non-rivals. To do a
market delineation, they can use the qualitative method. Besanko et al. (2017, s. 158) argue
that products are likely to be considered close substitutes when three conditions are met: they
exhibit similar product performance characteristics, they are intended for the same or similar
occasion for use, and they are sold in the same geographic market.

When it comes to a products performance characteristic, it describes what it does for the
consumers. If they match in several characteristic, we can assume that they are in the same

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market. Occasion of use describes when and where the product it used, and how it is used.
The last criterion, concerning the geographic market, we can say that two products are not
considered in the same geographic market if they are sold in different locations or if
transporting the goods is costly, and if the consumers face a substantial expense in traveling to
purchase these goods. Based on a good marked delineation they can make a substitutional axis
(Lien et al. 2016, s. 76).

Organizations are depending on their environment for survival and success (Whittington et
al., 2021, s. 22). Conducting an external analysis is essential for understanding the
fundamental forces that influence the characteristics and attractiveness of a market, and to
anticipate how they might evolve in the future. Whittington et al (2021) mentions three key
frameworks in a macro-environment analysis: Pestel, Forecasting, and Scenario analysis.

PESTEL analysis is a strategic tool that we can use to examine six environmental factors;
political, economic, social, technological, ecological and legal (Whittington et al., 2021, s.
22). The purpose of this analysis is to identify how these factors can impact the organization.
By analyzing their impact on the organization, we can identify both possible risks and
opportunities.

To deal with the uncertainty of the forces that we find in the PESTEL analysis, they can use
forecasting or scenario analysis. When using forecasting as a framework in macro-
environment analysis, we make predictions about the future based on past and present data
and trends (Whittington et al., 2021, s. 32). It has three approaches to the future based on
varying degrees of certainty; Single point, range, and multiple-futures forecasting. The last
framework is scenario analysis. Scenarios present believable alternative views of how the
macro-environment might develop in the future, usually in the long term (Whittington et al.,
2021, s. 33). When organizations face conditions with high uncertainty, they can use scenario
analysis. With scenarios the point is to learn more than just predict.

After doing a macro-environment analysis, it is important for an organization to identify the

attractiveness of a market. Here, they can use Porter´s Five Forces. The framework analyzes
five competitive forces, and an industry is less appealing where the five forces are strong
(Whittington et al., 2021, s. 43).

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The first factor they need to consider is the threat of entry. An industry that are attractive,
often has higher barriers to entry, which means that it reduces the threat of entry (Whittington
et al., 2021, s. 45). The main barriers to market entry include both structural and strategic
barriers. These encompass factors like customer loyalty, a steep learning curve, economies of
scale, and limit pricing, among others.

Secondly we have the threat of substitutes. Substitutes refer to products or services that
provide comparable functionality and benefits as those offered by an industry, but has
different nature (Whittington et al., 2021, s. 47). Managers frequently concentrate on their
direct competitors within their own industry, overlooking the significant threat posed by
substitute products or services. These substitutes can lead to a decrease in demand for a
specific type of product as consumers opt for alternative options.

Thirdly we have the bargaining power of buyers. Buyers are the ones who direct purchases an
organization´s products or services but is not necessarily the ultimate customers (Whittington
et al., 2021, s. 47). When these buyers possess significant power, they have the leverage to
negotiate lower prices or demand enhancements to the product or service, which can be
expensive for the organization to implement.

The bargaining power of suppliers is the fourth force. Suppliers are the businesses or
individuals that provide an organization with the essential materials or resources needed to
produce its product or service (Whittington et al., 2021, s. 48).

Lastly, we have the extent of rivalry between competitors. Organizations operating within the
same market, offering similar products or services targeted at identical customer groups, are
considered competitive rivals (Whittington et al., 2021, s. 44). There are five factors that
defines the extent of rivalry: Competitor concentration and balance, industry growth rate, high
fixed costs, high exit barriers, and low differentiation.

Recognizing the significance of building partnerships, Kiva highlights this aspect as a crucial
component of their strategy (Ghotge, 2023). For a non-profit organization like Kiva, which
operates in the realm of microfinance and social impact, forging strong partnerships can be
instrumental in amplifying their reach and efficacy. By prioritizing partnerships, Kiva can
leverage the strengths and resources of various stakeholders, thereby expanding their capacity

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to provide financial services to underserved communities. So, to get this crucial part into the
analysis, they can consider using the Value Net Model instead of Porter's Five Forces. The
Value Net Model is an extension of Porter’s framework but examines four categories of
players capable of influencing the organization: Customers, Suppliers, Competitors, and
Complementors (Brandenburger, 1996). This model is particularly beneficial for non-profits
as it not only assesses the traditional competitive elements but also includes complementors.
They can add value and enhance the organization’s offerings through collaboration and
partnerships.

3)
It is hard to navigate between securing enough earnings to grow the organization and securing
the best possible conditions for lenders and borrowers. Financial struggles are the reality for
many non-profit organizations. That is because they depend mostly on donations from others.
To deal with these challenges Kiva needs to be transparent and live up to their purpose: “we
envision a financially inclusive world where all people hold the power to improve their lives.”
(Kiva, u.å.). As mentioned in task 2, they already focus on partnership, and this is an
important step in this situation as well. This is because it can provide new opportunities such
as more fundings and resource sharing.
It will also be of use to analyze the stakeholders. As mentioned earlier, the strategic decisions
are significantly shaped by the expectations and interests of its stakeholder.

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References:
Besanko, D., Dranove, D., Shanley, M., Schaefer, S. (2017). Economics of Strategy (7th ed.).
SD Books

Brandenburger, A. (1996). Co-operation. New York: Dobleday

Cote, C. (6. October, 2020) WHY IS STRATEGIC PLANNING IMPORTANT?

https://online.hbs.edu/blog/post/why-is-strategic-planning-important

Ghotge, V. (13.november, 2023) Announcing Kiva’s Bold New Impact Strategy: The
Nonprofit Microfinance Pioneer Shares its Refined Approach — And Unveils the
Process Behind its Development https://nextbillion.net/announcing-kivas-new-impact-
strategy-nonprofit-microfinance-pioneer-refined-approach-process-behind-
development/

Kiva. (u.å.). Kiva. https://www.kiva.org/about

Lien, L. B., Knudsen, E. S., & Baardsen, T. Ø. (2016). Strategiboken. Bergen: Fagokforlaget.

Whittington, R., Regnér, P., Angwin, D., Johnson, G., & Scholes, K. (2021). Fundamental of
Strategy. Pearson.

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