Sample Business Studies Paper on MasterCard SWOT Analysis

MasterCard SWOT Analysis

Your Excellencies; Distinguished guests; Ladies and gentlemen; all protocols observed: It is an honor to welcome you all to this year’s MasterCard’s stakeholder’s conference. I would also like to thank the conference’s organizers for providing us the opportunity to present MasterCard’s strengths, weaknesses, opportunities, and threats (SWOT) analysis to its key stakeholders.

SWOT analysis has for years proven to be a useful strategic planning tool. Therefore, MasterCard’s SWOT analysis will also be instrumental in understanding MasterCard’s future performance, and enable it make informed strategic planning, including maximizing on its strengths, minimizing its weaknesses, capitalizing on its opportunities, and avoiding the threats that it is facing.

MasterCard’s strengths include:

  1. Operator world’s fastest payment network. MasterCard can facilitate the processing of a large number of payment transactions, which provides it some competitive advantage. MasterCard’s ability to make payments easier and more efficient through its several payment solutions and services can help it increase its customer base.   
  2. Trusted brand and reputation. MasterCard’s solutions and services are well-known, hence can be embraced easily by new customers. MasterCard reputation as a market leader could be beneficial in attracting new customers and penetrating new markets.
  3. Is available in more than 100 countries worldwide. This makes the MasterCard the most preferred network for processing both domestic and cross-border transactions. Its presence in most parts of the world has made it attractive to international travelers.   
  4. End consumers have global access to network for most services, in many formats. MasterCard’s global presence allows MasterCard cardholders use their cards and other payment devices at millions of merchants across the world. MasterCard’s partnership with mobile leaders has enabled consumers to securely carry out digital payments using their smartphones.  
  5. Leader in replacement of traditional magnetic-stripe, and evolving a roadmap for the migration to EMV, the international standard for chip technology. MasterCard’s chip-enabled products are offering cardholders increased security and fraud protection. MasterCard’s leadership on safety and security can offer it considerable competitive advantage over competitors.    

MasterCard’s weaknesses include:

  1. Government regulations. MasterCard is subject to strict regulations that are affecting the payments industry in several countries in which its cards and payment devices are used. MasterCard’s interchange fees are mostly reviewed or challenged in several jurisdictions worldwide, thereby minimizing its efficiency.
  2. Reliance on third parties, including competitors and potential competitors for development of and access to new technologies. MasterCard often bears the responsibility associated with third parties’ failure to perform. MasterCard’s obligation to its customers in such circumstances can adversely affect its financial and operational performance.    
  3. Competitors possess a greater percentage of domestic transactions in jurisdictions outside the U.S. Governments tend to promote local networks for domestic processing. Therefore, MasterCard cannot compete effectively in domestic processing activities.    
  4. The Foundation, (10% voting power/stock holding), may have different incentive and goals compared to other public stockholders. This can discourage or make acquisition proposals desired by other stockholders more difficult.
  5. Rapid technological developments require increased costs to maintain the latest technical infrastructure. Due to rapid technological advances, MasterCard cannot effectively predict technological changes in its business. These developments can also expose MasterCard’s potential intellectual property.   

Opportunities available to MasterCard include:

  1. Development of innovative platforms and solutions. This provides MasterCard the opportunity to lead the transition to digital payments. As a market leader, MasterCard would have competitive advantage as it would gain consumers’ and businesses’ trust.    
  2. Mobile and web-based payment platforms. MasterCard should use these platforms to make online transactions more safe and easy, regardless of their formats. Since these platforms are extensively used, their adoption would increase MasterCard’s market share.     
  3. Convergence of physical and digital worlds. This would enable MasterCard cardholders or consumers to increasingly choose to pay online. It will also help MasterCard develop new partners to enhance its competitiveness.   
  4. Exploiting new payment areas (i.e. transit, parking, person-to-person transfers, bill pay). The use of MasterCard products in new payment areas would increase acceptance of MasterCard’s products. It would enable MasterCard compete effectively in domestic or local processing of transactions.    
  5. Financial inclusion for unbanked and under-banked. This would increase its market share and global penetration, thus increased profitability.  
  6. Exploit existing and new markets. This would diversify MasterCard’s business and fasten its growth.  

Threats facing MasterCard include:

  1. Competitive issues caused by preferential or protective government actions. Government actions that prefer or protect providers of domestic payment services in their respective countries can prevent MasterCard from competing effectively against such providers (MasterCard Incorporated SWOT Analysis, 2013, p. 7). This could negatively affect MasterCard’s ability to maintain or increase its revenues.  
  2. Potential future changes in the competitive landscape; competitive pressure on pricing; banking industry consolidation; loss of significant business from significant customers; merchant activity. The rapid technological advances could result in the development of new innovative products that could potentially reduce the use of MasterCard’s products. The increasing consolidation in the banking industry can make MasterCard lose a substantial part of its business because the consolidations have included customers having a substantial MasterCard portfolio.     
  3. Competitor advantages over four-party payments systems using End-to-end payment systems. These systems do not require any official interchange fees to facilitate the balancing of payment system costs between the issuing and the acquiring parties in their business. This has enabled MasterCard’s competitors avoid the same regulatory and legislative, and litigation challenges that MasterCard is facing.    
  4. Competitor innovative programs and services and other alternate payment service providers. MasterCard’s new competitors have developed innovative alternative payment systems, e-commerce payment systems, and mobile-based payment systems, which could make MasterCard lose substantial market share. The low costs and flexibility offered by these innovative payment services are making MasterCard’s products and services less attractive.    
  5. Account data breaches. Account data breaches that involve data stored, processed, and transmitted by MasterCard or third party entities can negatively affect MasterCard’s reputation and operations’ outcomes. A significant increase in fraudulent activities using MasterCard’s cards can potentially damage MasterCard’s brand reputation and/or its regulatory intervention, which could result in reduced use and acceptance of MasterCard’s cards, and other payment devices.      
  6. Competitors’ use of the Internet. MasterCard’s competitors are mainly using the internet to support their services, which makes them enjoy lower costs than MasterCard; hence can potentially put MasterCard at a competitive disadvantage. The internet’s flexibility and reach could enable MasterCard’s competitors attract more customers, some of whom have substantial MasterCard portfolio, which can make MasterCard lose substantial part of its market share.   

Therefore, your excellencies, distinguished guests, and ladies and gentlemen; as I conclude, it is evident from the SWOT analysis that MasterCard can have an impressive future performance if it maximizes its strengths, minimizes its weaknesses, capitalizes on available opportunities, and avoid threats that it is facing. Thank you all for your attentive listening.

References

MasterCard Incorporated SWOT Analysis. (2013). MasterCard International SWOT Analysis, 1-8.

United States Securities and Exchange Commission. (2013). MasterCard Incorporated. Retrieved from: http://www.sec.gov/Archives/edgar/data/1141391/000114139114000003/ma12312013-10xk.htm