Harvard Case - MobilePay A/S: A new business model with a swipe?
"MobilePay A/S: A new business model with a swipe?" Harvard business case study is written by Christoph Grimpe. It deals with the challenges in the field of Strategy. The case study is 10 page(s) long and it was first published on : Dec 21, 2023
At Fern Fort University, we recommend MobilePay A/S pursue a multi-pronged growth strategy focused on strategic expansion, product development, and internationalization. This involves leveraging their existing core competencies in mobile payments and building strategic alliances to enter new markets and offer innovative solutions.
2. Background
MobilePay A/S, a Danish mobile payment platform, has achieved remarkable success in its domestic market. However, with the increasing competition from international players like Apple Pay and Google Pay, MobilePay faces a critical juncture. The case study explores the challenges and opportunities for MobilePay as it seeks to expand its reach and maintain its market leadership.
The main protagonists are:
- Jesper Nielsen: CEO of MobilePay A/S, responsible for charting the company's future direction.
- The Board of Directors: Responsible for overseeing the company's strategic decisions and ensuring shareholder value.
- The MobilePay Team: Responsible for executing the company's strategy and delivering innovative solutions.
3. Analysis of the Case Study
This case study can be analyzed using several frameworks, including:
1. Porter's Five Forces:
- Threat of New Entrants: High, due to the ease of entry into the mobile payments market and the increasing number of global players.
- Bargaining Power of Buyers: Moderate, as consumers have multiple options and can easily switch between platforms.
- Bargaining Power of Suppliers: Low, as the technology required for mobile payments is readily available.
- Threat of Substitutes: High, with alternative payment methods like bank transfers, cash, and other mobile wallets gaining popularity.
- Competitive Rivalry: High, as the market is dominated by several players, each vying for market share.
2. SWOT Analysis:
Strengths:
- Strong brand recognition in Denmark.
- Large user base and high penetration rate.
- Secure and reliable platform.
- Strong partnerships with banks and retailers.
- Innovative product development capabilities.
Weaknesses:
- Limited international presence.
- Dependence on the Danish market.
- Potential vulnerability to new entrants and competitive pressure.
Opportunities:
- Expanding into new markets, especially in the Nordic region and other European countries.
- Developing new products and services, such as peer-to-peer payments, loyalty programs, and digital wallets.
- Leveraging technology and analytics to enhance user experience and personalize services.
Threats:
- Increasing competition from global players like Apple Pay and Google Pay.
- Regulatory changes and data privacy concerns.
- Economic downturn and consumer spending habits.
3. Value Chain Analysis:
MobilePay's value chain consists of:
- Inbound Logistics: Partnering with banks and retailers to integrate payment systems.
- Operations: Developing and maintaining the mobile platform.
- Outbound Logistics: Providing seamless payment experience to users.
- Marketing & Sales: Promoting the platform and acquiring new users.
- Customer Service: Providing support and resolving issues.
4. Business Model Innovation:
MobilePay can leverage its existing business model to:
- Expand into new markets: Targeting specific regions and tailoring their offerings to local needs.
- Develop new products and services: Adding features like peer-to-peer payments, loyalty programs, and digital wallets.
- Partner with other businesses: Creating strategic alliances to offer bundled services and expand reach.
4. Recommendations
1. Strategic Expansion:
- Focus on the Nordic Region: MobilePay should prioritize expansion into other Nordic countries, leveraging its existing brand recognition and cultural similarities.
- Target Emerging Markets: Explore opportunities in emerging markets with high mobile penetration and growing demand for digital payments.
- Strategic Acquisitions: Consider acquiring smaller, local payment providers to accelerate market entry and gain access to new customer segments.
2. Product Development:
- Enhance Existing Features: Improve the user interface, add new functionalities, and personalize the platform based on user data.
- Develop New Products: Introduce new services like peer-to-peer payments, loyalty programs, and digital wallets to attract new customer segments.
- Focus on Innovation: Invest in research and development to stay ahead of the competition and create innovative payment solutions.
3. Internationalization:
- Build Strategic Alliances: Partner with local banks, retailers, and mobile operators to establish a strong presence in new markets.
- Localize Products and Services: Adapt the platform to local languages, currencies, and payment preferences.
- Develop a Global Brand: Establish a consistent brand identity and messaging across all markets.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: MobilePay's existing strengths in mobile payments, technology, and brand recognition provide a solid foundation for expansion.
- External Customers: The recommendations address the needs of both existing and potential customers by offering innovative solutions and expanding reach.
- Competitors: The recommendations aim to differentiate MobilePay from competitors by focusing on specific market segments and offering unique value propositions.
- Attractiveness: The recommendations are expected to generate positive returns on investment, considering the growth potential of the mobile payments market.
6. Conclusion
MobilePay A/S has a unique opportunity to become a leading player in the global mobile payments market. By pursuing a multi-pronged growth strategy focused on strategic expansion, product development, and internationalization, MobilePay can leverage its existing strengths and overcome the challenges posed by competition.
7. Discussion
Other alternatives not selected include:
- Focusing solely on the Danish market: This would limit MobilePay's growth potential and expose it to increased competition from international players.
- Merging with a larger competitor: This could lead to loss of control and brand identity.
Key assumptions:
- MobilePay's brand recognition and user experience will translate well to new markets.
- The company can successfully navigate regulatory hurdles and data privacy concerns.
- The mobile payments market will continue to grow and offer significant opportunities.
8. Next Steps
- Develop a detailed strategic plan: Outline specific goals, timelines, and resource allocation for each recommendation.
- Form strategic partnerships: Identify potential partners in new markets and negotiate agreements.
- Invest in product development: Allocate resources to research and development of new products and services.
- Monitor progress and adjust strategy: Continuously evaluate the effectiveness of the recommendations and make necessary adjustments.
By implementing these recommendations, MobilePay A/S can solidify its position as a leading player in the global mobile payments market, ensuring its long-term success and sustainability.
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Case Description
MobilePay, a popular mobile payment system in Denmark, set new records in 2021. Danes had used the app more than 424 million times and transferred about DKK 160 billion (USD 22.6 billion), an increase of 29% from the previous year, which had also seen record growth. Every day, more than one million transactions were carried out through a customer's "swipe" on a mobile phone. While these numbers looked impressive, Claus Bunkenborg, MobilePay's CEO, knew that the coming years would be challenging. He thought about the DKK 208 million (USD 29 million) in losses that MobilePay had incurred in 2021. "We have high growth but we are not profitable. Our business model is not viable in the long run. Getting paid to facilitate transactions is not viable because the price that the merchants are paying to use our service is just going down, down, down. Are we in the payments business or something else? If we want to do more of the same, we need more scale. However, we also need to look at the business model. How can we create revenue streams? How can we monetize our brand, our user platform, our merchant base? It's easy to say we want to be a platform, but what does that actually mean in our case?
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