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Obopay Case Analysis

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Obopay |Michael Irroni |

08
Fall

Obopay
Lauren O’Brien | Jaspreet Sanghera | LunLun Fu | Ashleigh Jessup | Eila Shargh | Michael Irroni | Nasir Rizvi

08
Fall

Obopay is a private company currently located in San Mateo, CA. Since Obopay is a private company, the information utilized for this analysis came from sources such as confidential company documents as well as interviews with the former General Counsel and current consultant, CFO, and SVP of HR. A comparative company to Obopay is the Indian telecommunications giant Bharti Airtel. This company was chosen because its Airtel Money segment offers the same service as Obopay in Obopay’s primary market of India. The analysis presented in this paper is as of May 2012.
Part I: Company Background
History of Obopay Obopay is one of the first companies to provide mobile payment solutions, integrating mobile technology with money services. The concept behind Obopay and the mobile wallet came to Carol Realini while traveling to Africa where she saw how many people despite not having access to basic banking services did own mobile phones (“TLP SV Speakers for Nov 4: Obopay and Venrock”). Founded by Carol Realini in 2005, Obopay was designed to make banking services as pervasive as mobile phones by partnering with financial institutions and mobile service providers. In the last seven years, Obopay has established partnerships with organizations such as Nokia, MasterCard, AT&T, Verizon, Essar, Union Bank of India, Yes Bank in India, Citibank and Société Générale (“Obopay Overview”). Today, Obopay has between 150 – 200 employees, the majority of which are located in Bangalore, India (O’Brien).
Mission Statement Obopay’s mission statement is, “To provide a broad range of services including money transfer, mobile and online commerce, top up, bill pay, and disbursements,” (“Obopay Corporate – Solutions”). In doing so, Obopay provides mobile payment solutions for individuals to send, receive, spend, and track money through their mobile phones using the Obopay application. They also work with partners to offer white-label mobile money services to use with their customers. These can vary depending on who the service is customized and designed for (“Obopay Corporate – Solutions”).
Company Performance Carol Realini intended for Obopay services to cater to underdeveloped countries. However, after realizing the potential of the groundbreaking technology, investors ambitiously wanted to serve U.S businesses and consumers as well (O’Brien). This, along with poor business decisions, downturn in the economy and controlling partnerships, is reflected in their financials. In 2009, Obopay had revenue of $5 million with $18 million in expenses. In 2010, Obopay had revenue of $8 million with $30 million in expenses. Between 2010 and 2009, there was an increase in revenue of 60%. However, there was a dramatic increase in expenses of 67%. This can be attributed to the fact that investors pushed Obopay executives to expand their services to the United States. In 2011, although Obopay increased revenue by 113% to $17 million with steady expenses of $30 million, they were still not breaking even. (Scharninghausen and Hunter). See Exhibit I for financials.
Executive Leadership
In January of 2011, Carol Realini stepped down from her position of CEO of Obopay and assumed the role of Executive Chairman of the company. The current CEO is Deepak Chandnani, with extensive experience as Executive, President, and CEO for companies such as Wire and Wireless, NCR, Yahoo!, and Citibank (“Deepak Chandnani Made Global CEO of Struggling Mobile Payments Co Obopay”). Chandnani assumed the position of CEO after serving as the President of Global Markets of Obopay in India for 2 years.
Obopay SWOT
As a first mover in the mobile payments industry, Obopay is a company with several strengths. Obopay has developed patents, technologies, and customer management services that other companies have difficulty replicating and implementing successfully. They are also renowned for their ability to manage large volumes of users that other companies have not yet been able to support. This has given them a competitive edge in the mobile payments industry. As one of the first companies to work with developing nations, they have become an “international innovator” with strong brand recognition not yet established by similar companies. Additionally, through partnerships and executives with large networks in India, Obopay has developed strong relationships within the Indian business community. This includes the current CEO who has strong personal ties to the Indian business elite and experience in the Indian communications market (Scharninghausen and Hunter). In 2009, Obopay entered into a partnership with Nokia where Obopay was able to use and operate out of Nokia’s 8000 agent locations in India. This, combined with the $70 million in funding from Nokia, helped establish Obopay’s strong presence in India. However, in March 2012 Nokia pulled out of this contract due to their own financial struggles, leaving Obopay without a distribution channel in India. This leaves Obopay extremely vulnerable to competitors who are aggressively entering the mobile payments market in India. Obopay no longer has access to an already established customer base, which increases their user acquisition costs. Due to these high costs, they are unable to attract the number of users they had access to under the Nokia partnership. Another weakness that Obopay has been confronted with in the past is their difficulty in allocating resources efficiently due to conflict of interest between investors and top management. After a series of funding would come in, Obopay executives would decide to use the resources on a wide variety of projects without considering the most effective business decisions. Instead, they would try to please investors by trying to cover both the U.S market and the emerging markets abroad. This resulted in an unnecessary amount of spending and the need for continuous rounds of funding, making Obopay an unattractive investment. These poor decisions have led Obopay to its current situation where they need to raise $25 million to cover its existing operation costs in India. This makes potential investors view Obopay as an unattractive and unpredictable venture (O’Brien).
Although Obopay has made poor decisions in the past, there are still plenty of opportunities for Obopay. The mobile payments industry is expected to grow from $60 billion in 2010 to $1.13 trillion in 2014. This is due to the large network of untapped mobile users that are not yet being served. If Obopay can capitalize on this situation it could place them in a more competitive position. Additionally, if Obopay can work with government regulations to set up remittances, this potentially huge market could prove to be a great opportunity. This would allow mobile payment users to transfer funds internationally to family or friends. Being relieved of the restrictive Nokia contract now gives Obopay more autonomy to pursue their own strategic goals (Confidential Obopay Document).
Since Obopay operates in a rapidly growing market, multi-national corporations have taken notice of this market opportunity and taken action. Established companies such as Visa and Bharti Airtel have either acquired or developed similar services. Another possible threat to Obopay could be the time-consuming and expensive process of acquiring licenses in emerging markets. Obopay’s lack of funds could potentially prevent them from pursuing expansion into other emerging markets, leaving the door open for financially established competitors. The entrance of such competitors could push Obopay out of the market (O’Brien).
Obopay TOWS The fundamental strength of Obopay is the quality of their technology. Several competitors have entered the market by trying to develop a technology similar to that of Obopay’s. Companies such as Bharti Airtel and Visa have yet to create a technology that performs as effectively and efficiently as Obopay’s. This technological strength provides leverage in the quickly growing mobile banking market. Another strength that Obopay can use to take advantage of an opportunity is the recently opened door for new partnerships. Obopay’s partnership with Nokia had caused several issues for the company. Nokia’s reputation for being difficult to work with ended and prevented some partnerships, such as Obopay’s deal with Mastercard. Additionally, there were several Nokia executives on the Obopay Board of Executives. This caused a conflict of interest regarding the direction the company should take. The end of Obopay’s partnership with Nokia leaves the door open to working with other companies that share the same vision.
National regulatory processes are very complex and difficult to navigate. When Obopay first expanded their services to India, government regulations were so restrictive that it prevented Obopay from running their business the way they intended. In order to pursue their business model, an Obopay representative testified in front of members of the Indian government resulting in legal amendments that now allow telecommunication companies to act as banking agents (O’Brien). One of Obopay’s greatest weaknesses is that they need funding. Currently, they are in series F of capital fundraising, but this weakness could be an opportunity. During Obopay’s partnership with Nokia, they were limited as to who they could receive funding from. Since they are no longer in a contractual agreement with Nokia, Oboay is free to seek out other financial partners and opportunities. Another weakness is the costly licensing process they must deal with in their industry. Finding a way to lower customer acquisition costs to offset the expense of licensing could allow Obopay to increase their operations and improve market share.
History of Bharti Airtel Headquartered in New Delhi, India, Bharti Airtel Limited was founded in July 1995 (“Company Profile”). Bharti Airtel is a leading telecommunications company with operations in 20 countries throughout Asia and Africa. As of February 2012, Bharti Airtel has over 250 million customers, making it one of the top five mobile service providers in the world (“About Bharti Airtel”). Per 2010 estimates, Bharti Airtel employs over 18,000 people (Hoovers).
In 2011, Bharti Airtel entered into a joint venture with State Bank of India to allow its mobile phone users to use their phones for banking services, known as Airtel Money. The target customers for the joint venture are people living in rural areas who do not have access to banking facilities (Hoovers). Bharti Airtel’s mobile money division, Airtel M Commerce Services Limited (AMSL), is a fully owned subsidiary of Bharti Airtel Limited. Airtel Money, a segment of Bharti Airtel Limited, provides a secure service for people to easily make payments or transfer money with mobile phones. AMSL's flagship product is semi-closed wallet - launched under the brand name 'Airtel Money'. Semi-closed wallet is a prepaid payment instruments that is redeemable at a group of clearly identified merchant locations/ establishments, which contract specifically with the issuer (AMSL is the issuer in this case) to accept the payment instrument (Airtel Money: About Us).
Vision and Promise “By 2015 Airtel will be the most loved brand, enriching the lives of millions” is Bharti Airtel’s vision and promise statement. The corporate website further explains: "Enriching lives means putting the customer at the heart of everything we do. We will meet their needs based on our deep understanding of their ambitions, wherever they are. By having this focus we will enrich our own lives and those of our other key stakeholders. Only then will we be thought of as exciting, innovation, on their side and a truly world class company," (“Our Vision & Promise”).
Company Performance Bharti Airtel has seen large growth in its revenue in the past few years, especially between 2010 and 2011, during which time revenue increased by nearly 50%. As of the 2012 fiscal year end, Bharti Airtel saw revenues just shy of $15 billion. The sharp increase in revenue may be primarily attributed to the increase in the total customer base seen by Airtel, nearly doubling from 2010 to 2012, ending at 251,646 thousand customers (“Company Profile”). See Exhibit II for financials.
Executive Leadership At the very top of Bharti Airtel is Sunil Bharti Mittal. Mittal is the founder of Bharti Enterprises, as well as the chairman and group CEO and has been for seventeen years. Recognized for his services to society, Mittal has received several awards and accolades including the Padma Bhushan, the highest civilian award in India. In 2008, Mittal received the “Global Vision” award by the US-India business council. Mittal believes in corporate responsibility and has started the Bharti Foundation to provide education to under-privileged (“Company Profile”).
Bharti Airtel SWOT
When Airtel decided to penetrate the mobile payments industry and develop Airtel Money, a dominant strength they held was being one of the top ten global wireless carriers in the world, giving them access to an already established customer base for their new product (Hoovers). Aside from transferring money and paying utility bills, customers are able to shop at over 7000 merchant outlets (Airtel Money). Airtel’s already established business has allowed them to easily integrate Airtel Money into their existing operations. Another strength that Airtel possesses is that they can prevent “churning” since they are the carrier that is associated with the service of Airtel Money. Therefore, all operations happen in-house, giving Airtel complete control over the technology and business operations. Furthermore, they have eliminated the need for agents and their associated feed since their technology enables users to link their e-wallets to bank accounts (O’Brien). Airtel has also been able to position itself as a leading mobile money provider after receiving the Best Mobile Money Award in 2012 (“Airtel Money picks Best Mobile Money Award”). Lastly, Airtel Money has recently formed a joint venture with State Bank of India, which will allow their users to access their bank accounts via their phones, a service that was not available with Airtel Money before this transaction (Hoovers). There are various opportunities for Airtel Money to capitalize on in the mobile payments industry. Their existing 246 million-customer base could be a potential in-house market for Airtel Money. Airtel is currently available across 300 major cities in India, which increases their ability to access the 240 million people in India who hold bank accounts, the 90% of people who use cash for daily needs, and the 900 million people in India who have mobile phones (Airtel Money). Airtel’s large presence in India gives them the opportunity to capture this market with Airtel Money. While Airtel Money has many opportunities and strengths in reaching India’s population with their service, one major weakness is that Airtel Money is a relatively new service. Not only is their mobile payments solution not well known but they have had difficulty in perfecting the technology. The technology is missing a closed-loop control so money transfers occasionally do not reach their destinations and the sender is still billed for the transaction. There have also been many complaints regarding their customer service related to this issue (O’Brien). Lastly, Airtel Money can only provide mobile payment services to customers with Airtel telecom service accounts, therefore limiting their service to Airtel customers in a market where it is common to switch carriers continuously based on SIM card availability. The biggest threat facing Airtel Money is the mobile payment technology that is being developed by competitors. Even though Airtel Money has many opportunities and strengths that its competitors do not have, their technology is not as reliable as those of its competitors such as Visa (who acquired Fundamo), Vodafone (who owns Safaricom), and even Obopay (O’Brien). Partly because of their inefficient technology, Airtel Money is losing market share in Africa to Safaricom. These technological issues could also leave them vulnerable to losing market share in India if not fixed ("Bharti Airtel: Strategy Gone Sour”).
Bharti Airtel TOWS Since Airtel is one of the largest wireless carriers in India, Airtel Money has a built-in consumer base to access for their service. This is both an internal strength and opportunity by giving them a resource that many competitors who are trying to penetrate the mobile services industry will not have. Also, having in-house technology development allows Airtel Money to be responsive to needs of their handset providers to improve the user experience. In-house development also allows Airtel Money to have minimal reliance on agents, which reduces their cost structure and increases convenience to their mobile phone users. Even though Airtel Money is a new name in the industry and not recognized by many users they have the potential for rapid growth through their existing customer base. Even though Airtel Money can only provide mobile payment services to customers with Airtel telecom service accounts, they still have the potential to acquire any of the 900 million people in India who have mobile phones.
While Airtel Money has inferior technology to competitors, the multi-billion dollar corporation has the appropriate resources to improve their technology. Unlike some smaller companies, Airtel Money can spend the time and money on research and development, engineers, etc. to solve the various issues they are experiencing with their service. Also, Airtel’s significant dominance in the Indian market helps them compete with new competitors such as Vodafone and Visa, which are trying to enter the Indian mobile payments industry.
Airtel Money does not have a perfected technology, which could open the door to competitors with superior technology. Even though Airtel has the resources to devote to improving their technology, they have entered an extremely innovative and competitive market, giving them limited time and opportunity to improve the issues that users have been experiencing with their mobile payments service. Therefore, Airtel Money needs to capitalize on their strengths and opportunities to limit these threats and weaknesses.
Comparative Analysis
Obopay’s technology has proven to be superior to its competitors, including Airtel. Obopay has the capability to manage large volumes of users; something Airtel Money has yet to master. Despite superior technology, Obopay does not have access to a large customer base because it does not currently have a partnership with a mobile service provider. Because Airtel is a telecommunications giant in India, it already has a large customer base to which it can market its Airtel Money service and the resources to market if effectively. Additionally, despite Obopay’s CEO having connections with the business elite of India, Airtel has a more prominent presence in India as one of India’s largest companies. Overall, while Obopay has the best technology, it falls short when it comes to customer base and financial standing.
PART II: Organization Design Diagnoses
Obopay Burton Model
Organizational Goals: Efficiency
Obopay’s current goal is to be efficient by developing relationships with new investors and finding a new major partner (Scharninghausen and Hunter). Partnering with a local provider for access to their network of customers will help reduce acquisition costs and marketing cost. This partnership, if large enough, will make Obopay a more attractive investment to potential investors. Since proper resource allocation has been a challenge in the past, Obopay will have to be efficient with their new funds (O’Brien). One attempt to reduce costs has been to outsource their operations to India. Being efficient is the main goal of Obopay as they have yet to break even and finding new funding will be a continued issue in the future if efficiency does not improve.

Strategy: Defender
When Obopay was founded, they were an analyzer with innovation, as the first mover in the mobile payments industry. Since completing the core development of its product, Obopay’s focus has moved away from innovation and towards market penetration. This has shifted Obopay from exploration towards exploitation. Through a series of unfortunate circumstances and bad business deals, Obopay is now a defender struggling to maintain its position (O’Brien). As Obopay focuses on one particular product, they are innovative in a narrow area and highly focused. In order to achieve efficiency they need to be high on exploitation. By finding new partnerships with local distribution channels, Obopay will be able to promote on a larger scale and reduce customer acquisition cost. This will allow Obopay to defend their product. Additionally, once they partner with a local distributor, Obopay can focus on refining their mobile payment service for that specific market. Because of market conditions, being a defender is the favorable strategy for Obopay.
Environment: Turbulent Obopay is facing a turbulent environment globally. Due to acquisitions by multi-national corporations of other private mobile payment companies, unpredictability and complexity are high. Complexity is high due to existing and emerging competitors and government regulations in developing countries, all of which affect Obopay’s decision-making process. Obopay introduced the mobile payments to the Indian market and were the first to work with Reserve Bank of India and the Indian government to establish the required regulations for the mobile payments market. Unfortunately, this led to lower barriers of entry for competitors. Obopay is heavily reliant on partnerships resulting in a high unpredictability. For example, when Nokia pulled out of their three year contract with Obopay in March of 2012, Obopay lost their 8,000 agents in India, leaving them without a proper distribution channel in their largest market (O’Brien). Additionally, with the expected development of the new near field communication (NFC) technology, it is unclear as to what direction the mobile payments market will take.
Configuration: Functional
Obopay emphasizes the functionality of one product more than product/service/customer orientation. Having finished the foundation of the product development allows the company to focus on their sole product, while exploring potential partnership opportunities. The company structure and its subunits (i.e. Human Resources, R&D, finance, etc.) have been designed to produce and serve only one product. Obopay’s control of information flow is very centralized at the executive level where decisions are handed down from top to bottom (O’Brien).
Geographic Distribution: Transnational
Obopay is headquartered in the US, however the largest portion of their operations is in India to best serve their target market. Obopay takes advantage of the local talent pool and economical efficiencies of optimal labor sourcing in India. By locating the majority of their employees in India, not only are they most responsive to their target market, it allows them to take advantage of the less costly labor. For example, they have reduced costs per software engineer from $120,000 to $35,000 in annual salary by hiring in India (Scharninghausen and Hunter).
People: Lab
Due to lay offs and their current financial situation, Obopay is substantially smaller today than it was a few years ago. Currently Obopay has approximately 200 employees internationally and will be experiencing a 50-person lay-off in the near future due to the loss of the Nokia partnership (O’Brien). The majority of the employees are highly skilled engineers in the R&D department along with Chief Officers and Senior Vice Presidents. Therefore, Obopay would fit in the Lab category.

Organization Climate: Internal Process With a low readiness to change and high tension, Obopay has an internal process climate. Characteristics of internal process that are prevalent at Obopay are low morale, unpleasant emotions, little sharing and openness, lack of trust, and conflict. In December 2010, former CEO Carole Realini was forced to step down by the Board of Directors and various investors of Obopay. Realini had planned to leave her post peacefully but a few hostile Board members and investors decided go against their agreement with her and cut her severance a year and a half before originally decided. Board members and investors unnecessarily declared Obopay’s current dismal financial position was due solely to decisions made by Realini. This has led to high tension at Obopay and lack of trust between current CEO Deepak Chandnani and Board members and investors (O’Brien). Furthermore, readiness to change is low. Despite their negative experience partnering with Nokia, Obopay’s future plan is to partner with another large company, similar to Nokia. The company does not appear willing to consider alternatives (Scharninghausen and Hunter).
Organizational Complexity: Flat
Obopay is moderately high on horizontal differentiation and low on vertical differentiation. Due to layoffs, middle management is nearly non-existent at Obopay. Furthermore, this has led each business unit to be significantly smaller. The executive level has to coordinate among subunits on two different continents and has taken on duties that are more commonly done by middle management. This leads to inefficiencies because the CEO has to be in two places at once (Scharninghausen and Hunter).
Fit Diagnosis
Given Obopay’s weak financial position, efficiency has become its primary goal. After a series of strategic misalignments between Obopay’s founders and its investors, (most notably Nokia due to the presence of two Nokia executives on Obopay’s Board of Directors) the company has shifted from an analyzer with innovation to a defender strategy. For example, to reduce costs Obopay has cut its largest expenditure (labor) by 66% as a result of moving development to Bangalore, India (Scharninghausen and Hunter). Hence, the defender strategy is consistent with its current goal of efficiency. The functional configuration of Obopay is well suited with the defender strategy and focus on efficiency. See Exhibit III for 2x2 Burton Model.
Misfit Diagnosis
Although a misfit exists within Obopay’s organizational design, the combination of defender and laboratory can be practical. According to Burton, in order to be a defender the ideal structure is a factory or an office (Burton and Obel and DeSanctis). However, since Obopay is seeking a partner to help them distribute their product as “white label” using the partner’s existing network of customers, they can keep their small-scale operation using a classic laboratory structure.
When Obopay first started its operations, it was categorized as an analyzer with innovation. Partnering with Nokia in 2009 provided Obopay a platform to reduce the distribution and marketing cost, making Obopay more efficient and effective. Since the ending of the Nokia partnership, Obopay has moved to a defender strategy, yet the environment has remained turbulent. This creates an undesirable misfit situation because the level of unpredictability of the industry is inconsistent. The defender strategy cannot handle the unpredictability in a turbulent environment. Obopay will always be in a highly unpredictable environment due to the nature of the mobile payments industry.
The international reach of a company like Obopay typically necessitates a hierarchal structure. However, flat is the only financially sustainable structure for Obopay at this time. Therefore, it is a fit due to circumstance.
Moving the majority of operations to India helps Obopay optimize their resource exploitation. This also allows them to increase their local responsiveness to their primary market. These factors contribute to Obopay being a transnational organization, even though their main strategy is defender. Obopay had moved operations to India in order to be efficient, cost effective and a successful defender. Coincidentally, the move allowed Obopay to be locally responsive since their main market is in India as well. Therefore, this “misfit” might be positive for Obopay.
Airtel Burton Model
Organizational Goals: Efficiency and Effectiveness
The primary goal of Airtel Money is to survive in a competitive, complex and volatile environment by maintaining low cost and remaining current with their technologies. Airtel has developed the technology necessary to operate in the mobile payments industry and therefore, its focus is on keeping their costs low and expanding its market, which makes efficiency their priority.
Strategy: Analyzer Without Innovation
Despite not having first-mover advantage in the mobile payments industry, Airtel has already captured a large market share. According to the CEO Sunjay Kumar, Airtel Money’s main focus is to exploit and accelerate mobile-based commerce (Airtel Money). Airtel money provides services that meet the local market’s needs without further innovation, while pursuing technologies that are already operating successfully. That puts Airtel money into the analyzer without innovation category. To expand the market, Airtel Money needs to utilize partnerships and advertisement, while keeping the cost of acquiring new customers low. Airtel already has a huge customer base; therefore, it would be advantageous for Airtel to grow its new line of business among the existing customers. Environment: Turbulent
The external environment factors that influence the company include regulation, competition, industry development and financial conditions. Any change in one of these factors will influence each of the rest. The regulations can change the size of the market and penetration strategy. Financial conditions can affect the capability of Airtel to raise money to fund the operation and can make the banking system reluctant to invest in new business opportunities. Lastly, Visa, Vodafone and other major competitors have created competitive pressure for Airtel.
Configuration: Matrix
Airtel has a complex structure, which is both functional and divisional. The CEO and other executives are in charge of policy and strategy making, while each department has its own function. The departments are divided based on the product and services: telecom services, financial services, retail/wholesale, and infrastructure, etc. Meanwhile, there are several “Groups”, including Finance, HR, legal & secretarial, M&A/business development and brand & communications that work cross functionally throughout all the products and services (Airtel).
Airtel Fit Diagnosis
Airtel’s organizational design is appropriate to its goals and strategy. Airtel Money is an analyzer without innovation. They have been able to replicate a similar mobile payment service and offer it to their extensive database of mobile customers. In accordance with its analyzer without innovation structure, Airtel followed in the footsteps of Obopay. They were able to capitalize on the technological and regulatory progress that Obopay had already achieved, thereby allowing them to focus on efficiency. Airtel has the technology, financial resources and established image as a trustworthy network provider to offer a more affordable service. They could potentially drive competitors, such as Obopay, out of the market or acquire them.
Airtel also fits the design of a multinational company. Operations are identified and categorized based on product/service or distribution channels. Logistical departments such as finance and human resources are cross-functional throughout the organization. This structure provides opportunities to coordinate while maintaining the autonomy of each department. See Exhibit IV for 2x2 Burton Model.
Burton Model Comparative Analysis
Airtel and Obopay intend to provide the same service to customers, a money transfer platform based on their mobile phones. The core difference between them is that Airtel is a mobile service provider that wants to add a mobile payment service and need the enabling technology while Obopay is a mobile payment technology company that needs to develop distribution channels and acquire customers for their service. That basic difference is illustrated by the results of their Burton model analyses as explained below:
Goals
When it was founded Obopay was a first mover and highly innovative. Now, they are focused on maintaining financial viability. However, they are no longer the only ones in the market and are lagging behind in means of distribution channels. Airtel was able to enter the market as an analyzer without innovation by copying Obopay’s technology. Obopay’s financial constraints have forced them to focus on efficiency, whereas Airtel is already efficient and can divert resources to becoming more effective.
Strategy
Airtel utilizes their existing customers in order to bring business to their new service. They are high on exploitation of their existing assets and have a limited interest in innovation. Although Obopay started out as an analyzer with innovation, they have regressed into a defender position. They must now look at alternative strategies to increase their efficiency and enable them to once again innovate.
Environment
Both companies are competing in the same turbulent environment. Due to its more compatible, flexible structure Airtel is better positioned to perform in this complex and unpredictable environment.

Structure
Airtel is divided into subunits based on their function (i.e. telecom services, financial services, and retail/wholesale) and are serviced by divisional departments (i.e. finance, HR, legal & secretarial, M&A and business development). The matrix structure provides Airtel with the efficiency of the functional units and the effectiveness of the divisional departments. Since Obopay is a smaller company offering one predominant service it cannot support the complexity of the matrix configuration and is best served by the functional configuration because it needs to operate with high efficiency and precision.
PART III: Change Recommendations
Recommendation #1 – Focus on Strategic Partnerships
Obopay was founded with the view of providing person-to-person (P2P) mobile payment solutions in lesser-developed countries (LCDs) where the majority of the population is unbanked. Through the use of agents, users can add money to their pre-paid mobile phone, which they can then use to transfer to family/friends and pay bills. In the United States and other well-banked economies, Obopay has failed to articulate a customer value proposition that resonates with consumers for the P2P aspect of its platform.
To address this, the first recommendation for Obopay is to focus on strategic partnerships with established companies in their target markets to offer more of a business-to-consumer solution. Based on the SWOT/TOWS analysis, one of Obopay’s biggest strengths is its technology, yet the biggest threat is that other entrants to the mobile payment industry with greater financial resources are offering relatively similar products. In order for Obopay to capitalize on its first mover advantage it needs to channel its energy into a multi-pronged approach of partnering with organizations that do bulk disbursements and financial institutions. In early May 2012, Obopay took a step toward creating partnerships with companies that do bulk disbursements by inking a deal with Visa to collaborate for near-real time disbursements to Visa Prepaid Cards (“PayPal Partners 15 New Retailers for In-store Payments”). As a result of the agreement, Obopay will offer its partners the ability to disburse funds from their corporate account directly on a Visa prepaid card, which they provide to a payee. The capability can benefit a range of industries including insurance, payroll, rebates, incentives, business expenses, government disbursements or any other bulk payment need. This could be an effective tool for businesses or governments to control and monitor employee expenditures, and/or as an alternative to cash to pay migrant workers who lack government identification to open a bank account.
Forming relationships with financial institutions is a strategy that Obopay has devoted little energy to because it has traditionally channeled its energy towards its P2P service. Although Obopay has a handful of partnerships with banks, most notably in India (Yes Bank and Union Bank of India) it needs to forge more partnerships to access potential consumers who are already banked. Since one of Obopay’s critical weaknesses is its lack of financial resources, partnering with banks/credit unions would provide a much-needed capital injection. Obopay has the ability to tailor its existing technology to the institution’s particular needs, saving the bank the considerable time and financial investment that would be needed for in-house development of mobile payment technology. Obopay appears to be exploring this recommendation as it recently partnered with the French bank Société Générale. This partnership has already allowed Obopay to begin offering its service in Senegal where a hybrid approach of agents and Société Générale branches allows banked customers to transfer money in and out of their bank accounts and allows unbanked customers to utilize an agent’s service to top-up their Obopay account. The unbanked client can feel confident using Obopay’s service because of its partnership with a recognized and respected institution. Société Générale benefits by getting instant access to Obopay’s technological innovation for its current customers and the potential benefit of getting unbanked Senegalese to become customers of its traditional banking services.
This type of partnership is one that Obopay can replicate in all its target markets. One weakness of Obopay’s P2P strategy is that in many areas complex regulations make it illegal to transfer money without the involvement of a chartered bank. Partnering with banks would allow Obopay to overcome this weakness. Another weakness identified in the SWOT is Obopay’s lack of an Indian mobile service provider. In markets where there is one dominant mobile provider that provides its own mobile payment solution (Airtel Money in India), partnering with banks allows Obopay entry into these markets where they would otherwise be unable to gain a foothold.
Should Obopay be able to implement this recommendation, it would also help to move it from its current position as a defender in the Burton model back to being an analyzer with innovation. Creating these strategic partnerships would allow Obopay to exploit its current position of resource utilization and market position, while simultaneously adopting an active innovation strategy of developing new services (personalized online banking platform tailored to clients) and their delivery processes. See Exhibit V for Force Field Analysis.
Recommendation #2 – Hire Executives With Experience in Banking Sector in Target Markets
One of Obopay’s strengths identified in the SWOT analysis was the company’s strong relationship with the business community in India. This stems largely from the appointment of Deepak Chandnani as CEO. He has been instrumental in launching of the Obopay service in India and has forged partnerships with Bank of India and Yes Bank among others. Prior to joining Obopay, Chandnani was the CEO of Wire and Wireless in India and had roles with Yahoo where he established their first office in India. Firsthand knowledge of a target market is an invaluable asset when attempting to break into a new market. Not only did Chandnani bring with him years of experience in the wireless industry but business connections and relationships that were forged through years of interactions.
The value of in-depth knowledge of local culture, customs and business practices is something that is often overlooked when companies attempt to enter new markets. A market strategy that has worked in home/domestic markets does not always translate to foreign markets. It is for these reasons that the second recommendation for Obopay is to hire executives with experience in the banking sector in their target markets. If Obopay follows the first recommendation to seek out partnerships with financial institutions and organizations that do bulk disbursements the best way to navigate the complex business and regulatory environment of new markets is to hire people who have a proven track record of working in those environments. They can draw upon their experience and existing contacts to identify opportunities or barriers that are unique to the market.
Using the Burton model, Obopay is classified as a transnational organization, meaning that it is high on optimal sourcing and high on local responsiveness. According to Burton, “...the executive managing a business centered in one locale, you become an expert in doing business in that environment. You know the people, the culture, and the general setting in which your firm operates. Your firm becomes highly knowledgeable about that one locale. This allows you to build efficiency and effectiveness based on local knowledge. In addition, doing business with partners, that is, managing relationships with suppliers, distributors, government regulators, and other entities, is relatively straightforward when all are co-located. You share a common language, laws, customs, and ways of doing business,” (Burton and Obel and DeSanctis, 86). Obopay currently displays these characteristics in its Indian operations and can replicate this success in other markets by following a similar approach. By first hiring the key executive with extensive local market knowledge to forge partnerships in the area, the local operations can then essentially be built up from this foundation. This fits the criteria of a transnational organization as described by Burton such that “some operations are located close to needed resources; but location decisions also are made such that the firm has presence in all areas of the world that are of strategic importance. In this way, the organization develops customized offerings by region while at the same time gaining efficiencies through worldwide centers of operation,” (Burton and Obel and DeSanctis, 93)
Being a transnational organization is a fit with Obopay’s current position as a defender, however should Obopay be able to return to being an analyzer with innovation (as a result of implementing the first recommendation) this would result in a misfit. Although a misfit is not ideal, being a transnational organization is well suited to Obopay’s business at this time. Eventually, successfully establishing Obopay in multiple foreign markets may allow Obopay to naturally evolve its structure to that of a matrix, resulting in a fit with being an analyzer with innovation as outline by Burton. See Exhibit VI for Force Field Analysis.
Change Model That Should be Used to Implement Recommendations: The Kotter Model
Currently, Obopay has not reached the breakeven point and the company is facing serious financial and operational challenges. The company needs to create a sense of urgency to change business strategy from focusing on end user to servicing large financial institutions. Given the financial position, along with the rapid adoption of mobile payment solutions across India, the Kotter change model provides the most logical approach towards implementing the recommendations of our analysis.
From the SWOT and TOWS analysis, it is recommended that Obopay form an influential coalition with key members of the company from the C-level along with members from the Indian operations to ensure the sense of urgency propagates through the entire organization. It is critical that all key members of the Obopay team are convinced that these change recommendations are necessary. This will take strong leadership from top executives and visible support from all levels of the organization. Once a coalition of influential people is formed, they must work as a group to build urgency and reinforce momentum around the need for change. Having a clear vision and statement that embodies this, “Obopay seeks to be the exclusive mobile payment solutions provider of the leading financial institution across India by focusing on technologies that substantially reduce transaction costs for the modern financial sector of India,” will help address the “why” and “what” questions that members will naturally ask themselves during the change process.
Ultimately, Obopay’s current position is attributed to a combination of poor decisions, bad luck, and lack of strategic vision. Although Obopay has organizational misfits and has been victim of unfortunate circumstances, implementing the change recommendations could realign their resources with their strategic goals.

Part IV: References

"About Bharti Airtel." Airtel.in. Airtel India. Web. 31 May 2012. <http://www.airtel.in/wps/wcm/connect/about bharti airtel/Bharti Airtel/About bharti airtel/?WCM_Page.ResetAll=TRUE>.
"Airtel." IndiaBuzzing.com. India Buzzing, 18 Oct. 2007. Web. 1 June 2012. <http://www.indiabuzzing.com/2007/10/18/airtel/>.
"Airtel Money: About Us." Airtel.In. Airtel. Web. 06 June 2012. <http://www.airtel.in/wps/wcm/connect/airtelmoney/airtelmoney/home/About Us/>. "'Airtel Money' Picks Best Mobile Money Award | Mobile Money Africa." 'Airtel Money' Picks Best Mobile Money Award | Mobile Money Africa. Mobile Money Africa, 25 Apr. 2012. Web. 05 June 2012. <http://mobilemoneyafrica.com/airtel-money-picks-best-mobile-money-award/>.
Burton, Richard M., Børge Obel, and Gerardine DeSanctis. Organizational Design: A Step-by-step Approach. Cambridge: Cambridge U
"Company Profile." Airtel.in. Airtel Indian. Web. 31 May 2012. <http://www.airtel.in/wps/wcm/connect/about bharti airtel/Bharti Airtel/Investor Relations/Company Profile/PG_Company_Profile?countrytabs=1>.
MacAyeal, John. "Bharti Airtel Limited." Hoovers.com. Hoover's Inc. Web. 31 May 2012. <http://0-subscriber.hoovers.com.sculib.scu.edu/H/company360/fulldescription.html?companyId=138405000000000>.
MacAyeal, John. "Bharti Airtel Limited." Hoovers.com. Hoover's Inc. Web. 31 May 2012. <http://0-subscriber.hoovers.com.sculib.scu.edu/H/company360/overview.html?companyId=138405000000000>.
"Now Use Airtel Money to Make Payments and Transfer Money across India." Now Use Airtel Money to Make Payments and Transfer Money across India. Airtel Money, 23 Feb. 2012. Web. 05 June 2012. <http://www.airtel.in/wps/wcm/connect/airtelmoney/airtelmoney/home/media/now-use-airtel-money-to-make-payments-and-transfer-money-across-india>.
O'Brien, Judy. "Obopay Former General Counsel Interview." Personal interview. 15 Apr. 2012.
"Obopay Corporate - Solutions." Obopay Corporate - Solutions. Obopay. Web. 27 May 2012. <https://www.obopay.com/corporate_website/about_obopay.php? sid=MjA=>. "Our Vision & Promise." Airtel.in. Airtel India. Web. 31 May 2012. <http://www.airtel.in/wps/wcm/connect/about bharti airtel/Bharti Airtel/About bharti airtel/Our Brand airtel/Our Vision and Promise/>.
Pahwa, Nikhil. "Deepak Chandnani Made Global CEO Of Struggling Mobile Payments Co Obopay - MediaNama." MediaNama. News & Analysis of Digital Media in India, 12 Jan. 2011. Web. 27 May 2012. <http://www.medianama.com/2011/01/223-deepak-chandnani-made-global-ceo-of-struggling-mobile-payments-co-obopay/>.
Swain, Gyana R. "Bharti Airtel: Strategy Gone Sour." Bharti Airtel: Strategy Gone Sour. Voice & Data, 4 May 2012. Web. 3 June 2012. <http://voicendata.ciol.com/content/top_stories/212050402.asp>.
Scharninghausen, William, and Glenn Hunter. "Obopay C-Level Management Interview." Personal interview. 10 May 2012. William Sharninghausen - CFO Glenn Hunter - SVP, HR

"TLP SV Speakers for Nov 4: Obopay and Venrock." Startupleadership.com. Startup Leadership Program, 29 Oct. 2009. Web. 27 May 2012. <http://www.startupleadership.com/2009/10/tlp-sv-speakers-for-nov-4-obopay-and-venrock>.
"VentureBeat Profiles." VentureBeatProfiles.com. Venture Beat. Web. 27 May 2012. <http://venturebeatprofiles.com/>
"Visa and Obopay Collaborate for Near Real-Time Electronic Disbursements to Visa Prepaid Cards." Reuters.com. Thomson Reuters, 9 May 2012. Web. 30 May 2012. <http://www.reuters.com/article/2012/05/09/idUS141262+09-May-2012+BW20120509>.

Part V: Appendix
Exhibit I. Obopay Financials US $ Mn | 2009 | 2010 | 2011 | Revenue | 5 | 8 | 17 | Expenses | 1,885 | 30 | 30 |

Exhibit II. Bharti Airtel Financials US $ Mn * | 2010 | 2011 | 2012 | Revenue | 8,797 | 13,063 | 14,937 | Net Income | 1,885 | 1,325 | 890 |
* Financials for Bharti Airtel Limited. No financials available for Airtel Money

Exhibit III. Obopay Organizational Fit
High

Efficient
Defender
Functional
Internal Process
Turbulent
Transnational

High

Low

Laboratory
Flat

Low

Exhibit IV. Airtel Organizational Fit
High

Efficiency and Effectiveness
Analyzer without innovation
Turbulent
Matrix

High

Low

Low

Exhibit V. Force Field Analysis – Recommendation #1
Forces FOR Change * Fulfills a need of banking institutions and organizations with bulk disbursements 5 * More lucrative market (as opposed to strictly P2P) 5 * Lower volume at higher profitability 4 * Partnering with large institutions provides security in a turbulent environment 4 * Cash infusion from partners 5 * Access to existing client bases 5
TOTAL= 24

Forces AGAINST Change * Loss of autonomy by partnering 4 * Reluctance of executives to move away from P2P focus 3
TOTAL=7

Exhibit VI. Force Field Analysis – Recommendation #2

Forces FOR Change * Provides entry into new markets 4 * Provides invaluable local knowledge 5 * Cuts down on time involved in learning about a new market 5
TOTAL=14

Forces AGAINST Change * Expense of hiring highly-skilled executive level employees 3 * Current executive structure is highly concentrated in the US 4 * Current executive structure may find it difficult to relinquish control and delegate
2
TOTAL=9
Exhibit VI: Interview Questions – Former General Counsel and Current Consultant to the CEO and Board of Directors: Judy O’Brien 1. Can you give us a general background of Obopay? Partnerships? Executive Leadership? etc? 2. What was the founding mission of Obopay? Has it changed? 3. What are the strengths/opportunities/threats/weaknesses? 4. Who are other competitors/major players in the industry? 5. How is Airtel a threat to Obopay? What is a strength that Obopay has that Airtel doesn't?

Exhibit VII: Interview Questions – CFO: Bill Scharninghausen and SVP of HR: Glenn Hunter
Stage 1: Opening Questions * How many years have you been in the industry, or how many years have you been here? * What did you do before? * What made you join Obopay?
Stage 2: Strategic Questions * What is your vision for growing the business? * What differentiates you from the competition? * Who is your target market? * What are your relative advantages in the current market? * What are Obopay’s strategic objectives?
Stage 3: Goal Questions * How do you intend to achieve these strategic objectives? * What are your primary goals in the short-term? * Where do you see Obopay in the next 5 to 10 years?
Stage 4: Environment Questions * What is the current climate of the mobile payment market? * Who are your direct competitors? Do they vary geographically? * What external factors are barriers and/or advantages (e.g., regulations, customs, etc.) to your success?
Stage 5: Anchor Questions * What are the possible ramifications if this strategy does not succeed? * Do you have any initiatives to outsource/ license technology?

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Case Study for Student Analysis

...A Case Analysis of Carl Robins By: Paul Van Berkum Comm/215 April 6, 2015 Instructor: Gary Tandy A Case Analysis of Carl Robins Introduction: Utilizing a case analysis of Carl Robins, the new campus recruiter for ABC, Inc., we are going to examine the processes in which new recruits will be selected, hired, and processed for orientation in a timely manner. From this analysis, we will develop new processes as we identify key issues, evaluate alternative solutions, and present possible solution to the issue. Background: Carl is charged with hiring and assuring that all recruits complete all necessary requirements and are ready to begin orientation on June 15th. This being Carl's first recruitment effort and having been at his new position for only six months, he will need to be well organized and efficient at scheduling conflicts in order to accomplish his goals. Carl will be coordinating the needs of the new recruits as well as the needs of the company with Monica Carrolls, the Operations Supervisor. Key Problems: Carl is off to a great start as he has already hired 15 new trainees, but already, there are several problems. Carl has hired more people than he is prepared to accommodate. Because there wasn't a specified number of new recruits required, he discovers that he doesn't have enough materials to complete the orientation as scheduled and he hasn't acquired a facility large enough to accommodate the large number of new recruits. Additionally, he discovers...

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