Global business strategy
INTL 706
Professor: James MacDonald
Project – 1
Submitted By:
Naveen Prudhvinadh Chintada (301200272)
Lo Ho Cheong Henr (301286429)
Amandeep Kaur (301239537)
Harideep Yemireddy (301210724)
Amanjot kaur (301281897)
February 1st, 2022
About the Company:
Paytm is was launched to serve as a digital currency where consumers has no need to carry any debit or credit card to make a payment. They just simply need to limk their banking information to Paytm wallet. This helps them go cash less, cardless protects the banking information leaked to the vendors. Paytm is more like a one-stop solution in the digital space, say it in shopping, transactions or even investing in the mutual funds (Paytm, 2023). The application makes transactions and banking to a simpler version. It is today seen as a fin-tech company, a virtual marketplace, and an application for monetary transactions. The applications has a digital payments bank called 'Paytm Payments Bank' that allow the user to start a digital account with Paytm to a mutual fund, and Paytm money that makes their investing easy and straight forward with zero commissions (Paytm, 2023) Paytm eefect has spread so rapidly that any merchant, ranging from a local store to a large supplier and retailer accepts transactions digitally through Paytm. (Paytm, 2023)
Mission statement of Paytm:
An Indian service with 100 million users. One of our best travels to date is this one. While concentrating on this goal, we also put a lot of effort into becoming the most reputable mobile commerce brand in the nation. (Paytm, 2023)
Future of the company:
According to Paytm's founder and CEO Vijay Shekhar Sharma, the world's largest digital payment company plans to become profitable in two years since it is monetizing its current client base and looking to the financial services industry as its next big growth area. (Bhalla, 2020)
• In an interview, Sharma explained that Paytm's expansion is divided into 3 stages: the initial three years were spent determining the best product-market fit; the following period was spent generating revenue and monetizing; and the last phase would focus on profitability and free cash flows. (Bhalla, 2020)
Paytm implemented QR codes in 2015, and by 2018–19, its service was fit into the market. From 2022–23, They will start charging for the services. (Bhalla, 2020)
Porter’s analysis for Paytm:
What is Porter’s analysis?
You can stay alive by being aware of your competitors and how their goods, services, and marketing tactics affect you. Using Porter's Five Forces model is one way to assess your rivals and position yourself in your business. (Martin Jan 23, 2023)
According to Porter's Five Forces, an understanding of the competitive dynamics and their underlying causes exposes the origins of an industry's current profitability and lays the groundwork for forecasting and influencing competition throughout time. A microanalytical method called Porter's Five Forces examines the industry's economy. (Martin Jan 23, 2023)
Paytm Building a Payments Network Porter Five (5) Forces Analysis:
Paytm may assess the sector's attractiveness and understand its competitive position in the market by using this methodology. You might also utilize the research to help you make some intelligent strategic decisions that would help Paytm Building a Payments Network function better and guarantee its long-term existence. (Henry Aug 22, 2018)
1-Threats of new entrants:
Threats from new rivals show how vulnerable established market players are to them. The threat of new entrants will be significant if the business is profitable and entry barriers are low, which will draw in more participants. (Henry Aug 22, 2018)
How Paytm will tackle the threats of new entrants:
If Paytm Building a Payments Network wishes to increase brand loyalty, it must focus on customer relationship management. Higher psychological switching costs will apply.
To increase access to the target market, it can establish long-term contractual partnerships with distributors.
To establish a solid foundation for the distinction, Paytm Building a Payments Network can also spend on R&D projects, collect priceless user data, and launch brand-new products and services. (Henry Aug 22, 2018)
2-The threat of Substitute Products or services:
The competitive environment makes it difficult for Paytm and other well-established firms to construct a Payments Network due to the availability of substitute goods or services. Consumers have access to alternatives from other economic sectors when the risk of substitution is significant. The severity of this threat to Paytm's ambitions to create a payments network depends on several factors. (Henry Aug 22, 2018)
How Paytm will tackle the Threats of Substitute Products and services:
Paytm Building a Payments Network can lessen the threat posed by rival products or services by emphasizing how superior its own offering is to the alternatives.
It must deliver a fantastic customer experience and exceptional value for its money in order to persuade people to make a purchase.
It may make switching more expensive, promoting loyalty.
Not to mention, it can improve quality, increase value for money, and make a strong case for differentiation to deter clients from using a competing product. (Henry Aug 22, 2018)
3-Rivalry among existing firms:
The struggle between established businesses reveals the sheer number of rivals that fiercely oppose Paytm's ambitions to build a payments network. Due to the fierce rivalry, it is possible that rival companies will exert significant pressure on Paytm to build a payments network, so limiting each other's capacity to develop. Companies compete strongly through pricing and targeting methods, which results in low profitability in many industries. (Henry Aug 22, 2018)
How Paytm will tackle the Rivalry among existing firms:
Paytm To increase the basis for difference, a payments network should concentrate on the implicit needs and expectations of its consumers. Building long-lasting consumer ties ought to make switching more expensive. For the corporation to find new consumer categories, research, and development must be funded. Sometimes collaborating with rivals can be advantageous for both parties. The company might also investigate this possibility. (Henry Aug 22, 2018)
4-Bargaining Power of Suppliers:
In the Porter 5 Force Model, the negotiating power of suppliers stands in for the pressure that suppliers put on corporate organisations using a variety of strategies, such as decreasing product availability, lowering product quality, or rising cost. Buyers must pay a price when suppliers have significant bargaining power. High supplier negotiating power can also heighten market rivalry while reducing Paytm Building a Payments Network's potential for growth and profit. In accordance with this, a sector with less supplier sway may be more alluring due to its high profitability and expansion potential. (Henry Aug 22, 2018)
How Paytm can tackle the Bargaining Power of Suppliers:
By reducing its reliance on a single or select group of providers, Paytm Building a Payments Network can better defend itself from vendors. It will become more sensitive to price. Paytm can build a Payments Network to increase the effectiveness of its supply chain while also reducing its negotiation power by forging long-term contractual connections with suppliers from other industries. Finally, if there is sufficient demand for the product and the company has the necessary skills and experience, Paytm Building a Payments Network may find alternative ways to produce it. To establish its viability, a thorough cost-benefit analysis is required. Diversifying the company's product offerings and redesigning its products can also help the company lessen the impact of its suppliers on the market. (Henry Aug 22, 2018)
5-Bargaining Power of Buyers:
Customers put a lot of pressure on businesses to deliver high-quality items at reasonable prices with excellent customer service, as evidenced by their capacity to bargain. The ability of Paytm Building a Payments Network to accomplish its operational objectives is directly impacted by this force. Strong negotiating positions raise industry competition and decrease profitability. However, when consumer power is limited, there is less competition in the market, which increases the profitability and growth potential of Paytm. (Henry Aug 22, 2018)
How Paytm will tackle the Bargaining Power of Buyers:
By expanding and diversifying its clientele, Paytm Building a Payments Network may be able to reduce the negotiating power of purchasers. This can be accomplished by adopting product diversification techniques, focusing on new market sectors, and launching new products. In this case, marketing and promotion methods could be useful. Raising switching prices and providing top-notch customer service can weaken their negotiating position by decreasing their ability to transfer providers. Several tactics can be used by Paytm Building a Payments Network to improve its position as a competitive business. (Henry Aug 22, 2018)
PESTEL Analysis:
The analysis of the PESTEL factors shows that the environment in Canada is generally favorable for PayTM's expansion. The country has a stable political environment, robust economy, diverse and open society, advanced technology infrastructure, and favorable legal environment. This could create a very attractive opportunity for PayTM to expand its services in Canada.
PESTEL analysis is a tool used to analyze the external environment of an organization and to assess the potential implications of changes within it. It stands for Political, Economic, Social, Technological, Environmental, and Legal factors (Kenton, 2022). This tool is important for PayTM Limited, which is planning to expand its business internationally, particularly in North America. This analysis will help the company to understand the potential implications of changes in the external environment, and to develop strategies to successfully expand its business in the region.
Political:
The political environment is an important factor in any international expansion. PayTM Limited is an Indian based company, and the Indian government has recently implemented a number of regulations related to the payments industry. These regulations will affect the company's ability to expand internationally, as certain services may not be allowed in certain countries. Additionally, PayTM Limited may face restrictions on international payments due to sanctions and other political considerations (Batista, 2022). It is also important to consider the political environment in North America, as this will affect the company's ability to expand in the region. For instance, the United States has strict regulations regarding the transfer of personal data, and any company operating in the country must comply with these regulations.
The political environment of the Canadian market is an important factor to consider when expanding a business. PayTM Limited India will need to understand the regulations and policies imposed by the Canadian government, as well as any potential tax implications. In addition, the political environment of Canada can be affected by global events, such as trade agreements or international sanctions, which could impact the ability of PayTM Limited India to do business in Canada.
Economic:
The economic environment is a key factor in any international expansion. The economic environment in North America is generally favorable for business expansion, as the region is relatively wealthy and has relatively low unemployment rates. However, PayTM Limited may face economic challenges due to the current economic downturn, as well as due to the potential for currency fluctuations. In addition, the company must consider the potential impact of tariffs and other trade restrictions, as these could have a negative impact on the company's operations (Wessel, 2022).The economic climate of Canada is an important factor to consider when expanding a business. The Canadian economy is primarily driven by the service sector, with the largest sectors being financial services, retail, and manufacturing. PayTM Limited India will need to be aware of the economic conditions in the Canadian market, as this will impact the demand for its services. Additionally, PayTM Limited India will need to consider the cost of doing business in Canada, as well as any potential exchange rate fluctuations between the Canadian dollar and Indian rupee.
Social:
The social environment is a critical factor in any international expansion. The social environment in North America is generally favorable for business expansion, as the region is generally open to new technology and new business models. However, PayTM Limited may face challenges due to cultural differences, as certain services or features may be seen as inappropriate or unwelcome in certain regions. It is also important to consider the potential impact of different consumer preferences, as these could affect the company's ability to successfully expand in the region. PayTM Limited India will need to understand the social and cultural norms of the Canadian market in order to be successful in its expansion (Paytm PESTLE Analysis, 2019). This includes understanding the values, beliefs, and attitudes of Canadians, as well as the type of products and services they are likely to purchase. Additionally, PayTM Limited India will need to consider any potential language barriers, as English and French are the two official languages of Canada.
Technological:
The technological environment is also an important factor in any international expansion. The technological environment in North America is generally favorable for business expansion, as the region has a high level of technological development and access to advanced digital infrastructure. However, PayTM Limited may face challenges due to the need to adapt its technology to the local market, as well as due to potential security and privacy concerns (One97 Communications (PayTM) SWOT & PESTEL Analysis, 2022). Additionally, the company must consider the potential impact of new technologies such as blockchain, artificial intelligence, and the Internet of Things, as these could have a significant impact on the company's operations. Technology is a key factor for PayTM Limited India to consider when expanding its business to Canada. PayTM Limited India will need to ensure that its products and services are compatible with the Canadian market, as well as being up to date with the latest technological trends. Additionally, PayTM Limited India will need to consider the type of infrastructure needed to support its products and services in the Canadian market.
Environmental:
The environmental environment is also a key factor in any international expansion. The environmental environment in North America is generally favorable for business expansion, as the region has relatively stringent environmental regulations and is generally open to new technologies that have the potential to reduce environmental damage. However, PayTM Limited may face challenges due to the need to adapt its technology to the local market, as well as due to potential environmental concerns. Additionally, the company must consider the potential impact of climate change, as this could have a significant impact on the company's operations. The environmental impact of PayTM Limited India's operations will need to be taken into consideration when expanding to the Canadian market. This includes understanding the environmental regulations in Canada, as well as any potential risks associated with the use of its products and services. Additionally, PayTM Limited India will need to consider any potential environmental costs associated with its operations, such as waste management and energy usage.
Legal:
The legal environment is also an important factor in any international expansion. The legal environment in North America is generally favorable for business expansion, as the region has a well-developed legal system and is generally open to new technologies and business models. However, PayTM Limited may face challenges due to the need to comply with local laws and regulations, as well as due to potential legal issues related to data privacy and consumer protection. Additionally, the company must consider the potential impact of evolving regulations, as these could have a significant impact on the company's operations (Batista, 2022). The legal environment of the Canadian market is an important factor to consider when expanding a business. PayTM Limited India will need to understand the regulations and laws in Canada, as well as any potential liabilities associated with its products and services. Additionally, PayTM Limited India will need to consider the type of insurance required to operate in the Canadian market, as well as any potential legal costs associated with setting up operations in Canada.
Overall, the PESTEL analysis is a critical tool for PayTM Limited as it plans to expand its business internationally, particularly in North America. This analysis helps the company to understand the potential implications of changes in the external environment, and to develop strategies to successfully expand its business in the region. This includes considering the political, economic, social, technological, environmental, and legal factors that could affect the company's operations. By understanding and preparing for these factors, the company can ensure a successful international expansion.
Market Analysis for Paytm
There's a decent possibility that the Paytm app is on your home screen if you possess a smartphone and spend any time in India. The majority of people in India utilise it for a variety of purposes, from selecting insurance policies and applying for loans to purchasing food and paying for school expenses.
Even by today's standards, adoption rates have been amazing. The business was established less than ten years ago. However, its QR code-based mobile payment system is already used by more than 7 million merchants in India. More than 100 million people have downloaded the app, and currently there are more than 420 million registered users, up from just 11 million in 2014. In 2018, earnings skyrocketed to US$480 million.
Economic
The organization's subsequent goal was even more audacious: to improve the reliability, efficiency, and inclusivity of India's payment system. It was a bold objective.
The great majority of people in India didn't have any access to conventional financial services when the company was started. Those who did have bank accounts frequently had trouble using the tools at their disposal. The percentage of people with credit accounts was under 2%. Cash and checks were typically used.
Business Model
The company delivers cutting-edge and user-friendly digital goods and services via a super-app that is payments-driven. On the Paytm app, customers have access to a variety of payment methods, including I Paytm Payment Instruments, which let them use digital wallets, sub-wallets, bank accounts, buy-now-pay-later accounts, and wealth management accounts, and (ii) important third-party instruments, like debit/credit cards and net banking .Vaidya, M. (2021). Merchants can take payments through Paytm Payment Instruments as well as other popular third-party payment methods using in-store and online payment solutions. PayTM provides them with services including ticket sales to customers, advertising, mini-app listings, channel, and loyalty solutions in order to help them attract and keep customers and generate demand.
As of March 2021, Paytm had 2.1 crore merchants on its network and served close to 33.3 crore users. The Gross Merchandise Value (GMV) of the company is Rs. 4 lakh crore. The term "GMV" stands for the aggregate rupee value of all payments made to merchants over a given period through transactions completed using Paytm Payment Instruments or its payment solutions.
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Concerns
Although Paytm provide unique services in India and the payments are customer friendly. However, there are still some concerns in Paytm regarding to their business model and in the market. First, electronic transactions are undoubtedly simple, practical, and appropriate. It still necessitates some degree of risk. Shastri, A. (2022). As a result, in order to complete the transaction and transmit payments, you will need both technical support and a secure procedure. Second, The internet and a quick connection are required for the full transaction process for opening an account, sending and receiving money, etc. It may work in both highly developed and less developed regions. On the other side, Paytm services wouldn't work well in developing nations and economies with expanding internet access issues.
Competitors
Due to the fact that its product offerings cover the complete spectrum, Paytm is in competition with a wide variety of companies. More importantly, it will be difficult to guarantee the long-term sustainability of profit margins if perfect competition develops in the Indian fintech sector as a result of market saturation. For instance, the business is already falling behind its rivals in the UPI arena. Paytm's UPI transactions in September 2021 were $8.4 billion, compared to PhonePe's $42 billion and Google Pay's $34 billion. Similar to how PhonePe's overall UPI transaction volume was 1.6 billion and Google Pay's 1.3 billion, Paytm's was 544 million.
Conclusion:
Paytm stands to benefit from the explosive growth happening in Canada in the digital space. Nevertheless, its competitors and monopoly also take a share of the growing pie. What makes Paytm stand out is the first-mover advantage in the minds of consumers that will play a role to a certain extent and the rapid scaling of the network to almost all throughout Canada. Also paytm can establish UPI transaction that allows Canadians to connect their bank acoount to their paytm wallets. We can predict that the market share it commands UPI-based merchants payments, will increase and create a brand new experience to them.
Paytm is very well integrated across all services, which many of its competitors lack. Paytm offers value to consumers by constantly innovating and it can prosper for a very long time.
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