10 Uncommon Values (R): Optimizing the Stock-Selection Process SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of 10 Uncommon Values (R): Optimizing the Stock-Selection Process
In 2003, Steve Hash, research director at Lehman Brothers, prepared to initiate the firm's "Ten Uncommon Values" stock-picking process for the year. An investment committee had to pick the 10 best stocks from about 100 stock ideas presented by the firm's analysts. The performance of the stocks selected for the Ten Uncommon Values had historically been strong--an investment strategy to acquire the recommended stocks and hold them for one year would have outperformed the S&P 500 for 39 of the last 54 years. However, during the latest three years--2000 to 2002--the recommendations had performed poorly, generating an average return of -22.5% vs. -11.7% for the S&P 500. Hash pondered several questions: What was the importance of the Ten Uncommon Values for Lehman Brothers and its clients? How much time and effort should the firm put into the process of selecting stocks for the report? How many members should be on the Investment Policy Committee, and who should be selected? What should the process for selection be? Should analysts whose stocks were selected be compensated for their picks? Finally, should they continue the process? Teaching Purpose: Using both qualitative and quantitative data, to allow students to discuss a range of issues: the optimal process of selecting stocks, the optimal size of the committee, how much time to spend with each analyst, private or public voting on stocks by the committee members, the right decision-making process, and whether incentives play a role in the process.
Authors :: Boris Groysberg, Paul M. Healy
Topics :: Organizational Development
Tags :: Financial management, Financial markets, Human resource management, Leading teams, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "10 Uncommon Values (R): Optimizing the Stock-Selection Process" written by Boris Groysberg, Paul M. Healy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Stocks Uncommon facing as an external strategic factors. Some of the topics covered in 10 Uncommon Values (R): Optimizing the Stock-Selection Process case study are - Strategic Management Strategies, Financial management, Financial markets, Human resource management, Leading teams and Organizational Development.
Some of the macro environment factors that can be used to understand the 10 Uncommon Values (R): Optimizing the Stock-Selection Process casestudy better are - – challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing transportation and logistics costs, technology disruption, there is increasing trade war between United States & China,
increasing household debt because of falling income levels, wage bills are increasing, etc
Introduction to SWOT Analysis of 10 Uncommon Values (R): Optimizing the Stock-Selection Process
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in 10 Uncommon Values (R): Optimizing the Stock-Selection Process case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Stocks Uncommon, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Stocks Uncommon operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of 10 Uncommon Values (R): Optimizing the Stock-Selection Process can be done for the following purposes –
1. Strategic planning using facts provided in 10 Uncommon Values (R): Optimizing the Stock-Selection Process case study
2. Improving business portfolio management of Stocks Uncommon
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Stocks Uncommon
Strengths 10 Uncommon Values (R): Optimizing the Stock-Selection Process | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Stocks Uncommon in 10 Uncommon Values (R): Optimizing the Stock-Selection Process Harvard Business Review case study are -
Training and development
– Stocks Uncommon has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in 10 Uncommon Values (R): Optimizing the Stock-Selection Process Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Stocks Uncommon has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the 10 Uncommon Values (R): Optimizing the Stock-Selection Process Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Stocks Uncommon has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Stocks Uncommon to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Stocks Uncommon is one of the leading recruiters in the industry. Managers in the 10 Uncommon Values (R): Optimizing the Stock-Selection Process are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Stocks Uncommon has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Stocks Uncommon are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Organizational Development industry
– 10 Uncommon Values (R): Optimizing the Stock-Selection Process firm has clearly differentiated products in the market place. This has enabled Stocks Uncommon to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Stocks Uncommon to invest into research and development (R&D) and innovation.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Stocks Uncommon digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Stocks Uncommon has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Organizational Development field
– Stocks Uncommon is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Stocks Uncommon in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Stocks Uncommon is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Boris Groysberg, Paul M. Healy can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Stocks Uncommon in the sector have low bargaining power. 10 Uncommon Values (R): Optimizing the Stock-Selection Process has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Stocks Uncommon to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses 10 Uncommon Values (R): Optimizing the Stock-Selection Process | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of 10 Uncommon Values (R): Optimizing the Stock-Selection Process are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process, is just above the industry average. Stocks Uncommon needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Stocks Uncommon has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - 10 Uncommon Values (R): Optimizing the Stock-Selection Process should strive to include more intangible value offerings along with its core products and services.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Stocks Uncommon supply chain. Even after few cautionary changes mentioned in the HBR case study - 10 Uncommon Values (R): Optimizing the Stock-Selection Process, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Stocks Uncommon vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Stocks Uncommon 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Stocks Uncommon has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Stocks Uncommon has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As 10 Uncommon Values (R): Optimizing the Stock-Selection Process HBR case study mentions - Stocks Uncommon takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Stocks Uncommon has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Stocks Uncommon even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Stocks Uncommon is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process, it seems that the employees of Stocks Uncommon don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process, in the dynamic environment Stocks Uncommon has struggled to respond to the nimble upstart competition. Stocks Uncommon has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities 10 Uncommon Values (R): Optimizing the Stock-Selection Process | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process are -
Creating value in data economy
– The success of analytics program of Stocks Uncommon has opened avenues for new revenue streams for the organization in the industry. This can help Stocks Uncommon to build a more holistic ecosystem as suggested in the 10 Uncommon Values (R): Optimizing the Stock-Selection Process case study. Stocks Uncommon can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Stocks Uncommon can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Stocks Uncommon can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Stocks Uncommon can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Stocks Uncommon can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Learning at scale
– Online learning technologies has now opened space for Stocks Uncommon to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Stocks Uncommon to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Stocks Uncommon can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Stocks Uncommon is facing challenges because of the dominance of functional experts in the organization. 10 Uncommon Values (R): Optimizing the Stock-Selection Process case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Stocks Uncommon can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, 10 Uncommon Values (R): Optimizing the Stock-Selection Process, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Stocks Uncommon to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Stocks Uncommon to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Stocks Uncommon can use these opportunities to build new business models that can help the communities that Stocks Uncommon operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Stocks Uncommon in the consumer business. Now Stocks Uncommon can target international markets with far fewer capital restrictions requirements than the existing system.
Threats 10 Uncommon Values (R): Optimizing the Stock-Selection Process External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process are -
Consumer confidence and its impact on Stocks Uncommon demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Stocks Uncommon high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Stocks Uncommon can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Stocks Uncommon needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Environmental challenges
– Stocks Uncommon needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Stocks Uncommon can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Stocks Uncommon will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Stocks Uncommon
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Stocks Uncommon.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Stocks Uncommon can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Stocks Uncommon.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Stocks Uncommon with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Stocks Uncommon can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of 10 Uncommon Values (R): Optimizing the Stock-Selection Process Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study 10 Uncommon Values (R): Optimizing the Stock-Selection Process is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of 10 Uncommon Values (R): Optimizing the Stock-Selection Process is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Stocks Uncommon needs to make to build a sustainable competitive advantage.
