Understanding Customer Profitability at Charles Schwab SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Understanding Customer Profitability at Charles Schwab
Charles Schwab is transforming into a customer-centric organization. Central to this cultural and organizational change is the utilization of customer profitability at different decision-making levels. Examines several technical aspects of the ABC cost system, as well as the change in budgeting and performance measurement introduced by the new profitability system. The system also shows how ABC informs segment and individual customer decisions (such as pricing or process improvement). Also examines Charles Schwab's necessary organizational changes (incentives, decision rights, etc.), as customer centricity is implemented throughout the firm.
Swot Analysis of "Understanding Customer Profitability at Charles Schwab" written by F. Asis Martinez-Jerez includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Charles Customer facing as an external strategic factors. Some of the topics covered in Understanding Customer Profitability at Charles Schwab case study are - Strategic Management Strategies, Change management, Costs, Motivating people, Organizational culture, Sales and Organizational Development.
Some of the macro environment factors that can be used to understand the Understanding Customer Profitability at Charles Schwab casestudy better are - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, technology disruption,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Understanding Customer Profitability at Charles Schwab
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Understanding Customer Profitability at Charles Schwab case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Charles Customer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Charles Customer 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 Understanding Customer Profitability at Charles Schwab can be done for the following purposes –
1. Strategic planning using facts provided in Understanding Customer Profitability at Charles Schwab case study
2. Improving business portfolio management of Charles Customer
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 Charles Customer
Strengths Understanding Customer Profitability at Charles Schwab | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Charles Customer in Understanding Customer Profitability at Charles Schwab Harvard Business Review case study are -
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Charles Customer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Charles Customer 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.
Diverse revenue streams
– Charles Customer is present in almost all the verticals within the industry. This has provided firm in Understanding Customer Profitability at Charles Schwab case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Organizational Development field
– Charles Customer 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 Charles Customer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Charles Customer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Understanding Customer Profitability at Charles Schwab 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.
Strong track record of project management
– Charles Customer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Charles Customer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Charles Customer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Charles Customer 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.
Low bargaining power of suppliers
– Suppliers of Charles Customer in the sector have low bargaining power. Understanding Customer Profitability at Charles Schwab has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Charles Customer to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Charles Customer is one of the leading recruiters in the industry. Managers in the Understanding Customer Profitability at Charles Schwab 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)
– Charles Customer 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 Understanding Customer Profitability at Charles Schwab - 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 Charles Customer 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.
Highly skilled collaborators
– Charles Customer has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Understanding Customer Profitability at Charles Schwab HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Understanding Customer Profitability at Charles Schwab | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Understanding Customer Profitability at Charles Schwab are -
Need for greater diversity
– Charles Customer has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Charles Customer, firm in the HBR case study Understanding Customer Profitability at Charles Schwab needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Charles Customer has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Charles Customer 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 - Understanding Customer Profitability at Charles Schwab should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Understanding Customer Profitability at Charles Schwab HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Charles Customer has relatively successful track record of launching new products.
High cash cycle compare to competitors
Charles Customer has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Asis Martinez-Jerez suggests that, Charles Customer is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Understanding Customer Profitability at Charles Schwab, in the dynamic environment Charles Customer has struggled to respond to the nimble upstart competition. Charles Customer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Charles Customer 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.
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 Charles Customer supply chain. Even after few cautionary changes mentioned in the HBR case study - Understanding Customer Profitability at Charles Schwab, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Charles Customer vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Charles Customer is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Charles Customer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Charles Customer to focus more on services rather than just following the product oriented approach.
Opportunities Understanding Customer Profitability at Charles Schwab | 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 Understanding Customer Profitability at Charles Schwab are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Charles Customer 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.
Better consumer reach
– The expansion of the 5G network will help Charles Customer to increase its market reach. Charles Customer will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Charles Customer can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Charles Customer can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Using analytics as competitive advantage
– Charles Customer has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Understanding Customer Profitability at Charles Schwab - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Charles Customer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Charles Customer has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Charles Customer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Charles Customer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Charles Customer 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 Charles Customer 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.
Developing new processes and practices
– Charles Customer 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Charles Customer can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Charles Customer can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Charles Customer is facing challenges because of the dominance of functional experts in the organization. Understanding Customer Profitability at Charles Schwab 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.
Threats Understanding Customer Profitability at Charles Schwab External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Understanding Customer Profitability at Charles Schwab are -
Stagnating economy with rate increase
– Charles Customer 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.
Shortening product life cycle
– it is one of the major threat that Charles Customer is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Charles Customer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Charles Customer 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 Understanding Customer Profitability at Charles Schwab .
Regulatory challenges
– Charles Customer needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
High dependence on third party suppliers
– Charles Customer 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.
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 Charles Customer.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Charles Customer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Charles Customer needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Increasing wage structure of Charles Customer
– 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 Charles Customer.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Charles Customer in the Organizational Development sector and impact the bottomline of the organization.
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.
Weighted SWOT Analysis of Understanding Customer Profitability at Charles Schwab 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 Understanding Customer Profitability at Charles Schwab 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 Understanding Customer Profitability at Charles Schwab 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 Understanding Customer Profitability at Charles Schwab 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 Understanding Customer Profitability at Charles Schwab 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 Charles Customer needs to make to build a sustainable competitive advantage.
