Case Study Description of Massachusetts Financial Services
This case describes the compensation and performance evaluations at an investment management company. The senior management team of Massachusetts Financial Services (MFS) Investment Management was contemplating an introduction of hedge funds at the firm, but many believed that typical hedge fund manager pay (20% of the upside) would harm the MFS culture, which glorified "star performance but not star egos." The case presents the MFS compensation philosophy and plan (including the plan's emphasis on subjective compensation), the types of people it attracted, the resulting culture, and how the senior management team approached the hedge funds question. It includes side discussion on firm-specific human capital.
Swot Analysis of "Massachusetts Financial Services" written by Brian J. Hall, Jonathan P. Lim includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mfs Hedge facing as an external strategic factors. Some of the topics covered in Massachusetts Financial Services case study are - Strategic Management Strategies, Financial management, Motivating people, Performance measurement and Organizational Development.
Some of the macro environment factors that can be used to understand the Massachusetts Financial Services casestudy better are - – supply chains are disrupted by pandemic , increasing transportation and logistics costs, technology disruption, increasing commodity prices, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Massachusetts Financial Services
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Massachusetts Financial Services case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mfs Hedge, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mfs Hedge 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 Massachusetts Financial Services can be done for the following purposes –
1. Strategic planning using facts provided in Massachusetts Financial Services case study
2. Improving business portfolio management of Mfs Hedge
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 Mfs Hedge
Strengths Massachusetts Financial Services | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mfs Hedge in Massachusetts Financial Services Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Mfs Hedge in the sector have low bargaining power. Massachusetts Financial Services has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mfs Hedge to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Mfs Hedge
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mfs Hedge does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Mfs Hedge is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Mfs Hedge has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Massachusetts Financial Services 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.
Highly skilled collaborators
– Mfs Hedge 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 Massachusetts Financial Services HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Mfs Hedge is one of the leading recruiters in the industry. Managers in the Massachusetts Financial Services are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Mfs Hedge has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mfs Hedge has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Massachusetts Financial Services 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
– Mfs Hedge has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mfs Hedge to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Mfs Hedge is one of the most innovative firm in sector. Manager in Massachusetts Financial Services Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Organizational Development field
– Mfs Hedge 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 Mfs Hedge in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Mfs Hedge 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.
Weaknesses Massachusetts Financial Services | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Massachusetts Financial Services are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Massachusetts Financial Services, it seems that the employees of Mfs Hedge 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.
Slow decision making process
– As mentioned earlier in the report, Mfs Hedge 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. Mfs Hedge 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Brian J. Hall, Jonathan P. Lim suggests that, Mfs Hedge 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.
Low market penetration in new markets
– Outside its home market of Mfs Hedge, firm in the HBR case study Massachusetts Financial Services needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Mfs Hedge products
– To increase the profitability and margins on the products, Mfs Hedge needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Mfs Hedge 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 - Massachusetts Financial Services should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mfs Hedge is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Massachusetts Financial Services can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Mfs Hedge 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Massachusetts Financial Services 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 Mfs Hedge 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Massachusetts Financial Services that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Massachusetts Financial Services can leverage the sales team experience to cultivate customer relationships as Mfs Hedge is planning to shift buying processes online.
Need for greater diversity
– Mfs Hedge 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.
Opportunities Massachusetts Financial Services | 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 Massachusetts Financial Services are -
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. Mfs Hedge 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. Mfs Hedge 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.
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 Mfs Hedge 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.
Better consumer reach
– The expansion of the 5G network will help Mfs Hedge to increase its market reach. Mfs Hedge 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mfs Hedge 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, Massachusetts Financial Services, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Mfs Hedge has opened avenues for new revenue streams for the organization in the industry. This can help Mfs Hedge to build a more holistic ecosystem as suggested in the Massachusetts Financial Services case study. Mfs Hedge can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Mfs Hedge can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Massachusetts Financial Services suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mfs Hedge can use these opportunities to build new business models that can help the communities that Mfs Hedge operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Developing new processes and practices
– Mfs Hedge 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mfs Hedge 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mfs Hedge 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 Mfs Hedge to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Mfs Hedge 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 Massachusetts Financial Services - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mfs Hedge to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Mfs Hedge 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.
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. Mfs Hedge can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Massachusetts Financial Services External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Massachusetts Financial Services are -
Increasing wage structure of Mfs Hedge
– 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 Mfs Hedge.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mfs Hedge 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 Massachusetts Financial Services .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mfs Hedge 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. Mfs Hedge needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Mfs Hedge has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Mfs Hedge needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Mfs Hedge 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.
Regulatory challenges
– Mfs Hedge 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mfs Hedge in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Mfs Hedge is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Mfs Hedge in the Organizational Development sector and impact the bottomline of the organization.
Consumer confidence and its impact on Mfs Hedge 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.
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 Mfs Hedge.
Weighted SWOT Analysis of Massachusetts Financial Services 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 Massachusetts Financial Services 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 Massachusetts Financial Services 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 Massachusetts Financial Services 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 Massachusetts Financial Services 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 Mfs Hedge needs to make to build a sustainable competitive advantage.
