Credit Solicitations as Market Experiments in the U.S. Credit Card Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Credit Solicitations as Market Experiments in the U.S. Credit Card Industry
Describes market experiments conducted by a major credit card issuer. In a typical experiment, the issuer sends out hundreds of thousands of solicitations based on information received from credit reporting agencies (e.g., credit score, past delinquencies, etc.). Selection bias is striking: the average risk profile of those responding to higher interest rates is significantly worse than that of respondents to lower rates. Tracking respondents for 27 months after the experiment, respondents to higher rates displayed significantly higher delinquency and bankruptcy rates. Based on a research paper by Larry Ausubel.
Authors :: Nabil Al-Najjar, David Besanko, Roberto Uchoa
Swot Analysis of "Credit Solicitations as Market Experiments in the U.S. Credit Card Industry" written by Nabil Al-Najjar, David Besanko, Roberto Uchoa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Respondents Credit facing as an external strategic factors. Some of the topics covered in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry case study are - Strategic Management Strategies, Market research, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Credit Solicitations as Market Experiments in the U.S. Credit Card Industry casestudy better are - – talent flight as more people leaving formal jobs, increasing energy prices, technology disruption, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing commodity prices,
increasing household debt because of falling income levels, wage bills are increasing, etc
Introduction to SWOT Analysis of Credit Solicitations as Market Experiments in the U.S. Credit Card Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Respondents Credit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Respondents Credit 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry can be done for the following purposes –
1. Strategic planning using facts provided in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry case study
2. Improving business portfolio management of Respondents Credit
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Respondents Credit
Strengths Credit Solicitations as Market Experiments in the U.S. Credit Card Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Respondents Credit in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry Harvard Business Review case study are -
Ability to recruit top talent
– Respondents Credit is one of the leading recruiters in the industry. Managers in the Credit Solicitations as Market Experiments in the U.S. Credit Card Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Respondents Credit 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.
Learning organization
- Respondents Credit is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Respondents Credit is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Respondents Credit is one of the most innovative firm in sector. Manager in Credit Solicitations as Market Experiments in the U.S. Credit Card Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Respondents Credit is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Respondents Credit has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Respondents Credit 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.
Effective Research and Development (R&D)
– Respondents Credit 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Respondents Credit has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Respondents Credit to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Respondents Credit digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Respondents Credit 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.
Low bargaining power of suppliers
– Suppliers of Respondents Credit in the sector have low bargaining power. Credit Solicitations as Market Experiments in the U.S. Credit Card Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Respondents Credit to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Respondents Credit
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Respondents Credit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Sales & Marketing field
– Respondents Credit 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 Respondents Credit in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Credit Solicitations as Market Experiments in the U.S. Credit Card Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Credit Solicitations as Market Experiments in the U.S. Credit Card Industry are -
High cash cycle compare to competitors
Respondents Credit 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.
Aligning sales with marketing
– It come across in the case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry can leverage the sales team experience to cultivate customer relationships as Respondents Credit is planning to shift buying processes online.
Need for greater diversity
– Respondents Credit 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.
Lack of clear differentiation of Respondents Credit products
– To increase the profitability and margins on the products, Respondents Credit needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Respondents Credit 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.
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 Respondents Credit supply chain. Even after few cautionary changes mentioned in the HBR case study - Credit Solicitations as Market Experiments in the U.S. Credit Card Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Respondents Credit vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Respondents Credit 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry, in the dynamic environment Respondents Credit has struggled to respond to the nimble upstart competition. Respondents Credit has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Nabil Al-Najjar, David Besanko, Roberto Uchoa suggests that, Respondents Credit 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Respondents Credit has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Credit Solicitations as Market Experiments in the U.S. Credit Card Industry | 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Respondents Credit 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. Respondents Credit 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.
Building a culture of innovation
– managers at Respondents Credit 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 Sales & Marketing segment.
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 Respondents Credit 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.
Manufacturing automation
– Respondents Credit can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Respondents Credit is facing challenges because of the dominance of functional experts in the organization. Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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, Respondents Credit 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, Credit Solicitations as Market Experiments in the U.S. Credit Card Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Respondents Credit can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Respondents Credit to increase its market reach. Respondents Credit 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Respondents Credit 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 Respondents Credit 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 Respondents Credit to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Respondents Credit can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Respondents Credit in the consumer business. Now Respondents Credit can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Respondents Credit can develop new processes and procedures in Sales & Marketing 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.
Threats Credit Solicitations as Market Experiments in the U.S. Credit Card Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry are -
Technology acceleration in Forth Industrial Revolution
– Respondents Credit has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Respondents Credit needs to keep up with the evolution of technology in the Sales & Marketing 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Respondents Credit business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Respondents Credit in the Sales & Marketing industry. The Sales & Marketing 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.
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.
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 Respondents Credit.
Regulatory challenges
– Respondents Credit 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 Sales & Marketing industry regulations.
Stagnating economy with rate increase
– Respondents Credit 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Credit Solicitations as Market Experiments in the U.S. Credit Card Industry, Respondents Credit may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Respondents Credit can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Respondents Credit
– 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 Respondents Credit.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Respondents Credit 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry .
High dependence on third party suppliers
– Respondents Credit 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Respondents Credit with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Credit Solicitations as Market Experiments in the U.S. Credit Card Industry 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 Respondents Credit needs to make to build a sustainable competitive advantage.