ETrade pioneered the electronic deep-discount brokerage business and experienced phenomenal growth by making extensive use of technology to achieve significant cost advantages over traditional firms. ETrade's strategy has been to pass these cost savings from automation on to its customers as it amortized its fixed costs over a greater number of accounts. By 1996, a flood of new competitors are establishing Internet sites and ETrade has been dethroned as the price leader. While some executives within ETrade believe they should continue to lower prices and go head-to-head with eBroker, others believe the company faces a larger challenge from Charles Schwab's entry into the market. Defending against Schwab would require focusing resources on enhancing its product/service offering, which might jeopardize ETrade's low-cost position. ETrade must decide where it can create a profitable and sustainable position along the price/quality (service) trade-off.
Authors :: Rajiv Lal, Chuck Glew, Mark Lotke, Mario Palumbo
Swot Analysis of "ETrade Securities, Inc." written by Rajiv Lal, Chuck Glew, Mark Lotke, Mario Palumbo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Etrade Etrade's facing as an external strategic factors. Some of the topics covered in ETrade Securities, Inc. case study are - Strategic Management Strategies, Customer service, Customers, Data and Sales & Marketing.
Some of the macro environment factors that can be used to understand the ETrade Securities, Inc. casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing energy prices, geopolitical disruptions, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic ,
increasing commodity prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of ETrade Securities, Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ETrade Securities, Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Etrade Etrade's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Etrade Etrade's 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 ETrade Securities, Inc. can be done for the following purposes –
1. Strategic planning using facts provided in ETrade Securities, Inc. case study
2. Improving business portfolio management of Etrade Etrade's
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 Etrade Etrade's
Strengths ETrade Securities, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Etrade Etrade's in ETrade Securities, Inc. Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Etrade Etrade's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Etrade Etrade's 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.
Learning organization
- Etrade Etrade's 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 Etrade Etrade's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ETrade Securities, Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Etrade Etrade's 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.
Operational resilience
– The operational resilience strategy in the ETrade Securities, Inc. 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.
Innovation driven organization
– Etrade Etrade's is one of the most innovative firm in sector. Manager in ETrade Securities, Inc. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Etrade Etrade's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Etrade Etrade's 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
– Etrade Etrade's 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 Etrade Etrade's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Etrade Etrade's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Etrade Etrade's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Etrade Etrade's 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 ETrade Securities, Inc. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Etrade Etrade's is one of the leading recruiters in the industry. Managers in the ETrade Securities, Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Sales & Marketing industry
– ETrade Securities, Inc. firm has clearly differentiated products in the market place. This has enabled Etrade Etrade's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Etrade Etrade's to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Etrade Etrade's 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 ETrade Securities, Inc. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses ETrade Securities, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ETrade Securities, Inc. are -
Products dominated business model
– Even though Etrade Etrade's 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 - ETrade Securities, Inc. should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Etrade Etrade's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ETrade Securities, Inc., is just above the industry average. Etrade Etrade's 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.
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 Etrade Etrade's supply chain. Even after few cautionary changes mentioned in the HBR case study - ETrade Securities, Inc., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Etrade Etrade's vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Rajiv Lal, Chuck Glew, Mark Lotke, Mario Palumbo suggests that, Etrade Etrade's 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.
Skills based hiring
– The stress on hiring functional specialists at Etrade Etrade's 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.
Lack of clear differentiation of Etrade Etrade's products
– To increase the profitability and margins on the products, Etrade Etrade's needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study ETrade Securities, Inc. 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 ETrade Securities, Inc. can leverage the sales team experience to cultivate customer relationships as Etrade Etrade's is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ETrade Securities, Inc., it seems that the employees of Etrade Etrade's 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ETrade Securities, Inc. 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 Etrade Etrade's has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As ETrade Securities, Inc. HBR case study mentions - Etrade Etrade's 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.
Opportunities ETrade Securities, Inc. | 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 ETrade Securities, Inc. are -
Developing new processes and practices
– Etrade Etrade's 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.
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. Etrade Etrade's 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. Etrade Etrade's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Etrade Etrade's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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. Etrade Etrade's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Etrade Etrade's 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.
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. Etrade Etrade's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Etrade Etrade's 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 Etrade Etrade's to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Etrade Etrade's 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, ETrade Securities, Inc., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Etrade Etrade's in the consumer business. Now Etrade Etrade's can target international markets with far fewer capital restrictions requirements than the existing system.
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 Etrade Etrade's 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.
Building a culture of innovation
– managers at Etrade Etrade's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Etrade Etrade's can use these opportunities to build new business models that can help the communities that Etrade Etrade's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Etrade Etrade's is facing challenges because of the dominance of functional experts in the organization. ETrade Securities, Inc. 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 ETrade Securities, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ETrade Securities, Inc. are -
Stagnating economy with rate increase
– Etrade Etrade's 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.
Increasing wage structure of Etrade Etrade's
– 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 Etrade Etrade's.
Environmental challenges
– Etrade Etrade's 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. Etrade Etrade's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Regulatory challenges
– Etrade Etrade's 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.
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 Etrade Etrade's business can come under increasing regulations regarding data privacy, data security, etc.
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. Etrade Etrade's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Etrade Etrade's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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. Etrade Etrade's 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ETrade Securities, Inc., Etrade Etrade's 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 .
Consumer confidence and its impact on Etrade Etrade's 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.
Technology acceleration in Forth Industrial Revolution
– Etrade Etrade's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Etrade Etrade's 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.
Shortening product life cycle
– it is one of the major threat that Etrade Etrade's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of ETrade Securities, Inc. 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 ETrade Securities, Inc. 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 ETrade Securities, Inc. 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 ETrade Securities, Inc. 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 ETrade Securities, Inc. 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 Etrade Etrade's needs to make to build a sustainable competitive advantage.
