Deal Making in Troubled Waters: The ABN AMRO Takeover SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Deal Making in Troubled Waters: The ABN AMRO Takeover
In a letter to ABN AMRO in February 2007, TCI, a British hedge fund with a small stake in ABN AMRO, stated: "We believe that it would be in the interests of all shareholders, other stakeholders and ABN AMRO for the Managing Board of ABN AMRO to actively pursue the potential break up, spin-off, sale or merger of its various businesses (or as a whole)...". Eight months later, after a head-to-head battle with Barclays, the bank was finally sold to a Royal Bank of Scotland-led consortium, which included Banco Santander of Spain and Fortis, the Belgo-Dutch group. It was the largest financial services transaction ever and the first time that bidders had attempted to break up a large lender. This case looks at the events that led up to the takeover and examines some of the strategic decisions of the recent past which may have triggered the process. It discusses the financing and timing of the deal in the turbulent financial markets of 2007 and raises questions about the future. What were the risks of splitting the bank? Could this complex task be achieved successfully? Learning objectives: This integrative case gives participants an overview of the different aspects of a takeover: finance and control, integrated risk management, strategy. Issues for discussion include strategic lessons for the future of banking in Europe and worldwide; strengths and weaknesses of the two bids regarding valuation, synergies, timing, deal structure, concerns regarding integration planning and implementation.
Swot Analysis of "Deal Making in Troubled Waters: The ABN AMRO Takeover" written by Didier Cossin, Luc Keuleneer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Abn Amro facing as an external strategic factors. Some of the topics covered in Deal Making in Troubled Waters: The ABN AMRO Takeover case study are - Strategic Management Strategies, International business, Leadership, Mergers & acquisitions, Organizational structure, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Deal Making in Troubled Waters: The ABN AMRO Takeover casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions, increasing energy prices, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Deal Making in Troubled Waters: The ABN AMRO Takeover
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Deal Making in Troubled Waters: The ABN AMRO Takeover case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Abn Amro, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Abn Amro 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 Deal Making in Troubled Waters: The ABN AMRO Takeover can be done for the following purposes –
1. Strategic planning using facts provided in Deal Making in Troubled Waters: The ABN AMRO Takeover case study
2. Improving business portfolio management of Abn Amro
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Abn Amro
Strengths Deal Making in Troubled Waters: The ABN AMRO Takeover | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Abn Amro in Deal Making in Troubled Waters: The ABN AMRO Takeover Harvard Business Review case study are -
Learning organization
- Abn Amro 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 Abn Amro is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Deal Making in Troubled Waters: The ABN AMRO Takeover Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Abn Amro 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 Abn Amro in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Abn Amro digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Abn Amro 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.
Operational resilience
– The operational resilience strategy in the Deal Making in Troubled Waters: The ABN AMRO Takeover 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.
Analytics focus
– Abn Amro is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Didier Cossin, Luc Keuleneer can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Abn Amro in the sector have low bargaining power. Deal Making in Troubled Waters: The ABN AMRO Takeover has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Abn Amro to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Abn Amro is one of the leading recruiters in the industry. Managers in the Deal Making in Troubled Waters: The ABN AMRO Takeover are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Abn Amro 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Deal Making in Troubled Waters: The ABN AMRO Takeover firm has clearly differentiated products in the market place. This has enabled Abn Amro to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Abn Amro to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Abn Amro 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 Deal Making in Troubled Waters: The ABN AMRO Takeover - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Abn Amro
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Abn Amro does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Abn Amro is one of the most innovative firm in sector. Manager in Deal Making in Troubled Waters: The ABN AMRO Takeover Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Deal Making in Troubled Waters: The ABN AMRO Takeover | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Deal Making in Troubled Waters: The ABN AMRO Takeover are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Deal Making in Troubled Waters: The ABN AMRO Takeover, it seems that the employees of Abn Amro 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, Abn Amro 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. Abn Amro 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Deal Making in Troubled Waters: The ABN AMRO Takeover, in the dynamic environment Abn Amro has struggled to respond to the nimble upstart competition. Abn Amro has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Abn Amro supply chain. Even after few cautionary changes mentioned in the HBR case study - Deal Making in Troubled Waters: The ABN AMRO Takeover, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Abn Amro vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Abn Amro 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 - Deal Making in Troubled Waters: The ABN AMRO Takeover should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Abn Amro 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.
Slow to strategic competitive environment developments
– As Deal Making in Troubled Waters: The ABN AMRO Takeover HBR case study mentions - Abn Amro 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Deal Making in Troubled Waters: The ABN AMRO Takeover, is just above the industry average. Abn Amro 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 cash cycle compare to competitors
Abn Amro 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.
Capital Spending Reduction
– Even during the low interest decade, Abn Amro 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 bargaining power of channel partners
– Because of the regulatory requirements, Didier Cossin, Luc Keuleneer suggests that, Abn Amro 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.
Opportunities Deal Making in Troubled Waters: The ABN AMRO Takeover | 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 Deal Making in Troubled Waters: The ABN AMRO Takeover are -
Building a culture of innovation
– managers at Abn Amro 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 Strategy & Execution segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Abn Amro can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Abn Amro can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Abn Amro 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 Deal Making in Troubled Waters: The ABN AMRO Takeover - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Abn Amro to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Abn Amro 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.
Loyalty marketing
– Abn Amro 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.
Better consumer reach
– The expansion of the 5G network will help Abn Amro to increase its market reach. Abn Amro 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.
Developing new processes and practices
– Abn Amro can develop new processes and procedures in Strategy & Execution 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 Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Abn Amro 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. Abn Amro 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.
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 Abn Amro in the consumer business. Now Abn Amro can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Abn Amro 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 Abn Amro to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Abn Amro has opened avenues for new revenue streams for the organization in the industry. This can help Abn Amro to build a more holistic ecosystem as suggested in the Deal Making in Troubled Waters: The ABN AMRO Takeover case study. Abn Amro can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Abn Amro is facing challenges because of the dominance of functional experts in the organization. Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Deal Making in Troubled Waters: The ABN AMRO Takeover External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Deal Making in Troubled Waters: The ABN AMRO Takeover are -
Environmental challenges
– Abn Amro 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. Abn Amro can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Deal Making in Troubled Waters: The ABN AMRO Takeover, Abn Amro may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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. Abn Amro needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Abn Amro 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.
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 Abn Amro in the Strategy & Execution sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Abn Amro is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Abn Amro 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.
Increasing wage structure of Abn Amro
– 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 Abn Amro.
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 Abn Amro.
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.
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 Abn Amro business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Abn Amro can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Abn Amro 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.
Weighted SWOT Analysis of Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Deal Making in Troubled Waters: The ABN AMRO Takeover 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 Abn Amro needs to make to build a sustainable competitive advantage.