Charles Schwab & Co. Inc. (A): In 1999 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Charles Schwab & Co. Inc. (A): In 1999
Dave Pottruck, president and co-CEO of Charles Schwab Corp. (CSC), is contemplating a piece of news in the June 1, 1999 edition of the Wall Street Journal that was about to send shock waves through the brokerage community: Merrill Lynch's decision to launch online trading on December 1, 1999. Customers at Merrill Lynch would be able to trade online for $29.95/trade or, for a minimum annual fee of $1,500, make as many trades as they wanted. Now that Merrill Lynch had joined the online trading revolution, Pottruck wondered, how would this affect Charles Schwab & Co., Inc. (Schwab), and what should the company do in response? Pottruck observes that Merrill Lynch, E*Trade, WingspanBank, and Schwab, although competing for similar customers, appeared to be doing so from very different starting points. Pottruck considers the competitive dynamics of the brokerage industry and wonders: How can Schwab maintain its growth trajectory in the face of so many, varied competitors? What other firms might enter the space? How could Schwab protect and grow its existing customer base? Was Schwab getting "squeezed in the middle" or could it create a "category of one"?
Authors :: Robert A. Burgelman, Margot Sutherland, Kelly Dubois
Swot Analysis of "Charles Schwab & Co. Inc. (A): In 1999" written by Robert A. Burgelman, Margot Sutherland, Kelly Dubois includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Schwab Pottruck facing as an external strategic factors. Some of the topics covered in Charles Schwab & Co. Inc. (A): In 1999 case study are - Strategic Management Strategies, Competitive strategy, Networking, Strategic planning, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Charles Schwab & Co. Inc. (A): In 1999 casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, etc
Introduction to SWOT Analysis of Charles Schwab & Co. Inc. (A): In 1999
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Charles Schwab & Co. Inc. (A): In 1999 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Schwab Pottruck, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Schwab Pottruck 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 Charles Schwab & Co. Inc. (A): In 1999 can be done for the following purposes –
1. Strategic planning using facts provided in Charles Schwab & Co. Inc. (A): In 1999 case study
2. Improving business portfolio management of Schwab Pottruck
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 Schwab Pottruck
Strengths Charles Schwab & Co. Inc. (A): In 1999 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Schwab Pottruck in Charles Schwab & Co. Inc. (A): In 1999 Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Charles Schwab & Co. Inc. (A): In 1999 firm has clearly differentiated products in the market place. This has enabled Schwab Pottruck to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Schwab Pottruck to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Schwab Pottruck 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 Charles Schwab & Co. Inc. (A): In 1999 - 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
– Schwab Pottruck has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Schwab Pottruck to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Schwab Pottruck is one of the leading recruiters in the industry. Managers in the Charles Schwab & Co. Inc. (A): In 1999 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Schwab Pottruck is one of the most innovative firm in sector. Manager in Charles Schwab & Co. Inc. (A): In 1999 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
– Schwab Pottruck is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Schwab Pottruck 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 Schwab Pottruck in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Schwab Pottruck
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Schwab Pottruck does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Schwab Pottruck digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Schwab Pottruck 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.
Training and development
– Schwab Pottruck has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Charles Schwab & Co. Inc. (A): In 1999 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.
Diverse revenue streams
– Schwab Pottruck is present in almost all the verticals within the industry. This has provided firm in Charles Schwab & Co. Inc. (A): In 1999 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Schwab Pottruck 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 Charles Schwab & Co. Inc. (A): In 1999 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Charles Schwab & Co. Inc. (A): In 1999 are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Charles Schwab & Co. Inc. (A): In 1999 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 Schwab Pottruck has relatively successful track record of launching new products.
Lack of clear differentiation of Schwab Pottruck products
– To increase the profitability and margins on the products, Schwab Pottruck needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Charles Schwab & Co. Inc. (A): In 1999, it seems that the employees of Schwab Pottruck 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Schwab Pottruck needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Schwab Pottruck 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. Schwab Pottruck 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.
Capital Spending Reduction
– Even during the low interest decade, Schwab Pottruck 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.
Increasing silos among functional specialists
– The organizational structure of Schwab Pottruck is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Schwab Pottruck needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Schwab Pottruck to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert A. Burgelman, Margot Sutherland, Kelly Dubois suggests that, Schwab Pottruck 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Schwab Pottruck is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Charles Schwab & Co. Inc. (A): In 1999 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Schwab Pottruck 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.
Low market penetration in new markets
– Outside its home market of Schwab Pottruck, firm in the HBR case study Charles Schwab & Co. Inc. (A): In 1999 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Charles Schwab & Co. Inc. (A): In 1999 | 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 Charles Schwab & Co. Inc. (A): In 1999 are -
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 Schwab Pottruck 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.
Buying journey improvements
– Schwab Pottruck can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Charles Schwab & Co. Inc. (A): In 1999 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.
Creating value in data economy
– The success of analytics program of Schwab Pottruck has opened avenues for new revenue streams for the organization in the industry. This can help Schwab Pottruck to build a more holistic ecosystem as suggested in the Charles Schwab & Co. Inc. (A): In 1999 case study. Schwab Pottruck can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Schwab Pottruck 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 Schwab Pottruck to hire the very best people irrespective of their geographical location.
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 Schwab Pottruck in the consumer business. Now Schwab Pottruck can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Schwab Pottruck 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.
Developing new processes and practices
– Schwab Pottruck 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. Schwab Pottruck 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. Schwab Pottruck 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Schwab Pottruck can use these opportunities to build new business models that can help the communities that Schwab Pottruck operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Schwab Pottruck can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Schwab Pottruck 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, Charles Schwab & Co. Inc. (A): In 1999, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Schwab Pottruck to increase its market reach. Schwab Pottruck 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Schwab Pottruck can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Charles Schwab & Co. Inc. (A): In 1999 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Charles Schwab & Co. Inc. (A): In 1999 are -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Schwab Pottruck with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Schwab Pottruck 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 Strategy & Execution 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 Schwab Pottruck business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Schwab Pottruck has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Schwab Pottruck needs to keep up with the evolution of technology in the Strategy & Execution 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.
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.
Increasing wage structure of Schwab Pottruck
– 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 Schwab Pottruck.
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. Schwab Pottruck can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Schwab Pottruck in the Strategy & Execution sector and impact the bottomline of the organization.
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. Schwab Pottruck 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 Schwab Pottruck 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.
Stagnating economy with rate increase
– Schwab Pottruck 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.
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. Schwab Pottruck 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 Charles Schwab & Co. Inc. (A): In 1999 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 Charles Schwab & Co. Inc. (A): In 1999 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 Charles Schwab & Co. Inc. (A): In 1999 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 Charles Schwab & Co. Inc. (A): In 1999 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 Charles Schwab & Co. Inc. (A): In 1999 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 Schwab Pottruck needs to make to build a sustainable competitive advantage.