Swot Analysis of "Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B)" written by James K. Sebenius, David T. Kotchen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that S.g Warburg facing as an external strategic factors. Some of the topics covered in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) case study are - Strategic Management Strategies, International business, Mergers & acquisitions, Negotiations and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) casestudy better are - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, increasing household debt because of falling income levels, increasing transportation and logistics costs, wage bills are increasing, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the S.g Warburg, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which S.g Warburg 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) can be done for the following purposes –
1. Strategic planning using facts provided in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) case study
2. Improving business portfolio management of S.g Warburg
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 S.g Warburg
Strengths Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of S.g Warburg in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) Harvard Business Review case study are -
Training and development
– S.g Warburg has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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.
Effective Research and Development (R&D)
– S.g Warburg 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For S.g Warburg digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. S.g Warburg 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.
Innovation driven organization
– S.g Warburg is one of the most innovative firm in sector. Manager in Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– S.g Warburg is one of the leading recruiters in the industry. Managers in the Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– S.g Warburg 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 S.g Warburg in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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.
Cross disciplinary teams
– Horizontal connected teams at the S.g Warburg 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.
High brand equity
– S.g Warburg has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled S.g Warburg to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– S.g Warburg 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that S.g Warburg 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.
Analytics focus
– S.g Warburg 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 James K. Sebenius, David T. Kotchen 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.
Weaknesses Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) are -
Need for greater diversity
– S.g Warburg 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.
Aligning sales with marketing
– It come across in the case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) can leverage the sales team experience to cultivate customer relationships as S.g Warburg is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at S.g Warburg 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.
Slow to strategic competitive environment developments
– As Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) HBR case study mentions - S.g Warburg 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.
Workers concerns about automation
– As automation is fast increasing in the segment, S.g Warburg 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B), in the dynamic environment S.g Warburg has struggled to respond to the nimble upstart competition. S.g Warburg has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B), is just above the industry average. S.g Warburg 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 operating costs
– Compare to the competitors, firm in the HBR case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 S.g Warburg 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, S.g Warburg is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B), it seems that the employees of S.g Warburg 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, S.g Warburg 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. S.g Warburg 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.
Opportunities Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) | 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) are -
Leveraging digital technologies
– S.g Warburg 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.
Building a culture of innovation
– managers at S.g Warburg 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
– S.g Warburg 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. S.g Warburg 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. S.g Warburg 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.
Creating value in data economy
– The success of analytics program of S.g Warburg has opened avenues for new revenue streams for the organization in the industry. This can help S.g Warburg to build a more holistic ecosystem as suggested in the Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) case study. S.g Warburg can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects S.g Warburg can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 S.g Warburg 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, S.g Warburg 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, Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, S.g Warburg can use these opportunities to build new business models that can help the communities that S.g Warburg operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– S.g Warburg 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, S.g Warburg is facing challenges because of the dominance of functional experts in the organization. Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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.
Better consumer reach
– The expansion of the 5G network will help S.g Warburg to increase its market reach. S.g Warburg 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.
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. S.g Warburg can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) are -
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 S.g Warburg in the Strategy & Execution sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents S.g Warburg with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of S.g Warburg
– 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 S.g Warburg.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B), S.g Warburg 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 dependence on third party suppliers
– S.g Warburg 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.
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. S.g Warburg 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.
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. S.g Warburg can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– S.g Warburg 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. S.g Warburg can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Consumer confidence and its impact on S.g Warburg 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
– S.g Warburg has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, S.g Warburg 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.
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 S.g Warburg business can come under increasing regulations regarding data privacy, data security, etc.
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.
Regulatory challenges
– S.g Warburg 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.
Weighted SWOT Analysis of Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 Morgan Stanley and S.G. Warburg: Investment Bank of the Future (B) 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 S.g Warburg needs to make to build a sustainable competitive advantage.