Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC
To maximize their effectiveness, color cases should be printed in color.Euronex.liffe, a derivatives trading exchange, launches matching, clearing, and confirmation services for the over-the-counter market. This combination of services creates a new platform for a market that potentially cannibalizes its current exchange-based services. Is this good idea? Does the design of this new combination of services make sense? Is it the best positioned among other exchanges and services to the derivatives trading market to launch this new platform?
Swot Analysis of "Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC" written by Estelle S. Cantillon, Pai-Ling Yin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Derivatives Services facing as an external strategic factors. Some of the topics covered in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC case study are - Strategic Management Strategies, Financial markets, Growth strategy, IT, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC casestudy better are - – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, there is increasing trade war between United States & China, technology disruption, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Derivatives Services, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Derivatives Services 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC can be done for the following purposes –
1. Strategic planning using facts provided in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC case study
2. Improving business portfolio management of Derivatives Services
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 Derivatives Services
Strengths Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Derivatives Services in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC Harvard Business Review case study are -
Analytics focus
– Derivatives Services 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 Estelle S. Cantillon, Pai-Ling Yin 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.
High brand equity
– Derivatives Services has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Derivatives Services to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Derivatives Services is present in almost all the verticals within the industry. This has provided firm in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Derivatives Services digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Derivatives Services 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.
Cross disciplinary teams
– Horizontal connected teams at the Derivatives Services 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.
Ability to lead change in Strategy & Execution field
– Derivatives Services 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 Derivatives Services in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Derivatives Services has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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.
Operational resilience
– The operational resilience strategy in the Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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.
Learning organization
- Derivatives Services 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 Derivatives Services is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Derivatives Services 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.
Ability to recruit top talent
– Derivatives Services is one of the leading recruiters in the industry. Managers in the Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Derivatives Services in the sector have low bargaining power. Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Derivatives Services to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC are -
Skills based hiring
– The stress on hiring functional specialists at Derivatives Services 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.
Increasing silos among functional specialists
– The organizational structure of Derivatives Services is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Derivatives Services needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Derivatives Services to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC, in the dynamic environment Derivatives Services has struggled to respond to the nimble upstart competition. Derivatives Services has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Derivatives Services 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC, is just above the industry average. Derivatives Services 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC, it seems that the employees of Derivatives Services 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 bargaining power of channel partners
– Because of the regulatory requirements, Estelle S. Cantillon, Pai-Ling Yin suggests that, Derivatives Services is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Derivatives Services has relatively successful track record of launching new products.
High cash cycle compare to competitors
Derivatives Services 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Derivatives Services is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Derivatives Services 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 - Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC should strive to include more intangible value offerings along with its core products and services.
Opportunities Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC | 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Derivatives Services can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Derivatives Services to increase its market reach. Derivatives Services 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.
Buying journey improvements
– Derivatives Services can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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.
Manufacturing automation
– Derivatives Services can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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 Derivatives Services in the consumer business. Now Derivatives Services can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Derivatives Services can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Derivatives Services 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.
Loyalty marketing
– Derivatives Services 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.
Leveraging digital technologies
– Derivatives Services 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.
Learning at scale
– Online learning technologies has now opened space for Derivatives Services to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 Derivatives Services 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Derivatives Services is facing challenges because of the dominance of functional experts in the organization. Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Derivatives Services 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 Derivatives Services to hire the very best people irrespective of their geographical location.
Threats Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC are -
Environmental challenges
– Derivatives Services 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. Derivatives Services can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Derivatives Services has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Derivatives Services 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Derivatives Services in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Derivatives Services is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
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. Derivatives Services 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.
Stagnating economy with rate increase
– Derivatives Services 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 Derivatives Services
– 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 Derivatives Services.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Derivatives Services can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC .
Regulatory challenges
– Derivatives Services 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.
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. Derivatives Services can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Derivatives Services.
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.
Weighted SWOT Analysis of Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Bringing OTC Back to the Exchange: Euronext.liffe's Launch of ABC 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 Derivatives Services needs to make to build a sustainable competitive advantage.