Case Study Description of First Commonwealth Financial Corp.
First Commonwealth Financial Corp., a financial institution in central and southwestern Pennsylvania, implemented the Balanced Scorecard for describing and implementing its new customer-focused strategy. Its founder and chairman decided that the Balanced Scorecard also should become the primary information input for the corporate governance process with the board of directors so that the board could become more knowledgeable about and more actively involved in the company's strategy. Describes how the board became knowledgeable about the company's Balanced Scorecard and how it participated in developing a Balanced Scorecard for itself. In addition to the enterprise and board scorecards, the company also developed scorecards for each senior executive for the governance and compensation committees to assess and reward senior management performance. Extensive exhibits illustrate the three different scorecards and the reports and supporting documents for these scorecards.
Swot Analysis of "First Commonwealth Financial Corp." written by Robert S. Kaplan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Scorecards Scorecard facing as an external strategic factors. Some of the topics covered in First Commonwealth Financial Corp. case study are - Strategic Management Strategies, Competitive strategy, Corporate governance and Strategy & Execution.
Some of the macro environment factors that can be used to understand the First Commonwealth Financial Corp. casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, wage bills are increasing, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of First Commonwealth Financial Corp.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in First Commonwealth Financial Corp. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Scorecards Scorecard, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Scorecards Scorecard 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 First Commonwealth Financial Corp. can be done for the following purposes –
1. Strategic planning using facts provided in First Commonwealth Financial Corp. case study
2. Improving business portfolio management of Scorecards Scorecard
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 Scorecards Scorecard
Strengths First Commonwealth Financial Corp. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scorecards Scorecard in First Commonwealth Financial Corp. Harvard Business Review case study are -
Organizational Resilience of Scorecards Scorecard
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Scorecards Scorecard does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Scorecards Scorecard in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Strategy & Execution industry
– First Commonwealth Financial Corp. firm has clearly differentiated products in the market place. This has enabled Scorecards Scorecard to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Scorecards Scorecard to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the First Commonwealth Financial Corp. 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
– Scorecards Scorecard 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 Robert S. Kaplan 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 switching costs
– The high switching costs that Scorecards Scorecard 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.
Strong track record of project management
– Scorecards Scorecard is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Scorecards Scorecard has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Scorecards Scorecard has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Scorecards Scorecard digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Scorecards Scorecard 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.
Low bargaining power of suppliers
– Suppliers of Scorecards Scorecard in the sector have low bargaining power. First Commonwealth Financial Corp. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Scorecards Scorecard to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Scorecards Scorecard is present in almost all the verticals within the industry. This has provided firm in First Commonwealth Financial Corp. 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.
Learning organization
- Scorecards Scorecard 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 Scorecards Scorecard is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in First Commonwealth Financial Corp. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses First Commonwealth Financial Corp. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of First Commonwealth Financial Corp. are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study First Commonwealth Financial Corp., in the dynamic environment Scorecards Scorecard has struggled to respond to the nimble upstart competition. Scorecards Scorecard has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study First Commonwealth Financial Corp. 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 First Commonwealth Financial Corp. can leverage the sales team experience to cultivate customer relationships as Scorecards Scorecard is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Scorecards Scorecard 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. Scorecards Scorecard 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Scorecards Scorecard 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study First Commonwealth Financial Corp., is just above the industry average. Scorecards Scorecard 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.
No frontier risks strategy
– After analyzing the HBR case study First Commonwealth Financial Corp., it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Scorecards Scorecard 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.
Lack of clear differentiation of Scorecards Scorecard products
– To increase the profitability and margins on the products, Scorecards Scorecard needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Scorecards Scorecard is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study First Commonwealth Financial Corp. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Scorecards Scorecard 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.
High operating costs
– Compare to the competitors, firm in the HBR case study First Commonwealth Financial Corp. 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 Scorecards Scorecard 's lucrative customers.
Opportunities First Commonwealth Financial Corp. | 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 First Commonwealth Financial Corp. are -
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. Scorecards Scorecard 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. Scorecards Scorecard can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Scorecards Scorecard in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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 Scorecards Scorecard 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.
Creating value in data economy
– The success of analytics program of Scorecards Scorecard has opened avenues for new revenue streams for the organization in the industry. This can help Scorecards Scorecard to build a more holistic ecosystem as suggested in the First Commonwealth Financial Corp. case study. Scorecards Scorecard can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Scorecards Scorecard to increase its market reach. Scorecards Scorecard 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.
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 Scorecards Scorecard in the consumer business. Now Scorecards Scorecard can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Scorecards Scorecard 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Scorecards Scorecard 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Scorecards Scorecard can use these opportunities to build new business models that can help the communities that Scorecards Scorecard operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Scorecards Scorecard can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Scorecards Scorecard can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. First Commonwealth Financial Corp. 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Scorecards Scorecard is facing challenges because of the dominance of functional experts in the organization. First Commonwealth Financial Corp. 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.
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. Scorecards Scorecard can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats First Commonwealth Financial Corp. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study First Commonwealth Financial Corp. are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study First Commonwealth Financial Corp., Scorecards Scorecard 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 .
Stagnating economy with rate increase
– Scorecards Scorecard 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Scorecards Scorecard with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Scorecards Scorecard 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.
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. Scorecards Scorecard can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Scorecards Scorecard needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Scorecards Scorecard 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 First Commonwealth Financial Corp. .
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 Scorecards Scorecard in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Scorecards Scorecard 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. Scorecards Scorecard can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Scorecards Scorecard
– 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 Scorecards Scorecard.
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 Scorecards Scorecard.
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.
Regulatory challenges
– Scorecards Scorecard 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 First Commonwealth Financial Corp. 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 First Commonwealth Financial Corp. 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 First Commonwealth Financial Corp. 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 First Commonwealth Financial Corp. 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 First Commonwealth Financial Corp. 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 Scorecards Scorecard needs to make to build a sustainable competitive advantage.