Capital One Financial Corp.: Setting and Shaping Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Capital One Financial Corp.: Setting and Shaping Strategy
Capital One CEO and founder, Rich Fairbank, had much to be proud of both in terms of his and co-founder Nigel Morris' accomplishments and the accomplishments of Capital One. However, he and Morris didn't want to rest on their laurels. In 2000, they called a meeting with their senior managers to assess the company's strategy. Specifically, Fairbank wondered whether the company had executed on the optimal strategy throughout its history and whether the company's strategy was consistent, yet fluid and flexible, during changing times. Also, had the various functions optimally aligned with the company's strategy? Other financial companies imitated Capital One's successes. Fairbank wanted to ensure that the company remained ahead of the competition, while maintaining its culture of testing and innovation.
Swot Analysis of "Capital One Financial Corp.: Setting and Shaping Strategy" written by Garth Saloner, Victoria Chang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fairbank Accomplishments facing as an external strategic factors. Some of the topics covered in Capital One Financial Corp.: Setting and Shaping Strategy case study are - Strategic Management Strategies, Innovation, Organizational culture, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Capital One Financial Corp.: Setting and Shaping Strategy casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, supply chains are disrupted by pandemic , wage bills are increasing, central banks are concerned over increasing inflation, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Capital One Financial Corp.: Setting and Shaping Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Capital One Financial Corp.: Setting and Shaping Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fairbank Accomplishments, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Capital One Financial Corp.: Setting and Shaping Strategy case study
2. Improving business portfolio management of Fairbank Accomplishments
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 Fairbank Accomplishments
Strengths Capital One Financial Corp.: Setting and Shaping Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fairbank Accomplishments in Capital One Financial Corp.: Setting and Shaping Strategy Harvard Business Review case study are -
Training and development
– Fairbank Accomplishments has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Capital One Financial Corp.: Setting and Shaping Strategy 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.
Analytics focus
– Fairbank Accomplishments 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 Garth Saloner, Victoria Chang 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.
Highly skilled collaborators
– Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Capital One Financial Corp.: Setting and Shaping Strategy firm has clearly differentiated products in the market place. This has enabled Fairbank Accomplishments to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Fairbank Accomplishments to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Fairbank Accomplishments digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fairbank Accomplishments 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.
Superior customer experience
– The customer experience strategy of Fairbank Accomplishments in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Fairbank Accomplishments is one of the most innovative firm in sector. Manager in Capital One Financial Corp.: Setting and Shaping Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Fairbank Accomplishments has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fairbank Accomplishments to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Fairbank Accomplishments 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 Fairbank Accomplishments is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Capital One Financial Corp.: Setting and Shaping Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Capital One Financial Corp.: Setting and Shaping Strategy 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.
Successful track record of launching new products
– Fairbank Accomplishments has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fairbank Accomplishments 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.
Ability to recruit top talent
– Fairbank Accomplishments is one of the leading recruiters in the industry. Managers in the Capital One Financial Corp.: Setting and Shaping Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Capital One Financial Corp.: Setting and Shaping Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Capital One Financial Corp.: Setting and Shaping Strategy are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fairbank Accomplishments is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Capital One Financial Corp.: Setting and Shaping Strategy 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Garth Saloner, Victoria Chang suggests that, Fairbank Accomplishments 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.
Need for greater diversity
– Fairbank Accomplishments 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.
Products dominated business model
– Even though Fairbank Accomplishments 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 - Capital One Financial Corp.: Setting and Shaping Strategy should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments 's lucrative customers.
Interest costs
– Compare to the competition, Fairbank Accomplishments has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at Fairbank Accomplishments 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.
Aligning sales with marketing
– It come across in the case study Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy can leverage the sales team experience to cultivate customer relationships as Fairbank Accomplishments is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy, in the dynamic environment Fairbank Accomplishments has struggled to respond to the nimble upstart competition. Fairbank Accomplishments has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Capital One Financial Corp.: Setting and Shaping Strategy | 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 Capital One Financial Corp.: Setting and Shaping Strategy are -
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. Fairbank Accomplishments can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fairbank Accomplishments is facing challenges because of the dominance of functional experts in the organization. Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments 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 Fairbank Accomplishments to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fairbank Accomplishments 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, Capital One Financial Corp.: Setting and Shaping Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Fairbank Accomplishments 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. Fairbank Accomplishments 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.
Learning at scale
– Online learning technologies has now opened space for Fairbank Accomplishments 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.
Leveraging digital technologies
– Fairbank Accomplishments 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.
Buying journey improvements
– Fairbank Accomplishments can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Capital One Financial Corp.: Setting and Shaping Strategy 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.
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. Fairbank Accomplishments can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Fairbank Accomplishments 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fairbank Accomplishments 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.
Using analytics as competitive advantage
– Fairbank Accomplishments has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Capital One Financial Corp.: Setting and Shaping Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fairbank Accomplishments to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fairbank Accomplishments can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Capital One Financial Corp.: Setting and Shaping Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Capital One Financial Corp.: Setting and Shaping Strategy are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fairbank Accomplishments 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fairbank Accomplishments with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Fairbank Accomplishments 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Capital One Financial Corp.: Setting and Shaping Strategy, Fairbank Accomplishments 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 .
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 Fairbank Accomplishments in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Fairbank Accomplishments 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy .
Environmental challenges
– Fairbank Accomplishments 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. Fairbank Accomplishments can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Fairbank Accomplishments 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.
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. Fairbank Accomplishments needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Fairbank Accomplishments 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.
High dependence on third party suppliers
– Fairbank Accomplishments 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.
Weighted SWOT Analysis of Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments needs to make to build a sustainable competitive advantage.