Case Study Description of BlackRock (A): Selling the Systems?
As the case opens in 1999, several key leaders at BlackRock, Inc.- then a relatively small asset management firm -- are trying to convince CEO Larry Fink and others that the firm should begin to offer Aladdin -- its proprietary analytics and trading platform -- to other asset managers. While some members of the senior team saw "selling our systems" as an opportunity, others likened it to "selling weapons to the enemy" or "giving away the crown jewels." What should Fink do? The case provides an overview of the asset management industry, the beginnings of BlackRock, and details around the Aladdin platform.
Authors :: Ranjay Gulati, Jan W. Rivkin, Kelly McNamara
Swot Analysis of "BlackRock (A): Selling the Systems?" written by Ranjay Gulati, Jan W. Rivkin, Kelly McNamara includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Blackrock Aladdin facing as an external strategic factors. Some of the topics covered in BlackRock (A): Selling the Systems? case study are - Strategic Management Strategies, Organizational culture, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the BlackRock (A): Selling the Systems? casestudy better are - – there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of BlackRock (A): Selling the Systems?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BlackRock (A): Selling the Systems? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Blackrock Aladdin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Blackrock Aladdin 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 BlackRock (A): Selling the Systems? can be done for the following purposes –
1. Strategic planning using facts provided in BlackRock (A): Selling the Systems? case study
2. Improving business portfolio management of Blackrock Aladdin
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 Blackrock Aladdin
Strengths BlackRock (A): Selling the Systems? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Blackrock Aladdin in BlackRock (A): Selling the Systems? Harvard Business Review case study are -
Highly skilled collaborators
– Blackrock Aladdin 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 BlackRock (A): Selling the Systems? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Blackrock Aladdin in the sector have low bargaining power. BlackRock (A): Selling the Systems? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Blackrock Aladdin to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Blackrock Aladdin is present in almost all the verticals within the industry. This has provided firm in BlackRock (A): Selling the Systems? 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.
Ability to recruit top talent
– Blackrock Aladdin is one of the leading recruiters in the industry. Managers in the BlackRock (A): Selling the Systems? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Blackrock Aladdin has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Blackrock Aladdin to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Blackrock Aladdin is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Blackrock Aladdin in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the BlackRock (A): Selling the Systems? 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
– Blackrock Aladdin 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 Ranjay Gulati, Jan W. Rivkin, Kelly McNamara 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.
Ability to lead change in Strategy & Execution field
– Blackrock Aladdin 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 Blackrock Aladdin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Blackrock Aladdin digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Blackrock Aladdin 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
– Blackrock Aladdin is one of the most innovative firm in sector. Manager in BlackRock (A): Selling the Systems? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses BlackRock (A): Selling the Systems? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BlackRock (A): Selling the Systems? are -
Slow to strategic competitive environment developments
– As BlackRock (A): Selling the Systems? HBR case study mentions - Blackrock Aladdin 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.
No frontier risks strategy
– After analyzing the HBR case study BlackRock (A): Selling the Systems?, 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.
High operating costs
– Compare to the competitors, firm in the HBR case study BlackRock (A): Selling the Systems? 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 Blackrock Aladdin 's lucrative customers.
Aligning sales with marketing
– It come across in the case study BlackRock (A): Selling the Systems? 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 BlackRock (A): Selling the Systems? can leverage the sales team experience to cultivate customer relationships as Blackrock Aladdin is planning to shift buying processes online.
Products dominated business model
– Even though Blackrock Aladdin 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 - BlackRock (A): Selling the Systems? should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study BlackRock (A): Selling the Systems?, it seems that the employees of Blackrock Aladdin 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Blackrock Aladdin is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study BlackRock (A): Selling the Systems? 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 bargaining power of channel partners
– Because of the regulatory requirements, Ranjay Gulati, Jan W. Rivkin, Kelly McNamara suggests that, Blackrock Aladdin 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.
Lack of clear differentiation of Blackrock Aladdin products
– To increase the profitability and margins on the products, Blackrock Aladdin needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Blackrock Aladdin 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.
Interest costs
– Compare to the competition, Blackrock Aladdin 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.
Opportunities BlackRock (A): Selling the Systems? | 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 BlackRock (A): Selling the Systems? are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Blackrock Aladdin 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.
Using analytics as competitive advantage
– Blackrock Aladdin 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 BlackRock (A): Selling the Systems? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Blackrock Aladdin to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Blackrock Aladdin 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.
Building a culture of innovation
– managers at Blackrock Aladdin 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Blackrock Aladdin 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 Blackrock Aladdin to increase its market reach. Blackrock Aladdin 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.
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. Blackrock Aladdin 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. Blackrock Aladdin 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 Blackrock Aladdin has opened avenues for new revenue streams for the organization in the industry. This can help Blackrock Aladdin to build a more holistic ecosystem as suggested in the BlackRock (A): Selling the Systems? case study. Blackrock Aladdin can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Blackrock Aladdin can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. BlackRock (A): Selling the Systems? 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Blackrock Aladdin 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 Blackrock Aladdin to hire the very best people irrespective of their geographical location.
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. Blackrock Aladdin can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Blackrock Aladdin 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, BlackRock (A): Selling the Systems?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Blackrock Aladdin 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.
Threats BlackRock (A): Selling the Systems? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BlackRock (A): Selling the Systems? are -
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. Blackrock Aladdin can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Blackrock Aladdin 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.
Environmental challenges
– Blackrock Aladdin 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. Blackrock Aladdin can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Blackrock Aladdin 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.
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.
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 Blackrock Aladdin.
Increasing wage structure of Blackrock Aladdin
– 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 Blackrock Aladdin.
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 Blackrock Aladdin in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Blackrock Aladdin 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Blackrock Aladdin 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 BlackRock (A): Selling the Systems? .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study BlackRock (A): Selling the Systems?, Blackrock Aladdin 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 .
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. Blackrock Aladdin 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.
Shortening product life cycle
– it is one of the major threat that Blackrock Aladdin is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of BlackRock (A): Selling the Systems? 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 BlackRock (A): Selling the Systems? 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 BlackRock (A): Selling the Systems? 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 BlackRock (A): Selling the Systems? 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 BlackRock (A): Selling the Systems? 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 Blackrock Aladdin needs to make to build a sustainable competitive advantage.
