Case Study Description of Molycorp: Morgan Brothers' Reverse Convertible Notes (C)
In August 2011, Morgan Brothers Bank was issuing a $2.5 million reverse convertible note with payoffs linked to the price of Molycorp's common stock. These financially engineered securities were just one of many kinds of structured notes available in the retail market. Investors must decide whether the notes were fairly priced and whether they offered a favorable risk-return trade-off.
Swot Analysis of "Molycorp: Morgan Brothers' Reverse Convertible Notes (C)" written by Benjamin C. Esty, E. Scott Mayfield includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Notes Convertible facing as an external strategic factors. Some of the topics covered in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) case study are - Strategic Management Strategies, Budgeting, Competition, Costs, Financial analysis, Financial markets, Managing uncertainty, Marketing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Molycorp: Morgan Brothers' Reverse Convertible Notes (C) casestudy better are - – geopolitical disruptions, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, technology disruption, increasing commodity prices,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Molycorp: Morgan Brothers' Reverse Convertible Notes (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Notes Convertible, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Notes Convertible 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) can be done for the following purposes –
1. Strategic planning using facts provided in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) case study
2. Improving business portfolio management of Notes Convertible
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Notes Convertible
Strengths Molycorp: Morgan Brothers' Reverse Convertible Notes (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Notes Convertible in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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.
Organizational Resilience of Notes Convertible
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Notes Convertible does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Notes Convertible 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 Benjamin C. Esty, E. Scott Mayfield 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
– Notes Convertible has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Notes Convertible to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Notes Convertible digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Notes Convertible 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.
Training and development
– Notes Convertible has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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.
Innovation driven organization
– Notes Convertible is one of the most innovative firm in sector. Manager in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Notes Convertible 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 Notes Convertible is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Notes Convertible is one of the leading recruiters in the industry. Managers in the Molycorp: Morgan Brothers' Reverse Convertible Notes (C) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Molycorp: Morgan Brothers' Reverse Convertible Notes (C) firm has clearly differentiated products in the market place. This has enabled Notes Convertible to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Notes Convertible to invest into research and development (R&D) and innovation.
Strong track record of project management
– Notes Convertible is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Finance & Accounting field
– Notes Convertible 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 Notes Convertible in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Molycorp: Morgan Brothers' Reverse Convertible Notes (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Molycorp: Morgan Brothers' Reverse Convertible Notes (C) are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Notes Convertible supply chain. Even after few cautionary changes mentioned in the HBR case study - Molycorp: Morgan Brothers' Reverse Convertible Notes (C), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Notes Convertible vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Notes Convertible, firm in the HBR case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) can leverage the sales team experience to cultivate customer relationships as Notes Convertible is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Notes Convertible 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Benjamin C. Esty, E. Scott Mayfield suggests that, Notes Convertible 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C), in the dynamic environment Notes Convertible has struggled to respond to the nimble upstart competition. Notes Convertible has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Molycorp: Morgan Brothers' Reverse Convertible Notes (C) HBR case study mentions - Notes Convertible 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Notes Convertible has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Notes Convertible is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Notes Convertible needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Notes Convertible to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Notes Convertible 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. Notes Convertible 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C), it seems that the employees of Notes Convertible 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.
Opportunities Molycorp: Morgan Brothers' Reverse Convertible Notes (C) | 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) are -
Using analytics as competitive advantage
– Notes Convertible 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Notes Convertible to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Notes Convertible 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. Notes Convertible 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.
Leveraging digital technologies
– Notes Convertible 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Notes Convertible can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Notes Convertible can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Notes Convertible 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Notes Convertible 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, Molycorp: Morgan Brothers' Reverse Convertible Notes (C), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Notes Convertible has opened avenues for new revenue streams for the organization in the industry. This can help Notes Convertible to build a more holistic ecosystem as suggested in the Molycorp: Morgan Brothers' Reverse Convertible Notes (C) case study. Notes Convertible can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Notes Convertible in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Notes Convertible 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 Notes Convertible to hire the very best people irrespective of their geographical location.
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 Notes Convertible 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Notes Convertible can use these opportunities to build new business models that can help the communities that Notes Convertible operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Better consumer reach
– The expansion of the 5G network will help Notes Convertible to increase its market reach. Notes Convertible 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.
Threats Molycorp: Morgan Brothers' Reverse Convertible Notes (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C) are -
Stagnating economy with rate increase
– Notes Convertible 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 dependence on third party suppliers
– Notes Convertible 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.
Consumer confidence and its impact on Notes Convertible 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Notes Convertible in the Finance & Accounting industry. The Finance & Accounting 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.
Regulatory challenges
– Notes Convertible 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 Finance & Accounting industry regulations.
Environmental challenges
– Notes Convertible 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. Notes Convertible can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology acceleration in Forth Industrial Revolution
– Notes Convertible has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Notes Convertible needs to keep up with the evolution of technology in the Finance & Accounting 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Notes Convertible 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C), Notes Convertible may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Shortening product life cycle
– it is one of the major threat that Notes Convertible is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Notes Convertible.
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 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. Notes Convertible needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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 Notes Convertible needs to make to build a sustainable competitive advantage.