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 - – technology disruption, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing commodity prices, increasing government debt because of Covid-19 spendings,
geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
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.
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.
Effective Research and Development (R&D)
– Notes Convertible has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Notes Convertible 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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Notes Convertible in the sector have low bargaining power. Molycorp: Morgan Brothers' Reverse Convertible Notes (C) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Notes Convertible to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Notes Convertible has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Notes Convertible 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.
Superior customer experience
– The customer experience strategy of Notes Convertible in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Notes Convertible are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Notes Convertible is present in almost all the verticals within the industry. This has provided firm in Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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.
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 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.
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.
Need for greater diversity
– Notes Convertible 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Notes Convertible is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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
Notes Convertible 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.
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.
Products dominated business model
– Even though Notes Convertible 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 - Molycorp: Morgan Brothers' Reverse Convertible Notes (C) should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
Lack of clear differentiation of Notes Convertible products
– To increase the profitability and margins on the products, Notes Convertible needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Notes Convertible is facing challenges because of the dominance of functional experts in the organization. Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Notes Convertible can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Notes Convertible 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.
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.
Buying journey improvements
– Notes Convertible can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Molycorp: Morgan Brothers' Reverse Convertible Notes (C) 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.
Building a culture of innovation
– managers at Notes Convertible 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 Finance & Accounting segment.
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.
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.
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.
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 Notes Convertible in the consumer business. Now Notes Convertible can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Increasing wage structure of Notes Convertible
– 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 Notes Convertible.
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) .
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.
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.
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.
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 Notes Convertible in the Finance & Accounting sector and impact the bottomline of the organization.
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 Notes Convertible business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Notes Convertible can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
