Euronext.liffe and the Over-the-Counter Derivatives Market (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Euronext.liffe and the Over-the-Counter Derivatives Market (A)
Euronext.liffe, a derivatives trading exchange, had just finished rolling out three new services targeted at the over-the-counter (OTC) market in 2004. The services offered automated confirmation and clearing for OTC equity derivatives. Yet, developments in the industry seemed to call for a re-evaluation of the exchange's OTC strategy. Describes the exchange and OTC markets for derivatives, Euronext.liffe's existing OTC services, and the other key market participants in 2004. Provides the information needed to evaluate the exchange's existing OTC services and consider other ways in which the exchange could create value for the industry.
Swot Analysis of "Euronext.liffe and the Over-the-Counter Derivatives Market (A)" written by Estelle S. Cantillon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Otc Derivatives facing as an external strategic factors. Some of the topics covered in Euronext.liffe and the Over-the-Counter Derivatives Market (A) case study are - Strategic Management Strategies, Competitive strategy, Financial markets, Marketing, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Euronext.liffe and the Over-the-Counter Derivatives Market (A) casestudy better are - – wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Euronext.liffe and the Over-the-Counter Derivatives Market (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Euronext.liffe and the Over-the-Counter Derivatives Market (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Otc Derivatives, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Otc Derivatives 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) can be done for the following purposes –
1. Strategic planning using facts provided in Euronext.liffe and the Over-the-Counter Derivatives Market (A) case study
2. Improving business portfolio management of Otc Derivatives
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 Otc Derivatives
Strengths Euronext.liffe and the Over-the-Counter Derivatives Market (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Otc Derivatives in Euronext.liffe and the Over-the-Counter Derivatives Market (A) Harvard Business Review case study are -
Learning organization
- Otc Derivatives 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 Otc Derivatives is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Euronext.liffe and the Over-the-Counter Derivatives Market (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Euronext.liffe and the Over-the-Counter Derivatives Market (A) firm has clearly differentiated products in the market place. This has enabled Otc Derivatives to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Otc Derivatives to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Otc Derivatives 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 Otc Derivatives in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Otc Derivatives 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 Estelle S. Cantillon 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.
Low bargaining power of suppliers
– Suppliers of Otc Derivatives in the sector have low bargaining power. Euronext.liffe and the Over-the-Counter Derivatives Market (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Otc Derivatives to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Otc Derivatives has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Otc Derivatives 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.
High switching costs
– The high switching costs that Otc Derivatives 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.
Diverse revenue streams
– Otc Derivatives is present in almost all the verticals within the industry. This has provided firm in Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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.
Organizational Resilience of Otc Derivatives
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Otc Derivatives does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Otc Derivatives 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Otc Derivatives 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.
Operational resilience
– The operational resilience strategy in the Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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.
Weaknesses Euronext.liffe and the Over-the-Counter Derivatives Market (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Euronext.liffe and the Over-the-Counter Derivatives Market (A) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Euronext.liffe and the Over-the-Counter Derivatives Market (A), in the dynamic environment Otc Derivatives has struggled to respond to the nimble upstart competition. Otc Derivatives has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Euronext.liffe and the Over-the-Counter Derivatives Market (A), 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.
Skills based hiring
– The stress on hiring functional specialists at Otc Derivatives 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Euronext.liffe and the Over-the-Counter Derivatives Market (A), it seems that the employees of Otc Derivatives 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.
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 Otc Derivatives supply chain. Even after few cautionary changes mentioned in the HBR case study - Euronext.liffe and the Over-the-Counter Derivatives Market (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Otc Derivatives vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Otc Derivatives products
– To increase the profitability and margins on the products, Otc Derivatives needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Otc Derivatives is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Otc Derivatives needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Otc Derivatives to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Otc Derivatives has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Estelle S. Cantillon suggests that, Otc Derivatives 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.
Products dominated business model
– Even though Otc Derivatives 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 - Euronext.liffe and the Over-the-Counter Derivatives Market (A) should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Otc Derivatives is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Euronext.liffe and the Over-the-Counter Derivatives Market (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Euronext.liffe and the Over-the-Counter Derivatives Market (A) | 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) are -
Buying journey improvements
– Otc Derivatives can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Otc Derivatives 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 Otc Derivatives to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Otc Derivatives 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.
Creating value in data economy
– The success of analytics program of Otc Derivatives has opened avenues for new revenue streams for the organization in the industry. This can help Otc Derivatives to build a more holistic ecosystem as suggested in the Euronext.liffe and the Over-the-Counter Derivatives Market (A) case study. Otc Derivatives can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Otc Derivatives in the consumer business. Now Otc Derivatives can target international markets with far fewer capital restrictions requirements than the existing system.
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. Otc Derivatives can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Otc Derivatives 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
– Otc Derivatives can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Otc Derivatives can use these opportunities to build new business models that can help the communities that Otc Derivatives operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Better consumer reach
– The expansion of the 5G network will help Otc Derivatives to increase its market reach. Otc Derivatives 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.
Building a culture of innovation
– managers at Otc Derivatives 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Otc Derivatives can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Otc Derivatives 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. Otc Derivatives 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.
Threats Euronext.liffe and the Over-the-Counter Derivatives Market (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Euronext.liffe and the Over-the-Counter Derivatives Market (A) are -
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.
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. Otc Derivatives 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.
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 Otc Derivatives.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Otc Derivatives 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) .
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. Otc Derivatives needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Otc Derivatives can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Euronext.liffe and the Over-the-Counter Derivatives Market (A), Otc Derivatives 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 .
Increasing wage structure of Otc Derivatives
– 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 Otc Derivatives.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Otc Derivatives 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.
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 Otc Derivatives business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Otc Derivatives has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Otc Derivatives needs to keep up with the evolution of technology in the Strategy & Execution 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.
Consumer confidence and its impact on Otc Derivatives 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
– Otc Derivatives 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Euronext.liffe and the Over-the-Counter Derivatives Market (A) 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 Otc Derivatives needs to make to build a sustainable competitive advantage.
