BlackRock (A): Selling the Systems? (with video links) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BlackRock (A): Selling the Systems? (with video links)
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. This case includes videos.
Authors :: Ranjay Gulati, Jan W. Rivkin, Kelly McNamara
Swot Analysis of "BlackRock (A): Selling the Systems? (with video links)" 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? (with video links) case study are - Strategic Management Strategies, Financial management, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the BlackRock (A): Selling the Systems? (with video links) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, geopolitical disruptions, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , increasing energy prices, digital marketing is dominated by two big players Facebook and Google,
competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of BlackRock (A): Selling the Systems? (with video links)
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? (with video links) 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? (with video links) can be done for the following purposes –
1. Strategic planning using facts provided in BlackRock (A): Selling the Systems? (with video links) 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? (with video links) | 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? (with video links) Harvard Business Review case study are -
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? (with video links) 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.
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? (with video links) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Training and development
– Blackrock Aladdin has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in BlackRock (A): Selling the Systems? (with video links) 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.
High switching costs
– The high switching costs that Blackrock Aladdin 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.
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.
Learning organization
- Blackrock Aladdin 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 Blackrock Aladdin is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BlackRock (A): Selling the Systems? (with video links) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the BlackRock (A): Selling the Systems? (with video links) 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.
Successful track record of launching new products
– Blackrock Aladdin has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Blackrock Aladdin 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 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.
Low bargaining power of suppliers
– Suppliers of Blackrock Aladdin in the sector have low bargaining power. BlackRock (A): Selling the Systems? (with video links) 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.
Weaknesses BlackRock (A): Selling the Systems? (with video links) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BlackRock (A): Selling the Systems? (with video links) are -
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? (with video links) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Blackrock Aladdin 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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study BlackRock (A): Selling the Systems? (with video links) 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.
Increasing silos among functional specialists
– The organizational structure of Blackrock Aladdin is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Blackrock Aladdin needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Blackrock Aladdin to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study BlackRock (A): Selling the Systems? (with video links), in the dynamic environment Blackrock Aladdin has struggled to respond to the nimble upstart competition. Blackrock Aladdin 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 BlackRock (A): Selling the Systems? (with video links), 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.
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? (with video links) should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Blackrock Aladdin, firm in the HBR case study BlackRock (A): Selling the Systems? (with video links) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Capital Spending Reduction
– Even during the low interest decade, Blackrock Aladdin 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.
Opportunities BlackRock (A): Selling the Systems? (with video links) | 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? (with video links) are -
Learning at scale
– Online learning technologies has now opened space for Blackrock Aladdin 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Blackrock Aladdin can use these opportunities to build new business models that can help the communities that Blackrock Aladdin operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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? (with video links) - 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.
Manufacturing automation
– Blackrock Aladdin 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.
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 Blackrock Aladdin in the consumer business. Now Blackrock Aladdin can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Blackrock Aladdin can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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? (with video links), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Blackrock Aladdin is facing challenges because of the dominance of functional experts in the organization. BlackRock (A): Selling the Systems? (with video links) 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.
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.
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.
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.
Threats BlackRock (A): Selling the Systems? (with video links) 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? (with video links) are -
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 Blackrock Aladdin business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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? (with video links) .
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.
Consumer confidence and its impact on Blackrock Aladdin 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Blackrock Aladdin in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Blackrock Aladdin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.
Weighted SWOT Analysis of BlackRock (A): Selling the Systems? (with video links) 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? (with video links) 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? (with video links) 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? (with video links) 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? (with video links) 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.
