Case Study Description of ScotiaMcLeod Equity Trading: The Quantex Decision
The manager of equity derivatives at ScotiaMcLeod is deciding whether to replace a software system that enables investment dealers to trade electronically on Canada's major stock exchanges. The new system allows access to institutional clients, which presents opportunities as well as threats to the traditional role of investment dealers. The case's primary objective is to introduce students to the concepts of financial markets and trading and to show the importance of information technology in the evolution of stock trading.
Authors :: Stephen R. Foerster, Sid L. Huff, Mike Kahn
Swot Analysis of "ScotiaMcLeod Equity Trading: The Quantex Decision" written by Stephen R. Foerster, Sid L. Huff, Mike Kahn includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Scotiamcleod Trading facing as an external strategic factors. Some of the topics covered in ScotiaMcLeod Equity Trading: The Quantex Decision case study are - Strategic Management Strategies, Financial markets, IT and Finance & Accounting.
Some of the macro environment factors that can be used to understand the ScotiaMcLeod Equity Trading: The Quantex Decision casestudy better are - – wage bills are increasing, increasing energy prices, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing commodity prices,
there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of ScotiaMcLeod Equity Trading: The Quantex Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ScotiaMcLeod Equity Trading: The Quantex Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Scotiamcleod Trading, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Scotiamcleod Trading 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 ScotiaMcLeod Equity Trading: The Quantex Decision can be done for the following purposes –
1. Strategic planning using facts provided in ScotiaMcLeod Equity Trading: The Quantex Decision case study
2. Improving business portfolio management of Scotiamcleod Trading
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 Scotiamcleod Trading
Strengths ScotiaMcLeod Equity Trading: The Quantex Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scotiamcleod Trading in ScotiaMcLeod Equity Trading: The Quantex Decision Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Scotiamcleod Trading in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– ScotiaMcLeod Equity Trading: The Quantex Decision firm has clearly differentiated products in the market place. This has enabled Scotiamcleod Trading to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Scotiamcleod Trading to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Scotiamcleod Trading has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Scotiamcleod Trading 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.
Analytics focus
– Scotiamcleod Trading 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 Stephen R. Foerster, Sid L. Huff, Mike Kahn 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.
Innovation driven organization
– Scotiamcleod Trading is one of the most innovative firm in sector. Manager in ScotiaMcLeod Equity Trading: The Quantex Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Scotiamcleod Trading has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ScotiaMcLeod Equity Trading: The Quantex Decision 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 brand equity
– Scotiamcleod Trading has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Scotiamcleod Trading to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Scotiamcleod Trading 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.
Organizational Resilience of Scotiamcleod Trading
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Scotiamcleod Trading does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Scotiamcleod Trading 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 ScotiaMcLeod Equity Trading: The Quantex Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Scotiamcleod Trading 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
– Scotiamcleod Trading is present in almost all the verticals within the industry. This has provided firm in ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ScotiaMcLeod Equity Trading: The Quantex Decision are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ScotiaMcLeod Equity Trading: The Quantex Decision, is just above the industry average. Scotiamcleod Trading needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Low market penetration in new markets
– Outside its home market of Scotiamcleod Trading, firm in the HBR case study ScotiaMcLeod Equity Trading: The Quantex Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Scotiamcleod Trading 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 - ScotiaMcLeod Equity Trading: The Quantex Decision should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ScotiaMcLeod Equity Trading: The Quantex Decision 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 Scotiamcleod Trading has relatively successful track record of launching new products.
Lack of clear differentiation of Scotiamcleod Trading products
– To increase the profitability and margins on the products, Scotiamcleod Trading needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Scotiamcleod Trading 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. Scotiamcleod Trading 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.
Slow to strategic competitive environment developments
– As ScotiaMcLeod Equity Trading: The Quantex Decision HBR case study mentions - Scotiamcleod Trading 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.
Skills based hiring
– The stress on hiring functional specialists at Scotiamcleod Trading 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Scotiamcleod Trading is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ScotiaMcLeod Equity Trading: The Quantex Decision can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Scotiamcleod Trading needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study ScotiaMcLeod Equity Trading: The Quantex Decision, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Opportunities ScotiaMcLeod Equity Trading: The Quantex Decision | 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 ScotiaMcLeod Equity Trading: The Quantex Decision are -
Creating value in data economy
– The success of analytics program of Scotiamcleod Trading has opened avenues for new revenue streams for the organization in the industry. This can help Scotiamcleod Trading to build a more holistic ecosystem as suggested in the ScotiaMcLeod Equity Trading: The Quantex Decision case study. Scotiamcleod Trading can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Scotiamcleod Trading can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Scotiamcleod Trading 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.
Developing new processes and practices
– Scotiamcleod Trading can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Scotiamcleod Trading 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.
Better consumer reach
– The expansion of the 5G network will help Scotiamcleod Trading to increase its market reach. Scotiamcleod Trading 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.
Buying journey improvements
– Scotiamcleod Trading can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ScotiaMcLeod Equity Trading: The Quantex Decision 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.
Learning at scale
– Online learning technologies has now opened space for Scotiamcleod Trading 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.
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 Scotiamcleod Trading in the consumer business. Now Scotiamcleod Trading can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Scotiamcleod Trading 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 ScotiaMcLeod Equity Trading: The Quantex Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Scotiamcleod Trading to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Scotiamcleod Trading is facing challenges because of the dominance of functional experts in the organization. ScotiaMcLeod Equity Trading: The Quantex Decision 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.
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. Scotiamcleod Trading 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. Scotiamcleod Trading 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.
Loyalty marketing
– Scotiamcleod Trading has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats ScotiaMcLeod Equity Trading: The Quantex Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ScotiaMcLeod Equity Trading: The Quantex Decision are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Scotiamcleod Trading with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Shortening product life cycle
– it is one of the major threat that Scotiamcleod Trading is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ScotiaMcLeod Equity Trading: The Quantex Decision, Scotiamcleod Trading 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 .
High dependence on third party suppliers
– Scotiamcleod Trading 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.
Technology acceleration in Forth Industrial Revolution
– Scotiamcleod Trading has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Scotiamcleod Trading 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Scotiamcleod Trading 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.
Consumer confidence and its impact on Scotiamcleod Trading 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.
Increasing wage structure of Scotiamcleod Trading
– 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 Scotiamcleod Trading.
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.
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 Scotiamcleod Trading in the Finance & Accounting sector and impact the bottomline of the organization.
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 Scotiamcleod Trading.
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. Scotiamcleod Trading 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 ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision 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 Scotiamcleod Trading needs to make to build a sustainable competitive advantage.
