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 - – technology disruption, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
central banks are concerned over increasing inflation, geopolitical disruptions, 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 -
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.
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.
Low bargaining power of suppliers
– Suppliers of Scotiamcleod Trading in the sector have low bargaining power. ScotiaMcLeod Equity Trading: The Quantex Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Scotiamcleod Trading to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Scotiamcleod Trading 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 Scotiamcleod Trading is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ScotiaMcLeod Equity Trading: The Quantex Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
Ability to lead change in Finance & Accounting field
– Scotiamcleod Trading 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 Scotiamcleod Trading in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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 -
Aligning sales with marketing
– It come across in the case study ScotiaMcLeod Equity Trading: The Quantex Decision 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 ScotiaMcLeod Equity Trading: The Quantex Decision can leverage the sales team experience to cultivate customer relationships as Scotiamcleod Trading is planning to shift buying processes online.
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.
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.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study ScotiaMcLeod Equity Trading: The Quantex Decision 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 Scotiamcleod Trading 's lucrative customers.
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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Scotiamcleod Trading 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ScotiaMcLeod Equity Trading: The Quantex Decision, in the dynamic environment Scotiamcleod Trading has struggled to respond to the nimble upstart competition. Scotiamcleod Trading has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
Building a culture of innovation
– managers at Scotiamcleod Trading 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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Scotiamcleod Trading to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Scotiamcleod Trading 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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Scotiamcleod Trading can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Scotiamcleod Trading can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
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 -
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.
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.
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 Scotiamcleod Trading business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Scotiamcleod Trading 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. Scotiamcleod Trading 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 Scotiamcleod Trading is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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. Scotiamcleod Trading 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.
Regulatory challenges
– Scotiamcleod Trading needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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.
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.
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.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Scotiamcleod Trading 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 ScotiaMcLeod Equity Trading: The Quantex Decision .
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.