Capital One Financial Corp.: Setting and Shaping Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Capital One Financial Corp.: Setting and Shaping Strategy
Capital One CEO and founder, Rich Fairbank, had much to be proud of both in terms of his and co-founder Nigel Morris' accomplishments and the accomplishments of Capital One. However, he and Morris didn't want to rest on their laurels. In 2000, they called a meeting with their senior managers to assess the company's strategy. Specifically, Fairbank wondered whether the company had executed on the optimal strategy throughout its history and whether the company's strategy was consistent, yet fluid and flexible, during changing times. Also, had the various functions optimally aligned with the company's strategy? Other financial companies imitated Capital One's successes. Fairbank wanted to ensure that the company remained ahead of the competition, while maintaining its culture of testing and innovation.
Swot Analysis of "Capital One Financial Corp.: Setting and Shaping Strategy" written by Garth Saloner, Victoria Chang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fairbank Accomplishments facing as an external strategic factors. Some of the topics covered in Capital One Financial Corp.: Setting and Shaping Strategy case study are - Strategic Management Strategies, Innovation, Organizational culture, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Capital One Financial Corp.: Setting and Shaping Strategy casestudy better are - – digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing household debt because of falling income levels,
central banks are concerned over increasing inflation, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Capital One Financial Corp.: Setting and Shaping Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Capital One Financial Corp.: Setting and Shaping Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fairbank Accomplishments, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Capital One Financial Corp.: Setting and Shaping Strategy case study
2. Improving business portfolio management of Fairbank Accomplishments
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 Fairbank Accomplishments
Strengths Capital One Financial Corp.: Setting and Shaping Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fairbank Accomplishments in Capital One Financial Corp.: Setting and Shaping Strategy Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Capital One Financial Corp.: Setting and Shaping Strategy firm has clearly differentiated products in the market place. This has enabled Fairbank Accomplishments to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Fairbank Accomplishments to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Fairbank Accomplishments
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fairbank Accomplishments does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Capital One Financial Corp.: Setting and Shaping Strategy 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.
Ability to lead change in Strategy & Execution field
– Fairbank Accomplishments 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 Fairbank Accomplishments in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Fairbank Accomplishments 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.
Superior customer experience
– The customer experience strategy of Fairbank Accomplishments in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Fairbank Accomplishments is one of the leading recruiters in the industry. Managers in the Capital One Financial Corp.: Setting and Shaping Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Fairbank Accomplishments 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 Fairbank Accomplishments is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Capital One Financial Corp.: Setting and Shaping Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Fairbank Accomplishments 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.
High brand equity
– Fairbank Accomplishments has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fairbank Accomplishments to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Fairbank Accomplishments is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Capital One Financial Corp.: Setting and Shaping Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Capital One Financial Corp.: Setting and Shaping Strategy are -
Need for greater diversity
– Fairbank Accomplishments has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Fairbank Accomplishments 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. Fairbank Accomplishments 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fairbank Accomplishments is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Capital One Financial Corp.: Setting and Shaping Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Fairbank Accomplishments is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Fairbank Accomplishments needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fairbank Accomplishments to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments 's lucrative customers.
Products dominated business model
– Even though Fairbank Accomplishments 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 - Capital One Financial Corp.: Setting and Shaping Strategy should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Fairbank Accomplishments products
– To increase the profitability and margins on the products, Fairbank Accomplishments needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy can leverage the sales team experience to cultivate customer relationships as Fairbank Accomplishments is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Capital One Financial Corp.: Setting and Shaping Strategy, is just above the industry average. Fairbank Accomplishments 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.
Skills based hiring
– The stress on hiring functional specialists at Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy, it seems that the employees of Fairbank Accomplishments 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.
Opportunities Capital One Financial Corp.: Setting and Shaping Strategy | 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 Capital One Financial Corp.: Setting and Shaping Strategy are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Fairbank Accomplishments 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.
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 Fairbank Accomplishments in the consumer business. Now Fairbank Accomplishments can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Fairbank Accomplishments 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.
Using analytics as competitive advantage
– Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fairbank Accomplishments to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Fairbank Accomplishments 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.
Better consumer reach
– The expansion of the 5G network will help Fairbank Accomplishments to increase its market reach. Fairbank Accomplishments 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.
Loyalty marketing
– Fairbank Accomplishments 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.
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 Fairbank Accomplishments 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.
Developing new processes and practices
– Fairbank Accomplishments can develop new processes and procedures in Strategy & Execution 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.
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. Fairbank Accomplishments can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Fairbank Accomplishments has opened avenues for new revenue streams for the organization in the industry. This can help Fairbank Accomplishments to build a more holistic ecosystem as suggested in the Capital One Financial Corp.: Setting and Shaping Strategy case study. Fairbank Accomplishments can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fairbank Accomplishments 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 Fairbank Accomplishments to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Fairbank Accomplishments can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Capital One Financial Corp.: Setting and Shaping Strategy 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.
Threats Capital One Financial Corp.: Setting and Shaping Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments in the Strategy & Execution sector and impact the bottomline of the organization.
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. Fairbank Accomplishments needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Fairbank Accomplishments 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.
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. Fairbank Accomplishments can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fairbank Accomplishments 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.
Environmental challenges
– Fairbank Accomplishments 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. Fairbank Accomplishments can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fairbank Accomplishments 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 Capital One Financial Corp.: Setting and Shaping Strategy .
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 Fairbank Accomplishments business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Fairbank Accomplishments 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Capital One Financial Corp.: Setting and Shaping Strategy, Fairbank Accomplishments 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 .
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 Fairbank Accomplishments is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Fairbank Accomplishments has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Fairbank Accomplishments 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.
Weighted SWOT Analysis of Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Capital One Financial Corp.: Setting and Shaping Strategy 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 Fairbank Accomplishments needs to make to build a sustainable competitive advantage.
