Case Study Description of Retail Financial Services in 1998: Merrill Lynch
Provides an overview of Merrill Lynch's current strategy for retail financial services. Retail Financial Services in 1998 should be given to all students as background material. The class should then be split into groups, with each group receiving one of the following cases: Retail Financial Services in 1998: Charles Schwab, Retail Financial Services in 1998: Fidelity Investments, Retail Financial Services in 1998: First Union, Retail Financial Services in 1998: Merrill Lynch, or Retail Financial Services in 1998: Travelers to prepare in order to understand how each player is attempting to capture value in the converging world of retail financial services.
Swot Analysis of "Retail Financial Services in 1998: Merrill Lynch" written by Stephen P. Bradley, Takia Mahmood includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Retail 1998 facing as an external strategic factors. Some of the topics covered in Retail Financial Services in 1998: Merrill Lynch case study are - Strategic Management Strategies, Financial markets, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Retail Financial Services in 1998: Merrill Lynch casestudy better are - – supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing household debt because of falling income levels,
wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Retail Financial Services in 1998: Merrill Lynch
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Retail Financial Services in 1998: Merrill Lynch case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Retail 1998, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Retail 1998 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 Retail Financial Services in 1998: Merrill Lynch can be done for the following purposes –
1. Strategic planning using facts provided in Retail Financial Services in 1998: Merrill Lynch case study
2. Improving business portfolio management of Retail 1998
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 Retail 1998
Strengths Retail Financial Services in 1998: Merrill Lynch | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Retail 1998 in Retail Financial Services in 1998: Merrill Lynch Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Retail Financial Services in 1998: Merrill Lynch 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.
High switching costs
– The high switching costs that Retail 1998 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.
Successful track record of launching new products
– Retail 1998 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Retail 1998 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.
Innovation driven organization
– Retail 1998 is one of the most innovative firm in sector. Manager in Retail Financial Services in 1998: Merrill Lynch Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Retail 1998 in the sector have low bargaining power. Retail Financial Services in 1998: Merrill Lynch has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Retail 1998 to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Retail 1998 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Retail 1998 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Retail 1998 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 Retail 1998 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Retail 1998 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Retail 1998 has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Retail 1998 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 Retail 1998 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Retail Financial Services in 1998: Merrill Lynch Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Retail 1998 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Retail Financial Services in 1998: Merrill Lynch 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.
Effective Research and Development (R&D)
– Retail 1998 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 Retail Financial Services in 1998: Merrill Lynch - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Retail 1998 is present in almost all the verticals within the industry. This has provided firm in Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Retail Financial Services in 1998: Merrill Lynch are -
Aligning sales with marketing
– It come across in the case study Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch can leverage the sales team experience to cultivate customer relationships as Retail 1998 is planning to shift buying processes online.
Lack of clear differentiation of Retail 1998 products
– To increase the profitability and margins on the products, Retail 1998 needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Retail 1998, firm in the HBR case study Retail Financial Services in 1998: Merrill Lynch needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Retail Financial Services in 1998: Merrill Lynch, it seems that the employees of Retail 1998 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.
Products dominated business model
– Even though Retail 1998 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 - Retail Financial Services in 1998: Merrill Lynch should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Retail 1998 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. Retail 1998 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.
Interest costs
– Compare to the competition, Retail 1998 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Retail Financial Services in 1998: Merrill Lynch 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 Retail 1998 has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Retail Financial Services in 1998: Merrill Lynch, is just above the industry average. Retail 1998 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.
Increasing silos among functional specialists
– The organizational structure of Retail 1998 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Retail 1998 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Retail 1998 to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Retail 1998 supply chain. Even after few cautionary changes mentioned in the HBR case study - Retail Financial Services in 1998: Merrill Lynch, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Retail 1998 vulnerable to further global disruptions in South East Asia.
Opportunities Retail Financial Services in 1998: Merrill Lynch | 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 Retail Financial Services in 1998: Merrill Lynch are -
Building a culture of innovation
– managers at Retail 1998 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.
Loyalty marketing
– Retail 1998 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.
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. Retail 1998 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Retail 1998 in the consumer business. Now Retail 1998 can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Retail 1998 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.
Buying journey improvements
– Retail 1998 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Retail Financial Services in 1998: Merrill Lynch 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.
Manufacturing automation
– Retail 1998 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Retail 1998 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. Retail 1998 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.
Learning at scale
– Online learning technologies has now opened space for Retail 1998 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Retail 1998 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, Retail Financial Services in 1998: Merrill Lynch, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Retail 1998 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 Retail Financial Services in 1998: Merrill Lynch - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Retail 1998 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Retail 1998 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Retail 1998 can use these opportunities to build new business models that can help the communities that Retail 1998 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Retail Financial Services in 1998: Merrill Lynch External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Retail Financial Services in 1998: Merrill Lynch are -
Increasing wage structure of Retail 1998
– 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 Retail 1998.
High dependence on third party suppliers
– Retail 1998 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.
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. Retail 1998 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Retail 1998 in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Retail 1998 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.
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. Retail 1998 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Retail 1998 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Retail 1998 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.
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 Retail 1998 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.
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 Retail 1998.
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. Retail 1998 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.
Shortening product life cycle
– it is one of the major threat that Retail 1998 is facing in Strategy & Execution 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 Retail Financial Services in 1998: Merrill Lynch, Retail 1998 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 .
Weighted SWOT Analysis of Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch 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 Retail Financial Services in 1998: Merrill Lynch 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 Retail 1998 needs to make to build a sustainable competitive advantage.