International Investor: Islamic Finance and the Equate Project SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of International Investor: Islamic Finance and the Equate Project
Equate Petrochemical Co. (Equate) is a joint venture between Union Carbide Corp. and Petrochemical Industries Co. (PIC) for the construction of a $2 billion petrochemical plant in Kuwait. The sponsors began construction in August 1994, using a bridge loan, and are in search of permanent, nonrecourse finance. As part of the permanent financing, the sponsors want to use a tranche of Islamic finance--funds that are invested in accordance with Islamic religious principles known as Sharia. The sponsors hired Kuwait Finance House which, in turn, approached The International Investor (TII is a Kuwaiti investment bank) to assist in structuring and underwriting the Islamic tranche. The case is set in early December 1995, as members of The Institutional Investor's Structured Finance Group are deciding which Islamic structure to use, how to resolve various conflicts between the Islamic and conventional tranches, and how large a commitment to make on behalf of their investors.
Swot Analysis of "International Investor: Islamic Finance and the Equate Project" written by Benjamin C. Esty, Mathew Mateo Millett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Islamic Equate facing as an external strategic factors. Some of the topics covered in International Investor: Islamic Finance and the Equate Project case study are - Strategic Management Strategies, Financial management, Organizational culture, Project management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the International Investor: Islamic Finance and the Equate Project casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, increasing transportation and logistics costs, central banks are concerned over increasing inflation, wage bills are increasing, geopolitical disruptions,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of International Investor: Islamic Finance and the Equate Project
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in International Investor: Islamic Finance and the Equate Project case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Islamic Equate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Islamic Equate 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 International Investor: Islamic Finance and the Equate Project can be done for the following purposes –
1. Strategic planning using facts provided in International Investor: Islamic Finance and the Equate Project case study
2. Improving business portfolio management of Islamic Equate
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 Islamic Equate
Strengths International Investor: Islamic Finance and the Equate Project | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Islamic Equate in International Investor: Islamic Finance and the Equate Project Harvard Business Review case study are -
Diverse revenue streams
– Islamic Equate is present in almost all the verticals within the industry. This has provided firm in International Investor: Islamic Finance and the Equate Project 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.
Learning organization
- Islamic Equate 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 Islamic Equate is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in International Investor: Islamic Finance and the Equate Project Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Islamic Equate in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the International Investor: Islamic Finance and the Equate Project 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 Finance & Accounting field
– Islamic Equate 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 Islamic Equate in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Islamic Equate has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Islamic Equate 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.
Ability to recruit top talent
– Islamic Equate is one of the leading recruiters in the industry. Managers in the International Investor: Islamic Finance and the Equate Project are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Islamic Equate 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 Benjamin C. Esty, Mathew Mateo Millett 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 Islamic Equate in the sector have low bargaining power. International Investor: Islamic Finance and the Equate Project has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Islamic Equate to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Islamic Equate is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Islamic Equate is one of the most innovative firm in sector. Manager in International Investor: Islamic Finance and the Equate Project Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Islamic Equate 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 International Investor: Islamic Finance and the Equate Project HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses International Investor: Islamic Finance and the Equate Project | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of International Investor: Islamic Finance and the Equate Project are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study International Investor: Islamic Finance and the Equate Project, in the dynamic environment Islamic Equate has struggled to respond to the nimble upstart competition. Islamic Equate has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the International Investor: Islamic Finance and the Equate Project 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 Islamic Equate has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Islamic Equate is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Islamic Equate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Islamic Equate to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Islamic Equate 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 strategic competitive environment developments
– As International Investor: Islamic Finance and the Equate Project HBR case study mentions - Islamic Equate 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Islamic Equate is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study International Investor: Islamic Finance and the Equate Project can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study International Investor: Islamic Finance and the Equate Project 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 Islamic Equate 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study International Investor: Islamic Finance and the Equate Project, is just above the industry average. Islamic Equate 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.
High cash cycle compare to competitors
Islamic Equate has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study International Investor: Islamic Finance and the Equate Project 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 International Investor: Islamic Finance and the Equate Project can leverage the sales team experience to cultivate customer relationships as Islamic Equate is planning to shift buying processes online.
Lack of clear differentiation of Islamic Equate products
– To increase the profitability and margins on the products, Islamic Equate needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities International Investor: Islamic Finance and the Equate Project | 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 International Investor: Islamic Finance and the Equate Project are -
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. Islamic Equate can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Islamic Equate 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Islamic Equate can use these opportunities to build new business models that can help the communities that Islamic Equate operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Islamic Equate has opened avenues for new revenue streams for the organization in the industry. This can help Islamic Equate to build a more holistic ecosystem as suggested in the International Investor: Islamic Finance and the Equate Project case study. Islamic Equate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Islamic Equate to increase its market reach. Islamic Equate 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
– Islamic Equate can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. International Investor: Islamic Finance and the Equate Project 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Islamic Equate is facing challenges because of the dominance of functional experts in the organization. International Investor: Islamic Finance and the Equate Project 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.
Loyalty marketing
– Islamic Equate 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.
Building a culture of innovation
– managers at Islamic Equate 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.
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. Islamic Equate can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Islamic Equate 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Islamic Equate in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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 Islamic Equate 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.
Threats International Investor: Islamic Finance and the Equate Project External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study International Investor: Islamic Finance and the Equate Project are -
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 Islamic Equate.
Consumer confidence and its impact on Islamic Equate 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.
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 Islamic Equate business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Islamic Equate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Islamic Equate can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Islamic Equate is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Islamic Equate can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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. Islamic Equate needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Islamic Equate 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Islamic Equate 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.
Regulatory challenges
– Islamic Equate 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.
Increasing wage structure of Islamic Equate
– 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 Islamic Equate.
Environmental challenges
– Islamic Equate 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. Islamic Equate can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of International Investor: Islamic Finance and the Equate Project 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 International Investor: Islamic Finance and the Equate Project 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 International Investor: Islamic Finance and the Equate Project 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 International Investor: Islamic Finance and the Equate Project 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 International Investor: Islamic Finance and the Equate Project 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 Islamic Equate needs to make to build a sustainable competitive advantage.