Case Study Description of Pilgrim Bank (A): Customer Profitability
Used as part of the third module of a course on Managing Service Operations, which addresses how managers can inform their decisions with customer data (606-097).Provides a context in which students can explore managerial decision making that is critically informed by data analysis. The setting is a retail bank and the decision making relates to the bank's policy toward online banking. The management team is evaluating whether the bank should charge for access to online banking, provide incentives to use the service, or devise some other policy altogether. With thousands of customers already using the online site, the bank is well positioned to assess the impact of the service on customer profitability and retention before making final policy decisions. Told from the perspective of a recent MBA graduate who was charged with performing the necessary data analysis and ultimately coming up with policy recommendations.
Swot Analysis of "Pilgrim Bank (A): Customer Profitability" written by Frances X. Frei, Dennis Campbell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Policy Bank facing as an external strategic factors. Some of the topics covered in Pilgrim Bank (A): Customer Profitability case study are - Strategic Management Strategies, Financial management, Market research and Technology & Operations.
Some of the macro environment factors that can be used to understand the Pilgrim Bank (A): Customer Profitability casestudy better are - – talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, wage bills are increasing, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China,
increasing commodity prices, increasing energy prices, etc
Introduction to SWOT Analysis of Pilgrim Bank (A): Customer Profitability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pilgrim Bank (A): Customer Profitability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Policy Bank, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Policy Bank 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 Pilgrim Bank (A): Customer Profitability can be done for the following purposes –
1. Strategic planning using facts provided in Pilgrim Bank (A): Customer Profitability case study
2. Improving business portfolio management of Policy Bank
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Policy Bank
Strengths Pilgrim Bank (A): Customer Profitability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Policy Bank in Pilgrim Bank (A): Customer Profitability Harvard Business Review case study are -
Strong track record of project management
– Policy Bank is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Policy Bank is present in almost all the verticals within the industry. This has provided firm in Pilgrim Bank (A): Customer Profitability 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Policy Bank digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Policy Bank 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.
Effective Research and Development (R&D)
– Policy Bank 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 Pilgrim Bank (A): Customer Profitability - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Policy Bank has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Policy Bank 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.
High switching costs
– The high switching costs that Policy Bank 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.
Low bargaining power of suppliers
– Suppliers of Policy Bank in the sector have low bargaining power. Pilgrim Bank (A): Customer Profitability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Policy Bank to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Technology & Operations field
– Policy Bank 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 Policy Bank in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Policy Bank has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Policy Bank to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Technology & Operations industry
– Pilgrim Bank (A): Customer Profitability firm has clearly differentiated products in the market place. This has enabled Policy Bank to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Policy Bank to invest into research and development (R&D) and innovation.
Learning organization
- Policy Bank 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 Policy Bank is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pilgrim Bank (A): Customer Profitability Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Policy Bank 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 Frances X. Frei, Dennis Campbell 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.
Weaknesses Pilgrim Bank (A): Customer Profitability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pilgrim Bank (A): Customer Profitability are -
Interest costs
– Compare to the competition, Policy Bank 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pilgrim Bank (A): Customer Profitability, in the dynamic environment Policy Bank has struggled to respond to the nimble upstart competition. Policy Bank 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 Pilgrim Bank (A): Customer Profitability 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 Policy Bank has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Pilgrim Bank (A): Customer Profitability HBR case study mentions - Policy Bank 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pilgrim Bank (A): Customer Profitability, is just above the industry average. Policy Bank 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 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 Policy Bank supply chain. Even after few cautionary changes mentioned in the HBR case study - Pilgrim Bank (A): Customer Profitability, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Policy Bank vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Policy Bank, firm in the HBR case study Pilgrim Bank (A): Customer Profitability needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Policy Bank 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 - Pilgrim Bank (A): Customer Profitability should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Pilgrim Bank (A): Customer Profitability, it seems that the employees of Policy Bank 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.
Increasing silos among functional specialists
– The organizational structure of Policy Bank is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Policy Bank needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Policy Bank to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Policy Bank products
– To increase the profitability and margins on the products, Policy Bank needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Pilgrim Bank (A): Customer Profitability | 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 Pilgrim Bank (A): Customer Profitability are -
Leveraging digital technologies
– Policy Bank 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.
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 Policy Bank 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Policy Bank can use these opportunities to build new business models that can help the communities that Policy Bank operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Policy Bank can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Policy Bank 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, Pilgrim Bank (A): Customer Profitability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Policy Bank can develop new processes and procedures in Technology & Operations 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.
Creating value in data economy
– The success of analytics program of Policy Bank has opened avenues for new revenue streams for the organization in the industry. This can help Policy Bank to build a more holistic ecosystem as suggested in the Pilgrim Bank (A): Customer Profitability case study. Policy Bank can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Policy Bank 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 Technology & Operations segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Policy Bank can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Policy Bank is facing challenges because of the dominance of functional experts in the organization. Pilgrim Bank (A): Customer Profitability 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.
Better consumer reach
– The expansion of the 5G network will help Policy Bank to increase its market reach. Policy Bank 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Policy Bank 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Policy Bank 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 Policy Bank to hire the very best people irrespective of their geographical location.
Threats Pilgrim Bank (A): Customer Profitability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pilgrim Bank (A): Customer Profitability are -
Technology acceleration in Forth Industrial Revolution
– Policy Bank has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Policy Bank needs to keep up with the evolution of technology in the Technology & Operations 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.
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 Policy Bank.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Policy Bank with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Policy Bank 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. Policy Bank can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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. Policy Bank 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.
Stagnating economy with rate increase
– Policy Bank 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.
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 Policy Bank in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Policy Bank
– 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 Policy Bank.
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 Policy Bank business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Policy Bank in the Technology & Operations industry. The Technology & Operations 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Policy Bank 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 Pilgrim Bank (A): Customer Profitability .
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.
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. Policy Bank needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Pilgrim Bank (A): Customer Profitability 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 Pilgrim Bank (A): Customer Profitability 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 Pilgrim Bank (A): Customer Profitability 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 Pilgrim Bank (A): Customer Profitability 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 Pilgrim Bank (A): Customer Profitability 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 Policy Bank needs to make to build a sustainable competitive advantage.
