Case Study Description of Understanding Customer Choices in e-Financial Services
Given the rapid increase of Web-based sales, e-services (both pure online and hybrid "clicks and mortar" market plays) face a difficult challenge: What value-added features should they offer to gain market share and profits effectively while realistically considering operational and financial constraints embedded in a perfect market paradigm? Explores similarities and differences in customer values and switching inertia between different customer segments for e-financial services in the United States. Through a national, online, customer-choice experiment involving 2,200 online customers, the authors found that customer values differ widely across segments and online features (such as availability of traditional data-quoting and buy/sell decision support services price, access to a brick-and-mortar retail outlet, and various formats of online accessibility). The results of this study have both managerial and research implications for design and operations strategy development for e-services in other industries as well.
Authors :: Rohit Verma, Zafar Iqbal, Gerhard Plaschka
Swot Analysis of "Understanding Customer Choices in e-Financial Services" written by Rohit Verma, Zafar Iqbal, Gerhard Plaschka includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Online Customer facing as an external strategic factors. Some of the topics covered in Understanding Customer Choices in e-Financial Services case study are - Strategic Management Strategies, Customers and Technology & Operations.
Some of the macro environment factors that can be used to understand the Understanding Customer Choices in e-Financial Services casestudy better are - – there is increasing trade war between United States & China, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , increasing energy prices,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Understanding Customer Choices in e-Financial Services
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Understanding Customer Choices in e-Financial Services case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Online Customer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Online Customer 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 Understanding Customer Choices in e-Financial Services can be done for the following purposes –
1. Strategic planning using facts provided in Understanding Customer Choices in e-Financial Services case study
2. Improving business portfolio management of Online Customer
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 Online Customer
Strengths Understanding Customer Choices in e-Financial Services | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Online Customer in Understanding Customer Choices in e-Financial Services Harvard Business Review case study are -
Learning organization
- Online Customer 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 Online Customer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Understanding Customer Choices in e-Financial Services Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Online Customer 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 Rohit Verma, Zafar Iqbal, Gerhard Plaschka 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.
Successful track record of launching new products
– Online Customer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Online Customer 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.
Sustainable margins compare to other players in Technology & Operations industry
– Understanding Customer Choices in e-Financial Services firm has clearly differentiated products in the market place. This has enabled Online Customer to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Online Customer to invest into research and development (R&D) and innovation.
Ability to lead change in Technology & Operations field
– Online Customer 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 Online Customer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Online Customer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Online Customer 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.
Strong track record of project management
– Online Customer 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
– Online Customer is one of the most innovative firm in sector. Manager in Understanding Customer Choices in e-Financial Services 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
– Online Customer 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 Understanding Customer Choices in e-Financial Services HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Online Customer is present in almost all the verticals within the industry. This has provided firm in Understanding Customer Choices in e-Financial Services 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 Online Customer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Online Customer 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.
Weaknesses Understanding Customer Choices in e-Financial Services | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Understanding Customer Choices in e-Financial Services are -
Aligning sales with marketing
– It come across in the case study Understanding Customer Choices in e-Financial Services 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 Understanding Customer Choices in e-Financial Services can leverage the sales team experience to cultivate customer relationships as Online Customer is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Understanding Customer Choices in e-Financial Services, is just above the industry average. Online Customer 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.
Capital Spending Reduction
– Even during the low interest decade, Online Customer has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Online Customer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Understanding Customer Choices in e-Financial Services can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Understanding Customer Choices in e-Financial Services HBR case study mentions - Online Customer 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 decision making process
– As mentioned earlier in the report, Online Customer 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. Online Customer 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.
Low market penetration in new markets
– Outside its home market of Online Customer, firm in the HBR case study Understanding Customer Choices in e-Financial Services needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Understanding Customer Choices in e-Financial Services, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Understanding Customer Choices in e-Financial Services, in the dynamic environment Online Customer has struggled to respond to the nimble upstart competition. Online Customer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Online Customer 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.
Interest costs
– Compare to the competition, Online Customer 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.
Opportunities Understanding Customer Choices in e-Financial Services | 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 Understanding Customer Choices in e-Financial Services are -
Building a culture of innovation
– managers at Online Customer 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.
Using analytics as competitive advantage
– Online Customer 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 Understanding Customer Choices in e-Financial Services - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Online Customer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Online Customer 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.
Creating value in data economy
– The success of analytics program of Online Customer has opened avenues for new revenue streams for the organization in the industry. This can help Online Customer to build a more holistic ecosystem as suggested in the Understanding Customer Choices in e-Financial Services case study. Online Customer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Online Customer can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Online Customer 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, Online Customer can use these opportunities to build new business models that can help the communities that Online Customer operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Online Customer 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Online Customer 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. Online Customer 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Online Customer is facing challenges because of the dominance of functional experts in the organization. Understanding Customer Choices in e-Financial Services 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 Online Customer to increase its market reach. Online Customer 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Online Customer 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 Online Customer to hire the very best people irrespective of their geographical location.
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. Online Customer can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Understanding Customer Choices in e-Financial Services External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Understanding Customer Choices in e-Financial Services are -
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. Online Customer 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.
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 Online Customer.
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. Online Customer needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Online Customer 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.
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.
Consumer confidence and its impact on Online Customer 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 Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Online Customer 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
– Online Customer has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Online Customer 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.
Stagnating economy with rate increase
– Online Customer 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Online Customer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Understanding Customer Choices in e-Financial Services, Online Customer may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
High dependence on third party suppliers
– Online Customer 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.
Increasing wage structure of Online Customer
– 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 Online Customer.
Weighted SWOT Analysis of Understanding Customer Choices in e-Financial Services 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 Understanding Customer Choices in e-Financial Services 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 Understanding Customer Choices in e-Financial Services 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 Understanding Customer Choices in e-Financial Services 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 Understanding Customer Choices in e-Financial Services 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 Online Customer needs to make to build a sustainable competitive advantage.