Case Study Description of Merrill Lynch: Supernova
Supernova is the name given to a new way to manage client relationships that originated in the Merrill Lynch Indianapolis offices. During a trial period, Supernova generated very good results among financial advisers and their customers, but challenged the traditional ways in which financial advisers were rewarded and the nature of the relationship with their clients. The case protagonist needs to decide whether to recommend a national rollout for Supernova.
Authors :: Rogelio Oliva, Roger Hallowell, Gabriel Bitran
Swot Analysis of "Merrill Lynch: Supernova" written by Rogelio Oliva, Roger Hallowell, Gabriel Bitran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Supernova Advisers facing as an external strategic factors. Some of the topics covered in Merrill Lynch: Supernova case study are - Strategic Management Strategies, Customers, Financial management, Managing people, Operations management, Organizational culture and Technology & Operations.
Some of the macro environment factors that can be used to understand the Merrill Lynch: Supernova casestudy better are - – increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing commodity prices, wage bills are increasing, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Merrill Lynch: Supernova
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merrill Lynch: Supernova case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Supernova Advisers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Supernova Advisers 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 Merrill Lynch: Supernova can be done for the following purposes –
1. Strategic planning using facts provided in Merrill Lynch: Supernova case study
2. Improving business portfolio management of Supernova Advisers
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 Supernova Advisers
Strengths Merrill Lynch: Supernova | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Supernova Advisers in Merrill Lynch: Supernova Harvard Business Review case study are -
Ability to recruit top talent
– Supernova Advisers is one of the leading recruiters in the industry. Managers in the Merrill Lynch: Supernova are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Supernova Advisers in the sector have low bargaining power. Merrill Lynch: Supernova has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Supernova Advisers to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Supernova Advisers 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 Rogelio Oliva, Roger Hallowell, Gabriel Bitran 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.
Organizational Resilience of Supernova Advisers
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Supernova Advisers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Supernova Advisers 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 Merrill Lynch: Supernova - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Supernova Advisers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Supernova Advisers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Supernova Advisers 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 Supernova Advisers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merrill Lynch: Supernova Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Supernova Advisers is present in almost all the verticals within the industry. This has provided firm in Merrill Lynch: Supernova 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.
Superior customer experience
– The customer experience strategy of Supernova Advisers 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 Merrill Lynch: Supernova 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 Supernova Advisers 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.
Training and development
– Supernova Advisers has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merrill Lynch: Supernova 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.
Weaknesses Merrill Lynch: Supernova | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merrill Lynch: Supernova are -
No frontier risks strategy
– After analyzing the HBR case study Merrill Lynch: Supernova, 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Supernova Advisers is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Merrill Lynch: Supernova 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 bargaining power of channel partners
– Because of the regulatory requirements, Rogelio Oliva, Roger Hallowell, Gabriel Bitran suggests that, Supernova Advisers is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Supernova Advisers, firm in the HBR case study Merrill Lynch: Supernova 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 Merrill Lynch: Supernova, it seems that the employees of Supernova Advisers 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.
Lack of clear differentiation of Supernova Advisers products
– To increase the profitability and margins on the products, Supernova Advisers needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Supernova Advisers supply chain. Even after few cautionary changes mentioned in the HBR case study - Merrill Lynch: Supernova, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Supernova Advisers vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Supernova Advisers is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Supernova Advisers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Supernova Advisers to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Supernova Advisers 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, Supernova Advisers 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.
Slow to strategic competitive environment developments
– As Merrill Lynch: Supernova HBR case study mentions - Supernova Advisers 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.
Opportunities Merrill Lynch: Supernova | 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 Merrill Lynch: Supernova are -
Buying journey improvements
– Supernova Advisers can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merrill Lynch: Supernova 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.
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 Supernova Advisers 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. Supernova Advisers 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. Supernova Advisers 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.
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 Supernova Advisers in the consumer business. Now Supernova Advisers can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Supernova Advisers 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Supernova Advisers 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 Supernova Advisers to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Supernova Advisers is facing challenges because of the dominance of functional experts in the organization. Merrill Lynch: Supernova 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.
Developing new processes and practices
– Supernova Advisers 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Supernova Advisers 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, Merrill Lynch: Supernova, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Supernova Advisers 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
– Supernova Advisers 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 Merrill Lynch: Supernova - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Supernova Advisers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Supernova Advisers 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Supernova Advisers can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Merrill Lynch: Supernova External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merrill Lynch: Supernova are -
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. Supernova Advisers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merrill Lynch: Supernova, Supernova Advisers 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 .
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 Supernova Advisers.
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 Supernova Advisers in the Technology & Operations sector and impact the bottomline of the organization.
Environmental challenges
– Supernova Advisers 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. Supernova Advisers can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Shortening product life cycle
– it is one of the major threat that Supernova Advisers is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Supernova Advisers 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 Merrill Lynch: Supernova .
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. Supernova Advisers needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Supernova Advisers 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.
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. Supernova Advisers 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.
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.
Increasing wage structure of Supernova Advisers
– 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 Supernova Advisers.
Weighted SWOT Analysis of Merrill Lynch: Supernova 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 Merrill Lynch: Supernova 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 Merrill Lynch: Supernova 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 Merrill Lynch: Supernova 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 Merrill Lynch: Supernova 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 Supernova Advisers needs to make to build a sustainable competitive advantage.