Lehman Brothers and the Securitization of American Express Charge-Card Receivables SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lehman Brothers and the Securitization of American Express Charge-Card Receivables
In early 1992, Lehman Brothers had received a mandate from its affiliate, American Express Travel Related Services (TRS) Co., to securitize a portion of its consumer charge-card receivables portfolio. It is now July 22, and Lehman and TRS have just returned from a "road show" that was undertaken to convince prospective investors of the merits of these new securities. Lehman must now price the securities. Because this is the first-ever securitization of charge-card receivables, there are no directly comparable benchmarks that can help in pricing. However, the securities share common features with credit-card receivables backed securities, which by now are well accepted. Another comparable is non-callable finance company debt. This deal is being watched closely by competing underwriters, investors, and senior management at TRS and Lehman. "Success" could catapult Lehman into becoming a major player in the asset-backed market whereas "failure" would be a major setback.
Swot Analysis of "Lehman Brothers and the Securitization of American Express Charge-Card Receivables" written by Andre F. Perold, Kuljot Singh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lehman Receivables facing as an external strategic factors. Some of the topics covered in Lehman Brothers and the Securitization of American Express Charge-Card Receivables case study are - Strategic Management Strategies, Decision making, Financial management, Financial markets, Pricing, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Lehman Brothers and the Securitization of American Express Charge-Card Receivables casestudy better are - – challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, wage bills are increasing, increasing energy prices, technology disruption, supply chains are disrupted by pandemic , geopolitical disruptions,
increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Lehman Brothers and the Securitization of American Express Charge-Card Receivables
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lehman Brothers and the Securitization of American Express Charge-Card Receivables case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lehman Receivables, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lehman Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables can be done for the following purposes –
1. Strategic planning using facts provided in Lehman Brothers and the Securitization of American Express Charge-Card Receivables case study
2. Improving business portfolio management of Lehman Receivables
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 Lehman Receivables
Strengths Lehman Brothers and the Securitization of American Express Charge-Card Receivables | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lehman Receivables in Lehman Brothers and the Securitization of American Express Charge-Card Receivables Harvard Business Review case study are -
Ability to recruit top talent
– Lehman Receivables is one of the leading recruiters in the industry. Managers in the Lehman Brothers and the Securitization of American Express Charge-Card Receivables are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Lehman Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Lehman Receivables has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lehman Receivables 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 lead change in Finance & Accounting field
– Lehman Receivables 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 Lehman Receivables in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Lehman Receivables has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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.
Cross disciplinary teams
– Horizontal connected teams at the Lehman Receivables 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.
Learning organization
- Lehman Receivables 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 Lehman Receivables is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lehman Brothers and the Securitization of American Express Charge-Card Receivables Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Lehman Receivables in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Lehman Receivables
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lehman Receivables does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Lehman Receivables is one of the most innovative firm in sector. Manager in Lehman Brothers and the Securitization of American Express Charge-Card Receivables Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Finance & Accounting industry
– Lehman Brothers and the Securitization of American Express Charge-Card Receivables firm has clearly differentiated products in the market place. This has enabled Lehman Receivables to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Lehman Receivables to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Lehman Receivables in the sector have low bargaining power. Lehman Brothers and the Securitization of American Express Charge-Card Receivables has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lehman Receivables to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Lehman Brothers and the Securitization of American Express Charge-Card Receivables | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lehman Brothers and the Securitization of American Express Charge-Card Receivables are -
Lack of clear differentiation of Lehman Receivables products
– To increase the profitability and margins on the products, Lehman Receivables needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Lehman Receivables needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Andre F. Perold, Kuljot Singh suggests that, Lehman Receivables 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.
Products dominated business model
– Even though Lehman Receivables 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 - Lehman Brothers and the Securitization of American Express Charge-Card Receivables should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Receivables 's lucrative customers.
Need for greater diversity
– Lehman Receivables has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Lehman Receivables 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. Lehman Receivables 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 Lehman Receivables, firm in the HBR case study Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables, it seems that the employees of Lehman Receivables 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lehman Receivables is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lehman Brothers and the Securitization of American Express Charge-Card Receivables can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Lehman Receivables 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.
Opportunities Lehman Brothers and the Securitization of American Express Charge-Card Receivables | 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables are -
Creating value in data economy
– The success of analytics program of Lehman Receivables has opened avenues for new revenue streams for the organization in the industry. This can help Lehman Receivables to build a more holistic ecosystem as suggested in the Lehman Brothers and the Securitization of American Express Charge-Card Receivables case study. Lehman Receivables can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Lehman Receivables can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lehman Receivables in the consumer business. Now Lehman Receivables can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lehman Receivables is facing challenges because of the dominance of functional experts in the organization. Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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.
Manufacturing automation
– Lehman Receivables can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Loyalty marketing
– Lehman Receivables 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.
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 Lehman Receivables 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.
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. Lehman Receivables 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 Lehman Receivables 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.
Developing new processes and practices
– Lehman Receivables can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Lehman Receivables can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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.
Better consumer reach
– The expansion of the 5G network will help Lehman Receivables to increase its market reach. Lehman Receivables 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lehman Receivables can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Lehman Brothers and the Securitization of American Express Charge-Card Receivables External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lehman Brothers and the Securitization of American Express Charge-Card Receivables are -
Shortening product life cycle
– it is one of the major threat that Lehman Receivables is facing in Finance & Accounting 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, Lehman Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables .
Environmental challenges
– Lehman Receivables 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. Lehman Receivables can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Lehman Receivables needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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. Lehman Receivables can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Lehman Receivables in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lehman Receivables with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Lehman Receivables 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.
Technology acceleration in Forth Industrial Revolution
– Lehman Receivables has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Lehman Receivables needs to keep up with the evolution of technology in the Finance & Accounting 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lehman Brothers and the Securitization of American Express Charge-Card Receivables, Lehman Receivables may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 Lehman Receivables business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Lehman Receivables 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.
Stagnating economy with rate increase
– Lehman Receivables 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.
Weighted SWOT Analysis of Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Brothers and the Securitization of American Express Charge-Card Receivables 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 Lehman Receivables needs to make to build a sustainable competitive advantage.
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