Has LIBOR Lost Its Stature in Derivatives Markets? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Has LIBOR Lost Its Stature in Derivatives Markets?
In April 2016, a large U.S. proprietary trading group in New York, with a significant fixed-income portfolio, was debating what discount rate to use to value the group's interest-rate swap portfolio. The counterparties to these swaps were major banks, and the deals were collateralized. Criticisms about the use of the London interbank offered rate (LIBOR) as a benchmark for valuing these swaps were circulating, and there were reports that LIBOR was being manipulated. There was talk about an alternative, nearly "risk-free" reference rate that could potentially be launched during 2016. Was it time for the trading group to substitute some of its maturing LIBOR-based interest-rate swaps with overnight index swaps.
Swot Analysis of "Has LIBOR Lost Its Stature in Derivatives Markets?" written by Walid Busaba, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Libor Swaps facing as an external strategic factors. Some of the topics covered in Has LIBOR Lost Its Stature in Derivatives Markets? case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Has LIBOR Lost Its Stature in Derivatives Markets? casestudy better are - – increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing energy prices, cloud computing is disrupting traditional business models, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization,
technology disruption, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Has LIBOR Lost Its Stature in Derivatives Markets?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Has LIBOR Lost Its Stature in Derivatives Markets? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Libor Swaps, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Libor Swaps 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 Has LIBOR Lost Its Stature in Derivatives Markets? can be done for the following purposes –
1. Strategic planning using facts provided in Has LIBOR Lost Its Stature in Derivatives Markets? case study
2. Improving business portfolio management of Libor Swaps
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 Libor Swaps
Strengths Has LIBOR Lost Its Stature in Derivatives Markets? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Libor Swaps in Has LIBOR Lost Its Stature in Derivatives Markets? Harvard Business Review case study are -
Training and development
– Libor Swaps has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Has LIBOR Lost Its Stature in Derivatives Markets? 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.
High switching costs
– The high switching costs that Libor Swaps 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.
High brand equity
– Libor Swaps has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Libor Swaps to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Libor Swaps
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Libor Swaps does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Finance & Accounting industry
– Has LIBOR Lost Its Stature in Derivatives Markets? firm has clearly differentiated products in the market place. This has enabled Libor Swaps to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Libor Swaps to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Libor Swaps in the sector have low bargaining power. Has LIBOR Lost Its Stature in Derivatives Markets? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Libor Swaps to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Libor Swaps 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
– Libor Swaps is one of the most innovative firm in sector. Manager in Has LIBOR Lost Its Stature in Derivatives Markets? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Libor Swaps 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 Walid Busaba, Ken Mark 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.
Superior customer experience
– The customer experience strategy of Libor Swaps in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Libor Swaps 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 Libor Swaps is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Has LIBOR Lost Its Stature in Derivatives Markets? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Libor Swaps digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Libor Swaps 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 Has LIBOR Lost Its Stature in Derivatives Markets? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Has LIBOR Lost Its Stature in Derivatives Markets? are -
Products dominated business model
– Even though Libor Swaps 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 - Has LIBOR Lost Its Stature in Derivatives Markets? should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Libor Swaps 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Has LIBOR Lost Its Stature in Derivatives Markets? 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 Libor Swaps has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Has LIBOR Lost Its Stature in Derivatives Markets? HBR case study mentions - Libor Swaps 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Has LIBOR Lost Its Stature in Derivatives Markets?, in the dynamic environment Libor Swaps has struggled to respond to the nimble upstart competition. Libor Swaps has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Libor Swaps 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. Libor Swaps 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Libor Swaps 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.
Low market penetration in new markets
– Outside its home market of Libor Swaps, firm in the HBR case study Has LIBOR Lost Its Stature in Derivatives Markets? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Has LIBOR Lost Its Stature in Derivatives Markets?, is just above the industry average. Libor Swaps 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Has LIBOR Lost Its Stature in Derivatives Markets?, it seems that the employees of Libor Swaps 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Has LIBOR Lost Its Stature in Derivatives Markets? 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 Libor Swaps 's lucrative customers.
Opportunities Has LIBOR Lost Its Stature in Derivatives Markets? | 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 Has LIBOR Lost Its Stature in Derivatives Markets? are -
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 Libor Swaps 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.
Leveraging digital technologies
– Libor Swaps 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.
Developing new processes and practices
– Libor Swaps 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.
Creating value in data economy
– The success of analytics program of Libor Swaps has opened avenues for new revenue streams for the organization in the industry. This can help Libor Swaps to build a more holistic ecosystem as suggested in the Has LIBOR Lost Its Stature in Derivatives Markets? case study. Libor Swaps can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Libor Swaps to increase its market reach. Libor Swaps 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Libor Swaps in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Libor Swaps is facing challenges because of the dominance of functional experts in the organization. Has LIBOR Lost Its Stature in Derivatives Markets? 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Libor Swaps 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 Libor Swaps to hire the very best people irrespective of their geographical location.
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 Libor Swaps in the consumer business. Now Libor Swaps can target international markets with far fewer capital restrictions requirements than the existing system.
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. Libor Swaps can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Libor Swaps 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 Has LIBOR Lost Its Stature in Derivatives Markets? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Libor Swaps to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Libor Swaps 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. Libor Swaps 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.
Building a culture of innovation
– managers at Libor Swaps can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Threats Has LIBOR Lost Its Stature in Derivatives Markets? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Has LIBOR Lost Its Stature in Derivatives Markets? are -
Increasing wage structure of Libor Swaps
– 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 Libor Swaps.
Shortening product life cycle
– it is one of the major threat that Libor Swaps is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Libor Swaps needs to understand the core reasons impacting the Finance & Accounting 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 Libor Swaps in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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. Libor Swaps 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
– Libor Swaps 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.
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. Libor Swaps can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Environmental challenges
– Libor Swaps 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. Libor Swaps can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Libor Swaps with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Libor Swaps 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.
Regulatory challenges
– Libor Swaps needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Libor Swaps 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 Has LIBOR Lost Its Stature in Derivatives Markets? .
Weighted SWOT Analysis of Has LIBOR Lost Its Stature in Derivatives Markets? 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 Has LIBOR Lost Its Stature in Derivatives Markets? 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 Has LIBOR Lost Its Stature in Derivatives Markets? 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 Has LIBOR Lost Its Stature in Derivatives Markets? 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 Has LIBOR Lost Its Stature in Derivatives Markets? 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 Libor Swaps needs to make to build a sustainable competitive advantage.