Standard Chartered Bank: Valuation and Capital Structure SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Standard Chartered Bank: Valuation and Capital Structure
Following a turbulent 2014 for Standard Chartered Bank, the bank's largest shareholder, Temasek Holdings, began showing indications that it was seriously considering offloading at least a portion of its massive shareholdings in Standard Chartered Bank. This case seeks to provide a fair valuation of Standard Chartered Bank's intrinsic value, as well as rationalize the most appropriate way for Standard Chartered Bank to raise funds to satisfy the higher capital requirements under Basel III regulatory rules. Assuming that Standard Chartered Bank decided to hold on to its significant bank investments and to raise funds to satisfy the higher capital requirements, what could be some possible financing alternatives? Would it help to attract more bank deposits, raise debt, or go for a seasoned offering? What would be the impact of these financing alternatives? Finally, what would be a suitable recommendation on how to raise the funds if one took the valuation results into consideration? Ruth S. K. Tan is affiliated with NUS Business School. Zsuzsa R. Huszar is affiliated with NUS Business School. Weina Zhang is affiliated with NUS Business School.
Authors :: Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang
Swot Analysis of "Standard Chartered Bank: Valuation and Capital Structure" written by Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chartered Standard facing as an external strategic factors. Some of the topics covered in Standard Chartered Bank: Valuation and Capital Structure case study are - Strategic Management Strategies, Financial analysis, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Standard Chartered Bank: Valuation and Capital Structure casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, geopolitical disruptions, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Standard Chartered Bank: Valuation and Capital Structure
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Standard Chartered Bank: Valuation and Capital Structure case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chartered Standard, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure can be done for the following purposes –
1. Strategic planning using facts provided in Standard Chartered Bank: Valuation and Capital Structure case study
2. Improving business portfolio management of Chartered Standard
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 Chartered Standard
Strengths Standard Chartered Bank: Valuation and Capital Structure | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chartered Standard in Standard Chartered Bank: Valuation and Capital Structure Harvard Business Review case study are -
Highly skilled collaborators
– Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Chartered Standard has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chartered Standard to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Chartered Standard 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 Chartered Standard is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Standard Chartered Bank: Valuation and Capital Structure Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Chartered Standard
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Chartered Standard does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Chartered Standard has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Standard Chartered Bank: Valuation and Capital Structure 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.
Superior customer experience
– The customer experience strategy of Chartered Standard in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Chartered Standard is one of the most innovative firm in sector. Manager in Standard Chartered Bank: Valuation and Capital Structure Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Chartered Standard is one of the leading recruiters in the industry. Managers in the Standard Chartered Bank: Valuation and Capital Structure 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 Chartered Standard in the sector have low bargaining power. Standard Chartered Bank: Valuation and Capital Structure has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chartered Standard to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Chartered Standard is present in almost all the verticals within the industry. This has provided firm in Standard Chartered Bank: Valuation and Capital Structure 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.
High switching costs
– The high switching costs that Chartered Standard 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.
Weaknesses Standard Chartered Bank: Valuation and Capital Structure | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Standard Chartered Bank: Valuation and Capital Structure are -
Capital Spending Reduction
– Even during the low interest decade, Chartered Standard 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, Chartered Standard is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Standard Chartered Bank: Valuation and Capital Structure can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Standard Chartered Bank: Valuation and Capital Structure, it seems that the employees of Chartered Standard 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 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 Chartered Standard supply chain. Even after few cautionary changes mentioned in the HBR case study - Standard Chartered Bank: Valuation and Capital Structure, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chartered Standard vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Chartered Standard products
– To increase the profitability and margins on the products, Chartered Standard needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Standard Chartered Bank: Valuation and Capital Structure HBR case study mentions - Chartered Standard 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang suggests that, Chartered Standard 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Standard Chartered Bank: Valuation and Capital Structure, in the dynamic environment Chartered Standard has struggled to respond to the nimble upstart competition. Chartered Standard has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Chartered Standard, firm in the HBR case study Standard Chartered Bank: Valuation and Capital Structure 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 Standard Chartered Bank: Valuation and Capital Structure, is just above the industry average. Chartered Standard 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.
Interest costs
– Compare to the competition, Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure | 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 Standard Chartered Bank: Valuation and Capital Structure are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chartered Standard can use these opportunities to build new business models that can help the communities that Chartered Standard operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Chartered Standard can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chartered Standard 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chartered Standard 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, Standard Chartered Bank: Valuation and Capital Structure, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chartered Standard to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chartered Standard can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Chartered Standard 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.
Buying journey improvements
– Chartered Standard can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Standard Chartered Bank: Valuation and Capital Structure 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.
Developing new processes and practices
– Chartered Standard 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Chartered Standard 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 Chartered Standard to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chartered Standard 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.
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. Chartered Standard 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. Chartered Standard 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 Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Standard Chartered Bank: Valuation and Capital Structure are -
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 Chartered Standard.
Increasing wage structure of Chartered Standard
– 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 Chartered Standard.
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. Chartered Standard can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Chartered Standard 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. Chartered Standard can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Shortening product life cycle
– it is one of the major threat that Chartered Standard is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chartered Standard 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.
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 Chartered Standard in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Standard Chartered Bank: Valuation and Capital Structure, Chartered Standard 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 Chartered Standard business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Chartered Standard 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.
High dependence on third party suppliers
– Chartered Standard 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Chartered Standard 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 Standard Chartered Bank: Valuation and Capital Structure .
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. Chartered Standard needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Standard Chartered Bank: Valuation and Capital Structure 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 Standard Chartered Bank: Valuation and Capital Structure 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 Standard Chartered Bank: Valuation and Capital Structure 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 Standard Chartered Bank: Valuation and Capital Structure 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 Standard Chartered Bank: Valuation and Capital Structure 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 Chartered Standard needs to make to build a sustainable competitive advantage.