Case Study Description of Optimark: Launching a Virtual Securities Market
To maximize their effectiveness, color cases should be printed in color.Bill Lupien's OptiMark Technologies, Inc., plans to launch a super-computer system in September, 1998 that he believes will release previously withheld liquidity to the securities market. While today's market matches those trades based on price and size, Lupien's system proposes to match trades based on investors' willingness to trade across a continuous range of outcomes. Investors enter changeable profiles into the system that express a willingness to trade specific volumes at specific prices--for example, no shares at $51.50; 10,000 shares at $51; 20,000 at $50.50, etc. If it works, the system will continuously take in buy and sell orders for stocks from both institutional and individual investors, match them instantaneously at the investor's preferred prices, and execute the trades--all in total secrecy, except for reporting each transaction to the market once completed. "We in our industry have communicated at a kindergarten level in what we call two-dimensional space--price and size. Those are the two variables--how many do you want to buy and what price?" explained Lupien. "We call OptiMark three-dimensional because it can represent degrees of investor discretion (willingness to trade) as well as price and size. By adding a third dimension to the market, we create an almost infinite language." Includes color exhibits.
Swot Analysis of "Optimark: Launching a Virtual Securities Market" written by John J. Sviokla includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Optimark Trades facing as an external strategic factors. Some of the topics covered in Optimark: Launching a Virtual Securities Market case study are - Strategic Management Strategies, Financial management, Financial markets, IT, Product development and Technology & Operations.
Some of the macro environment factors that can be used to understand the Optimark: Launching a Virtual Securities Market casestudy better are - – there is increasing trade war between United States & China, geopolitical disruptions, increasing commodity prices, cloud computing is disrupting traditional business models, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Optimark: Launching a Virtual Securities Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Optimark: Launching a Virtual Securities Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Optimark Trades, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Optimark Trades 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 Optimark: Launching a Virtual Securities Market can be done for the following purposes –
1. Strategic planning using facts provided in Optimark: Launching a Virtual Securities Market case study
2. Improving business portfolio management of Optimark Trades
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 Optimark Trades
Strengths Optimark: Launching a Virtual Securities Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Optimark Trades in Optimark: Launching a Virtual Securities Market Harvard Business Review case study are -
Diverse revenue streams
– Optimark Trades is present in almost all the verticals within the industry. This has provided firm in Optimark: Launching a Virtual Securities Market 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.
Ability to lead change in Technology & Operations field
– Optimark Trades 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 Optimark Trades in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Optimark Trades 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 Optimark: Launching a Virtual Securities Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Optimark: Launching a Virtual Securities Market 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.
Sustainable margins compare to other players in Technology & Operations industry
– Optimark: Launching a Virtual Securities Market firm has clearly differentiated products in the market place. This has enabled Optimark Trades to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Optimark Trades to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Optimark Trades in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Optimark Trades has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Optimark: Launching a Virtual Securities Market 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 brand equity
– Optimark Trades has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Optimark Trades to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Optimark Trades 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 Optimark Trades is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Optimark: Launching a Virtual Securities Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Optimark Trades 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 John J. Sviokla 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Optimark Trades digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Optimark Trades 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.
Ability to recruit top talent
– Optimark Trades is one of the leading recruiters in the industry. Managers in the Optimark: Launching a Virtual Securities Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Optimark: Launching a Virtual Securities Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Optimark: Launching a Virtual Securities Market are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Optimark: Launching a Virtual Securities Market, in the dynamic environment Optimark Trades has struggled to respond to the nimble upstart competition. Optimark Trades has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Optimark: Launching a Virtual Securities Market, it seems that the employees of Optimark Trades 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.
Increasing silos among functional specialists
– The organizational structure of Optimark Trades is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Optimark Trades needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Optimark Trades to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Optimark Trades 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, Optimark Trades 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. Optimark Trades 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Optimark Trades is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Optimark: Launching a Virtual Securities Market 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Optimark: Launching a Virtual Securities Market 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 Optimark Trades has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Optimark Trades, firm in the HBR case study Optimark: Launching a Virtual Securities Market 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 Optimark: Launching a Virtual Securities Market, is just above the industry average. Optimark Trades 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.
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 Optimark Trades supply chain. Even after few cautionary changes mentioned in the HBR case study - Optimark: Launching a Virtual Securities Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Optimark Trades vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Optimark: Launching a Virtual Securities Market HBR case study mentions - Optimark Trades 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 Optimark: Launching a Virtual Securities Market | 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 Optimark: Launching a Virtual Securities Market are -
Learning at scale
– Online learning technologies has now opened space for Optimark Trades 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Optimark Trades can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Optimark Trades 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.
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. Optimark Trades can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Optimark Trades 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.
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 Optimark Trades 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.
Better consumer reach
– The expansion of the 5G network will help Optimark Trades to increase its market reach. Optimark Trades 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.
Creating value in data economy
– The success of analytics program of Optimark Trades has opened avenues for new revenue streams for the organization in the industry. This can help Optimark Trades to build a more holistic ecosystem as suggested in the Optimark: Launching a Virtual Securities Market case study. Optimark Trades can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Optimark Trades 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 Optimark: Launching a Virtual Securities Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Optimark Trades to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Optimark Trades in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Manufacturing automation
– Optimark Trades can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Optimark Trades 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 Optimark Trades 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, Optimark Trades 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.
Threats Optimark: Launching a Virtual Securities Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Optimark: Launching a Virtual Securities Market 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 Optimark Trades.
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. Optimark Trades 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.
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.
Technology acceleration in Forth Industrial Revolution
– Optimark Trades has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Optimark Trades needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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 Optimark Trades business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Optimark Trades 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 Optimark: Launching a Virtual Securities 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 Optimark Trades in the Technology & Operations sector and impact the bottomline of the organization.
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. Optimark Trades needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Optimark: Launching a Virtual Securities Market, Optimark Trades 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 .
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. Optimark Trades can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Optimark Trades is facing in Technology & Operations 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 Optimark Trades 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.
Weighted SWOT Analysis of Optimark: Launching a Virtual Securities Market 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 Optimark: Launching a Virtual Securities Market 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 Optimark: Launching a Virtual Securities Market 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 Optimark: Launching a Virtual Securities Market 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 Optimark: Launching a Virtual Securities Market 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 Optimark Trades needs to make to build a sustainable competitive advantage.
