The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel

This sequel accompanies Case Number 2047.0. Designed for a course in public finance or in transportation, this case describes the financial crisis that, in 2013, loomed over the Southeastern Pennsylvania Transportation Authority (SEPTA), the transit system serving Philadelphia and four surrounding counties. The difficulties were predominantly in the system's long-inadequate capital budget, which funded maintenance, repair, and replacement costs for the aging legacy system, but these problems were severe enough that they were threatening day-to-day operations. SEPTA had been forced to delay needed reinvestment in the system for so many years that, absent significant new funding, the SEPTA board and general manager warned that they would be forced to shrink its system dramatically over the next 10 years, reducing service in the city of Philadelphia and nearly eliminating suburban commuter rail service. To ground the discussion, the case provides political and structural background about SEPTA, alongside the recent financial history of both operating and capital budgets, allowing students to understand the nature of the funding difficulties that had historically beset the authority. The case also provides enough information on transit finance to support a more general conversation. Case exhibits include demographic and commuting data for the five counties served by SEPTA; fare and subsidy information by mode of transport; fare elasticity by mode of transport; sources of subsidy in both operating and capital budgets; information about the tax burden in Pennsylvania; the projected consequences of abolishing SEPTA for commuting costs, jobs, and property values; and pros and cons of using different kinds of state funding to finance transit. A brief 2-page sequel describes how proponents were eventually able to win legislative approval for additional funding, and what the legislature ultimately chose as its revenue source. Case number 2047.1

Authors :: Jose Gomez-Ibanez, Jay K. Rosengard, Pamela Varley

Topics :: Finance & Accounting

Tags :: Policy, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel" written by Jose Gomez-Ibanez, Jay K. Rosengard, Pamela Varley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Septa Transit facing as an external strategic factors. Some of the topics covered in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel case study are - Strategic Management Strategies, Policy and Finance & Accounting.

Some of the macro environment factors that can be used to understand the The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel casestudy better are - – challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, etc

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Introduction to SWOT Analysis of The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Septa Transit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Septa Transit 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel can be done for the following purposes –
1. Strategic planning using facts provided in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel case study
2. Improving business portfolio management of Septa Transit
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 Septa Transit

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Strengths The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Septa Transit in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel Harvard Business Review case study are -

Learning organization

- Septa Transit 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 Septa Transit is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Successful track record of launching new products

– Septa Transit has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Septa Transit 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.

Innovation driven organization

– Septa Transit is one of the most innovative firm in sector. Manager in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Effective Research and Development (R&D)

– Septa Transit 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Cross disciplinary teams

– Horizontal connected teams at the Septa Transit 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.

Ability to lead change in Finance & Accounting field

– Septa Transit 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 Septa Transit in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Analytics focus

– Septa Transit 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 Jose Gomez-Ibanez, Jay K. Rosengard, Pamela Varley 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.

Ability to recruit top talent

– Septa Transit is one of the leading recruiters in the industry. Managers in the The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Sustainable margins compare to other players in Finance & Accounting industry

– The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel firm has clearly differentiated products in the market place. This has enabled Septa Transit to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Septa Transit to invest into research and development (R&D) and innovation.

Low bargaining power of suppliers

– Suppliers of Septa Transit in the sector have low bargaining power. The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Septa Transit to manage not only supply disruptions but also source products at highly competitive prices.

Organizational Resilience of Septa Transit

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Septa Transit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Diverse revenue streams

– Septa Transit is present in almost all the verticals within the industry. This has provided firm in The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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.

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Weaknesses The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel are -

Interest costs

– Compare to the competition, Septa Transit 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.

Capital Spending Reduction

– Even during the low interest decade, Septa Transit 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, Septa Transit is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Aligning sales with marketing

– It come across in the case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel can leverage the sales team experience to cultivate customer relationships as Septa Transit is planning to shift buying processes online.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel, is just above the industry average. Septa Transit 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 Septa Transit supply chain. Even after few cautionary changes mentioned in the HBR case study - The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Septa Transit vulnerable to further global disruptions in South East Asia.

Slow to strategic competitive environment developments

– As The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel HBR case study mentions - Septa Transit 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel, in the dynamic environment Septa Transit has struggled to respond to the nimble upstart competition. Septa Transit has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Need for greater diversity

– Septa Transit 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.

No frontier risks strategy

– After analyzing the HBR case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel, it seems that the employees of Septa Transit 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.

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Opportunities The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel | 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel are -

Building a culture of innovation

– managers at Septa Transit 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Septa Transit 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Septa Transit 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.

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 Septa Transit in the consumer business. Now Septa Transit can target international markets with far fewer capital restrictions requirements than the existing system.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Septa Transit can use these opportunities to build new business models that can help the communities that Septa Transit operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Septa Transit is facing challenges because of the dominance of functional experts in the organization. The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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.

Learning at scale

– Online learning technologies has now opened space for Septa Transit 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.

Creating value in data economy

– The success of analytics program of Septa Transit has opened avenues for new revenue streams for the organization in the industry. This can help Septa Transit to build a more holistic ecosystem as suggested in the The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel case study. Septa Transit can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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. Septa Transit 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. Septa Transit 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.

Buying journey improvements

– Septa Transit can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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.

Manufacturing automation

– Septa Transit 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

– Septa Transit 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 Septa Transit 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.

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Threats The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel are -

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. Septa Transit 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.

Environmental challenges

– Septa Transit 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. Septa Transit can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.

High dependence on third party suppliers

– Septa Transit 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Septa Transit 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.

Increasing wage structure of Septa Transit

– 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 Septa Transit.

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 Septa Transit business can come under increasing regulations regarding data privacy, data security, 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. Septa Transit needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.

Technology acceleration in Forth Industrial Revolution

– Septa Transit has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Septa Transit 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.

Shortening product life cycle

– it is one of the major threat that Septa Transit is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– Septa Transit 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. Septa Transit can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Septa Transit demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Septa Transit 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel .

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Weighted SWOT Analysis of The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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 The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis Sequel 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 Septa Transit needs to make to build a sustainable competitive advantage.

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