Turkish Economy Bank and Fortis Bank: Managing a Complex Merger SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Turkish Economy Bank and Fortis Bank: Managing a Complex Merger
Following the announcement of the merger of the Turkish Economic Bank (TEB) and Fortis Bank AS, Varol Civil, TEB's CEO, is faced with the task of executing the merger of these two entities. First, all parties must agree to the economic terms of this merger; a process that is challenging due to the complex ownership structures of these banks. Second, Civil and his team must find a way to combine the operations of the banks. With meaningful overlap between the two franchises the potential for cost savings and synergies is significant. However, the risks involved are also significant.
Authors :: Stuart C. Gilson, Esel Cekin, Sarah L. Abbott
Swot Analysis of "Turkish Economy Bank and Fortis Bank: Managing a Complex Merger" written by Stuart C. Gilson, Esel Cekin, Sarah L. Abbott includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merger Fortis facing as an external strategic factors. Some of the topics covered in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger case study are - Strategic Management Strategies, Reorganization and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Turkish Economy Bank and Fortis Bank: Managing a Complex Merger casestudy better are - – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, talent flight as more people leaving formal jobs, there is backlash against globalization, wage bills are increasing, geopolitical disruptions,
increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Turkish Economy Bank and Fortis Bank: Managing a Complex Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merger Fortis, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merger Fortis 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger can be done for the following purposes –
1. Strategic planning using facts provided in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger case study
2. Improving business portfolio management of Merger Fortis
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 Merger Fortis
Strengths Turkish Economy Bank and Fortis Bank: Managing a Complex Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merger Fortis in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger Harvard Business Review case study are -
Strong track record of project management
– Merger Fortis is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Finance & Accounting field
– Merger Fortis 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 Merger Fortis in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Merger Fortis in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Merger Fortis is one of the leading recruiters in the industry. Managers in the Turkish Economy Bank and Fortis Bank: Managing a Complex Merger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Merger Fortis 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 Stuart C. Gilson, Esel Cekin, Sarah L. Abbott 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.
Organizational Resilience of Merger Fortis
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merger Fortis does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Merger Fortis digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merger Fortis 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.
Low bargaining power of suppliers
– Suppliers of Merger Fortis in the sector have low bargaining power. Turkish Economy Bank and Fortis Bank: Managing a Complex Merger has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merger Fortis to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Merger Fortis 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Merger Fortis 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Merger Fortis is present in almost all the verticals within the industry. This has provided firm in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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.
Learning organization
- Merger Fortis 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 Merger Fortis is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Turkish Economy Bank and Fortis Bank: Managing a Complex Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Turkish Economy Bank and Fortis Bank: Managing a Complex Merger are -
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 Merger Fortis supply chain. Even after few cautionary changes mentioned in the HBR case study - Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merger Fortis vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Merger Fortis products
– To increase the profitability and margins on the products, Merger Fortis needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Merger Fortis has relatively successful track record of launching new products.
High cash cycle compare to competitors
Merger Fortis has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, is just above the industry average. Merger Fortis 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.
Slow decision making process
– As mentioned earlier in the report, Merger Fortis 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. Merger Fortis 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, in the dynamic environment Merger Fortis has struggled to respond to the nimble upstart competition. Merger Fortis 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 Merger Fortis, firm in the HBR case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merger Fortis is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, it seems that the employees of Merger Fortis 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.
Aligning sales with marketing
– It come across in the case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger can leverage the sales team experience to cultivate customer relationships as Merger Fortis is planning to shift buying processes online.
Opportunities Turkish Economy Bank and Fortis Bank: Managing a Complex Merger | 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger are -
Manufacturing automation
– Merger Fortis 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.
Creating value in data economy
– The success of analytics program of Merger Fortis has opened avenues for new revenue streams for the organization in the industry. This can help Merger Fortis to build a more holistic ecosystem as suggested in the Turkish Economy Bank and Fortis Bank: Managing a Complex Merger case study. Merger Fortis can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Merger Fortis 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merger Fortis can use these opportunities to build new business models that can help the communities that Merger Fortis operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Merger Fortis in the consumer business. Now Merger Fortis can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Merger Fortis 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.
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. Merger Fortis 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. Merger Fortis 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.
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. Merger Fortis can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merger Fortis is facing challenges because of the dominance of functional experts in the organization. Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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.
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 Merger Fortis 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.
Buying journey improvements
– Merger Fortis can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merger Fortis 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, Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Merger Fortis 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.
Threats Turkish Economy Bank and Fortis Bank: Managing a Complex Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger are -
Stagnating economy with rate increase
– Merger Fortis 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.
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.
Shortening product life cycle
– it is one of the major threat that Merger Fortis is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, Merger Fortis 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 .
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 Merger Fortis.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merger Fortis with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Merger Fortis can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Merger Fortis needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Technology 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.
Increasing wage structure of Merger Fortis
– 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 Merger Fortis.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merger Fortis 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger .
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 Merger Fortis in the Finance & Accounting 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. Merger Fortis needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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 Merger Fortis needs to make to build a sustainable competitive advantage.