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 - – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, technology disruption, increasing commodity prices, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing,
increasing energy prices, digital marketing is dominated by two big players Facebook and Google, 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 -
Innovation driven organization
– Merger Fortis is one of the most innovative firm in sector. Manager in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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.
Cross disciplinary teams
– Horizontal connected teams at the Merger Fortis 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.
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.
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.
Successful track record of launching new products
– Merger Fortis has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merger Fortis 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.
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.
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.
High brand equity
– Merger Fortis has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merger Fortis to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Turkish Economy Bank and Fortis Bank: Managing a Complex Merger firm has clearly differentiated products in the market place. This has enabled Merger Fortis to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Merger Fortis to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Merger Fortis 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.
Training and development
– Merger Fortis has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Turkish Economy Bank and Fortis Bank: Managing a Complex Merger 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.
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 -
No frontier risks strategy
– After analyzing the HBR case study Turkish Economy Bank and Fortis Bank: Managing a Complex Merger, 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.
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.
Increasing silos among functional specialists
– The organizational structure of Merger Fortis is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Merger Fortis needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merger Fortis to focus more on services rather than just following the product oriented approach.
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.
Slow to strategic competitive environment developments
– As Turkish Economy Bank and Fortis Bank: Managing a Complex Merger HBR case study mentions - Merger Fortis 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 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.
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.
Need for greater diversity
– Merger Fortis 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Merger Fortis needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Merger Fortis has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Turkish Economy Bank and Fortis Bank: Managing a Complex Merger should strive to include more intangible value offerings along with its core products and services.
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.
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 -
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.
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.
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.
Loyalty marketing
– Merger Fortis 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. Merger Fortis can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Better consumer reach
– The expansion of the 5G network will help Merger Fortis to increase its market reach. Merger Fortis 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merger Fortis 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.
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.
Building a culture of innovation
– managers at Merger Fortis 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.
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.
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.
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.
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 -
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.
Consumer confidence and its impact on Merger Fortis 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.
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.
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 Merger Fortis business can come under increasing regulations regarding data privacy, data security, etc.
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.
Environmental challenges
– Merger Fortis 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. Merger Fortis can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
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 .
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.
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.
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. Merger Fortis 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.
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.
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.
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.