Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund
In the business environment surrounding the 2008 financial crisis, a new field within investing emerged to address the shortcomings of a "profit-only" mission of business. The nascent impact investing industry sought to create positive impact beyond financial returns. Putting this idyllic-sounding idea into practice demanded that institutions interested in this line of work consider what social impact means, how to assess it, how returns in impact investments would differ from traditional investments, and where to invest capital. Four students at the University of Michigan's Ross School of Business realized the flawed structure of the financial system and wanted to see how they and their university could play a role in the impact investing industry. Collaborating with faculty and industry professionals, the students conceived the idea of a student-run venture capital fund that would invest in companies for both financial and social returns. Social Venture Fund was the first of any such organization on any campus. Before the students could even make an investment, however, they had to decide on the nature of their organization. The students wrestled with four questions at the same time as the overall impact investing industry was struggling with the identical questions: How would they define impact? What would their investment thesis be? How would they measure impact? In which sectors and geographies would they invest?
Swot Analysis of "Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund" written by Gautam Kaul includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Impact Investing facing as an external strategic factors. Some of the topics covered in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund case study are - Strategic Management Strategies, Ethics, Social enterprise and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund casestudy better are - – technology disruption, increasing commodity prices, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing transportation and logistics costs, increasing energy prices,
increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Impact Investing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Impact Investing 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund can be done for the following purposes –
1. Strategic planning using facts provided in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund case study
2. Improving business portfolio management of Impact Investing
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Impact Investing
Strengths Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Impact Investing in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund Harvard Business Review case study are -
High brand equity
– Impact Investing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Impact Investing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Impact Investing is one of the most innovative firm in sector. Manager in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Impact Investing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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.
Effective Research and Development (R&D)
– Impact Investing 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Impact Investing in the sector have low bargaining power. Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Impact Investing to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Impact Investing 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 Gautam Kaul 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.
High switching costs
– The high switching costs that Impact Investing 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.
Ability to recruit top talent
– Impact Investing is one of the leading recruiters in the industry. Managers in the Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Impact Investing 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 Innovation & Entrepreneurship field
– Impact Investing 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 Impact Investing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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.
Learning organization
- Impact Investing 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 Impact Investing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund are -
Capital Spending Reduction
– Even during the low interest decade, Impact Investing 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Gautam Kaul suggests that, Impact Investing is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Increasing silos among functional specialists
– The organizational structure of Impact Investing is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Impact Investing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Impact Investing to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Impact Investing 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.
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 Impact Investing supply chain. Even after few cautionary changes mentioned in the HBR case study - Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Impact Investing vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Impact Investing 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, Impact Investing 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund, it seems that the employees of Impact Investing 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.
Skills based hiring
– The stress on hiring functional specialists at Impact Investing has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Impact Investing 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Impact Investing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund | 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Impact Investing 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 Impact Investing to hire the very best people irrespective of their geographical location.
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. Impact Investing can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Impact Investing 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, Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Impact Investing 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Impact Investing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Impact Investing in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Impact Investing to increase its market reach. Impact Investing 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Impact Investing can use these opportunities to build new business models that can help the communities that Impact Investing operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Impact Investing 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.
Learning at scale
– Online learning technologies has now opened space for Impact Investing 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.
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 Impact Investing in the consumer business. Now Impact Investing can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Impact Investing is facing challenges because of the dominance of functional experts in the organization. Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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.
Using analytics as competitive advantage
– Impact Investing 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Impact Investing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund are -
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.
High dependence on third party suppliers
– Impact Investing 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.
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.
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 Impact Investing in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Impact Investing 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund .
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Impact Investing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Impact Investing in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Impact Investing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Impact Investing needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Impact Investing 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.
Consumer confidence and its impact on Impact Investing 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.
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 Impact Investing business can come under increasing regulations regarding data privacy, data security, etc.
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 Impact Investing.
Weighted SWOT Analysis of Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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 Michigan's Social Venture Fund: Founding the Nation's First Student-Run Impact Investing Fund 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 Impact Investing needs to make to build a sustainable competitive advantage.
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