An Introduction to Zero-Coupon Risk-Free Bonds SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of An Introduction to Zero-Coupon Risk-Free Bonds
This note introduces students to the basics of bonds and the time value of money through the simplest of financial contracts-the zero-coupon risk-free bond contract. The note covers the concepts of present value, yield to maturity, and bond pricing conventions. The note is appropriate as a companion for the Bond Trader simulation. A demo for this simulation is available at https://forio.com/simulate/darden/bond-trader-demo/.
Swot Analysis of "An Introduction to Zero-Coupon Risk-Free Bonds" written by Michael J. Schill includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bond Demo facing as an external strategic factors. Some of the topics covered in An Introduction to Zero-Coupon Risk-Free Bonds case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the An Introduction to Zero-Coupon Risk-Free Bonds casestudy better are - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%,
there is backlash against globalization, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of An Introduction to Zero-Coupon Risk-Free Bonds
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in An Introduction to Zero-Coupon Risk-Free Bonds case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bond Demo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bond Demo 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 An Introduction to Zero-Coupon Risk-Free Bonds can be done for the following purposes –
1. Strategic planning using facts provided in An Introduction to Zero-Coupon Risk-Free Bonds case study
2. Improving business portfolio management of Bond Demo
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 Bond Demo
Strengths An Introduction to Zero-Coupon Risk-Free Bonds | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bond Demo in An Introduction to Zero-Coupon Risk-Free Bonds Harvard Business Review case study are -
Strong track record of project management
– Bond Demo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Bond Demo 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 An Introduction to Zero-Coupon Risk-Free Bonds - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Bond Demo 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 Bond Demo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Bond Demo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bond Demo 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Bond Demo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bond Demo 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 Bond Demo in the sector have low bargaining power. An Introduction to Zero-Coupon Risk-Free Bonds has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bond Demo to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Bond Demo is present in almost all the verticals within the industry. This has provided firm in An Introduction to Zero-Coupon Risk-Free Bonds 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.
Superior customer experience
– The customer experience strategy of Bond Demo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Bond Demo 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 An Introduction to Zero-Coupon Risk-Free Bonds HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the An Introduction to Zero-Coupon Risk-Free Bonds 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 Bond Demo 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.
High brand equity
– Bond Demo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bond Demo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses An Introduction to Zero-Coupon Risk-Free Bonds | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of An Introduction to Zero-Coupon Risk-Free Bonds are -
High bargaining power of channel partners
– Because of the regulatory requirements, Michael J. Schill suggests that, Bond Demo 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.
Products dominated business model
– Even though Bond Demo 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 - An Introduction to Zero-Coupon Risk-Free Bonds should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Bond Demo 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Bond Demo 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.
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 Bond Demo supply chain. Even after few cautionary changes mentioned in the HBR case study - An Introduction to Zero-Coupon Risk-Free Bonds, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bond Demo vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bond Demo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study An Introduction to Zero-Coupon Risk-Free Bonds can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the An Introduction to Zero-Coupon Risk-Free Bonds 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 Bond Demo has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Bond Demo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Bond Demo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bond Demo to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study An Introduction to Zero-Coupon Risk-Free Bonds, it seems that the employees of Bond Demo 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.
Slow decision making process
– As mentioned earlier in the report, Bond Demo 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. Bond Demo 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
– Bond Demo 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.
Opportunities An Introduction to Zero-Coupon Risk-Free Bonds | 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 An Introduction to Zero-Coupon Risk-Free Bonds are -
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. Bond Demo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bond Demo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Bond Demo 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.
Using analytics as competitive advantage
– Bond Demo 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 An Introduction to Zero-Coupon Risk-Free Bonds - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bond Demo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bond Demo 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.
Leveraging digital technologies
– Bond Demo 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bond Demo 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 Bond Demo to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Bond Demo to increase its market reach. Bond Demo 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, Bond Demo can use these opportunities to build new business models that can help the communities that Bond Demo operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Bond Demo 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bond Demo 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.
Building a culture of innovation
– managers at Bond Demo 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 Bond Demo has opened avenues for new revenue streams for the organization in the industry. This can help Bond Demo to build a more holistic ecosystem as suggested in the An Introduction to Zero-Coupon Risk-Free Bonds case study. Bond Demo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats An Introduction to Zero-Coupon Risk-Free Bonds External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study An Introduction to Zero-Coupon Risk-Free Bonds are -
Shortening product life cycle
– it is one of the major threat that Bond Demo is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Bond Demo.
Regulatory challenges
– Bond Demo 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.
Environmental challenges
– Bond Demo 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. Bond Demo can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Bond Demo
– 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 Bond Demo.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bond Demo 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.
Stagnating economy with rate increase
– Bond Demo 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. Bond Demo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bond Demo 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. Bond Demo 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.
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 Bond Demo business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bond Demo 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 An Introduction to Zero-Coupon Risk-Free Bonds .
High dependence on third party suppliers
– Bond Demo 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.
Weighted SWOT Analysis of An Introduction to Zero-Coupon Risk-Free Bonds 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 An Introduction to Zero-Coupon Risk-Free Bonds 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 An Introduction to Zero-Coupon Risk-Free Bonds 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 An Introduction to Zero-Coupon Risk-Free Bonds 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 An Introduction to Zero-Coupon Risk-Free Bonds 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 Bond Demo needs to make to build a sustainable competitive advantage.
