Case Study Description of Manufacturers Hanover Corp.: Customer Profitability Report
Banking company noting declining profitability from its traditional lending activities has started to measure the total profitability of its lending relationships. A loan pricing model estimates the profit and return-on-equity from commercial loans. Additional work was required to recognize the revenue from fee-for-service business for the same customer that is performed by other units in the bank. The case raises the problem of how revenues and expenses from diverse activities can be combined to produce an accurate picture of customer profitability.
Swot Analysis of "Manufacturers Hanover Corp.: Customer Profitability Report" written by Robert S. Kaplan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Profitability Lending facing as an external strategic factors. Some of the topics covered in Manufacturers Hanover Corp.: Customer Profitability Report case study are - Strategic Management Strategies, Customers, Financial analysis, Supply chain and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Manufacturers Hanover Corp.: Customer Profitability Report casestudy better are - – increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies,
technology disruption, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Manufacturers Hanover Corp.: Customer Profitability Report
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Manufacturers Hanover Corp.: Customer Profitability Report case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Profitability Lending, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Profitability Lending 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 Manufacturers Hanover Corp.: Customer Profitability Report can be done for the following purposes –
1. Strategic planning using facts provided in Manufacturers Hanover Corp.: Customer Profitability Report case study
2. Improving business portfolio management of Profitability Lending
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 Profitability Lending
Strengths Manufacturers Hanover Corp.: Customer Profitability Report | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Profitability Lending in Manufacturers Hanover Corp.: Customer Profitability Report Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Profitability Lending in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Finance & Accounting field
– Profitability Lending 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 Profitability Lending in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Profitability Lending digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Profitability Lending 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.
Training and development
– Profitability Lending has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Manufacturers Hanover Corp.: Customer Profitability Report 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)
– Profitability Lending 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 Manufacturers Hanover Corp.: Customer Profitability Report - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Profitability Lending 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 Manufacturers Hanover Corp.: Customer Profitability Report HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Profitability Lending is present in almost all the verticals within the industry. This has provided firm in Manufacturers Hanover Corp.: Customer Profitability Report 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.
Operational resilience
– The operational resilience strategy in the Manufacturers Hanover Corp.: Customer Profitability Report 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Manufacturers Hanover Corp.: Customer Profitability Report firm has clearly differentiated products in the market place. This has enabled Profitability Lending to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Profitability Lending to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Profitability Lending 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.
Learning organization
- Profitability Lending 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 Profitability Lending is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Manufacturers Hanover Corp.: Customer Profitability Report Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Profitability Lending is one of the leading recruiters in the industry. Managers in the Manufacturers Hanover Corp.: Customer Profitability Report are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Manufacturers Hanover Corp.: Customer Profitability Report | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Manufacturers Hanover Corp.: Customer Profitability Report are -
Need for greater diversity
– Profitability Lending 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.
Capital Spending Reduction
– Even during the low interest decade, Profitability Lending 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.
Products dominated business model
– Even though Profitability Lending 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 - Manufacturers Hanover Corp.: Customer Profitability Report should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert S. Kaplan suggests that, Profitability Lending 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Manufacturers Hanover Corp.: Customer Profitability Report, is just above the industry average. Profitability Lending 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Profitability Lending 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Profitability Lending is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Manufacturers Hanover Corp.: Customer Profitability Report 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 operating costs
– Compare to the competitors, firm in the HBR case study Manufacturers Hanover Corp.: Customer Profitability Report has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Profitability Lending 's lucrative customers.
Lack of clear differentiation of Profitability Lending products
– To increase the profitability and margins on the products, Profitability Lending needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Profitability Lending 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. Profitability Lending 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.
High cash cycle compare to competitors
Profitability Lending 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.
Opportunities Manufacturers Hanover Corp.: Customer Profitability Report | 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 Manufacturers Hanover Corp.: Customer Profitability Report are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Profitability Lending 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, Manufacturers Hanover Corp.: Customer Profitability Report, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Profitability Lending can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Profitability Lending 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.
Loyalty marketing
– Profitability Lending 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.
Leveraging digital technologies
– Profitability Lending 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.
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. Profitability Lending can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Profitability Lending 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 Manufacturers Hanover Corp.: Customer Profitability Report - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Profitability Lending to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Profitability Lending in the consumer business. Now Profitability Lending can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Profitability Lending 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.
Developing new processes and practices
– Profitability Lending 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.
Buying journey improvements
– Profitability Lending can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Manufacturers Hanover Corp.: Customer Profitability Report 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.
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. Profitability Lending 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. Profitability Lending 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Profitability Lending 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.
Threats Manufacturers Hanover Corp.: Customer Profitability Report External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Manufacturers Hanover Corp.: Customer Profitability Report are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Profitability Lending 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.
Environmental challenges
– Profitability Lending 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. Profitability Lending can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Profitability Lending
– 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 Profitability Lending.
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.
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 Profitability Lending business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Profitability Lending 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Manufacturers Hanover Corp.: Customer Profitability Report, Profitability Lending 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 .
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 Profitability Lending in the Finance & Accounting sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Profitability Lending 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.
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 Profitability Lending.
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. Profitability Lending can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Profitability Lending needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Profitability Lending 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 Manufacturers Hanover Corp.: Customer Profitability Report .
Weighted SWOT Analysis of Manufacturers Hanover Corp.: Customer Profitability Report 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 Manufacturers Hanover Corp.: Customer Profitability Report 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 Manufacturers Hanover Corp.: Customer Profitability Report 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 Manufacturers Hanover Corp.: Customer Profitability Report 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 Manufacturers Hanover Corp.: Customer Profitability Report 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 Profitability Lending needs to make to build a sustainable competitive advantage.
