Case Study Description of Mortgage-Backs at Ticonderoga
Ticonderoga is a small hedge fund that trades in mortgage-backed securities--securities created from pooled mortgage loans. They often appear as straightforward so-called "pass-throughs," but can also be pooled again to create collateral for a mortgage security known as a collateralized mortgage obligation (CMO). CMOs allow cash flows from the underlying pass-throughs to be directed, allowing the creation of different classes of securities--tranches--with different maturities, coupons, and risk profiles. In April 2005, the general managers of Ticonderoga are looking at the market data, trying to construct a trade given their view on the prepayment speed of mortgages vs. the implied prepayment speed they derive from CMOs in the market.
Authors :: George Chacko, Peter Hecht, Vincent Dessain, Anders Sjoman
Swot Analysis of "Mortgage-Backs at Ticonderoga" written by George Chacko, Peter Hecht, Vincent Dessain, Anders Sjoman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mortgage Ticonderoga facing as an external strategic factors. Some of the topics covered in Mortgage-Backs at Ticonderoga case study are - Strategic Management Strategies, Financial markets, International business, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Mortgage-Backs at Ticonderoga casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing commodity prices, increasing transportation and logistics costs, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, increasing energy prices, etc
Introduction to SWOT Analysis of Mortgage-Backs at Ticonderoga
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mortgage-Backs at Ticonderoga case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mortgage Ticonderoga, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mortgage Ticonderoga 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 Mortgage-Backs at Ticonderoga can be done for the following purposes –
1. Strategic planning using facts provided in Mortgage-Backs at Ticonderoga case study
2. Improving business portfolio management of Mortgage Ticonderoga
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 Mortgage Ticonderoga
Strengths Mortgage-Backs at Ticonderoga | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mortgage Ticonderoga in Mortgage-Backs at Ticonderoga Harvard Business Review case study are -
Learning organization
- Mortgage Ticonderoga 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 Mortgage Ticonderoga is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Mortgage-Backs at Ticonderoga Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Mortgage Ticonderoga has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Mortgage-Backs at Ticonderoga 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.
Strong track record of project management
– Mortgage Ticonderoga 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)
– Mortgage Ticonderoga 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 Mortgage-Backs at Ticonderoga - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Mortgage Ticonderoga is present in almost all the verticals within the industry. This has provided firm in Mortgage-Backs at Ticonderoga 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Mortgage-Backs at Ticonderoga firm has clearly differentiated products in the market place. This has enabled Mortgage Ticonderoga to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Mortgage Ticonderoga to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Mortgage Ticonderoga 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.
Innovation driven organization
– Mortgage Ticonderoga is one of the most innovative firm in sector. Manager in Mortgage-Backs at Ticonderoga Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Mortgage Ticonderoga
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mortgage Ticonderoga does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Mortgage Ticonderoga digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mortgage Ticonderoga 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.
Highly skilled collaborators
– Mortgage Ticonderoga 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 Mortgage-Backs at Ticonderoga HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Mortgage Ticonderoga is one of the leading recruiters in the industry. Managers in the Mortgage-Backs at Ticonderoga 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 Mortgage-Backs at Ticonderoga | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mortgage-Backs at Ticonderoga are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mortgage-Backs at Ticonderoga, is just above the industry average. Mortgage Ticonderoga 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.
Need for greater diversity
– Mortgage Ticonderoga 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, Mortgage Ticonderoga 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 Mortgage Ticonderoga 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 - Mortgage-Backs at Ticonderoga should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Mortgage-Backs at Ticonderoga 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 Mortgage Ticonderoga has relatively successful track record of launching new products.
Lack of clear differentiation of Mortgage Ticonderoga products
– To increase the profitability and margins on the products, Mortgage Ticonderoga needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Mortgage Ticonderoga 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.
Interest costs
– Compare to the competition, Mortgage Ticonderoga 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.
Slow to strategic competitive environment developments
– As Mortgage-Backs at Ticonderoga HBR case study mentions - Mortgage Ticonderoga 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Mortgage-Backs at Ticonderoga 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 Mortgage Ticonderoga 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Mortgage Ticonderoga, firm in the HBR case study Mortgage-Backs at Ticonderoga needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Mortgage-Backs at Ticonderoga | 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 Mortgage-Backs at Ticonderoga are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mortgage Ticonderoga 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 Mortgage Ticonderoga to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Mortgage Ticonderoga can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Mortgage-Backs at Ticonderoga 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.
Manufacturing automation
– Mortgage Ticonderoga 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.
Developing new processes and practices
– Mortgage Ticonderoga 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.
Better consumer reach
– The expansion of the 5G network will help Mortgage Ticonderoga to increase its market reach. Mortgage Ticonderoga 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.
Building a culture of innovation
– managers at Mortgage Ticonderoga 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 Mortgage Ticonderoga has opened avenues for new revenue streams for the organization in the industry. This can help Mortgage Ticonderoga to build a more holistic ecosystem as suggested in the Mortgage-Backs at Ticonderoga case study. Mortgage Ticonderoga can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Mortgage Ticonderoga in the consumer business. Now Mortgage Ticonderoga can target international markets with far fewer capital restrictions requirements than the existing system.
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. Mortgage Ticonderoga 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. Mortgage Ticonderoga 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, Mortgage Ticonderoga 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mortgage Ticonderoga is facing challenges because of the dominance of functional experts in the organization. Mortgage-Backs at Ticonderoga 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.
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. Mortgage Ticonderoga can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Mortgage Ticonderoga 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.
Threats Mortgage-Backs at Ticonderoga External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mortgage-Backs at Ticonderoga are -
Technology acceleration in Forth Industrial Revolution
– Mortgage Ticonderoga has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Mortgage Ticonderoga needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
Environmental challenges
– Mortgage Ticonderoga 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. Mortgage Ticonderoga can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Mortgage Ticonderoga needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Mortgage Ticonderoga 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Mortgage-Backs at Ticonderoga, Mortgage Ticonderoga 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 .
Increasing wage structure of Mortgage Ticonderoga
– 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 Mortgage Ticonderoga.
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 Mortgage Ticonderoga.
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 Mortgage Ticonderoga in the Finance & Accounting sector and impact the bottomline 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 Mortgage Ticonderoga business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Mortgage Ticonderoga is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Mortgage Ticonderoga 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.
Regulatory challenges
– Mortgage Ticonderoga 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.
Weighted SWOT Analysis of Mortgage-Backs at Ticonderoga 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 Mortgage-Backs at Ticonderoga 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 Mortgage-Backs at Ticonderoga 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 Mortgage-Backs at Ticonderoga 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 Mortgage-Backs at Ticonderoga 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 Mortgage Ticonderoga needs to make to build a sustainable competitive advantage.