Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board
As Canada Pension Plan Investment Board (CPPIB) CEO David Denison and SVP and Chief Investment Strategist Don Raymond embarked upon a review of CPPIB's investment strategy, they reflected on the changes that had been made in recent years. The Reference Portfolio played an integral role in allowing CPPIB to look through the labels of asset classes and to holistically consider each asset in terms of its underlying factors. In this case, which draws upon interviews with both Denison and Raymond, students will learn about the history of CPPIB, the genesis of the Reference Portfolio, and how the Reference Portfolio operates to guide CPPIB's high performing investment strategy.
Swot Analysis of "Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board" written by Andrew Ang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cppib Reference facing as an external strategic factors. Some of the topics covered in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board case study are - Strategic Management Strategies, Financial markets, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board casestudy better are - – challanges to central banks by blockchain based private currencies, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing transportation and logistics costs, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cppib Reference, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cppib Reference 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board can be done for the following purposes –
1. Strategic planning using facts provided in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board case study
2. Improving business portfolio management of Cppib Reference
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 Cppib Reference
Strengths Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cppib Reference in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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.
Strong track record of project management
– Cppib Reference is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Cppib Reference in the sector have low bargaining power. Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cppib Reference to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Cppib Reference has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cppib Reference 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.
Training and development
– Cppib Reference has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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)
– Cppib Reference 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Cppib Reference in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Cppib Reference 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Cppib Reference 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.
High brand equity
– Cppib Reference has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cppib Reference to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Cppib Reference 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 Cppib Reference is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Cppib Reference is one of the leading recruiters in the industry. Managers in the Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board are -
Low market penetration in new markets
– Outside its home market of Cppib Reference, firm in the HBR case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Cppib Reference needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Cppib Reference 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 - Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Cppib Reference 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 operating costs
– Compare to the competitors, firm in the HBR case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Cppib Reference 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Cppib Reference 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. Cppib Reference 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
Cppib Reference 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.
Skills based hiring
– The stress on hiring functional specialists at Cppib Reference 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.
Aligning sales with marketing
– It come across in the case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board can leverage the sales team experience to cultivate customer relationships as Cppib Reference is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board HBR case study mentions - Cppib Reference 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.
Opportunities Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board | 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cppib Reference can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cppib Reference 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, Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Cppib Reference in the consumer business. Now Cppib Reference can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Cppib Reference 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.
Leveraging digital technologies
– Cppib Reference 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.
Better consumer reach
– The expansion of the 5G network will help Cppib Reference to increase its market reach. Cppib Reference 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.
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 Cppib Reference 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.
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. Cppib Reference can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Cppib Reference has opened avenues for new revenue streams for the organization in the industry. This can help Cppib Reference to build a more holistic ecosystem as suggested in the Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board case study. Cppib Reference can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Cppib Reference 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cppib Reference can use these opportunities to build new business models that can help the communities that Cppib Reference operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Using analytics as competitive advantage
– Cppib Reference 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cppib Reference to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cppib Reference 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 Cppib Reference to hire the very best people irrespective of their geographical location.
Threats Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board are -
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 Cppib Reference.
Increasing wage structure of Cppib Reference
– 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 Cppib Reference.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cppib Reference 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board, Cppib Reference 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 .
Consumer confidence and its impact on Cppib Reference 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.
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 Cppib Reference in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Cppib Reference 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.
Technology acceleration in Forth Industrial Revolution
– Cppib Reference has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cppib Reference 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cppib Reference with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Cppib Reference 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.
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 Cppib Reference business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cppib Reference 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.
Weighted SWOT Analysis of Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Factor Investing: The Reference Portfolio and Canada Pension Plan Investment Board 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 Cppib Reference needs to make to build a sustainable competitive advantage.
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