Case Study Description of Ticonderoga: Inverse Floating Rate Bond
Presents a simple interest hedging exercise. A hedge fund is considering an investment in a structured fixed--income product: an inverse floating-rate bond, or inverse floater, designed by a U.S. investment bank. The hedge fund's normal policy is to hedge interest rate risk, maintaining a duration and convexity-neutral portfolio. Because of the complicated nature of the structured product, the protagonist must figure out how to hedge this product.
Swot Analysis of "Ticonderoga: Inverse Floating Rate Bond" written by George Chacko, Anders Sjoman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Inverse Hedge facing as an external strategic factors. Some of the topics covered in Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond casestudy better are - – increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, there is backlash against globalization, central banks are concerned over increasing inflation, wage bills are increasing, there is increasing trade war between United States & China, geopolitical disruptions,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Ticonderoga: Inverse Floating Rate Bond
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ticonderoga: Inverse Floating Rate Bond case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inverse Hedge, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inverse Hedge 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 Ticonderoga: Inverse Floating Rate Bond can be done for the following purposes –
1. Strategic planning using facts provided in Ticonderoga: Inverse Floating Rate Bond case study
2. Improving business portfolio management of Inverse Hedge
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 Inverse Hedge
Strengths Ticonderoga: Inverse Floating Rate Bond | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inverse Hedge in Ticonderoga: Inverse Floating Rate Bond Harvard Business Review case study are -
Training and development
– Inverse Hedge has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ticonderoga: Inverse Floating Rate Bond 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.
Organizational Resilience of Inverse Hedge
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Inverse Hedge 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 Inverse Hedge digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inverse Hedge 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.
Cross disciplinary teams
– Horizontal connected teams at the Inverse Hedge 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.
Analytics focus
– Inverse Hedge is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by George Chacko, Anders Sjoman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Inverse Hedge 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 Inverse Hedge is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ticonderoga: Inverse Floating Rate Bond Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Inverse Hedge in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Inverse Hedge is present in almost all the verticals within the industry. This has provided firm in Ticonderoga: Inverse Floating Rate Bond 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
– Ticonderoga: Inverse Floating Rate Bond firm has clearly differentiated products in the market place. This has enabled Inverse Hedge to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Inverse Hedge to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Inverse Hedge in the sector have low bargaining power. Ticonderoga: Inverse Floating Rate Bond has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inverse Hedge to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Inverse Hedge 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 Inverse Hedge in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Ticonderoga: Inverse Floating Rate Bond 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.
Weaknesses Ticonderoga: Inverse Floating Rate Bond | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ticonderoga: Inverse Floating Rate Bond are -
Slow decision making process
– As mentioned earlier in the report, Inverse Hedge 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. Inverse Hedge 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.
Increasing silos among functional specialists
– The organizational structure of Inverse Hedge is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Inverse Hedge needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Inverse Hedge to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Inverse Hedge 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.
Interest costs
– Compare to the competition, Inverse Hedge 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.
Lack of clear differentiation of Inverse Hedge products
– To increase the profitability and margins on the products, Inverse Hedge needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Inverse Hedge 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 bargaining power of channel partners
– Because of the regulatory requirements, George Chacko, Anders Sjoman suggests that, Inverse Hedge 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.
Aligning sales with marketing
– It come across in the case study Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond can leverage the sales team experience to cultivate customer relationships as Inverse Hedge is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Ticonderoga: Inverse Floating Rate Bond, 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ticonderoga: Inverse Floating Rate Bond 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 Inverse Hedge has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Inverse Hedge 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.
Opportunities Ticonderoga: Inverse Floating Rate Bond | 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 Ticonderoga: Inverse Floating Rate Bond are -
Using analytics as competitive advantage
– Inverse Hedge 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 Ticonderoga: Inverse Floating Rate Bond - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inverse Hedge to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Inverse Hedge can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Inverse Hedge has opened avenues for new revenue streams for the organization in the industry. This can help Inverse Hedge to build a more holistic ecosystem as suggested in the Ticonderoga: Inverse Floating Rate Bond case study. Inverse Hedge can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Inverse Hedge is facing challenges because of the dominance of functional experts in the organization. Ticonderoga: Inverse Floating Rate Bond 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.
Manufacturing automation
– Inverse Hedge 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.
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 Inverse Hedge 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Inverse Hedge 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 Inverse Hedge to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Inverse Hedge 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.
Buying journey improvements
– Inverse Hedge can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ticonderoga: Inverse Floating Rate Bond 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.
Leveraging digital technologies
– Inverse Hedge 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Inverse Hedge 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, Ticonderoga: Inverse Floating Rate Bond, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Inverse Hedge can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Inverse Hedge 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.
Threats Ticonderoga: Inverse Floating Rate Bond External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ticonderoga: Inverse Floating Rate Bond are -
Regulatory challenges
– Inverse Hedge 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.
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. Inverse Hedge can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Inverse Hedge with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Inverse Hedge
– 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 Inverse Hedge.
High dependence on third party suppliers
– Inverse Hedge 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.
Shortening product life cycle
– it is one of the major threat that Inverse Hedge is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Inverse Hedge 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, Inverse Hedge 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 Ticonderoga: Inverse Floating Rate Bond .
Technology acceleration in Forth Industrial Revolution
– Inverse Hedge has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Inverse Hedge 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.
Environmental challenges
– Inverse Hedge 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. Inverse Hedge can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Inverse Hedge 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.
Weighted SWOT Analysis of Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond 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 Ticonderoga: Inverse Floating Rate Bond 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 Inverse Hedge needs to make to build a sustainable competitive advantage.
