Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version
The Vanguard Group is one of the largest asset managers in the U.S., with over $1 trillion in assets, ninety percent of which are mutual fund assets, and more than 12,000 employees at year-end 2006. Vanguard has built a strong reputation as the manager of reference for low-cost investing and high-quality customer service which always does what it thinks is best for its clients. Vanguard has recently launched a family of life-cycle funds called Target Retirement Funds. Life-cycle funds, which have proven popular both with investors in company-sponsored defined-contribution pension plans and with individual investors, are built on the idea of "age-based investing," or the notion that investors should allocate more of their long-term savings to stocks when they are young and have longer retirement horizons, and decrease this allocation as they approach retirement. The management at Vanguard is examining the central role of these funds may play in some initiatives aimed at growing Vanguard's retail, defined contribution and client advisory services. The pending approval of the Pension Protection Act will make it possible for sponsors of defined-contribution plans to take a more active role in advising plan participants, and the assets in individual retirement accounts and defined-contribution pension plans are expected to continue their rapid growth moving forward. Should Vanguard promote these funds as the next step in Vanguard's quest to make investing as simple, low-cost, and effective as it can possibly be? At stake is Vanguard's brand and client trust, and the welfare of millions of Americans now responsible for providing for their own retirement.
Swot Analysis of "Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version" written by Luis M. Viceira includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vanguard Retirement facing as an external strategic factors. Some of the topics covered in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version casestudy better are - – increasing household debt because of falling income levels, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, there is increasing trade war between United States & China, increasing commodity prices, increasing energy prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vanguard Retirement, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vanguard Retirement 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version can be done for the following purposes –
1. Strategic planning using facts provided in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version case study
2. Improving business portfolio management of Vanguard Retirement
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 Vanguard Retirement
Strengths Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vanguard Retirement in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version Harvard Business Review case study are -
Innovation driven organization
– Vanguard Retirement is one of the most innovative firm in sector. Manager in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Vanguard Retirement 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 Vanguard Retirement is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Vanguard Retirement 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.
Highly skilled collaborators
– Vanguard Retirement 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Vanguard Retirement 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Vanguard Retirement has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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.
Ability to lead change in Finance & Accounting field
– Vanguard Retirement 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 Vanguard Retirement in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Vanguard Retirement is present in almost all the verticals within the industry. This has provided firm in Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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.
Organizational Resilience of Vanguard Retirement
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vanguard Retirement does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Vanguard Retirement has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vanguard Retirement 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.
Low bargaining power of suppliers
– Suppliers of Vanguard Retirement in the sector have low bargaining power. Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vanguard Retirement to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Vanguard Retirement is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version, it seems that the employees of Vanguard Retirement don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Luis M. Viceira suggests that, Vanguard Retirement 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.
High cash cycle compare to competitors
Vanguard Retirement 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Vanguard Retirement supply chain. Even after few cautionary changes mentioned in the HBR case study - Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vanguard Retirement vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version HBR case study mentions - Vanguard Retirement 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.
Lack of clear differentiation of Vanguard Retirement products
– To increase the profitability and margins on the products, Vanguard Retirement needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vanguard Retirement is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Vanguard Retirement 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.
Need for greater diversity
– Vanguard Retirement 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, Vanguard Retirement 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.
No frontier risks strategy
– After analyzing the HBR case study Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version, 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.
Opportunities Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version | 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vanguard Retirement 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.
Using analytics as competitive advantage
– Vanguard Retirement 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vanguard Retirement to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vanguard Retirement 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.
Manufacturing automation
– Vanguard Retirement 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 Vanguard Retirement 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.
Better consumer reach
– The expansion of the 5G network will help Vanguard Retirement to increase its market reach. Vanguard Retirement 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vanguard Retirement 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, Vanguard Retirement 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, Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Vanguard Retirement 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. Vanguard Retirement 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vanguard Retirement 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 Vanguard Retirement to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Vanguard Retirement has opened avenues for new revenue streams for the organization in the industry. This can help Vanguard Retirement to build a more holistic ecosystem as suggested in the Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version case study. Vanguard Retirement can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Vanguard Retirement 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.
Buying journey improvements
– Vanguard Retirement can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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.
Threats Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version are -
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. Vanguard Retirement 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.
Shortening product life cycle
– it is one of the major threat that Vanguard Retirement is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Vanguard Retirement 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.
High dependence on third party suppliers
– Vanguard Retirement 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.
Technology acceleration in Forth Industrial Revolution
– Vanguard Retirement has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Vanguard Retirement 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vanguard Retirement 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vanguard Retirement 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.
Increasing wage structure of Vanguard Retirement
– 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 Vanguard Retirement.
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 Vanguard Retirement in the Finance & Accounting sector and impact the bottomline of the organization.
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 Vanguard Retirement.
Stagnating economy with rate increase
– Vanguard Retirement 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.
Consumer confidence and its impact on Vanguard Retirement 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.
Weighted SWOT Analysis of Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Group, Inc., in 2006 and Target Retirement Funds, Chinese Version 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 Vanguard Retirement needs to make to build a sustainable competitive advantage.
