Case Study Description of Investments: Delineating an Efficient Portfolio
A student in his final year at a management school has been asked by his uncle to suggest an optimal investment portfolio for the reinvestment of his retirement account. His uncle wants to invest only in mutual funds managed by reputed asset management companies that have historically given superior returns. He also wants to limit the risk involved to less than 10 per cent per annum. The student now needs to prepare a portfolio that offers the highest possible return for the risk defined by his uncle.
Swot Analysis of "Investments: Delineating an Efficient Portfolio" written by Upasana Mitra, M. Kannadhasan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Uncle Portfolio facing as an external strategic factors. Some of the topics covered in Investments: Delineating an Efficient Portfolio case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Investments: Delineating an Efficient Portfolio casestudy better are - – increasing transportation and logistics costs, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, technology disruption, supply chains are disrupted by pandemic , increasing commodity prices,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Investments: Delineating an Efficient Portfolio
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Investments: Delineating an Efficient Portfolio case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Uncle Portfolio, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Uncle Portfolio 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 Investments: Delineating an Efficient Portfolio can be done for the following purposes –
1. Strategic planning using facts provided in Investments: Delineating an Efficient Portfolio case study
2. Improving business portfolio management of Uncle Portfolio
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 Uncle Portfolio
Strengths Investments: Delineating an Efficient Portfolio | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Uncle Portfolio in Investments: Delineating an Efficient Portfolio Harvard Business Review case study are -
Strong track record of project management
– Uncle Portfolio is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Uncle Portfolio has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Investments: Delineating an Efficient Portfolio 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.
Successful track record of launching new products
– Uncle Portfolio has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Uncle Portfolio 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Uncle Portfolio digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Uncle Portfolio 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.
Learning organization
- Uncle Portfolio 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 Uncle Portfolio is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Investments: Delineating an Efficient Portfolio Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Uncle Portfolio 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 Investments: Delineating an Efficient Portfolio HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Uncle Portfolio 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.
Low bargaining power of suppliers
– Suppliers of Uncle Portfolio in the sector have low bargaining power. Investments: Delineating an Efficient Portfolio has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Uncle Portfolio to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Finance & Accounting industry
– Investments: Delineating an Efficient Portfolio firm has clearly differentiated products in the market place. This has enabled Uncle Portfolio to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Uncle Portfolio to invest into research and development (R&D) and innovation.
High brand equity
– Uncle Portfolio has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Uncle Portfolio to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Uncle Portfolio
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Uncle Portfolio does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Investments: Delineating an Efficient Portfolio 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 Investments: Delineating an Efficient Portfolio | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Investments: Delineating an Efficient Portfolio are -
Slow to strategic competitive environment developments
– As Investments: Delineating an Efficient Portfolio HBR case study mentions - Uncle Portfolio 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.
No frontier risks strategy
– After analyzing the HBR case study Investments: Delineating an Efficient Portfolio, 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 bargaining power of channel partners
– Because of the regulatory requirements, Upasana Mitra, M. Kannadhasan suggests that, Uncle Portfolio 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.
Increasing silos among functional specialists
– The organizational structure of Uncle Portfolio is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Uncle Portfolio needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Uncle Portfolio to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Investments: Delineating an Efficient Portfolio, in the dynamic environment Uncle Portfolio has struggled to respond to the nimble upstart competition. Uncle Portfolio has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Investments: Delineating an Efficient Portfolio, it seems that the employees of Uncle Portfolio 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.
Lack of clear differentiation of Uncle Portfolio products
– To increase the profitability and margins on the products, Uncle Portfolio needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Uncle Portfolio 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 - Investments: Delineating an Efficient Portfolio should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Uncle Portfolio, firm in the HBR case study Investments: Delineating an Efficient Portfolio needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Uncle Portfolio is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Investments: Delineating an Efficient Portfolio can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Investments: Delineating an Efficient Portfolio 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 Uncle Portfolio has relatively successful track record of launching new products.
Opportunities Investments: Delineating an Efficient Portfolio | 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 Investments: Delineating an Efficient Portfolio are -
Creating value in data economy
– The success of analytics program of Uncle Portfolio has opened avenues for new revenue streams for the organization in the industry. This can help Uncle Portfolio to build a more holistic ecosystem as suggested in the Investments: Delineating an Efficient Portfolio case study. Uncle Portfolio can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Uncle Portfolio 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 Uncle Portfolio to increase its market reach. Uncle Portfolio 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.
Buying journey improvements
– Uncle Portfolio can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Investments: Delineating an Efficient Portfolio 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.
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. Uncle Portfolio can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Uncle Portfolio can use these opportunities to build new business models that can help the communities that Uncle Portfolio operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Uncle Portfolio 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. Uncle Portfolio 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 Uncle Portfolio 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 Uncle Portfolio to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Uncle Portfolio 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.
Manufacturing automation
– Uncle Portfolio 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Uncle Portfolio 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, Investments: Delineating an Efficient Portfolio, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Uncle Portfolio 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 Investments: Delineating an Efficient Portfolio - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Uncle Portfolio to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Uncle Portfolio 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.
Threats Investments: Delineating an Efficient Portfolio External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Investments: Delineating an Efficient Portfolio are -
Stagnating economy with rate increase
– Uncle Portfolio 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.
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. Uncle Portfolio needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Uncle Portfolio is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Uncle Portfolio 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 Uncle Portfolio 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, Uncle Portfolio 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 Investments: Delineating an Efficient Portfolio .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Investments: Delineating an Efficient Portfolio, Uncle Portfolio 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Uncle Portfolio with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Uncle Portfolio.
Regulatory challenges
– Uncle Portfolio 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. Uncle Portfolio can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Uncle Portfolio 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Uncle Portfolio 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 Investments: Delineating an Efficient Portfolio 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 Investments: Delineating an Efficient Portfolio 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 Investments: Delineating an Efficient Portfolio 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 Investments: Delineating an Efficient Portfolio 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 Investments: Delineating an Efficient Portfolio 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 Uncle Portfolio needs to make to build a sustainable competitive advantage.