Parex Banka: Issuing a 200 Million Bond SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Parex Banka: Issuing a 200 Million Bond
After successfully issuing a a‚¬100 million Eurobond in 2005, executives at Parex Banka (Parex) in Riga, Latvia are considering issuing a second bond with a face value of a‚¬200 million and a term of 5 years. In planning the bond issue, the bank is debating the bond's characteristics, such as the currency (Euro versus U.S. dollar), the spread they would initially offer and how they would approach the meeting with potential investors. Students are tasked with assessing the bank's financing needs and recommending whether the bond should be issued and if so, its currency and price.
Swot Analysis of "Parex Banka: Issuing a 200 Million Bond" written by Basil A. Kalymon, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Parex Bond facing as an external strategic factors. Some of the topics covered in Parex Banka: Issuing a 200 Million Bond case study are - Strategic Management Strategies, Financial markets and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Parex Banka: Issuing a 200 Million Bond casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, geopolitical disruptions,
increasing government debt because of Covid-19 spendings, increasing commodity prices, etc
Introduction to SWOT Analysis of Parex Banka: Issuing a 200 Million Bond
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Parex Banka: Issuing a 200 Million Bond case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Parex Bond, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Parex Bond 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 Parex Banka: Issuing a 200 Million Bond can be done for the following purposes –
1. Strategic planning using facts provided in Parex Banka: Issuing a 200 Million Bond case study
2. Improving business portfolio management of Parex Bond
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 Parex Bond
Strengths Parex Banka: Issuing a 200 Million Bond | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Parex Bond in Parex Banka: Issuing a 200 Million Bond Harvard Business Review case study are -
Ability to recruit top talent
– Parex Bond is one of the leading recruiters in the industry. Managers in the Parex Banka: Issuing a 200 Million Bond are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Parex Bond has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Parex Banka: Issuing a 200 Million 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.
Cross disciplinary teams
– Horizontal connected teams at the Parex Bond 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.
Effective Research and Development (R&D)
– Parex Bond 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 Parex Banka: Issuing a 200 Million Bond - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Parex Bond is one of the most innovative firm in sector. Manager in Parex Banka: Issuing a 200 Million Bond Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Parex Bond in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Parex Bond is present in almost all the verticals within the industry. This has provided firm in Parex Banka: Issuing a 200 Million 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.
Strong track record of project management
– Parex Bond 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 Parex Bond in the sector have low bargaining power. Parex Banka: Issuing a 200 Million Bond has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Parex Bond to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Parex Bond 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 Parex Bond is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Parex Banka: Issuing a 200 Million Bond Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Parex Banka: Issuing a 200 Million 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.
Ability to lead change in Finance & Accounting field
– Parex Bond 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 Parex Bond in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Parex Banka: Issuing a 200 Million Bond | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Parex Banka: Issuing a 200 Million Bond are -
High cash cycle compare to competitors
Parex Bond 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.
Lack of clear differentiation of Parex Bond products
– To increase the profitability and margins on the products, Parex Bond needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Parex Banka: Issuing a 200 Million Bond, it seems that the employees of Parex Bond 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.
Aligning sales with marketing
– It come across in the case study Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million Bond can leverage the sales team experience to cultivate customer relationships as Parex Bond is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Parex Banka: Issuing a 200 Million Bond, in the dynamic environment Parex Bond has struggled to respond to the nimble upstart competition. Parex Bond has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Parex Bond is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Parex Bond needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Parex Bond to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Basil A. Kalymon, Jordan Mitchell suggests that, Parex Bond 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.
No frontier risks strategy
– After analyzing the HBR case study Parex Banka: Issuing a 200 Million 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.
Low market penetration in new markets
– Outside its home market of Parex Bond, firm in the HBR case study Parex Banka: Issuing a 200 Million Bond needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Parex Banka: Issuing a 200 Million Bond, is just above the industry average. Parex Bond needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Parex Bond 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.
Opportunities Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million Bond are -
Better consumer reach
– The expansion of the 5G network will help Parex Bond to increase its market reach. Parex Bond 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.
Leveraging digital technologies
– Parex Bond 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.
Loyalty marketing
– Parex Bond 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
– Parex Bond 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.
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. Parex Bond can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Parex Bond 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.
Buying journey improvements
– Parex Bond can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Parex Banka: Issuing a 200 Million 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.
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 Parex Bond in the consumer business. Now Parex Bond can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Parex Bond 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.
Creating value in data economy
– The success of analytics program of Parex Bond has opened avenues for new revenue streams for the organization in the industry. This can help Parex Bond to build a more holistic ecosystem as suggested in the Parex Banka: Issuing a 200 Million Bond case study. Parex Bond can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Parex Bond 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, Parex Banka: Issuing a 200 Million 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.
Using analytics as competitive advantage
– Parex Bond 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 Parex Banka: Issuing a 200 Million Bond - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Parex Bond to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Parex Bond is facing challenges because of the dominance of functional experts in the organization. Parex Banka: Issuing a 200 Million 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.
Threats Parex Banka: Issuing a 200 Million Bond External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Parex Banka: Issuing a 200 Million Bond are -
Consumer confidence and its impact on Parex Bond 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.
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 Parex Bond.
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. Parex Bond 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.
High dependence on third party suppliers
– Parex Bond 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Parex Banka: Issuing a 200 Million Bond, Parex Bond 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Parex Bond 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.
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. Parex Bond needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Parex Bond 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 Parex Banka: Issuing a 200 Million Bond .
Stagnating economy with rate increase
– Parex Bond 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.
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.
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 Parex Bond business can come under increasing regulations regarding data privacy, data security, etc.
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. Parex Bond can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Parex Bond with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million 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 Parex Banka: Issuing a 200 Million 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 Parex Bond needs to make to build a sustainable competitive advantage.