Portfolio Selection and the Capital Asset Pricing Model SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Portfolio Selection and the Capital Asset Pricing Model
In the context of determining an optimal portfolio to recommend to two hypothetical investors, this strucutuerd analysis leads students through a series of steps examining return data for three stocks. The analysis first explores the effects of portfolio formation on returns and volatility. With the addition of a market index and a bond portfolio, students easily recognize how portfolios from from these to investment vehicles may be optimal. The analysis then explores stock betas as a measure of risk and the statistical properties of those betas. At the conclusion, students will have a practical understanding of the capital asset pricing model.
Swot Analysis of "Portfolio Selection and the Capital Asset Pricing Model" written by Marc Lipson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Betas Portfolio facing as an external strategic factors. Some of the topics covered in Portfolio Selection and the Capital Asset Pricing Model case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Portfolio Selection and the Capital Asset Pricing Model casestudy better are - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , there is backlash against globalization, increasing household debt because of falling income levels, there is increasing trade war between United States & China, wage bills are increasing,
competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Portfolio Selection and the Capital Asset Pricing Model
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Portfolio Selection and the Capital Asset Pricing Model case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Betas Portfolio, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Betas 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 Portfolio Selection and the Capital Asset Pricing Model can be done for the following purposes –
1. Strategic planning using facts provided in Portfolio Selection and the Capital Asset Pricing Model case study
2. Improving business portfolio management of Betas 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 Betas Portfolio
Strengths Portfolio Selection and the Capital Asset Pricing Model | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Betas Portfolio in Portfolio Selection and the Capital Asset Pricing Model Harvard Business Review case study are -
High brand equity
– Betas Portfolio has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Betas Portfolio to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Betas 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.
Successful track record of launching new products
– Betas Portfolio has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Betas 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.
High switching costs
– The high switching costs that Betas Portfolio 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Betas Portfolio digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Betas 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
- Betas 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 Betas Portfolio is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Portfolio Selection and the Capital Asset Pricing Model Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Betas Portfolio is one of the most innovative firm in sector. Manager in Portfolio Selection and the Capital Asset Pricing Model Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Betas Portfolio
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Betas Portfolio does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Finance & Accounting field
– Betas Portfolio 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 Betas Portfolio in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Betas Portfolio is one of the leading recruiters in the industry. Managers in the Portfolio Selection and the Capital Asset Pricing Model are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Betas Portfolio in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Betas Portfolio in the sector have low bargaining power. Portfolio Selection and the Capital Asset Pricing Model has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Betas Portfolio to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Portfolio Selection and the Capital Asset Pricing Model | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Portfolio Selection and the Capital Asset Pricing Model are -
Skills based hiring
– The stress on hiring functional specialists at Betas Portfolio 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Portfolio Selection and the Capital Asset Pricing Model has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Betas Portfolio 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Betas Portfolio is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Betas Portfolio needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Betas Portfolio to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Betas Portfolio 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Portfolio Selection and the Capital Asset Pricing Model, it seems that the employees of Betas 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.
Need for greater diversity
– Betas Portfolio 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Portfolio Selection and the Capital Asset Pricing Model, is just above the industry average. Betas Portfolio 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.
No frontier risks strategy
– After analyzing the HBR case study Portfolio Selection and the Capital Asset Pricing Model, 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 Portfolio Selection and the Capital Asset Pricing Model 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 Betas Portfolio has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Betas Portfolio is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Portfolio Selection and the Capital Asset Pricing Model can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Betas 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 - Portfolio Selection and the Capital Asset Pricing Model should strive to include more intangible value offerings along with its core products and services.
Opportunities Portfolio Selection and the Capital Asset Pricing Model | 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 Portfolio Selection and the Capital Asset Pricing Model are -
Loyalty marketing
– Betas 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Betas Portfolio 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.
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. Betas Portfolio can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Betas Portfolio to increase its market reach. Betas 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
– Betas Portfolio can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Portfolio Selection and the Capital Asset Pricing Model 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
– Betas 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.
Building a culture of innovation
– managers at Betas Portfolio can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
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 Betas Portfolio 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Betas 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.
Learning at scale
– Online learning technologies has now opened space for Betas Portfolio to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Betas 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 Betas Portfolio to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Betas 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Betas Portfolio can use these opportunities to build new business models that can help the communities that Betas Portfolio operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Portfolio Selection and the Capital Asset Pricing Model External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Portfolio Selection and the Capital Asset Pricing Model are -
Technology acceleration in Forth Industrial Revolution
– Betas Portfolio has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Betas Portfolio 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.
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 Betas Portfolio business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Betas 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.
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. Betas Portfolio can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Betas 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 Portfolio Selection and the Capital Asset Pricing Model .
High dependence on third party suppliers
– Betas Portfolio 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.
Consumer confidence and its impact on Betas 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.
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 Betas Portfolio in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Betas Portfolio with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Portfolio Selection and the Capital Asset Pricing Model, Betas 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 .
Environmental challenges
– Betas Portfolio 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. Betas Portfolio can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
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. Betas Portfolio needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Portfolio Selection and the Capital Asset Pricing Model 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 Portfolio Selection and the Capital Asset Pricing Model 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 Portfolio Selection and the Capital Asset Pricing Model 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 Portfolio Selection and the Capital Asset Pricing Model 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 Portfolio Selection and the Capital Asset Pricing Model 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 Betas Portfolio needs to make to build a sustainable competitive advantage.