Credit Unions: The Future of the Cooperative Financial Institution SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Credit Unions: The Future of the Cooperative Financial Institution
Credit unions are a specialized type of depository institution with a cooperative, non-profit structure and a federal tax exemption. They originated as small, cooperative institutions with an emphasis on uncollateralized consumer lending to the unbanked working-classes. Over time, credit unions have evolved into a wide range of sizes, though compared to banks, a much higher proportion of credit unions are still very small. One subset of "non-traditional" credit unions have been able to expand as a result of looser field of membership requirements and expanded product and service offerings through the use of corporate credit unions and Credit Union Service Organizations. This case looks at the regulatory proposals around credit unions coming out of the financial crisis from the policy-making perspective. Credit unions have lobbied policymakers for expanded powers that will enable them to help stimulate the economy and create jobs by serving more customers and extending more credit. These expanded powers include increasing the business lending cap and raising secondary capital from non-members. The protagonist is a research analyst who must evaluate the benefits of credit unions against the costs, including the federal tax exemption. He also must consider the policy objectives of credit unions against alternative ways to achieve those objectives.
Swot Analysis of "Credit Unions: The Future of the Cooperative Financial Institution" written by Robert C. Pozen, Grace Hou includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Unions Credit facing as an external strategic factors. Some of the topics covered in Credit Unions: The Future of the Cooperative Financial Institution case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Credit Unions: The Future of the Cooperative Financial Institution casestudy better are - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies,
technology disruption, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Credit Unions: The Future of the Cooperative Financial Institution
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Credit Unions: The Future of the Cooperative Financial Institution case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Unions Credit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Unions Credit 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 Credit Unions: The Future of the Cooperative Financial Institution can be done for the following purposes –
1. Strategic planning using facts provided in Credit Unions: The Future of the Cooperative Financial Institution case study
2. Improving business portfolio management of Unions Credit
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 Unions Credit
Strengths Credit Unions: The Future of the Cooperative Financial Institution | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Unions Credit in Credit Unions: The Future of the Cooperative Financial Institution Harvard Business Review case study are -
High switching costs
– The high switching costs that Unions Credit 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.
Innovation driven organization
– Unions Credit is one of the most innovative firm in sector. Manager in Credit Unions: The Future of the Cooperative Financial Institution Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Unions Credit has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Unions Credit 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.
Diverse revenue streams
– Unions Credit is present in almost all the verticals within the industry. This has provided firm in Credit Unions: The Future of the Cooperative Financial Institution 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.
Ability to lead change in Finance & Accounting field
– Unions Credit 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 Unions Credit in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Unions Credit 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 Credit Unions: The Future of the Cooperative Financial Institution - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Unions Credit digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Unions Credit 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.
Strong track record of project management
– Unions Credit is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Unions Credit
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Unions Credit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Unions Credit 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 Credit Unions: The Future of the Cooperative Financial Institution HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Unions Credit is one of the leading recruiters in the industry. Managers in the Credit Unions: The Future of the Cooperative Financial Institution are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Unions Credit has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Unions Credit to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Credit Unions: The Future of the Cooperative Financial Institution | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Credit Unions: The Future of the Cooperative Financial Institution are -
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 Unions Credit supply chain. Even after few cautionary changes mentioned in the HBR case study - Credit Unions: The Future of the Cooperative Financial Institution, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Unions Credit vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Credit Unions: The Future of the Cooperative Financial Institution, it seems that the employees of Unions Credit 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.
Increasing silos among functional specialists
– The organizational structure of Unions Credit is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Unions Credit needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Unions Credit to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Credit Unions: The Future of the Cooperative Financial Institution, 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.
Interest costs
– Compare to the competition, Unions Credit has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert C. Pozen, Grace Hou suggests that, Unions Credit 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.
Capital Spending Reduction
– Even during the low interest decade, Unions Credit 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Credit Unions: The Future of the Cooperative Financial Institution 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 Unions Credit 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Unions Credit needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Unions Credit, firm in the HBR case study Credit Unions: The Future of the Cooperative Financial Institution needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Credit Unions: The Future of the Cooperative Financial Institution 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 Unions Credit has relatively successful track record of launching new products.
Opportunities Credit Unions: The Future of the Cooperative Financial Institution | 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 Credit Unions: The Future of the Cooperative Financial Institution are -
Learning at scale
– Online learning technologies has now opened space for Unions Credit 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Unions Credit can use these opportunities to build new business models that can help the communities that Unions Credit operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Buying journey improvements
– Unions Credit can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Credit Unions: The Future of the Cooperative Financial Institution 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Unions Credit is facing challenges because of the dominance of functional experts in the organization. Credit Unions: The Future of the Cooperative Financial Institution 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Unions Credit can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Unions Credit can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Unions Credit has opened avenues for new revenue streams for the organization in the industry. This can help Unions Credit to build a more holistic ecosystem as suggested in the Credit Unions: The Future of the Cooperative Financial Institution case study. Unions Credit can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Unions Credit 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.
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 Unions Credit in the consumer business. Now Unions Credit can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Unions Credit 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.
Manufacturing automation
– Unions Credit 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Unions Credit 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Unions Credit 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.
Threats Credit Unions: The Future of the Cooperative Financial Institution External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Credit Unions: The Future of the Cooperative Financial Institution are -
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. Unions Credit can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Credit Unions: The Future of the Cooperative Financial Institution, Unions Credit 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 .
Consumer confidence and its impact on Unions Credit 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 Unions Credit 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Unions Credit 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 Credit Unions: The Future of the Cooperative Financial Institution .
Technology acceleration in Forth Industrial Revolution
– Unions Credit has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Unions Credit 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.
Shortening product life cycle
– it is one of the major threat that Unions Credit is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Unions Credit.
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. Unions Credit needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Unions Credit in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Unions Credit 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.
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 Unions Credit business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Unions Credit can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Credit Unions: The Future of the Cooperative Financial Institution 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 Credit Unions: The Future of the Cooperative Financial Institution 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 Credit Unions: The Future of the Cooperative Financial Institution 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 Credit Unions: The Future of the Cooperative Financial Institution 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 Credit Unions: The Future of the Cooperative Financial Institution 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 Unions Credit needs to make to build a sustainable competitive advantage.