Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold
The global head of investment research at the World Gold Council (WGC) had finished his presentation "The Strategic Case for Gold as an Asset Class" at the 2012 Bloomberg Precious Metals Conference in New York. As a result of the market collapse in 2008 and the ongoing euro-area crisis, investors worldwide had safety and security on their minds, and many in the room were wondering whether gold would provide capital preservation and improve the overall risk-return tradeoff of their portfolios. At the same time, the sustained run-up in the price of gold since 2001 that was mentioned in the presentation was a cause for concern. Was gold the safe haven that it had proved to be in 2008 and 2009, or was it an asset class at the peak of a bubble? The investment case for gold deserved closer examination.
Swot Analysis of "Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold" written by Pedro Matos, Evans Richard includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gold Council facing as an external strategic factors. Some of the topics covered in Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold casestudy better are - – central banks are concerned over increasing inflation, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing commodity prices, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gold Council, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gold Council 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold can be done for the following purposes –
1. Strategic planning using facts provided in Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold case study
2. Improving business portfolio management of Gold Council
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 Gold Council
Strengths Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gold Council in Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold Harvard Business Review case study are -
High brand equity
– Gold Council has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gold Council to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Gold Council is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Gold Council has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Gold Council 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Gold Council has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gold Council 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.
Operational resilience
– The operational resilience strategy in the Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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.
Learning organization
- Gold Council 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 Gold Council is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Gold Council in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Gold Council 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Gold Council 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 Gold Council in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Gold Council is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Pedro Matos, Evans Richard can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Gold Council digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gold Council 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.
Weaknesses Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, in the dynamic environment Gold Council has struggled to respond to the nimble upstart competition. Gold Council has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, 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 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 Gold Council supply chain. Even after few cautionary changes mentioned in the HBR case study - Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Gold Council vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Gold Council, firm in the HBR case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Gold Council 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Pedro Matos, Evans Richard suggests that, Gold Council 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, Gold Council 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.
Slow decision making process
– As mentioned earlier in the report, Gold Council has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Gold Council even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Gold Council is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Gold Council needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Gold Council to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold Council 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, is just above the industry average. Gold Council 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.
Opportunities Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold | 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Gold Council is facing challenges because of the dominance of functional experts in the organization. Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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.
Leveraging digital technologies
– Gold Council 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.
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 Gold Council in the consumer business. Now Gold Council can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Gold Council to increase its market reach. Gold Council 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.
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. Gold Council can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Gold Council 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gold Council 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, Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gold Council 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 Gold Council to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Gold Council 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Gold Council 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.
Learning at scale
– Online learning technologies has now opened space for Gold Council 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.
Developing new processes and practices
– Gold Council 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gold Council can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold are -
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. Gold Council needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gold Council with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Gold Council 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.
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 Gold Council.
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 Gold Council business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Gold Council 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.
Shortening product life cycle
– it is one of the major threat that Gold Council is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold, Gold Council 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 .
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.
Stagnating economy with rate increase
– Gold Council 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gold Council 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.
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 Gold Council in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold as a Portfolio Diversifier: The World Gold Council and Investing in Gold 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 Gold Council needs to make to build a sustainable competitive advantage.
