LOYAL3: Own What You Love SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of LOYAL3: Own What You Love
This case features San Francisco-based financial technology startup, LOYAL3. Founded in 2008, the company seeks to disrupt the capital markets and democratize access to those markets for retail investors. By the fall of 2014, LOYAL3 had three products. In the first, the Social IPO Platforma„¢, LOYAL3 acted as co-manager of an issuing company's initial public offering (IPO), enabling individual investors to purchase IPO shares at the same price-and the same time-as institutional investors. The second product, the Social Stock Plana„¢, allowed investors to purchase stock in publicly traded companies they liked. The third product, Stock Rewardsa„¢, enabled companies to grant free stock to customers in lieu of promotional discounts or in recognition of brand loyalty. LOYAL3 CEO Barry Schneider viewed 2014 as a watershed year. The company had participated in 10 initial public offerings to date. In the case he contemplates the product roadmap going forward.
Authors :: Luis M. Viceira, Allison M. Ciechanover
Swot Analysis of "LOYAL3: Own What You Love" written by Luis M. Viceira, Allison M. Ciechanover includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Loyal3 Ipo facing as an external strategic factors. Some of the topics covered in LOYAL3: Own What You Love case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the LOYAL3: Own What You Love casestudy better are - – wage bills are increasing, technology disruption, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, there is increasing trade war between United States & China,
competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of LOYAL3: Own What You Love
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LOYAL3: Own What You Love case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Loyal3 Ipo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Loyal3 Ipo 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 LOYAL3: Own What You Love can be done for the following purposes –
1. Strategic planning using facts provided in LOYAL3: Own What You Love case study
2. Improving business portfolio management of Loyal3 Ipo
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 Loyal3 Ipo
Strengths LOYAL3: Own What You Love | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Loyal3 Ipo in LOYAL3: Own What You Love Harvard Business Review case study are -
Organizational Resilience of Loyal3 Ipo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Loyal3 Ipo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Loyal3 Ipo 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 LOYAL3: Own What You Love HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Loyal3 Ipo 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 Loyal3 Ipo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in LOYAL3: Own What You Love Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Loyal3 Ipo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Loyal3 Ipo 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.
Innovation driven organization
– Loyal3 Ipo is one of the most innovative firm in sector. Manager in LOYAL3: Own What You Love Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Finance & Accounting industry
– LOYAL3: Own What You Love firm has clearly differentiated products in the market place. This has enabled Loyal3 Ipo to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Loyal3 Ipo to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Loyal3 Ipo 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.
Ability to recruit top talent
– Loyal3 Ipo is one of the leading recruiters in the industry. Managers in the LOYAL3: Own What You Love are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Loyal3 Ipo 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 Loyal3 Ipo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Loyal3 Ipo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Loyal3 Ipo 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 brand equity
– Loyal3 Ipo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Loyal3 Ipo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Loyal3 Ipo 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 Luis M. Viceira, Allison M. Ciechanover 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.
Weaknesses LOYAL3: Own What You Love | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LOYAL3: Own What You Love are -
Interest costs
– Compare to the competition, Loyal3 Ipo 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 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 Loyal3 Ipo supply chain. Even after few cautionary changes mentioned in the HBR case study - LOYAL3: Own What You Love, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Loyal3 Ipo vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Loyal3 Ipo products
– To increase the profitability and margins on the products, Loyal3 Ipo needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Loyal3 Ipo 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.
Slow decision making process
– As mentioned earlier in the report, Loyal3 Ipo 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. Loyal3 Ipo 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.
Slow to strategic competitive environment developments
– As LOYAL3: Own What You Love HBR case study mentions - Loyal3 Ipo takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Loyal3 Ipo, firm in the HBR case study LOYAL3: Own What You Love needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Loyal3 Ipo 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.
No frontier risks strategy
– After analyzing the HBR case study LOYAL3: Own What You Love, 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.
Increasing silos among functional specialists
– The organizational structure of Loyal3 Ipo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Loyal3 Ipo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Loyal3 Ipo to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Loyal3 Ipo 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 - LOYAL3: Own What You Love should strive to include more intangible value offerings along with its core products and services.
Opportunities LOYAL3: Own What You Love | 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 LOYAL3: Own What You Love are -
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. Loyal3 Ipo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Loyal3 Ipo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Loyal3 Ipo can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Loyal3 Ipo can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Using analytics as competitive advantage
– Loyal3 Ipo 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 LOYAL3: Own What You Love - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Loyal3 Ipo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Loyal3 Ipo 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Loyal3 Ipo is facing challenges because of the dominance of functional experts in the organization. LOYAL3: Own What You Love 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.
Learning at scale
– Online learning technologies has now opened space for Loyal3 Ipo 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.
Building a culture of innovation
– managers at Loyal3 Ipo 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, Loyal3 Ipo 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, LOYAL3: Own What You Love, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Loyal3 Ipo 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 Loyal3 Ipo has opened avenues for new revenue streams for the organization in the industry. This can help Loyal3 Ipo to build a more holistic ecosystem as suggested in the LOYAL3: Own What You Love case study. Loyal3 Ipo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Loyal3 Ipo 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.
Better consumer reach
– The expansion of the 5G network will help Loyal3 Ipo to increase its market reach. Loyal3 Ipo 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.
Threats LOYAL3: Own What You Love External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LOYAL3: Own What You Love are -
Shortening product life cycle
– it is one of the major threat that Loyal3 Ipo is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Loyal3 Ipo needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Loyal3 Ipo 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 Loyal3 Ipo 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.
Environmental challenges
– Loyal3 Ipo 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. Loyal3 Ipo 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.
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. Loyal3 Ipo 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.
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 Loyal3 Ipo business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Loyal3 Ipo has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Loyal3 Ipo 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.
Increasing wage structure of Loyal3 Ipo
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Loyal3 Ipo.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Loyal3 Ipo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Loyal3 Ipo.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Loyal3 Ipo 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 LOYAL3: Own What You Love .
Weighted SWOT Analysis of LOYAL3: Own What You Love 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 LOYAL3: Own What You Love 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 LOYAL3: Own What You Love 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 LOYAL3: Own What You Love 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 LOYAL3: Own What You Love 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 Loyal3 Ipo needs to make to build a sustainable competitive advantage.
