Case Study Description of Schumpeter Finanzberatung GmbH: Evaluating Investment Risk
It is April 2014, and the small investment management firm Elke Schumpeter founded twelve years earlier in Frankfurt, Germany, is performing well. The fund, Schumpeter Finanzberatung GmbH (SF), has pursued a low-cost market timing (tactical asset allocation) strategy that targets a mix of 60% in the equity market index and 40% in German treasury bills (T-bills) but that also strategically changes the mix in an attempt to beat the passive benchmark. The fund has grown to just over a‚¬400 million and since 2006 has outperformed the passive benchmark by 98 basis points. At the suggestion of some investors, Schumpeter is now considering expanding her firm's investment thesis to include investments in individual stocks. She has investigated two firms: ThyssenKrupp AG and Deoleo SA. Before making the decision to invest in individual stocks, Schumpeter needs to decide how to measure the risk of those investments. Students are asked to measure the risk of both individual investments (stocks) as well as the risk of SF's overall portfolio. The case provides a way to explain the intuition behind the capital asset pricing model and to describe the distinction between idiosyncratic (diversifiable) risk and systematic (non-diversifiable) risk.
Swot Analysis of "Schumpeter Finanzberatung GmbH: Evaluating Investment Risk" written by Mitchell A. Petersen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Schumpeter Finanzberatung facing as an external strategic factors. Some of the topics covered in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk case study are - Strategic Management Strategies, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Schumpeter Finanzberatung GmbH: Evaluating Investment Risk casestudy better are - – there is increasing trade war between United States & China, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, wage bills are increasing, increasing transportation and logistics costs, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing government debt because of Covid-19 spendings, geopolitical disruptions, etc
Introduction to SWOT Analysis of Schumpeter Finanzberatung GmbH: Evaluating Investment Risk
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Schumpeter Finanzberatung, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Schumpeter Finanzberatung 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk can be done for the following purposes –
1. Strategic planning using facts provided in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk case study
2. Improving business portfolio management of Schumpeter Finanzberatung
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 Schumpeter Finanzberatung
Strengths Schumpeter Finanzberatung GmbH: Evaluating Investment Risk | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Schumpeter Finanzberatung in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk Harvard Business Review case study are -
Strong track record of project management
– Schumpeter Finanzberatung 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 Schumpeter Finanzberatung 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.
Training and development
– Schumpeter Finanzberatung has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Schumpeter Finanzberatung is one of the leading recruiters in the industry. Managers in the Schumpeter Finanzberatung GmbH: Evaluating Investment Risk are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Schumpeter Finanzberatung digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Schumpeter Finanzberatung 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.
Analytics focus
– Schumpeter Finanzberatung 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 Mitchell A. Petersen 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.
Learning organization
- Schumpeter Finanzberatung 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 Schumpeter Finanzberatung is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Schumpeter Finanzberatung 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Schumpeter Finanzberatung GmbH: Evaluating Investment Risk firm has clearly differentiated products in the market place. This has enabled Schumpeter Finanzberatung to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Schumpeter Finanzberatung to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Schumpeter Finanzberatung in the sector have low bargaining power. Schumpeter Finanzberatung GmbH: Evaluating Investment Risk has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Schumpeter Finanzberatung to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Schumpeter Finanzberatung is present in almost all the verticals within the industry. This has provided firm in Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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.
Superior customer experience
– The customer experience strategy of Schumpeter Finanzberatung in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Schumpeter Finanzberatung GmbH: Evaluating Investment Risk | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Schumpeter Finanzberatung GmbH: Evaluating Investment Risk are -
Capital Spending Reduction
– Even during the low interest decade, Schumpeter Finanzberatung 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.
Aligning sales with marketing
– It come across in the case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Schumpeter Finanzberatung GmbH: Evaluating Investment Risk can leverage the sales team experience to cultivate customer relationships as Schumpeter Finanzberatung is planning to shift buying processes online.
Lack of clear differentiation of Schumpeter Finanzberatung products
– To increase the profitability and margins on the products, Schumpeter Finanzberatung needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Schumpeter Finanzberatung 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.
Products dominated business model
– Even though Schumpeter Finanzberatung 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 - Schumpeter Finanzberatung GmbH: Evaluating Investment Risk should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk, is just above the industry average. Schumpeter Finanzberatung 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.
Slow decision making process
– As mentioned earlier in the report, Schumpeter Finanzberatung 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. Schumpeter Finanzberatung 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Schumpeter Finanzberatung, firm in the HBR case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Schumpeter Finanzberatung is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk, it seems that the employees of Schumpeter Finanzberatung 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.
Opportunities Schumpeter Finanzberatung GmbH: Evaluating Investment Risk | 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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. Schumpeter Finanzberatung can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Schumpeter Finanzberatung 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.
Using analytics as competitive advantage
– Schumpeter Finanzberatung 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Schumpeter Finanzberatung to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Schumpeter Finanzberatung 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 Schumpeter Finanzberatung to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Schumpeter Finanzberatung can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Schumpeter Finanzberatung 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Schumpeter Finanzberatung 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.
Better consumer reach
– The expansion of the 5G network will help Schumpeter Finanzberatung to increase its market reach. Schumpeter Finanzberatung 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
– Schumpeter Finanzberatung can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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.
Loyalty marketing
– Schumpeter Finanzberatung 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Schumpeter Finanzberatung can use these opportunities to build new business models that can help the communities that Schumpeter Finanzberatung operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Schumpeter Finanzberatung 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Schumpeter Finanzberatung 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, Schumpeter Finanzberatung GmbH: Evaluating Investment Risk, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Schumpeter Finanzberatung GmbH: Evaluating Investment Risk External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Schumpeter Finanzberatung 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.
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. Schumpeter Finanzberatung needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Environmental challenges
– Schumpeter Finanzberatung 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. Schumpeter Finanzberatung can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Schumpeter Finanzberatung GmbH: Evaluating Investment Risk, Schumpeter Finanzberatung 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 .
Regulatory challenges
– Schumpeter Finanzberatung 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.
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. Schumpeter Finanzberatung 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Schumpeter Finanzberatung with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Schumpeter Finanzberatung in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Schumpeter Finanzberatung 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk .
Stagnating economy with rate increase
– Schumpeter Finanzberatung 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.
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 Schumpeter Finanzberatung business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung GmbH: Evaluating Investment Risk 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 Schumpeter Finanzberatung needs to make to build a sustainable competitive advantage.
