Case Study Description of MF Global: Changing Stripes
Jon Corzine became the CEO of MF Global in March of 2010. 18 months later, and in the wake of a massive trade in European sovereign debt, the firm filed for bankruptcy, the 8th largest in U.S. history. As the firm failed it was discovered that over $1.6 billion in segregated customer assets was missing. The case explores issues that may have contributed to MF Global's demise, including its business model and the competitive pressures it faced prior to and following Corzine's arrival, and the strategic and managerial decisions taken by Corzine to reorient the firm. In addition, the sovereign debt trade, created to boost earnings, is described in some in some detail.
Authors :: Clayton Rose, Yasmin Dahya, Jenevieve Lee
Swot Analysis of "MF Global: Changing Stripes" written by Clayton Rose, Yasmin Dahya, Jenevieve Lee includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mf Corzine facing as an external strategic factors. Some of the topics covered in MF Global: Changing Stripes case study are - Strategic Management Strategies, Corporate governance, Financial management, Leadership, Recession, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the MF Global: Changing Stripes casestudy better are - – supply chains are disrupted by pandemic , increasing energy prices, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, technology disruption, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of MF Global: Changing Stripes
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in MF Global: Changing Stripes case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mf Corzine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mf Corzine 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 MF Global: Changing Stripes can be done for the following purposes –
1. Strategic planning using facts provided in MF Global: Changing Stripes case study
2. Improving business portfolio management of Mf Corzine
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 Mf Corzine
Strengths MF Global: Changing Stripes | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mf Corzine in MF Global: Changing Stripes Harvard Business Review case study are -
Highly skilled collaborators
– Mf Corzine 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 MF Global: Changing Stripes HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Mf Corzine is one of the leading recruiters in the industry. Managers in the MF Global: Changing Stripes are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Mf Corzine is one of the most innovative firm in sector. Manager in MF Global: Changing Stripes Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Mf Corzine 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 MF Global: Changing Stripes - 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
– Mf Corzine 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 Mf Corzine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Mf Corzine 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.
Operational resilience
– The operational resilience strategy in the MF Global: Changing Stripes 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.
Organizational Resilience of Mf Corzine
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mf Corzine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Mf Corzine 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 Clayton Rose, Yasmin Dahya, Jenevieve Lee 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.
Low bargaining power of suppliers
– Suppliers of Mf Corzine in the sector have low bargaining power. MF Global: Changing Stripes has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mf Corzine to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Mf Corzine is present in almost all the verticals within the industry. This has provided firm in MF Global: Changing Stripes 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.
Learning organization
- Mf Corzine 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 Mf Corzine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in MF Global: Changing Stripes Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses MF Global: Changing Stripes | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MF Global: Changing Stripes are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study MF Global: Changing Stripes, it seems that the employees of Mf Corzine 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study MF Global: Changing Stripes, in the dynamic environment Mf Corzine has struggled to respond to the nimble upstart competition. Mf Corzine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Mf Corzine 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 - MF Global: Changing Stripes should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Mf Corzine, firm in the HBR case study MF Global: Changing Stripes needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study MF Global: Changing Stripes 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 Mf Corzine 's lucrative customers.
Slow to strategic competitive environment developments
– As MF Global: Changing Stripes HBR case study mentions - Mf Corzine 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.
Aligning sales with marketing
– It come across in the case study MF Global: Changing Stripes 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 MF Global: Changing Stripes can leverage the sales team experience to cultivate customer relationships as Mf Corzine is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study MF Global: Changing Stripes, is just above the industry average. Mf Corzine 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.
Increasing silos among functional specialists
– The organizational structure of Mf Corzine is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Mf Corzine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mf Corzine to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Clayton Rose, Yasmin Dahya, Jenevieve Lee suggests that, Mf Corzine 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.
No frontier risks strategy
– After analyzing the HBR case study MF Global: Changing Stripes, 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.
Opportunities MF Global: Changing Stripes | 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 MF Global: Changing Stripes are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mf Corzine in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Mf Corzine 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.
Buying journey improvements
– Mf Corzine can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. MF Global: Changing Stripes 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mf Corzine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Mf Corzine 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.
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. Mf Corzine 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. Mf Corzine 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.
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 Mf Corzine 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.
Creating value in data economy
– The success of analytics program of Mf Corzine has opened avenues for new revenue streams for the organization in the industry. This can help Mf Corzine to build a more holistic ecosystem as suggested in the MF Global: Changing Stripes case study. Mf Corzine can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mf Corzine 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.
Using analytics as competitive advantage
– Mf Corzine 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 MF Global: Changing Stripes - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mf Corzine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Mf Corzine 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.
Building a culture of innovation
– managers at Mf Corzine 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.
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. Mf Corzine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats MF Global: Changing Stripes External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study MF Global: Changing Stripes are -
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 Mf Corzine business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Mf Corzine has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Mf Corzine 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.
Environmental challenges
– Mf Corzine 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. Mf Corzine can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mf Corzine 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 Mf Corzine in the Finance & Accounting sector and impact the bottomline of the organization.
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. Mf Corzine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Mf Corzine 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.
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. Mf Corzine needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Mf Corzine 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.
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.
Consumer confidence and its impact on Mf Corzine 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.
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.
Regulatory challenges
– Mf Corzine 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.
Weighted SWOT Analysis of MF Global: Changing Stripes 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 MF Global: Changing Stripes 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 MF Global: Changing Stripes 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 MF Global: Changing Stripes 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 MF Global: Changing Stripes 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 Mf Corzine needs to make to build a sustainable competitive advantage.
