Fannie Mae: A Shaky Foundation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Fannie Mae: A Shaky Foundation
Dennis Kozlowski took over the helm of Tyco International, Ltd. (Tyco) in 1992. By the end of its 2001 fiscal year, Kozlowski's Tyco had made over 100 announced acquisitions with total revenues in excess of $30 billion (Exhibit 1). Kozlowski's strategy, called "growth on growth," fueled Tyco's aggressive approach toward acquisitions and took the company from just over $3 billion of sales in 1992 to $36 billion in 2001. Investors supported Tyco's strategy as evidenced by the tenfold increase in Tyco's stock price over the same period (Exhibit 2). Analysts also lauded Tyco, issuing reports with titles like, "The Proof Is in the Great Numbers! Buy." But was the proof really there? This case describes the financial state of Fannie Mae prior to its entering government receivership. Provides a history of Fannie Mae and an overview of the factors leading to its failure.
Swot Analysis of "Fannie Mae: A Shaky Foundation" written by Maureen McNichols, Nathan T. Blair includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tyco Tyco's facing as an external strategic factors. Some of the topics covered in Fannie Mae: A Shaky Foundation case study are - Strategic Management Strategies, Financial markets, Government, Recession and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Fannie Mae: A Shaky Foundation casestudy better are - – digital marketing is dominated by two big players Facebook and Google, technology disruption, there is increasing trade war between United States & China, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of Fannie Mae: A Shaky Foundation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fannie Mae: A Shaky Foundation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tyco Tyco's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tyco Tyco's 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 Fannie Mae: A Shaky Foundation can be done for the following purposes –
1. Strategic planning using facts provided in Fannie Mae: A Shaky Foundation case study
2. Improving business portfolio management of Tyco Tyco's
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 Tyco Tyco's
Strengths Fannie Mae: A Shaky Foundation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tyco Tyco's in Fannie Mae: A Shaky Foundation Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Tyco Tyco's in the sector have low bargaining power. Fannie Mae: A Shaky Foundation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tyco Tyco's to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Tyco Tyco's 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 Tyco Tyco's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Tyco Tyco's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Fannie Mae: A Shaky Foundation firm has clearly differentiated products in the market place. This has enabled Tyco Tyco's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Tyco Tyco's to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Tyco Tyco's is present in almost all the verticals within the industry. This has provided firm in Fannie Mae: A Shaky Foundation 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.
Cross disciplinary teams
– Horizontal connected teams at the Tyco Tyco's 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.
Strong track record of project management
– Tyco Tyco's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Tyco Tyco's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fannie Mae: A Shaky Foundation 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.
High switching costs
– The high switching costs that Tyco Tyco's 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.
Successful track record of launching new products
– Tyco Tyco's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tyco Tyco's 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.
Analytics focus
– Tyco Tyco's 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 Maureen McNichols, Nathan T. Blair 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.
Highly skilled collaborators
– Tyco Tyco's 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 Fannie Mae: A Shaky Foundation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Fannie Mae: A Shaky Foundation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fannie Mae: A Shaky Foundation are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Fannie Mae: A Shaky Foundation 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 Tyco Tyco's has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Tyco Tyco's 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 to strategic competitive environment developments
– As Fannie Mae: A Shaky Foundation HBR case study mentions - Tyco Tyco's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fannie Mae: A Shaky Foundation, in the dynamic environment Tyco Tyco's has struggled to respond to the nimble upstart competition. Tyco Tyco's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Tyco Tyco's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Tyco Tyco's products
– To increase the profitability and margins on the products, Tyco Tyco's needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Tyco Tyco's 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.
Increasing silos among functional specialists
– The organizational structure of Tyco Tyco's is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Tyco Tyco's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tyco Tyco's to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tyco Tyco's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Fannie Mae: A Shaky Foundation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Tyco Tyco's 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.
Capital Spending Reduction
– Even during the low interest decade, Tyco Tyco's 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.
Opportunities Fannie Mae: A Shaky Foundation | 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 Fannie Mae: A Shaky Foundation are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tyco Tyco's 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 Tyco Tyco's to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tyco Tyco's can use these opportunities to build new business models that can help the communities that Tyco Tyco's 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 Tyco Tyco's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tyco Tyco's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tyco Tyco's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tyco Tyco's is facing challenges because of the dominance of functional experts in the organization. Fannie Mae: A Shaky Foundation case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Tyco Tyco's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Tyco Tyco's 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.
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 Tyco Tyco's in the consumer business. Now Tyco Tyco's can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Tyco Tyco's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Manufacturing automation
– Tyco Tyco's 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.
Loyalty marketing
– Tyco Tyco's 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.
Better consumer reach
– The expansion of the 5G network will help Tyco Tyco's to increase its market reach. Tyco Tyco's 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 Fannie Mae: A Shaky Foundation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fannie Mae: A Shaky Foundation are -
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 Tyco Tyco's in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Tyco Tyco's 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. Tyco Tyco's can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Tyco Tyco's.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fannie Mae: A Shaky Foundation, Tyco Tyco's 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tyco Tyco's 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 Fannie Mae: A Shaky Foundation .
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. Tyco Tyco's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
Stagnating economy with rate increase
– Tyco Tyco's 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.
Increasing wage structure of Tyco Tyco's
– 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 Tyco Tyco's.
Technology acceleration in Forth Industrial Revolution
– Tyco Tyco's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tyco Tyco's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tyco Tyco's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Tyco Tyco's 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.
Weighted SWOT Analysis of Fannie Mae: A Shaky Foundation 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 Fannie Mae: A Shaky Foundation 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 Fannie Mae: A Shaky Foundation 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 Fannie Mae: A Shaky Foundation 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 Fannie Mae: A Shaky Foundation 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 Tyco Tyco's needs to make to build a sustainable competitive advantage.