Standard & Poor's Sovereign Credit Ratings: Scales and Process SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Standard & Poor's Sovereign Credit Ratings: Scales and Process
Describes Standard & Poor's sovereign credit ratings scales and the credit rating process. In particular, describes the role and function of the rating committee and the analytical categories considered in arriving at a final sovereign credit rating.
Swot Analysis of "Standard & Poor's Sovereign Credit Ratings: Scales and Process" written by Rawi Abdelal, Christopher M. Bruner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sovereign Rating facing as an external strategic factors. Some of the topics covered in Standard & Poor's Sovereign Credit Ratings: Scales and Process case study are - Strategic Management Strategies, Financial markets, Global strategy, Policy, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Standard & Poor's Sovereign Credit Ratings: Scales and Process casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing household debt because of falling income levels, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Standard & Poor's Sovereign Credit Ratings: Scales and Process
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Standard & Poor's Sovereign Credit Ratings: Scales and Process case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sovereign Rating, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sovereign Rating 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process can be done for the following purposes –
1. Strategic planning using facts provided in Standard & Poor's Sovereign Credit Ratings: Scales and Process case study
2. Improving business portfolio management of Sovereign Rating
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sovereign Rating
Strengths Standard & Poor's Sovereign Credit Ratings: Scales and Process | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sovereign Rating in Standard & Poor's Sovereign Credit Ratings: Scales and Process Harvard Business Review case study are -
High switching costs
– The high switching costs that Sovereign Rating 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.
Strong track record of project management
– Sovereign Rating is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Sovereign Rating 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.
High brand equity
– Sovereign Rating has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sovereign Rating to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Sovereign Rating has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sovereign Rating 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.
Low bargaining power of suppliers
– Suppliers of Sovereign Rating in the sector have low bargaining power. Standard & Poor's Sovereign Credit Ratings: Scales and Process has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sovereign Rating to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Global Business field
– Sovereign Rating 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 Sovereign Rating in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Sovereign Rating has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Standard & Poor's Sovereign Credit Ratings: Scales and Process 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.
Highly skilled collaborators
– Sovereign Rating 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Sovereign Rating is one of the most innovative firm in sector. Manager in Standard & Poor's Sovereign Credit Ratings: Scales and Process Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Sovereign Rating digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sovereign Rating 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.
Sustainable margins compare to other players in Global Business industry
– Standard & Poor's Sovereign Credit Ratings: Scales and Process firm has clearly differentiated products in the market place. This has enabled Sovereign Rating to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Sovereign Rating to invest into research and development (R&D) and innovation.
Weaknesses Standard & Poor's Sovereign Credit Ratings: Scales and Process | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Standard & Poor's Sovereign Credit Ratings: Scales and Process are -
High cash cycle compare to competitors
Sovereign Rating 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.
Need for greater diversity
– Sovereign Rating has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Sovereign Rating has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Sovereign Rating, firm in the HBR case study Standard & Poor's Sovereign Credit Ratings: Scales and Process needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process can leverage the sales team experience to cultivate customer relationships as Sovereign Rating is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Sovereign Rating 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Sovereign Rating 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.
Slow to strategic competitive environment developments
– As Standard & Poor's Sovereign Credit Ratings: Scales and Process HBR case study mentions - Sovereign Rating 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Sovereign Rating 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Standard & Poor's Sovereign Credit Ratings: Scales and Process, in the dynamic environment Sovereign Rating has struggled to respond to the nimble upstart competition. Sovereign Rating has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Sovereign Rating is dominated by functional specialists. It is not different from other players in the Global Business segment. Sovereign Rating needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sovereign Rating to focus more on services rather than just following the product oriented approach.
Opportunities Standard & Poor's Sovereign Credit Ratings: Scales and Process | 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sovereign Rating can use these opportunities to build new business models that can help the communities that Sovereign Rating operates in. Secondly it can use opportunities from government spending in Global Business sector.
Using analytics as competitive advantage
– Sovereign Rating 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sovereign Rating to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Sovereign Rating 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.
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. Sovereign Rating can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Sovereign Rating 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, Sovereign Rating 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, Standard & Poor's Sovereign Credit Ratings: Scales and Process, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sovereign Rating 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 Global Business segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sovereign Rating is facing challenges because of the dominance of functional experts in the organization. Standard & Poor's Sovereign Credit Ratings: Scales and Process 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sovereign Rating 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 Sovereign Rating to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sovereign Rating in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Sovereign Rating can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Sovereign Rating 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.
Buying journey improvements
– Sovereign Rating can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Standard & Poor's Sovereign Credit Ratings: Scales and Process 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.
Threats Standard & Poor's Sovereign Credit Ratings: Scales and Process External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Standard & Poor's Sovereign Credit Ratings: Scales and Process are -
Environmental challenges
– Sovereign Rating 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. Sovereign Rating can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sovereign Rating 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process .
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.
Technology acceleration in Forth Industrial Revolution
– Sovereign Rating has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Sovereign Rating needs to keep up with the evolution of technology in the Global Business 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.
High dependence on third party suppliers
– Sovereign Rating high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Sovereign Rating is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sovereign Rating can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Sovereign Rating in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Sovereign Rating 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.
Regulatory challenges
– Sovereign Rating 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 Global Business industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sovereign Rating with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Sovereign Rating business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Sovereign Rating
– 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 Sovereign Rating.
Weighted SWOT Analysis of Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Standard & Poor's Sovereign Credit Ratings: Scales and Process 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 Sovereign Rating needs to make to build a sustainable competitive advantage.
