Mortgage Guarantee Programs and the Subprime Crisis SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Mortgage Guarantee Programs and the Subprime Crisis
The implosion of the mortgage market during 2007-2008 raises fundamental questions about the American system of mortgage finance, insurance, and credit guarantees for housing. This article analyzes federal programs providing these housing insurance and credit guarantees in the broader context of U.S. housing policy. It specifically examines activities managed by the Federal Housing Administration (FHA), the Veterans' Administration (VA), and the Government Sponsored Enterprises (GSEs). It reviews and quantifies the public resources devoted to these programs-the market value of the federal insurance and credit guarantees provided-and quantifies the crucial importance of credit guarantees in the federal system of housing support. The article then considers the activities of the FHA in more detail, focusing on the historical development of its role as supplier and guarantor of credit. It considers the rationale for these activities in the light of competition in the mortgage market, recent failures in the market for housing credit, and the provisions of the Housing and Economic Recovery Act of 2008. In addition, a reinvigorated FHA mortgage program could provide a comparison and a benchmark for evaluating predatory lending in the primary housing and mortgage markets.
Swot Analysis of "Mortgage Guarantee Programs and the Subprime Crisis" written by Dwight M. Jaffee, Michael Quigley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Housing Mortgage facing as an external strategic factors. Some of the topics covered in Mortgage Guarantee Programs and the Subprime Crisis case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Mortgage Guarantee Programs and the Subprime Crisis casestudy better are - – increasing transportation and logistics costs, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, there is backlash against globalization, talent flight as more people leaving formal jobs,
increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Mortgage Guarantee Programs and the Subprime Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mortgage Guarantee Programs and the Subprime Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Housing Mortgage, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Housing Mortgage 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 Mortgage Guarantee Programs and the Subprime Crisis can be done for the following purposes –
1. Strategic planning using facts provided in Mortgage Guarantee Programs and the Subprime Crisis case study
2. Improving business portfolio management of Housing Mortgage
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 Housing Mortgage
Strengths Mortgage Guarantee Programs and the Subprime Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Housing Mortgage in Mortgage Guarantee Programs and the Subprime Crisis Harvard Business Review case study are -
Training and development
– Housing Mortgage has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Mortgage Guarantee Programs and the Subprime Crisis 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 lead change in Finance & Accounting field
– Housing Mortgage 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 Housing Mortgage in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Housing Mortgage 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 Housing Mortgage is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Mortgage Guarantee Programs and the Subprime Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Housing Mortgage is one of the most innovative firm in sector. Manager in Mortgage Guarantee Programs and the Subprime Crisis Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Housing Mortgage is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Housing Mortgage 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 Dwight M. Jaffee, Michael Quigley 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.
Operational resilience
– The operational resilience strategy in the Mortgage Guarantee Programs and the Subprime Crisis 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.
Ability to recruit top talent
– Housing Mortgage is one of the leading recruiters in the industry. Managers in the Mortgage Guarantee Programs and the Subprime Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Housing Mortgage in the sector have low bargaining power. Mortgage Guarantee Programs and the Subprime Crisis has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Housing Mortgage to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Housing Mortgage in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Housing Mortgage 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 Mortgage Guarantee Programs and the Subprime Crisis - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Housing Mortgage
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Housing Mortgage does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Mortgage Guarantee Programs and the Subprime Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mortgage Guarantee Programs and the Subprime Crisis are -
Lack of clear differentiation of Housing Mortgage products
– To increase the profitability and margins on the products, Housing Mortgage needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Mortgage Guarantee Programs and the Subprime Crisis 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 Mortgage Guarantee Programs and the Subprime Crisis can leverage the sales team experience to cultivate customer relationships as Housing Mortgage is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mortgage Guarantee Programs and the Subprime Crisis, is just above the industry average. Housing Mortgage 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Housing Mortgage supply chain. Even after few cautionary changes mentioned in the HBR case study - Mortgage Guarantee Programs and the Subprime Crisis, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Housing Mortgage vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Housing Mortgage 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.
No frontier risks strategy
– After analyzing the HBR case study Mortgage Guarantee Programs and the Subprime Crisis, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Housing Mortgage is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Housing Mortgage needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Housing Mortgage 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, Housing Mortgage is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Mortgage Guarantee Programs and the Subprime Crisis can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Dwight M. Jaffee, Michael Quigley suggests that, Housing Mortgage 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.
Skills based hiring
– The stress on hiring functional specialists at Housing Mortgage 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Mortgage Guarantee Programs and the Subprime Crisis 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 Housing Mortgage 's lucrative customers.
Opportunities Mortgage Guarantee Programs and the Subprime Crisis | 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 Mortgage Guarantee Programs and the Subprime Crisis are -
Manufacturing automation
– Housing Mortgage 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.
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. Housing Mortgage can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Housing Mortgage 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, Mortgage Guarantee Programs and the Subprime Crisis, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Housing Mortgage in the consumer business. Now Housing Mortgage can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Housing Mortgage 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 Mortgage Guarantee Programs and the Subprime Crisis - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Housing Mortgage 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 Housing Mortgage 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.
Loyalty marketing
– Housing Mortgage 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.
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. Housing Mortgage 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. Housing Mortgage 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Housing Mortgage 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 Housing Mortgage to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Housing Mortgage 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Housing Mortgage can use these opportunities to build new business models that can help the communities that Housing Mortgage operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Housing Mortgage can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Housing Mortgage to increase its market reach. Housing Mortgage 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 Mortgage Guarantee Programs and the Subprime Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mortgage Guarantee Programs and the Subprime Crisis are -
Increasing wage structure of Housing Mortgage
– 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 Housing Mortgage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Housing Mortgage with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Housing Mortgage 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.
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 Housing Mortgage.
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 Housing Mortgage in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Mortgage Guarantee Programs and the Subprime Crisis, Housing Mortgage 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, Housing Mortgage 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 Mortgage Guarantee Programs and the Subprime Crisis .
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 Housing Mortgage 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 acceleration in Forth Industrial Revolution
– Housing Mortgage has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Housing Mortgage 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.
Shortening product life cycle
– it is one of the major threat that Housing Mortgage is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Housing Mortgage 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.
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. Housing Mortgage needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Mortgage Guarantee Programs and the Subprime Crisis 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 Mortgage Guarantee Programs and the Subprime Crisis 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 Mortgage Guarantee Programs and the Subprime Crisis 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 Mortgage Guarantee Programs and the Subprime Crisis 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 Mortgage Guarantee Programs and the Subprime Crisis 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 Housing Mortgage needs to make to build a sustainable competitive advantage.
