Case Study Description of The Financial Regulatory Environment
The financial regulatory environment in the United States covers the insurance, banking, and securities industries. This note summarizes the regulation of all three as of July 31, 2010. This compact technical note is intended to provide students with a summary of U.S. financial regulatory history. It traces regulatory agencies and the most relevant congressional acts from 1863 to 2010. Its original intent was to be used as background for the "The SEC vs. Goldman Sachs" cases (UVA-GEM-0101 and UVA-GEM-0102). It could also serve as a supplement for a class on financial markets and institutions, the history of U.S. financial crises, or the general history of business regulation in the United States.
Swot Analysis of "The Financial Regulatory Environment" written by Wei Li, Rick Green includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Regulatory Gem facing as an external strategic factors. Some of the topics covered in The Financial Regulatory Environment case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the The Financial Regulatory Environment casestudy better are - – increasing commodity prices, increasing energy prices, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing,
increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of The Financial Regulatory Environment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Financial Regulatory Environment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Regulatory Gem, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Regulatory Gem 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 The Financial Regulatory Environment can be done for the following purposes –
1. Strategic planning using facts provided in The Financial Regulatory Environment case study
2. Improving business portfolio management of Regulatory Gem
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 Regulatory Gem
Strengths The Financial Regulatory Environment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Regulatory Gem in The Financial Regulatory Environment Harvard Business Review case study are -
High switching costs
– The high switching costs that Regulatory Gem 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Regulatory Gem digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Regulatory Gem 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.
Innovation driven organization
– Regulatory Gem is one of the most innovative firm in sector. Manager in The Financial Regulatory Environment Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the The Financial Regulatory Environment 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 Regulatory Gem
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Regulatory Gem does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Regulatory Gem 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 The Financial Regulatory Environment - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Regulatory Gem has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Regulatory Gem to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Global Business industry
– The Financial Regulatory Environment firm has clearly differentiated products in the market place. This has enabled Regulatory Gem to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Regulatory Gem to invest into research and development (R&D) and innovation.
Ability to lead change in Global Business field
– Regulatory Gem 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 Regulatory Gem in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Regulatory Gem is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Regulatory Gem 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 Regulatory Gem is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Financial Regulatory Environment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Regulatory Gem is one of the leading recruiters in the industry. Managers in the The Financial Regulatory Environment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses The Financial Regulatory Environment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Financial Regulatory Environment are -
Lack of clear differentiation of Regulatory Gem products
– To increase the profitability and margins on the products, Regulatory Gem needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Regulatory Gem, firm in the HBR case study The Financial Regulatory Environment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As The Financial Regulatory Environment HBR case study mentions - Regulatory Gem 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.
Capital Spending Reduction
– Even during the low interest decade, Regulatory Gem has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study The Financial Regulatory Environment 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 The Financial Regulatory Environment can leverage the sales team experience to cultivate customer relationships as Regulatory Gem is planning to shift buying processes online.
High cash cycle compare to competitors
Regulatory Gem 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Financial Regulatory Environment, is just above the industry average. Regulatory Gem 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.
Skills based hiring
– The stress on hiring functional specialists at Regulatory Gem 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Financial Regulatory Environment, in the dynamic environment Regulatory Gem has struggled to respond to the nimble upstart competition. Regulatory Gem has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Regulatory Gem supply chain. Even after few cautionary changes mentioned in the HBR case study - The Financial Regulatory Environment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Regulatory Gem vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Regulatory Gem has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities The Financial Regulatory Environment | 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 The Financial Regulatory Environment are -
Better consumer reach
– The expansion of the 5G network will help Regulatory Gem to increase its market reach. Regulatory Gem 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Regulatory Gem 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.
Creating value in data economy
– The success of analytics program of Regulatory Gem has opened avenues for new revenue streams for the organization in the industry. This can help Regulatory Gem to build a more holistic ecosystem as suggested in the The Financial Regulatory Environment case study. Regulatory Gem can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Regulatory Gem 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.
Learning at scale
– Online learning technologies has now opened space for Regulatory Gem 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 Regulatory Gem can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Regulatory Gem is facing challenges because of the dominance of functional experts in the organization. The Financial Regulatory Environment 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.
Developing new processes and practices
– Regulatory Gem can develop new processes and procedures in Global Business 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Regulatory Gem 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 Regulatory Gem to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Regulatory Gem 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.
Buying journey improvements
– Regulatory Gem can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Financial Regulatory Environment 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.
Using analytics as competitive advantage
– Regulatory Gem 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 The Financial Regulatory Environment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Regulatory Gem to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Regulatory Gem 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.
Threats The Financial Regulatory Environment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Financial Regulatory Environment are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Regulatory Gem with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Regulatory Gem needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing wage structure of Regulatory Gem
– 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 Regulatory Gem.
Environmental challenges
– Regulatory Gem 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. Regulatory Gem can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Financial Regulatory Environment, Regulatory Gem may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Stagnating economy with rate increase
– Regulatory Gem 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.
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 Regulatory Gem.
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.
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. Regulatory Gem can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Regulatory Gem will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Regulatory Gem 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Regulatory Gem in the Global Business industry. The Global Business 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.
Weighted SWOT Analysis of The Financial Regulatory Environment 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 The Financial Regulatory Environment 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 The Financial Regulatory Environment 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 The Financial Regulatory Environment 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 The Financial Regulatory Environment 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 Regulatory Gem needs to make to build a sustainable competitive advantage.