Paul Volcker and the Federal Reserve--1979-82 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Paul Volcker and the Federal Reserve--1979-82
Describes three years of the Volcker monetary policy experiment. The Federal Reserve changed the focus by its operating procedure from an interest rate instrument to a reserve instrument and it reaffirmed its commitment to hitting its preannounced monetary growth target. At the same time Congress initiated widespread deregulation of financial institutions. The case encourages discussion on the best strategy and implementation of monetary policy, the effect of deregulation on its conduct, the causes of the recession and disinflation, and the competitive implications of the recent changes in monetary policy for competitive institutions.
Swot Analysis of "Paul Volcker and the Federal Reserve--1979-82" written by Michael G. Rukstad includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Monetary Volcker facing as an external strategic factors. Some of the topics covered in Paul Volcker and the Federal Reserve--1979-82 case study are - Strategic Management Strategies, Financial markets, Policy, Regulation and Global Business.
Some of the macro environment factors that can be used to understand the Paul Volcker and the Federal Reserve--1979-82 casestudy better are - – there is increasing trade war between United States & China, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, increasing commodity prices, technology disruption, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Paul Volcker and the Federal Reserve--1979-82
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Paul Volcker and the Federal Reserve--1979-82 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Monetary Volcker, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Monetary Volcker 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 Paul Volcker and the Federal Reserve--1979-82 can be done for the following purposes –
1. Strategic planning using facts provided in Paul Volcker and the Federal Reserve--1979-82 case study
2. Improving business portfolio management of Monetary Volcker
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 Monetary Volcker
Strengths Paul Volcker and the Federal Reserve--1979-82 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Monetary Volcker in Paul Volcker and the Federal Reserve--1979-82 Harvard Business Review case study are -
Ability to recruit top talent
– Monetary Volcker is one of the leading recruiters in the industry. Managers in the Paul Volcker and the Federal Reserve--1979-82 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Monetary Volcker 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.
Innovation driven organization
– Monetary Volcker is one of the most innovative firm in sector. Manager in Paul Volcker and the Federal Reserve--1979-82 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Monetary Volcker 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 Michael G. Rukstad 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.
Superior customer experience
– The customer experience strategy of Monetary Volcker in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Monetary Volcker has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Paul Volcker and the Federal Reserve--1979-82 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.
Learning organization
- Monetary Volcker 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 Monetary Volcker is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Paul Volcker and the Federal Reserve--1979-82 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Monetary Volcker has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Monetary Volcker 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.
Operational resilience
– The operational resilience strategy in the Paul Volcker and the Federal Reserve--1979-82 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 lead change in Global Business field
– Monetary Volcker 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 Monetary Volcker in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Monetary Volcker 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 Paul Volcker and the Federal Reserve--1979-82 - 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 switching costs
– The high switching costs that Monetary Volcker 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.
Weaknesses Paul Volcker and the Federal Reserve--1979-82 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Paul Volcker and the Federal Reserve--1979-82 are -
Slow decision making process
– As mentioned earlier in the report, Monetary Volcker has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Monetary Volcker even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Paul Volcker and the Federal Reserve--1979-82, it seems that the employees of Monetary Volcker don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
No frontier risks strategy
– After analyzing the HBR case study Paul Volcker and the Federal Reserve--1979-82, it seems that company is thinking about the frontier risks that can impact Global Business 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Paul Volcker and the Federal Reserve--1979-82 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 Monetary Volcker has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Monetary Volcker 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.
Capital Spending Reduction
– Even during the low interest decade, Monetary Volcker 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.
High cash cycle compare to competitors
Monetary Volcker 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.
Aligning sales with marketing
– It come across in the case study Paul Volcker and the Federal Reserve--1979-82 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 Paul Volcker and the Federal Reserve--1979-82 can leverage the sales team experience to cultivate customer relationships as Monetary Volcker is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Paul Volcker and the Federal Reserve--1979-82 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 Monetary Volcker 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Paul Volcker and the Federal Reserve--1979-82, in the dynamic environment Monetary Volcker has struggled to respond to the nimble upstart competition. Monetary Volcker 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 Monetary Volcker 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.
Opportunities Paul Volcker and the Federal Reserve--1979-82 | 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 Paul Volcker and the Federal Reserve--1979-82 are -
Learning at scale
– Online learning technologies has now opened space for Monetary Volcker 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Monetary Volcker 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.
Loyalty marketing
– Monetary Volcker 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.
Leveraging digital technologies
– Monetary Volcker 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.
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. Monetary Volcker can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Monetary Volcker is facing challenges because of the dominance of functional experts in the organization. Paul Volcker and the Federal Reserve--1979-82 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Monetary Volcker can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Monetary Volcker can use these opportunities to build new business models that can help the communities that Monetary Volcker operates in. Secondly it can use opportunities from government spending in Global Business sector.
Buying journey improvements
– Monetary Volcker can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Paul Volcker and the Federal Reserve--1979-82 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Monetary Volcker 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 Monetary Volcker to hire the very best people irrespective of their geographical location.
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 Monetary Volcker 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 Monetary Volcker in the consumer business. Now Monetary Volcker can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Monetary Volcker can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Threats Paul Volcker and the Federal Reserve--1979-82 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Paul Volcker and the Federal Reserve--1979-82 are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Monetary Volcker with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Monetary Volcker business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Paul Volcker and the Federal Reserve--1979-82, Monetary Volcker 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 .
Shortening product life cycle
– it is one of the major threat that Monetary Volcker is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Monetary Volcker.
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 Monetary Volcker in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Monetary Volcker 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Monetary Volcker 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 Paul Volcker and the Federal Reserve--1979-82 .
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. Monetary Volcker 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.
Environmental challenges
– Monetary Volcker 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. Monetary Volcker can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing wage structure of Monetary Volcker
– 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 Monetary Volcker.
Weighted SWOT Analysis of Paul Volcker and the Federal Reserve--1979-82 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 Paul Volcker and the Federal Reserve--1979-82 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 Paul Volcker and the Federal Reserve--1979-82 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 Paul Volcker and the Federal Reserve--1979-82 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 Paul Volcker and the Federal Reserve--1979-82 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 Monetary Volcker needs to make to build a sustainable competitive advantage.
