The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations
The financial system is the heart of free market economies. The 2007-2008 financial crisis raised concerns that the global financial and economic system might experience a truly substantial collapse. New financial instruments had proliferated to the degree that it had become impossible to calculate the market value of many of them, and so it had become impossible to know the market value of institutions that held them or that guaranteed them. The initial disaster occurred with the U.S. subprime residential mortgage market, but it quickly spread globally to institutions that held new financial instruments related to these mortgages. Firms that had guaranteed these financial instruments found that their net worth was disappearing, leading to concerns about the institutions that had relied on their guarantees. Meanwhile, new kinds of hedge funds introduced the risk of greater volatility, and they exposed investors to sudden shocks. Many banks were caught in this web and suddenly had to obtain additional equity capital in order to meet regulatory requirements and maintain the confidence of depositors. As a result of these developments, liquidity disappeared from the financial system. It seemed that recession in the United States was inevitable. Previous expectations that other economies had become "decoupled" for the United States were being replaced by fears that economies throughout the world would follow the United States into recession. Central banks reacted dramatically with attempts to reduce interest rates and to increase financial liquidity, and the U.S. government cut personal taxes through a tax refund program. It was not clear whether monetary and fiscal policies could prevent a long and deep recession. Debate arose concerning the advisability of a wide variety of new regulations that might be able to prevent future recurrence of such a financial crisis.
Swot Analysis of "The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations" written by David W. Conklin, Danielle Cadieux includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Financial Instruments facing as an external strategic factors. Some of the topics covered in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations case study are - Strategic Management Strategies, International business, Policy and Global Business.
Some of the macro environment factors that can be used to understand the The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations casestudy better are - – supply chains are disrupted by pandemic , wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, geopolitical disruptions, technology disruption,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Financial Instruments, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Financial Instruments 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations can be done for the following purposes –
1. Strategic planning using facts provided in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations case study
2. Improving business portfolio management of Financial Instruments
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 Financial Instruments
Strengths The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Financial Instruments in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations Harvard Business Review case study are -
Sustainable margins compare to other players in Global Business industry
– The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations firm has clearly differentiated products in the market place. This has enabled Financial Instruments to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Financial Instruments to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Financial Instruments has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Financial Instruments 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.
Diverse revenue streams
– Financial Instruments is present in almost all the verticals within the industry. This has provided firm in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Organizational Resilience of Financial Instruments
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Financial Instruments does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Financial Instruments 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Financial Instruments digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Financial Instruments 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.
Ability to recruit top talent
– Financial Instruments is one of the leading recruiters in the industry. Managers in the The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Financial Instruments in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Financial Instruments 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 The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Financial Instruments has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Financial Instruments to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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.
Analytics focus
– Financial Instruments 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 David W. Conklin, Danielle Cadieux 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.
Weaknesses The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations are -
Skills based hiring
– The stress on hiring functional specialists at Financial Instruments 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.
Interest costs
– Compare to the competition, Financial Instruments 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.
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 Financial Instruments supply chain. Even after few cautionary changes mentioned in the HBR case study - The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Financial Instruments vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Financial Instruments, firm in the HBR case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Financial Instruments 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations can leverage the sales team experience to cultivate customer relationships as Financial Instruments is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, it seems that the employees of Financial Instruments 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.
Slow to strategic competitive environment developments
– As The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations HBR case study mentions - Financial Instruments 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.
Products dominated business model
– Even though Financial Instruments has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, is just above the industry average. Financial Instruments 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Financial Instruments is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations | 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations are -
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. Financial Instruments can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Financial Instruments 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 Financial Instruments to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Financial Instruments is facing challenges because of the dominance of functional experts in the organization. The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Financial Instruments 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. Financial Instruments 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.
Building a culture of innovation
– managers at Financial Instruments 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.
Leveraging digital technologies
– Financial Instruments 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Financial Instruments 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, The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Financial Instruments 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Financial Instruments to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Financial Instruments 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.
Manufacturing automation
– Financial Instruments 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.
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 Financial Instruments 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 Financial Instruments in the consumer business. Now Financial Instruments can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Financial Instruments can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Financial Instruments 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.
High dependence on third party suppliers
– Financial Instruments 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.
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, Financial Instruments 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 The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations .
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.
Shortening product life cycle
– it is one of the major threat that Financial Instruments is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, Financial Instruments 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 .
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 Financial Instruments in the Global Business sector and impact the bottomline 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. Financial Instruments needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Financial Instruments.
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. Financial Instruments can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Financial Instruments 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.
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 Financial Instruments business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 Financial Instruments needs to make to build a sustainable competitive advantage.