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 - – central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
increasing household debt because of falling income levels, wage bills are increasing, 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 -
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.
Low bargaining power of suppliers
– Suppliers of Financial Instruments in the sector have low bargaining power. The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Financial Instruments to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Global Business field
– Financial Instruments 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 Financial Instruments in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Financial Instruments has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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.
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.
Learning organization
- Financial Instruments 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 Financial Instruments is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
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 -
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.
High bargaining power of channel partners
– Because of the regulatory requirements, David W. Conklin, Danielle Cadieux suggests that, Financial Instruments 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.
Need for greater diversity
– Financial Instruments has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
No frontier risks strategy
– After analyzing the HBR case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations, in the dynamic environment Financial Instruments has struggled to respond to the nimble upstart competition. Financial Instruments has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations 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 Financial Instruments has relatively successful track record of launching new products.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Financial Instruments 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.
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.
High cash cycle compare to competitors
Financial Instruments 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.
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 -
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. Financial Instruments can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Financial Instruments to increase its market reach. Financial Instruments 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Financial Instruments 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.
Learning at scale
– Online learning technologies has now opened space for Financial Instruments 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, Financial Instruments can use these opportunities to build new business models that can help the communities that Financial Instruments operates in. Secondly it can use opportunities from government spending in Global Business sector.
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.
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.
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.
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.
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.
Loyalty marketing
– Financial Instruments 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.
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.
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 -
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.
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.
Environmental challenges
– Financial Instruments 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. Financial Instruments can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
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.
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. Financial Instruments 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Financial Instruments with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 .
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.
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.
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.
Consumer confidence and its impact on Financial Instruments demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Financial Instruments needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
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.
