Case Study Description of Merchant Card Services, Inc. (A)
Explores the interaction between a venture capital firm that negotiates a good deal for itself and the portfolio company that seeks to extricate itself from its obligations. Exemplifies the potential conflicts between the fiduciary duty of board members and the shareholders' objectives of maximizing their investment value.
Swot Analysis of "Merchant Card Services, Inc. (A)" written by Constance E. Bagley, David Lane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Extricate Negotiates facing as an external strategic factors. Some of the topics covered in Merchant Card Services, Inc. (A) case study are - Strategic Management Strategies, Marketing, Negotiations, Venture capital and Global Business.
Some of the macro environment factors that can be used to understand the Merchant Card Services, Inc. (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, technology disruption, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Merchant Card Services, Inc. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merchant Card Services, Inc. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Extricate Negotiates, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Extricate Negotiates 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 Merchant Card Services, Inc. (A) can be done for the following purposes –
1. Strategic planning using facts provided in Merchant Card Services, Inc. (A) case study
2. Improving business portfolio management of Extricate Negotiates
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 Extricate Negotiates
Strengths Merchant Card Services, Inc. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Extricate Negotiates in Merchant Card Services, Inc. (A) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Extricate Negotiates 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 Merchant Card Services, Inc. (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Global Business industry
– Merchant Card Services, Inc. (A) firm has clearly differentiated products in the market place. This has enabled Extricate Negotiates to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Extricate Negotiates to invest into research and development (R&D) and innovation.
Analytics focus
– Extricate Negotiates 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 Constance E. Bagley, David Lane 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.
High brand equity
– Extricate Negotiates has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Extricate Negotiates to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Extricate Negotiates 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 Extricate Negotiates is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merchant Card Services, Inc. (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Extricate Negotiates in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Extricate Negotiates 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.
Diverse revenue streams
– Extricate Negotiates is present in almost all the verticals within the industry. This has provided firm in Merchant Card Services, Inc. (A) 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
– Extricate Negotiates has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Extricate Negotiates 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.
Low bargaining power of suppliers
– Suppliers of Extricate Negotiates in the sector have low bargaining power. Merchant Card Services, Inc. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Extricate Negotiates to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Extricate Negotiates 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.
Organizational Resilience of Extricate Negotiates
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Extricate Negotiates does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Merchant Card Services, Inc. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merchant Card Services, Inc. (A) are -
Aligning sales with marketing
– It come across in the case study Merchant Card Services, Inc. (A) 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 Merchant Card Services, Inc. (A) can leverage the sales team experience to cultivate customer relationships as Extricate Negotiates is planning to shift buying processes online.
Products dominated business model
– Even though Extricate Negotiates 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 - Merchant Card Services, Inc. (A) should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Extricate Negotiates is dominated by functional specialists. It is not different from other players in the Global Business segment. Extricate Negotiates needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Extricate Negotiates to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Extricate Negotiates 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.
Skills based hiring
– The stress on hiring functional specialists at Extricate Negotiates 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merchant Card Services, Inc. (A), it seems that the employees of Extricate Negotiates 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Merchant Card Services, Inc. (A) 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 Extricate Negotiates has relatively successful track record of launching new products.
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 Extricate Negotiates supply chain. Even after few cautionary changes mentioned in the HBR case study - Merchant Card Services, Inc. (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Extricate Negotiates vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Extricate Negotiates products
– To increase the profitability and margins on the products, Extricate Negotiates needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merchant Card Services, Inc. (A), is just above the industry average. Extricate Negotiates 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.
Interest costs
– Compare to the competition, Extricate Negotiates 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 Merchant Card Services, Inc. (A) | 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 Merchant Card Services, Inc. (A) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Extricate Negotiates 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.
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. Extricate Negotiates can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Extricate Negotiates 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 Merchant Card Services, Inc. (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Extricate Negotiates to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Extricate Negotiates 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.
Creating value in data economy
– The success of analytics program of Extricate Negotiates has opened avenues for new revenue streams for the organization in the industry. This can help Extricate Negotiates to build a more holistic ecosystem as suggested in the Merchant Card Services, Inc. (A) case study. Extricate Negotiates can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Extricate Negotiates is facing challenges because of the dominance of functional experts in the organization. Merchant Card Services, Inc. (A) 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.
Building a culture of innovation
– managers at Extricate Negotiates 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.
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 Extricate Negotiates in the consumer business. Now Extricate Negotiates 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 Extricate Negotiates 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, Extricate Negotiates can use these opportunities to build new business models that can help the communities that Extricate Negotiates operates in. Secondly it can use opportunities from government spending in Global Business sector.
Learning at scale
– Online learning technologies has now opened space for Extricate Negotiates 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.
Developing new processes and practices
– Extricate Negotiates 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.
Leveraging digital technologies
– Extricate Negotiates 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.
Threats Merchant Card Services, Inc. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merchant Card Services, Inc. (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Extricate Negotiates 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 Merchant Card Services, Inc. (A) .
Consumer confidence and its impact on Extricate Negotiates 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.
Environmental challenges
– Extricate Negotiates 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. Extricate Negotiates can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Extricate Negotiates with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Extricate Negotiates 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.
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 Extricate Negotiates in the Global Business sector and impact the bottomline of the organization.
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. Extricate Negotiates 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.
Increasing wage structure of Extricate Negotiates
– 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 Extricate Negotiates.
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 Extricate Negotiates.
Shortening product life cycle
– it is one of the major threat that Extricate Negotiates is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Extricate Negotiates 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.
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 Extricate Negotiates business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Merchant Card Services, Inc. (A) 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 Merchant Card Services, Inc. (A) 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 Merchant Card Services, Inc. (A) 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 Merchant Card Services, Inc. (A) 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 Merchant Card Services, Inc. (A) 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 Extricate Negotiates needs to make to build a sustainable competitive advantage.
