Case Study Description of CIBC Mellon: Managing a Cross-Border Joint Venture
During his 10-year tenure, the president and chief executive officer (CEO) of CIBC Mellon had presided over the dramatic growth of the jointly owned, Toronto-based asset servicing business of CIBC and The Bank of New York Mellon Corporation (BNY Mellon). In mid-September 2008, the CEO was witnessing the onset of the worst financial crisis since the Great Depression. The impending collapse of several major firms threatened to impact all players in the financial services industry worldwide. Although joint ventures (JVs) were uncommon in the financial sector, the CEO believed that the CIBC Mellon JV was uniquely positioned to withstand the fallout associated with the financial crisis. Two pressing issues faced the JV's executive management team. First, they needed to discuss how to best manage any risks confronting the JV as a consequence of the financial crisis. How could the policies and practices developed during the past decade be leveraged to sustain the JV through the broader financial crisis? Second, they needed to continue discussions regarding options for refining CIBC Mellon's strategic focus, so that the JV could emerge from the financial meltdown on even stronger footing. This case is intended to provide an example of best practice in joint venturing. There is a school of thought within the scholarly community that suggests that JVs are less profitable than wholly owned subsidiaries, are a transitional organization form, are very hard to manage, and are a vehicle that might result in the loss of one's technology. The CIBC Mellon JV provides a counterpoint. It has been quite profitable and stable, has not resulted in BNY Mellon losing its technology contribution, and senior management has been able to effectively manage operations. A second objective is to underscore the value in paying attention to the details in designing and managing a joint venture because, during an actual crisis, you'll surely find out whether major problems exist. Carefully considering such details greatly improves the chances that it will survive. Some joint ventures never pass such a test of their resiliency. The case can be used in the latter half of a strategic management course, or in a course about cooperative strategies.
Swot Analysis of "CIBC Mellon: Managing a Cross-Border Joint Venture" written by Paul W. Beamish, Michael Sartor includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mellon Cibc facing as an external strategic factors. Some of the topics covered in CIBC Mellon: Managing a Cross-Border Joint Venture case study are - Strategic Management Strategies, Leadership, Recession and Global Business.
Some of the macro environment factors that can be used to understand the CIBC Mellon: Managing a Cross-Border Joint Venture casestudy better are - – there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
increasing household debt because of falling income levels, increasing commodity prices, etc
Introduction to SWOT Analysis of CIBC Mellon: Managing a Cross-Border Joint Venture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CIBC Mellon: Managing a Cross-Border Joint Venture case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mellon Cibc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mellon Cibc 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 CIBC Mellon: Managing a Cross-Border Joint Venture can be done for the following purposes –
1. Strategic planning using facts provided in CIBC Mellon: Managing a Cross-Border Joint Venture case study
2. Improving business portfolio management of Mellon Cibc
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 Mellon Cibc
Strengths CIBC Mellon: Managing a Cross-Border Joint Venture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mellon Cibc in CIBC Mellon: Managing a Cross-Border Joint Venture Harvard Business Review case study are -
Organizational Resilience of Mellon Cibc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mellon Cibc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Mellon Cibc in the sector have low bargaining power. CIBC Mellon: Managing a Cross-Border Joint Venture has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mellon Cibc to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Mellon Cibc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Mellon Cibc 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.
High switching costs
– The high switching costs that Mellon Cibc 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
– Mellon Cibc is present in almost all the verticals within the industry. This has provided firm in CIBC Mellon: Managing a Cross-Border Joint Venture 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.
Ability to lead change in Global Business field
– Mellon Cibc 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 Mellon Cibc in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the CIBC Mellon: Managing a Cross-Border Joint Venture 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.
Innovation driven organization
– Mellon Cibc is one of the most innovative firm in sector. Manager in CIBC Mellon: Managing a Cross-Border Joint Venture Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Mellon Cibc 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 CIBC Mellon: Managing a Cross-Border Joint Venture HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Global Business industry
– CIBC Mellon: Managing a Cross-Border Joint Venture firm has clearly differentiated products in the market place. This has enabled Mellon Cibc to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Mellon Cibc to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Mellon Cibc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mellon Cibc 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.
Weaknesses CIBC Mellon: Managing a Cross-Border Joint Venture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CIBC Mellon: Managing a Cross-Border Joint Venture are -
Slow to strategic competitive environment developments
– As CIBC Mellon: Managing a Cross-Border Joint Venture HBR case study mentions - Mellon Cibc 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.
High cash cycle compare to competitors
Mellon Cibc 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.
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 Mellon Cibc supply chain. Even after few cautionary changes mentioned in the HBR case study - CIBC Mellon: Managing a Cross-Border Joint Venture, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mellon Cibc vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Mellon Cibc 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.
No frontier risks strategy
– After analyzing the HBR case study CIBC Mellon: Managing a Cross-Border Joint Venture, 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.
Need for greater diversity
– Mellon Cibc 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CIBC Mellon: Managing a Cross-Border Joint Venture, is just above the industry average. Mellon Cibc 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.
Aligning sales with marketing
– It come across in the case study CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture can leverage the sales team experience to cultivate customer relationships as Mellon Cibc is planning to shift buying processes online.
Interest costs
– Compare to the competition, Mellon Cibc 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.
Slow decision making process
– As mentioned earlier in the report, Mellon Cibc 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. Mellon Cibc 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the CIBC Mellon: Managing a Cross-Border Joint Venture 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 Mellon Cibc has relatively successful track record of launching new products.
Opportunities CIBC Mellon: Managing a Cross-Border Joint Venture | 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 CIBC Mellon: Managing a Cross-Border Joint Venture are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mellon Cibc can use these opportunities to build new business models that can help the communities that Mellon Cibc operates in. Secondly it can use opportunities from government spending in Global Business sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mellon Cibc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Mellon Cibc 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.
Loyalty marketing
– Mellon Cibc 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mellon Cibc 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.
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 Mellon Cibc in the consumer business. Now Mellon Cibc can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Mellon Cibc 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.
Creating value in data economy
– The success of analytics program of Mellon Cibc has opened avenues for new revenue streams for the organization in the industry. This can help Mellon Cibc to build a more holistic ecosystem as suggested in the CIBC Mellon: Managing a Cross-Border Joint Venture case study. Mellon Cibc can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mellon Cibc 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 Mellon Cibc 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 Mellon Cibc 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.
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. Mellon Cibc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Mellon Cibc 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.
Leveraging digital technologies
– Mellon Cibc 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 CIBC Mellon: Managing a Cross-Border Joint Venture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CIBC Mellon: Managing a Cross-Border Joint Venture 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.
Environmental challenges
– Mellon Cibc 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. Mellon Cibc can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Shortening product life cycle
– it is one of the major threat that Mellon Cibc is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Mellon Cibc 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.
Technology acceleration in Forth Industrial Revolution
– Mellon Cibc has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Mellon Cibc needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Mellon Cibc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Mellon Cibc 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 CIBC Mellon: Managing a Cross-Border Joint Venture, Mellon Cibc 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 .
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 Mellon Cibc.
Regulatory challenges
– Mellon Cibc 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.
Increasing wage structure of Mellon Cibc
– 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 Mellon Cibc.
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. Mellon Cibc needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture 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 Mellon Cibc needs to make to build a sustainable competitive advantage.