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 - – increasing energy prices, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing commodity prices, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
technology disruption, challanges to central banks by blockchain based private currencies, 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 -
Learning organization
- Mellon Cibc 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 Mellon Cibc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CIBC Mellon: Managing a Cross-Border Joint Venture Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Successful track record of launching new products
– Mellon Cibc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mellon Cibc 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
– 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.
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.
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.
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.
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.
Training and development
– Mellon Cibc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CIBC Mellon: Managing a Cross-Border Joint Venture 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 Mellon Cibc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Mellon Cibc 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 Paul W. Beamish, Michael Sartor 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
– Mellon Cibc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mellon Cibc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study CIBC Mellon: Managing a Cross-Border Joint Venture, it seems that the employees of Mellon Cibc 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.
Increasing silos among functional specialists
– The organizational structure of Mellon Cibc is dominated by functional specialists. It is not different from other players in the Global Business segment. Mellon Cibc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mellon Cibc to focus more on services rather than just following the product oriented approach.
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.
Lack of clear differentiation of Mellon Cibc products
– To increase the profitability and margins on the products, Mellon Cibc needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
Low market penetration in new markets
– Outside its home market of Mellon Cibc, firm in the HBR case study CIBC Mellon: Managing a Cross-Border Joint Venture 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 CIBC Mellon: Managing a Cross-Border Joint Venture, in the dynamic environment Mellon Cibc has struggled to respond to the nimble upstart competition. Mellon Cibc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
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.
Learning at scale
– Online learning technologies has now opened space for Mellon Cibc 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.
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.
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.
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.
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. Mellon Cibc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mellon Cibc 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, CIBC Mellon: Managing a Cross-Border Joint Venture, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Mellon Cibc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CIBC Mellon: Managing a Cross-Border Joint Venture suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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. Mellon Cibc 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. Mellon Cibc 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.
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.
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.
Using analytics as competitive advantage
– Mellon Cibc 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 CIBC Mellon: Managing a Cross-Border Joint Venture - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mellon Cibc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 -
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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mellon Cibc 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.
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 Mellon Cibc in the Global Business sector and impact the bottomline of the organization.
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.
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.
High dependence on third party suppliers
– Mellon Cibc 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.
Stagnating economy with rate increase
– Mellon Cibc 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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mellon Cibc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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. Mellon Cibc 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.
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.