Euro Zone Convergence, Divergence...and Then What? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Euro Zone Convergence, Divergence...and Then What?
A hedge-fund strategist had two decisions to make. First, what was the path of core euro zone long-term interest rates likely to be over the next year? Was the dramatic decline in German long rates over the past two years an aberration that would soon be reversed, or was it part of the "new normal" that would persist for some time? Second, how would periphery long rates evolve relative to core rates? That is-the spread between long rates in the likes of Greece, Spain, and Ireland and those in Germany-how would they evolve over the next year? Was the dramatic divergence in euro zone long rates likely to persist, or would the coming year see a reconvergence? He knew many factors influenced long-term interest rates; he would have to use his entire toolkit to address this issue. The evidence was in no way clear-cut. Some factors pointed toward lower German rates, some toward higher, some toward a widening of euro zone spreads (even a dissolution of the euro zone as we know it?), and some toward reconvergence. To form an opinion on the likely paths of euro zone long rates, he would have to sort through mounds of information.
Swot Analysis of "Euro Zone Convergence, Divergence...and Then What?" written by Francis Warnock, Peter Debaere includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zone Rates facing as an external strategic factors. Some of the topics covered in Euro Zone Convergence, Divergence...and Then What? case study are - Strategic Management Strategies, Financial markets, International business and Global Business.
Some of the macro environment factors that can be used to understand the Euro Zone Convergence, Divergence...and Then What? casestudy better are - – increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, technology disruption, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization,
there is increasing trade war between United States & China, geopolitical disruptions, etc
Introduction to SWOT Analysis of Euro Zone Convergence, Divergence...and Then What?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Euro Zone Convergence, Divergence...and Then What? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zone Rates, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zone Rates 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 Euro Zone Convergence, Divergence...and Then What? can be done for the following purposes –
1. Strategic planning using facts provided in Euro Zone Convergence, Divergence...and Then What? case study
2. Improving business portfolio management of Zone Rates
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 Zone Rates
Strengths Euro Zone Convergence, Divergence...and Then What? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zone Rates in Euro Zone Convergence, Divergence...and Then What? Harvard Business Review case study are -
Successful track record of launching new products
– Zone Rates has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zone Rates 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.
High brand equity
– Zone Rates has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zone Rates to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Zone Rates 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 Zone Rates is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Euro Zone Convergence, Divergence...and Then What? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Zone Rates 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 Euro Zone Convergence, Divergence...and Then What? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Zone Rates 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.
Ability to lead change in Global Business field
– Zone Rates 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 Zone Rates in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Global Business industry
– Euro Zone Convergence, Divergence...and Then What? firm has clearly differentiated products in the market place. This has enabled Zone Rates to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Zone Rates to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Euro Zone Convergence, Divergence...and Then What? 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.
Superior customer experience
– The customer experience strategy of Zone Rates in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Zone Rates
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zone Rates does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Zone Rates digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Zone Rates 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.
High switching costs
– The high switching costs that Zone Rates 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.
Weaknesses Euro Zone Convergence, Divergence...and Then What? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Euro Zone Convergence, Divergence...and Then What? are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Euro Zone Convergence, Divergence...and Then What?, it seems that the employees of Zone Rates 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.
Interest costs
– Compare to the competition, Zone Rates 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Euro Zone Convergence, Divergence...and Then What?, in the dynamic environment Zone Rates has struggled to respond to the nimble upstart competition. Zone Rates has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Francis Warnock, Peter Debaere suggests that, Zone Rates 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.
Increasing silos among functional specialists
– The organizational structure of Zone Rates is dominated by functional specialists. It is not different from other players in the Global Business segment. Zone Rates needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zone Rates to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Zone Rates 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Euro Zone Convergence, Divergence...and Then What? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Zone Rates 's lucrative customers.
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 Zone Rates supply chain. Even after few cautionary changes mentioned in the HBR case study - Euro Zone Convergence, Divergence...and Then What?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zone Rates vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Euro Zone Convergence, Divergence...and Then What? 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 Euro Zone Convergence, Divergence...and Then What? can leverage the sales team experience to cultivate customer relationships as Zone Rates is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zone Rates is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Euro Zone Convergence, Divergence...and Then What? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Zone Rates 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.
Opportunities Euro Zone Convergence, Divergence...and Then What? | 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 Euro Zone Convergence, Divergence...and Then What? 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, Zone Rates can use these opportunities to build new business models that can help the communities that Zone Rates 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 Zone Rates can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Zone Rates 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.
Developing new processes and practices
– Zone Rates 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.
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 Zone Rates in the consumer business. Now Zone Rates can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Zone Rates 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 Euro Zone Convergence, Divergence...and Then What? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zone Rates to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Zone Rates has opened avenues for new revenue streams for the organization in the industry. This can help Zone Rates to build a more holistic ecosystem as suggested in the Euro Zone Convergence, Divergence...and Then What? case study. Zone Rates can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Zone Rates 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.
Manufacturing automation
– Zone Rates 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.
Learning at scale
– Online learning technologies has now opened space for Zone Rates 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Zone Rates 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, Euro Zone Convergence, Divergence...and Then What?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zone Rates 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zone Rates is facing challenges because of the dominance of functional experts in the organization. Euro Zone Convergence, Divergence...and Then What? 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.
Threats Euro Zone Convergence, Divergence...and Then What? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Euro Zone Convergence, Divergence...and Then What? are -
Regulatory challenges
– Zone Rates 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Euro Zone Convergence, Divergence...and Then What?, Zone Rates 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zone Rates with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Zone Rates
– 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 Zone Rates.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zone Rates 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 Euro Zone Convergence, Divergence...and Then What? .
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.
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.
Stagnating economy with rate increase
– Zone Rates 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zone Rates 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.
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. Zone Rates can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Zone Rates is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Zone Rates has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Zone Rates 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.
Consumer confidence and its impact on Zone Rates 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.
Weighted SWOT Analysis of Euro Zone Convergence, Divergence...and Then What? 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 Euro Zone Convergence, Divergence...and Then What? 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 Euro Zone Convergence, Divergence...and Then What? 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 Euro Zone Convergence, Divergence...and Then What? 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 Euro Zone Convergence, Divergence...and Then What? 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 Zone Rates needs to make to build a sustainable competitive advantage.