FX Strategies in 2005: U.S. Dollar versus Euro SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of FX Strategies in 2005: U.S. Dollar versus Euro
This is a Darden case study.Riding the early morning Metro North train from Grand Central to Greenwich in late December 2004, the euro dominated Luke Anthony's thoughts. After bottoming out at about 0.85 $/a‚¬, in 2000 and 2001, the euro had appreciated sharply and now stood at 1.35 $/a‚¬ (Exhibit 1). Luke, an FX Strategist at a hedge fund, had to form a view about the likely path of the euro going forward. The evidence was in no way clear cut. Of the traditional factors, some were pointing toward further euro appreciation, but others seemed to favor the dollar. And there were a host of "new" factors to sift through. Sorting through the evidence would require both relatively standard thinking about forex markets and the more recent emphasis on prospective capital flows. And Luke had only this quiet week between Christmas and New Year's to form a cohesive plan for early 2005.
Swot Analysis of "FX Strategies in 2005: U.S. Dollar versus Euro" written by Francis Warnock includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Euro Luke facing as an external strategic factors. Some of the topics covered in FX Strategies in 2005: U.S. Dollar versus Euro case study are - Strategic Management Strategies, Financial management, Financial markets, International business and Global Business.
Some of the macro environment factors that can be used to understand the FX Strategies in 2005: U.S. Dollar versus Euro casestudy better are - – increasing commodity prices, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, increasing transportation and logistics costs, increasing energy prices, central banks are concerned over increasing inflation, wage bills are increasing,
increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of FX Strategies in 2005: U.S. Dollar versus Euro
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FX Strategies in 2005: U.S. Dollar versus Euro case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Euro Luke, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Euro Luke 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 FX Strategies in 2005: U.S. Dollar versus Euro can be done for the following purposes –
1. Strategic planning using facts provided in FX Strategies in 2005: U.S. Dollar versus Euro case study
2. Improving business portfolio management of Euro Luke
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 Euro Luke
Strengths FX Strategies in 2005: U.S. Dollar versus Euro | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Euro Luke in FX Strategies in 2005: U.S. Dollar versus Euro Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Euro Luke 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.
Highly skilled collaborators
– Euro Luke 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 FX Strategies in 2005: U.S. Dollar versus Euro HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Euro Luke digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Euro Luke has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Euro Luke is present in almost all the verticals within the industry. This has provided firm in FX Strategies in 2005: U.S. Dollar versus Euro 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.
High switching costs
– The high switching costs that Euro Luke 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.
Effective Research and Development (R&D)
– Euro Luke 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 FX Strategies in 2005: U.S. Dollar versus Euro - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Euro Luke is one of the most innovative firm in sector. Manager in FX Strategies in 2005: U.S. Dollar versus Euro Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the FX Strategies in 2005: U.S. Dollar versus Euro 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.
Successful track record of launching new products
– Euro Luke has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Euro Luke 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.
Ability to lead change in Global Business field
– Euro Luke 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 Euro Luke in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Euro Luke is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Euro Luke has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in FX Strategies in 2005: U.S. Dollar versus Euro 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.
Weaknesses FX Strategies in 2005: U.S. Dollar versus Euro | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FX Strategies in 2005: U.S. Dollar versus Euro are -
No frontier risks strategy
– After analyzing the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro, 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study FX Strategies in 2005: U.S. Dollar versus Euro, in the dynamic environment Euro Luke has struggled to respond to the nimble upstart competition. Euro Luke has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Euro Luke 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro, it seems that the employees of Euro Luke 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.
Products dominated business model
– Even though Euro Luke 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 - FX Strategies in 2005: U.S. Dollar versus Euro should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Euro Luke, firm in the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro, is just above the industry average. Euro Luke 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.
Slow to strategic competitive environment developments
– As FX Strategies in 2005: U.S. Dollar versus Euro HBR case study mentions - Euro Luke 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 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 Euro Luke supply chain. Even after few cautionary changes mentioned in the HBR case study - FX Strategies in 2005: U.S. Dollar versus Euro, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Euro Luke vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Euro Luke is dominated by functional specialists. It is not different from other players in the Global Business segment. Euro Luke needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Euro Luke to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro 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 Euro Luke 's lucrative customers.
Opportunities FX Strategies in 2005: U.S. Dollar versus Euro | 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 FX Strategies in 2005: U.S. Dollar versus Euro are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Euro Luke in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Euro Luke 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, FX Strategies in 2005: U.S. Dollar versus Euro, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Euro Luke 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.
Better consumer reach
– The expansion of the 5G network will help Euro Luke to increase its market reach. Euro Luke will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Euro Luke 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 Euro Luke to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Euro Luke has opened avenues for new revenue streams for the organization in the industry. This can help Euro Luke to build a more holistic ecosystem as suggested in the FX Strategies in 2005: U.S. Dollar versus Euro case study. Euro Luke 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, Euro Luke is facing challenges because of the dominance of functional experts in the organization. FX Strategies in 2005: U.S. Dollar versus Euro 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Euro Luke 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.
Developing new processes and practices
– Euro Luke 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.
Using analytics as competitive advantage
– Euro Luke 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 FX Strategies in 2005: U.S. Dollar versus Euro - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Euro Luke to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Euro Luke can use these opportunities to build new business models that can help the communities that Euro Luke operates in. Secondly it can use opportunities from government spending in Global Business sector.
Leveraging digital technologies
– Euro Luke 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.
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. Euro Luke 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. Euro Luke 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.
Threats FX Strategies in 2005: U.S. Dollar versus Euro External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FX Strategies in 2005: U.S. Dollar versus Euro are -
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 Euro Luke in the Global Business sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Euro Luke 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
– Euro Luke 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FX Strategies in 2005: U.S. Dollar versus Euro, Euro Luke 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 .
Environmental challenges
– Euro Luke 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. Euro Luke 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Euro Luke with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Euro Luke has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Euro Luke 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 Euro Luke 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Euro Luke 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 FX Strategies in 2005: U.S. Dollar versus Euro .
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. Euro Luke 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 Euro Luke
– 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 Euro Luke.
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 Euro Luke.
Weighted SWOT Analysis of FX Strategies in 2005: U.S. Dollar versus Euro 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 FX Strategies in 2005: U.S. Dollar versus Euro 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 FX Strategies in 2005: U.S. Dollar versus Euro 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 FX Strategies in 2005: U.S. Dollar versus Euro 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 FX Strategies in 2005: U.S. Dollar versus Euro 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 Euro Luke needs to make to build a sustainable competitive advantage.