Risk Management at Wellfleet Bank: Deciding about "Megadeals" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of Risk Management at Wellfleet Bank: Deciding about "Megadeals"
This case introduces risk management in the context of corporate lending, one of the bread-and-butter functions of commercial banks. It evokes the cultural tension between the risk function and the business line, which in this organization reverberated long after the decisive votes were cast at the group credit committee. The case further motivates debate on calculative cultures, and the role of model-based risk assessments in decision-making, and underlines the role of judgment in risk decisions. Modeling and judgment carry different weight in different types of risk decisions. While risk models can be relied upon as the key decision-makers in a retail banking environment (e.g. credit card applications), in the case of large credit decisions, their reliability is, generally, low. This is because the key features of the proposals at hand cannot all be condensed into risk metrics; as in these proposals, several "qualitative" issues arise that the decision-maker needs to judge in tandem with the quantitative metrics. The exercise also highlights that model-based risk metrics are themselves judgmental (they reflect the assumptions of the modeler) and that their use must be as much an art as a science. The story has got a temporal dimension: one proposal was current in mid-2006, the other in late 2008, two very different credit environments.
Swot Analysis of "Risk Management at Wellfleet Bank: Deciding about "Megadeals"" written by Anette Mikes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Risk Credit facing as an external strategic factors. Some of the topics covered in Risk Management at Wellfleet Bank: Deciding about "Megadeals" case study are - Strategic Management Strategies, Financial management, International business, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Risk Management at Wellfleet Bank: Deciding about "Megadeals" casestudy better are - – technology disruption, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Risk Management at Wellfleet Bank: Deciding about "Megadeals"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Risk Management at Wellfleet Bank: Deciding about "Megadeals" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Risk Credit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Risk Credit 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" can be done for the following purposes –
1. Strategic planning using facts provided in Risk Management at Wellfleet Bank: Deciding about "Megadeals" case study
2. Improving business portfolio management of Risk Credit
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Risk Credit
Strengths Risk Management at Wellfleet Bank: Deciding about "Megadeals" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Risk Credit in Risk Management at Wellfleet Bank: Deciding about "Megadeals" Harvard Business Review case study are -
Highly skilled collaborators
– Risk Credit 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Credit 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.
Effective Research and Development (R&D)
– Risk Credit 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Risk Credit
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Risk Credit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Risk Credit has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Credit in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Risk Management at Wellfleet Bank: Deciding about "Megadeals" firm has clearly differentiated products in the market place. This has enabled Risk Credit to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Risk Credit to invest into research and development (R&D) and innovation.
High brand equity
– Risk Credit has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Risk Credit to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Risk Credit is present in almost all the verticals within the industry. This has provided firm in Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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.
Learning organization
- Risk Credit 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 Risk Credit is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Risk Management at Wellfleet Bank: Deciding about "Megadeals" Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Risk Credit 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 Anette Mikes 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.
Strong track record of project management
– Risk Credit is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Risk Management at Wellfleet Bank: Deciding about "Megadeals" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Risk Management at Wellfleet Bank: Deciding about "Megadeals" are -
No frontier risks strategy
– After analyzing the HBR case study Risk Management at Wellfleet Bank: Deciding about "Megadeals", it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Risk Credit needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Risk Credit 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.
Increasing silos among functional specialists
– The organizational structure of Risk Credit is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Risk Credit needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Risk Credit to focus more on services rather than just following the product oriented approach.
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 Risk Credit supply chain. Even after few cautionary changes mentioned in the HBR case study - Risk Management at Wellfleet Bank: Deciding about "Megadeals", it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Risk Credit vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Risk Management at Wellfleet Bank: Deciding about "Megadeals", in the dynamic environment Risk Credit has struggled to respond to the nimble upstart competition. Risk Credit has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Risk Credit 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. Risk Credit 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 operating costs
– Compare to the competitors, firm in the HBR case study Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Credit 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Risk Management at Wellfleet Bank: Deciding about "Megadeals", it seems that the employees of Risk Credit don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Credit has relatively successful track record of launching new products.
Products dominated business model
– Even though Risk Credit 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 - Risk Management at Wellfleet Bank: Deciding about "Megadeals" should strive to include more intangible value offerings along with its core products and services.
Opportunities Risk Management at Wellfleet Bank: Deciding about "Megadeals" | 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" are -
Loyalty marketing
– Risk Credit 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Risk Credit 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. Risk Credit 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.
Building a culture of innovation
– managers at Risk Credit 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 Finance & Accounting segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Risk Credit 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Risk Credit 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 Risk Credit to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Risk Credit 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, Risk Management at Wellfleet Bank: Deciding about "Megadeals", to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Risk Credit can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Risk Credit can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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.
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 Risk Credit in the consumer business. Now Risk Credit can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Risk Credit is facing challenges because of the dominance of functional experts in the organization. Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Risk Credit can use these opportunities to build new business models that can help the communities that Risk Credit operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Risk Credit has opened avenues for new revenue streams for the organization in the industry. This can help Risk Credit to build a more holistic ecosystem as suggested in the Risk Management at Wellfleet Bank: Deciding about "Megadeals" case study. Risk Credit can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Risk Credit to increase its market reach. Risk Credit 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.
Threats Risk Management at Wellfleet Bank: Deciding about "Megadeals" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Risk Management at Wellfleet Bank: Deciding about "Megadeals" are -
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 Risk Credit.
High dependence on third party suppliers
– Risk Credit 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.
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.
Increasing wage structure of Risk Credit
– 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 Risk Credit.
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.
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. Risk Credit 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.
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 Risk Credit business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Risk Credit 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" .
Consumer confidence and its impact on Risk Credit 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.
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 Risk Credit in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Risk Credit in the Finance & Accounting industry. The Finance & Accounting 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.
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. Risk Credit needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Risk Credit 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.
Weighted SWOT Analysis of Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Credit needs to make to build a sustainable competitive advantage.