Risk Management at Wellfleet Bank: Deciding about "Megadeals" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
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 - – supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
there is backlash against globalization, increasing energy prices, 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 -
High switching costs
– The high switching costs that Risk Credit 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.
Operational resilience
– The operational resilience strategy in the Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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.
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.
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.
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.
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.
Ability to lead change in Finance & Accounting field
– Risk Credit 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 Risk Credit in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
Ability to recruit top talent
– Risk Credit is one of the leading recruiters in the industry. Managers in the Risk Management at Wellfleet Bank: Deciding about "Megadeals" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
Need for greater diversity
– Risk Credit 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Anette Mikes suggests that, Risk Credit 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 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.
Aligning sales with marketing
– It come across in the case study Risk Management at Wellfleet Bank: Deciding about "Megadeals" 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" can leverage the sales team experience to cultivate customer relationships as Risk Credit is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Risk Management at Wellfleet Bank: Deciding about "Megadeals" HBR case study mentions - Risk Credit 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.
Interest costs
– Compare to the competition, Risk Credit 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 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.
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.
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.
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.
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 -
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 Risk Credit to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Risk Credit can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Using analytics as competitive advantage
– Risk Credit 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 Risk Management at Wellfleet Bank: Deciding about "Megadeals" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Risk Credit to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Risk Credit 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.
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.
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.
Developing new processes and practices
– Risk Credit can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– 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.
Leveraging digital technologies
– Risk Credit 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.
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.
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.
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.
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 -
Regulatory challenges
– Risk Credit 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 Finance & Accounting industry regulations.
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.
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.
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.
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" .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Risk Management at Wellfleet Bank: Deciding about "Megadeals", Risk Credit may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Risk Credit can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Risk Credit business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Risk Credit 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. Risk Credit can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
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.
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.