Swot Analysis of "Itau Unibanco (A): The Merger Process" written by Belen Villalonga, John A. Davis, Ricardo Reisen de Pinho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Unibanco Itau facing as an external strategic factors. Some of the topics covered in Itau Unibanco (A): The Merger Process case study are - Strategic Management Strategies, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Itau Unibanco (A): The Merger Process casestudy better are - – supply chains are disrupted by pandemic , 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, cloud computing is disrupting traditional business models, geopolitical disruptions, increasing energy prices, increasing government debt because of Covid-19 spendings,
wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Itau Unibanco (A): The Merger Process
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Itau Unibanco (A): The Merger Process case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Unibanco Itau, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Unibanco Itau 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 Itau Unibanco (A): The Merger Process can be done for the following purposes –
1. Strategic planning using facts provided in Itau Unibanco (A): The Merger Process case study
2. Improving business portfolio management of Unibanco Itau
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 Unibanco Itau
Strengths Itau Unibanco (A): The Merger Process | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Unibanco Itau in Itau Unibanco (A): The Merger Process Harvard Business Review case study are -
Training and development
– Unibanco Itau has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Itau Unibanco (A): The Merger Process 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Itau Unibanco (A): The Merger Process firm has clearly differentiated products in the market place. This has enabled Unibanco Itau to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Unibanco Itau to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Unibanco Itau in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Unibanco Itau is one of the leading recruiters in the industry. Managers in the Itau Unibanco (A): The Merger Process are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Unibanco Itau has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Unibanco Itau to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Unibanco Itau has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Unibanco Itau 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.
Strong track record of project management
– Unibanco Itau is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Unibanco Itau 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 Itau Unibanco (A): The Merger Process HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Unibanco Itau is present in almost all the verticals within the industry. This has provided firm in Itau Unibanco (A): The Merger Process 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.
Low bargaining power of suppliers
– Suppliers of Unibanco Itau in the sector have low bargaining power. Itau Unibanco (A): The Merger Process has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Unibanco Itau to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Unibanco Itau 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 Finance & Accounting field
– Unibanco Itau 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 Unibanco Itau in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Itau Unibanco (A): The Merger Process | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Itau Unibanco (A): The Merger Process are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Itau Unibanco (A): The Merger Process 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 Unibanco Itau has relatively successful track record of launching new products.
Need for greater diversity
– Unibanco Itau 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.
Aligning sales with marketing
– It come across in the case study Itau Unibanco (A): The Merger Process 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 Itau Unibanco (A): The Merger Process can leverage the sales team experience to cultivate customer relationships as Unibanco Itau is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Itau Unibanco (A): The Merger Process 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 Unibanco Itau 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Unibanco Itau is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Unibanco Itau needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Unibanco Itau to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Unibanco Itau 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Belen Villalonga, John A. Davis, Ricardo Reisen de Pinho suggests that, Unibanco Itau 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.
Slow to strategic competitive environment developments
– As Itau Unibanco (A): The Merger Process HBR case study mentions - Unibanco Itau 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.
Slow decision making process
– As mentioned earlier in the report, Unibanco Itau 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. Unibanco Itau 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Itau Unibanco (A): The Merger Process, in the dynamic environment Unibanco Itau has struggled to respond to the nimble upstart competition. Unibanco Itau has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Unibanco Itau products
– To increase the profitability and margins on the products, Unibanco Itau needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Itau Unibanco (A): The Merger Process | 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 Itau Unibanco (A): The Merger Process 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, Unibanco Itau can use these opportunities to build new business models that can help the communities that Unibanco Itau operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Unibanco Itau 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.
Building a culture of innovation
– managers at Unibanco Itau 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.
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 Unibanco Itau in the consumer business. Now Unibanco Itau can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Unibanco Itau 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Unibanco Itau can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Unibanco Itau can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Unibanco Itau 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, Itau Unibanco (A): The Merger Process, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Unibanco Itau in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Loyalty marketing
– Unibanco Itau 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Unibanco Itau 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.
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. Unibanco Itau 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. Unibanco Itau 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.
Better consumer reach
– The expansion of the 5G network will help Unibanco Itau to increase its market reach. Unibanco Itau 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 Itau Unibanco (A): The Merger Process External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Itau Unibanco (A): The Merger Process are -
Stagnating economy with rate increase
– Unibanco Itau 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.
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 Unibanco Itau.
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.
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.
Consumer confidence and its impact on Unibanco Itau 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 Unibanco Itau in the Finance & Accounting sector and impact the bottomline of the organization.
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 Unibanco Itau 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, Unibanco Itau 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 Itau Unibanco (A): The Merger Process .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Itau Unibanco (A): The Merger Process, Unibanco Itau 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 .
Regulatory challenges
– Unibanco Itau 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.
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. Unibanco Itau can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Unibanco Itau 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 Unibanco Itau
– 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 Unibanco Itau.
Weighted SWOT Analysis of Itau Unibanco (A): The Merger Process 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 Itau Unibanco (A): The Merger Process 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 Itau Unibanco (A): The Merger Process 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 Itau Unibanco (A): The Merger Process 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 Itau Unibanco (A): The Merger Process 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 Unibanco Itau needs to make to build a sustainable competitive advantage.