Investment Banking in 2008 (A): Rise and Fall of the Bear SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Investment Banking in 2008 (A): Rise and Fall of the Bear
Gary Parr, deputy chairman of Lazard FrA¨res & Co. and Kellogg class of 1980, could not believe his ears. "You can't mean that," he said, reacting to the lowered bid given by Doug Braunstein, JP Morgan head of investment banking, for Parr's client, legendary investment bank Bear Stearns. Less than eighteen months after trading at an all-time high of $172.61 a share, Bear now had little choice but to accept Morgan's humiliating $2-per-share, Federal Reserve-sanctioned bailout offer. "I'll have to get back to you." Hanging up the phone, Parr leaned back and gave an exhausted sigh. Rumors had swirled around Bear ever since two of its hedge funds imploded as a result of the subprime housing crisis, but time and again, the scrappy Bear appeared to have weathered the storm. Parr's efforts to find a capital infusion for the bank had resulted in lengthy discussions and marathon due diligence sessions, but one after another, potential investors had backed away, scared off in part by Bear's sizable mortgage holdings at a time when every bank on Wall Street was reducing its positions and taking massive write-downs in the asset class. In the past week, those rumors had reached a fever pitch, with financial analysts openly questioning Bear's ability to continue operations and its clients running for the exits. Now Sunday afternoon, it had already been a long weekend, and it would almost certainly be a long night, as the Fed-backed bailout of Bear would require onerous negotiations before Monday's market open. By morning, the eighty-five-year-old investment bank, which had survived the Great Depression, the savings and loan crisis, and the dot-com implosion, would cease to exist as an independent firm. Pausing briefly before calling CEO Alan Schwartz and the rest of Bear's board, Parr allowed himself a moment of reflection. How had it all happened?
Swot Analysis of "Investment Banking in 2008 (A): Rise and Fall of the Bear" written by David P. Stowell, Evan Meagher includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bear Parr facing as an external strategic factors. Some of the topics covered in Investment Banking in 2008 (A): Rise and Fall of the Bear case study are - Strategic Management Strategies, International business and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Investment Banking in 2008 (A): Rise and Fall of the Bear casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, increasing commodity prices, technology disruption, 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, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Investment Banking in 2008 (A): Rise and Fall of the Bear
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Investment Banking in 2008 (A): Rise and Fall of the Bear case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bear Parr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bear Parr 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 Investment Banking in 2008 (A): Rise and Fall of the Bear can be done for the following purposes –
1. Strategic planning using facts provided in Investment Banking in 2008 (A): Rise and Fall of the Bear case study
2. Improving business portfolio management of Bear Parr
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 Bear Parr
Strengths Investment Banking in 2008 (A): Rise and Fall of the Bear | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bear Parr in Investment Banking in 2008 (A): Rise and Fall of the Bear Harvard Business Review case study are -
Ability to recruit top talent
– Bear Parr is one of the leading recruiters in the industry. Managers in the Investment Banking in 2008 (A): Rise and Fall of the Bear are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Bear Parr in the sector have low bargaining power. Investment Banking in 2008 (A): Rise and Fall of the Bear has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bear Parr to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Investment Banking in 2008 (A): Rise and Fall of the Bear 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.
High brand equity
– Bear Parr has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bear Parr to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Bear Parr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Bear Parr 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)
– Bear Parr 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 Investment Banking in 2008 (A): Rise and Fall of the Bear - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Bear Parr has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bear Parr 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.
Innovation driven organization
– Bear Parr is one of the most innovative firm in sector. Manager in Investment Banking in 2008 (A): Rise and Fall of the Bear Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Bear Parr 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.
Superior customer experience
– The customer experience strategy of Bear Parr in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Bear Parr 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 Bear Parr is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Investment Banking in 2008 (A): Rise and Fall of the Bear Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Investment Banking in 2008 (A): Rise and Fall of the Bear | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Investment Banking in 2008 (A): Rise and Fall of the Bear are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bear Parr is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Investment Banking in 2008 (A): Rise and Fall of the Bear can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Investment Banking in 2008 (A): Rise and Fall of the Bear can leverage the sales team experience to cultivate customer relationships as Bear Parr is planning to shift buying processes online.
Need for greater diversity
– Bear Parr has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High 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 Bear Parr supply chain. Even after few cautionary changes mentioned in the HBR case study - Investment Banking in 2008 (A): Rise and Fall of the Bear, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bear Parr vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Bear Parr is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Bear Parr needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bear Parr to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Bear Parr 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.
Lack of clear differentiation of Bear Parr products
– To increase the profitability and margins on the products, Bear Parr needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Investment Banking in 2008 (A): Rise and Fall of the Bear HBR case study mentions - Bear Parr 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Investment Banking in 2008 (A): Rise and Fall of the Bear, is just above the industry average. Bear Parr 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Bear Parr has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Investment Banking in 2008 (A): Rise and Fall of the Bear, it seems that the employees of Bear Parr 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 Investment Banking in 2008 (A): Rise and Fall of the Bear | 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 Investment Banking in 2008 (A): Rise and Fall of the Bear are -
Leveraging digital technologies
– Bear Parr 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.
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 Bear Parr in the consumer business. Now Bear Parr can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bear Parr 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 Bear Parr to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Bear Parr can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Investment Banking in 2008 (A): Rise and Fall of the Bear 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bear Parr is facing challenges because of the dominance of functional experts in the organization. Investment Banking in 2008 (A): Rise and Fall of the Bear 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bear Parr 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, Investment Banking in 2008 (A): Rise and Fall of the Bear, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Bear Parr 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 Investment Banking in 2008 (A): Rise and Fall of the Bear - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bear Parr to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Bear Parr to increase its market reach. Bear Parr 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bear Parr can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Bear Parr 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bear Parr can use these opportunities to build new business models that can help the communities that Bear Parr operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Bear Parr 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. Bear Parr can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Investment Banking in 2008 (A): Rise and Fall of the Bear External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Investment Banking in 2008 (A): Rise and Fall of the Bear are -
Technology acceleration in Forth Industrial Revolution
– Bear Parr has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Bear Parr needs to keep up with the evolution of technology in the Finance & Accounting 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.
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.
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. Bear Parr 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.
Consumer confidence and its impact on Bear Parr 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.
High dependence on third party suppliers
– Bear Parr 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
– Bear Parr 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bear Parr 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 Investment Banking in 2008 (A): Rise and Fall of the Bear .
Environmental challenges
– Bear Parr 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. Bear Parr can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Bear Parr business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bear Parr with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Bear Parr can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Bear Parr is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Investment Banking in 2008 (A): Rise and Fall of the Bear 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 Bear Parr needs to make to build a sustainable competitive advantage.