The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation
In response to the potential collapse of large financial institutions in 2007, the U.S. government committed trillions of dollars to loans, asset purchases, guarantees, direct spending to provide fiscal stimulus, expansionary monetary policy, and bailouts of various private financial institutions. The bailouts were especially controversial because public money was used to protect private financial institutions and their wealthy executives while ordinary citizens received no such protection. One outcome of the government's response was the proposal to enact into law the Volcker rule, which prohibited banks from engaging in proprietary trading, or trading for their own-not their clients'-benefit. Proprietary trading was believed to generate up to 10 percent of total trading revenues, which would have exceeded $5.9 billion in 2010 for the six largest American banks alone. If the Volcker rule were to become law, government agencies, including the Federal Reserve, the Securities and Exchange Commission, the FDIC, and the Office of the Comptroller of the Currency, would write the detailed regulations that would implement the law. These agencies employed civil servants but were run by political appointees with technical backgrounds. After issuing a notice of proposed rulemaking the agencies would solicit comments from the public, which would help shape the regulations. Executives of large banks needed to decide how to respond to this potential change in their business environment.
Swot Analysis of "The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation" written by Dylan Minor, Nicola Persico includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bailouts Volcker facing as an external strategic factors. Some of the topics covered in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation case study are - Strategic Management Strategies, Policy, Recession and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, technology disruption, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
increasing household debt because of falling income levels, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bailouts Volcker, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation can be done for the following purposes –
1. Strategic planning using facts provided in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation case study
2. Improving business portfolio management of Bailouts Volcker
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bailouts Volcker
Strengths The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bailouts Volcker in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation firm has clearly differentiated products in the market place. This has enabled Bailouts Volcker to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Bailouts Volcker to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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.
Ability to lead change in Innovation & Entrepreneurship field
– Bailouts Volcker 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 Bailouts Volcker in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Bailouts Volcker in the sector have low bargaining power. The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bailouts Volcker to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Bailouts Volcker 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 Dylan Minor, Nicola Persico 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 Bailouts Volcker
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bailouts Volcker does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Bailouts Volcker is present in almost all the verticals within the industry. This has provided firm in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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.
Strong track record of project management
– Bailouts Volcker is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Bailouts Volcker 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 Bailouts Volcker is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation are -
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 Bailouts Volcker supply chain. Even after few cautionary changes mentioned in the HBR case study - The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bailouts Volcker vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation can leverage the sales team experience to cultivate customer relationships as Bailouts Volcker is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation HBR case study mentions - Bailouts Volcker takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 Bailouts Volcker 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Bailouts Volcker has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Bailouts Volcker 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. Bailouts Volcker 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation, is just above the industry average. Bailouts Volcker 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.
No frontier risks strategy
– After analyzing the HBR case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation, in the dynamic environment Bailouts Volcker has struggled to respond to the nimble upstart competition. Bailouts Volcker has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 Bailouts Volcker has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Bailouts Volcker is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Bailouts Volcker needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bailouts Volcker to focus more on services rather than just following the product oriented approach.
Opportunities The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation | 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation are -
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. Bailouts Volcker can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bailouts Volcker in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Bailouts Volcker 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.
Loyalty marketing
– Bailouts Volcker 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.
Using analytics as competitive advantage
– Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bailouts Volcker to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Bailouts Volcker 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 Innovation & Entrepreneurship segment.
Creating value in data economy
– The success of analytics program of Bailouts Volcker has opened avenues for new revenue streams for the organization in the industry. This can help Bailouts Volcker to build a more holistic ecosystem as suggested in the The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation case study. Bailouts Volcker can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Bailouts Volcker 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. Bailouts Volcker 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.
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 Bailouts Volcker in the consumer business. Now Bailouts Volcker 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 Bailouts Volcker 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 Bailouts Volcker to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Bailouts Volcker can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bailouts Volcker can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Bailouts Volcker 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.
Threats The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 Bailouts Volcker.
Regulatory challenges
– Bailouts Volcker 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 Innovation & Entrepreneurship industry regulations.
Shortening product life cycle
– it is one of the major threat that Bailouts Volcker is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Bailouts Volcker has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Bailouts Volcker needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Stagnating economy with rate increase
– Bailouts Volcker 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bailouts Volcker 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation .
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. Bailouts Volcker 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.
Environmental challenges
– Bailouts Volcker 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. Bailouts Volcker can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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 Bailouts Volcker in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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.
High dependence on third party suppliers
– Bailouts Volcker 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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Bailouts Volcker can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bailouts Volcker with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation 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 Bailouts Volcker needs to make to build a sustainable competitive advantage.
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