Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis
This case describes the efforts of Ben Bernanke, Chairman of the Federal Reserve, to improve liquidity in money markets during the subprime crisis. The case explains the four main new tools for monetary policy (or quantitative easing) the Federal Reserve has used between 2007 and 2009: the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), the Term Securities Lending Facility (TSLF), and the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF).
Swot Analysis of "Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis" written by Aldo Musacchio, Dante Roscini includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Facility Subprime facing as an external strategic factors. Some of the topics covered in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis case study are - Strategic Management Strategies, Financial management, International business, Policy, Recession and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis casestudy better are - – there is increasing trade war between United States & China, increasing transportation and logistics costs, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, challanges to central banks by blockchain based private currencies,
technology disruption, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Facility Subprime, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Facility Subprime 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis can be done for the following purposes –
1. Strategic planning using facts provided in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis case study
2. Improving business portfolio management of Facility Subprime
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 Facility Subprime
Strengths Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Facility Subprime in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis Harvard Business Review case study are -
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Facility Subprime digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Facility Subprime has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Facility Subprime has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Facility Subprime to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Facility Subprime 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 Facility Subprime in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Facility Subprime 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 Facility Subprime is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis firm has clearly differentiated products in the market place. This has enabled Facility Subprime to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Facility Subprime to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Facility Subprime 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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.
Training and development
– Facility Subprime has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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.
Effective Research and Development (R&D)
– Facility Subprime 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis - 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
– Facility Subprime has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Facility Subprime 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.
Ability to recruit top talent
– Facility Subprime is one of the leading recruiters in the industry. Managers in the Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Facility Subprime 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.
Weaknesses Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Facility Subprime has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Aldo Musacchio, Dante Roscini suggests that, Facility Subprime 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.
Skills based hiring
– The stress on hiring functional specialists at Facility Subprime 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.
Capital Spending Reduction
– Even during the low interest decade, Facility Subprime 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Facility Subprime 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis, in the dynamic environment Facility Subprime has struggled to respond to the nimble upstart competition. Facility Subprime has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Facility Subprime 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. Facility Subprime 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Facility Subprime needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Facility Subprime 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 - Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Facility Subprime 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.
Low market penetration in new markets
– Outside its home market of Facility Subprime, firm in the HBR case study Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis | 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis are -
Manufacturing automation
– Facility Subprime 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Facility Subprime can use these opportunities to build new business models that can help the communities that Facility Subprime 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 Facility Subprime 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.
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. Facility Subprime 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. Facility Subprime 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.
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. Facility Subprime can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Facility Subprime can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Facility Subprime is facing challenges because of the dominance of functional experts in the organization. Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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.
Better consumer reach
– The expansion of the 5G network will help Facility Subprime to increase its market reach. Facility Subprime 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Facility Subprime 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Facility Subprime 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, Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis, 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 Facility Subprime 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.
Developing new processes and practices
– Facility Subprime 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.
Creating value in data economy
– The success of analytics program of Facility Subprime has opened avenues for new revenue streams for the organization in the industry. This can help Facility Subprime to build a more holistic ecosystem as suggested in the Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis case study. Facility Subprime can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis are -
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.
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 Facility Subprime business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Facility Subprime 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.
Increasing wage structure of Facility Subprime
– 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 Facility Subprime.
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 Facility Subprime.
Environmental challenges
– Facility Subprime 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. Facility Subprime can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Facility Subprime with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Facility Subprime in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Facility Subprime 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.
Consumer confidence and its impact on Facility Subprime 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 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. Facility Subprime needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Facility Subprime 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis, Facility Subprime 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 .
Weighted SWOT Analysis of Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis 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 Facility Subprime needs to make to build a sustainable competitive advantage.
