New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions
In January 2007, Gary Wendlandt was concerned about the US economy. As Chief Investment Officer of the New York Life Insurance Company (NYLIC), he was responsible for managing a $147 billion investment portfolio. The US housing market was weakening at a time when financial institutions had significant assets tied up in mortgage-backed securities and collateralized debt obligations. Credit risk spreads were narrowing despite a general easing of underwriting standards. Wendlandt outlined his concerns in a memo to Ted Mathas, NYLIC's Chief Operating Officer. The question before Wendlandt and his investment management team was how to implement a "quality tilt" strategy. This would require placing more of NYLIC's new cash flows into safer fixed income products. NYLIC had a responsibility to its policyholders. It was management's duty to protect the longevity and financial strength of the firm, so that it could continue to pay policyholder claims, distribute payments from annuities, and issue dividends. Wendlandt faced a classic risk/return tradeoff - i.e., lower current interest income to avoid the higher potential risk of capital losses. How should he adjust NYLIC's investment portfolio?
Swot Analysis of "New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions" written by Mary Michel, Janet L. Rovenpor includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wendlandt Nylic's facing as an external strategic factors. Some of the topics covered in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions case study are - Strategic Management Strategies, Financial analysis, Financial management, Financial markets, Recession and Finance & Accounting.
Some of the macro environment factors that can be used to understand the New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wendlandt Nylic's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wendlandt Nylic's 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions can be done for the following purposes –
1. Strategic planning using facts provided in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions case study
2. Improving business portfolio management of Wendlandt Nylic's
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 Wendlandt Nylic's
Strengths New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wendlandt Nylic's in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions Harvard Business Review case study are -
Innovation driven organization
– Wendlandt Nylic's is one of the most innovative firm in sector. Manager in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Wendlandt Nylic's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wendlandt Nylic's 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.
Sustainable margins compare to other players in Finance & Accounting industry
– New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions firm has clearly differentiated products in the market place. This has enabled Wendlandt Nylic's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Wendlandt Nylic's to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Wendlandt Nylic's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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.
Learning organization
- Wendlandt Nylic's 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 Wendlandt Nylic's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Wendlandt Nylic's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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.
Ability to recruit top talent
– Wendlandt Nylic's is one of the leading recruiters in the industry. Managers in the New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Wendlandt Nylic's 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 brand equity
– Wendlandt Nylic's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wendlandt Nylic's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Wendlandt Nylic's 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 Wendlandt Nylic's 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 Wendlandt Nylic's in the sector have low bargaining power. New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wendlandt Nylic's to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions are -
Products dominated business model
– Even though Wendlandt Nylic's 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 - New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Wendlandt Nylic's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Wendlandt Nylic's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 Wendlandt Nylic's has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Wendlandt Nylic's 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.
Low market penetration in new markets
– Outside its home market of Wendlandt Nylic's, firm in the HBR case study New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Mary Michel, Janet L. Rovenpor suggests that, Wendlandt Nylic's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 Wendlandt Nylic's 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions, it seems that the employees of Wendlandt Nylic's 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.
Slow to strategic competitive environment developments
– As New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions HBR case study mentions - Wendlandt Nylic's 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.
Need for greater diversity
– Wendlandt Nylic's 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.
Opportunities New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions | 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wendlandt Nylic's 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, New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wendlandt Nylic's can use these opportunities to build new business models that can help the communities that Wendlandt Nylic's operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Wendlandt Nylic's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Wendlandt Nylic's 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.
Buying journey improvements
– Wendlandt Nylic's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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.
Better consumer reach
– The expansion of the 5G network will help Wendlandt Nylic's to increase its market reach. Wendlandt Nylic's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wendlandt Nylic's is facing challenges because of the dominance of functional experts in the organization. New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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.
Using analytics as competitive advantage
– Wendlandt Nylic's 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wendlandt Nylic's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Wendlandt Nylic's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wendlandt Nylic's 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.
Manufacturing automation
– Wendlandt Nylic's 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.
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 Wendlandt Nylic's in the consumer business. Now Wendlandt Nylic's can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wendlandt Nylic's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wendlandt Nylic's 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.
Technology acceleration in Forth Industrial Revolution
– Wendlandt Nylic's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Wendlandt Nylic's 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.
Consumer confidence and its impact on Wendlandt Nylic's 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.
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. Wendlandt Nylic's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Wendlandt Nylic's 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions, Wendlandt Nylic's 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wendlandt Nylic's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Wendlandt Nylic's.
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, Wendlandt Nylic's 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions .
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. Wendlandt Nylic's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Environmental challenges
– Wendlandt Nylic's 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. Wendlandt Nylic's can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions 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 Wendlandt Nylic's needs to make to build a sustainable competitive advantage.
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