High Frequency Trading and Dark Pools: An Interview with John Succo SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of High Frequency Trading and Dark Pools: An Interview with John Succo
In this Executive Focus article, Emory Zink and Travis Selmier interview John Succo, an expert on derivatives securities and securities trading, who discusses the technical nature and the policy debates regarding how high frequency trading (HFT) and so-called 'dark pools' affect equity trading. Succo, a co-founder of one of the world's largest derivatives-trading hedge funds, deflates the arguments that HFT adds to liquidity, showing us how the mechanism of HFT actually removes liquidity from the market. Wondering why regulatory authorities accepted speed in lieu of liquidity, he finds politics and lobbying as key factors. Dark pools, on the other hand, are trading arrangements that benefit both their members and the general trading public by dampening stock price swings. This interview addresses many questions about HFT and dark pools.
Swot Analysis of "High Frequency Trading and Dark Pools: An Interview with John Succo" written by Travis W. Selmier II includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hft Trading facing as an external strategic factors. Some of the topics covered in High Frequency Trading and Dark Pools: An Interview with John Succo case study are - Strategic Management Strategies, Financial markets and Finance & Accounting.
Some of the macro environment factors that can be used to understand the High Frequency Trading and Dark Pools: An Interview with John Succo casestudy better are - – increasing transportation and logistics costs, increasing energy prices, technology disruption, geopolitical disruptions, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of High Frequency Trading and Dark Pools: An Interview with John Succo
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in High Frequency Trading and Dark Pools: An Interview with John Succo case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hft Trading, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hft Trading 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 High Frequency Trading and Dark Pools: An Interview with John Succo can be done for the following purposes –
1. Strategic planning using facts provided in High Frequency Trading and Dark Pools: An Interview with John Succo case study
2. Improving business portfolio management of Hft Trading
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 Hft Trading
Strengths High Frequency Trading and Dark Pools: An Interview with John Succo | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hft Trading in High Frequency Trading and Dark Pools: An Interview with John Succo Harvard Business Review case study are -
Ability to recruit top talent
– Hft Trading is one of the leading recruiters in the industry. Managers in the High Frequency Trading and Dark Pools: An Interview with John Succo are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Hft Trading is one of the most innovative firm in sector. Manager in High Frequency Trading and Dark Pools: An Interview with John Succo Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Hft Trading digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hft Trading 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.
Training and development
– Hft Trading has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in High Frequency Trading and Dark Pools: An Interview with John Succo 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.
Analytics focus
– Hft Trading 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 Travis W. Selmier II 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 Hft Trading
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hft Trading does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Hft Trading is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Finance & Accounting industry
– High Frequency Trading and Dark Pools: An Interview with John Succo firm has clearly differentiated products in the market place. This has enabled Hft Trading to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Hft Trading to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Hft Trading 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 High Frequency Trading and Dark Pools: An Interview with John Succo - 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
– Hft Trading has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hft Trading 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.
Operational resilience
– The operational resilience strategy in the High Frequency Trading and Dark Pools: An Interview with John Succo 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.
Cross disciplinary teams
– Horizontal connected teams at the Hft Trading 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 High Frequency Trading and Dark Pools: An Interview with John Succo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of High Frequency Trading and Dark Pools: An Interview with John Succo are -
High cash cycle compare to competitors
Hft Trading 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hft Trading is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study High Frequency Trading and Dark Pools: An Interview with John Succo can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study High Frequency Trading and Dark Pools: An Interview with John Succo 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 Hft Trading 's lucrative customers.
Aligning sales with marketing
– It come across in the case study High Frequency Trading and Dark Pools: An Interview with John Succo 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 High Frequency Trading and Dark Pools: An Interview with John Succo can leverage the sales team experience to cultivate customer relationships as Hft Trading is planning to shift buying processes online.
Need for greater diversity
– Hft Trading 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.
Slow decision making process
– As mentioned earlier in the report, Hft Trading 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. Hft Trading 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.
Low market penetration in new markets
– Outside its home market of Hft Trading, firm in the HBR case study High Frequency Trading and Dark Pools: An Interview with John Succo needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Hft Trading 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study High Frequency Trading and Dark Pools: An Interview with John Succo, in the dynamic environment Hft Trading has struggled to respond to the nimble upstart competition. Hft Trading has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Travis W. Selmier II suggests that, Hft Trading 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 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 Hft Trading supply chain. Even after few cautionary changes mentioned in the HBR case study - High Frequency Trading and Dark Pools: An Interview with John Succo, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hft Trading vulnerable to further global disruptions in South East Asia.
Opportunities High Frequency Trading and Dark Pools: An Interview with John Succo | 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 High Frequency Trading and Dark Pools: An Interview with John Succo are -
Manufacturing automation
– Hft Trading 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 Hft Trading in the consumer business. Now Hft Trading can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hft Trading 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.
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 Hft Trading 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.
Building a culture of innovation
– managers at Hft Trading 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.
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. Hft Trading can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Hft Trading 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.
Better consumer reach
– The expansion of the 5G network will help Hft Trading to increase its market reach. Hft Trading 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.
Using analytics as competitive advantage
– Hft Trading 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 High Frequency Trading and Dark Pools: An Interview with John Succo - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hft Trading to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Hft Trading 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hft Trading 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, High Frequency Trading and Dark Pools: An Interview with John Succo, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hft Trading is facing challenges because of the dominance of functional experts in the organization. High Frequency Trading and Dark Pools: An Interview with John Succo 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hft Trading 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 Hft Trading to hire the very best people irrespective of their geographical location.
Threats High Frequency Trading and Dark Pools: An Interview with John Succo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study High Frequency Trading and Dark Pools: An Interview with John Succo are -
Shortening product life cycle
– it is one of the major threat that Hft Trading is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Hft Trading.
Regulatory challenges
– Hft Trading 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.
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 Hft Trading business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Hft Trading
– 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 Hft Trading.
Environmental challenges
– Hft Trading 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. Hft Trading can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Hft Trading can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Hft Trading 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hft Trading with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Hft Trading has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Hft Trading 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.
High dependence on third party suppliers
– Hft Trading 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study High Frequency Trading and Dark Pools: An Interview with John Succo, Hft Trading 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 High Frequency Trading and Dark Pools: An Interview with John Succo 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 High Frequency Trading and Dark Pools: An Interview with John Succo 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 High Frequency Trading and Dark Pools: An Interview with John Succo 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 High Frequency Trading and Dark Pools: An Interview with John Succo 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 High Frequency Trading and Dark Pools: An Interview with John Succo 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 Hft Trading needs to make to build a sustainable competitive advantage.