Basel III: An Evaluation of New Banking Regulations SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Basel III: An Evaluation of New Banking Regulations
The most recent recessionary period and credit crisis has precipitated discussions on the importance of stable financial systems. Many national governments are considering enacting stricter regulation on financial markets and bank liquidity. National and international supervisors will implement regulatory adjustments through coordinated efforts or independently in the next few years. There will be major developments in the banking industry within the near future.This case provides a structure for discussing past international efforts to coordinate a strengthening of banking systems. The primary focus is the 2010 Basel negotiation to create new and more extensive internationally accepted regulations. Students can be encouraged to debate the basic concept of international rules, as well as possible versions of these rules. A central message is that such negotiations will likely continue indefinitely. China, India and other emerging nations have indicated that they are not prepared to enforce the 2010 Basel III. Furthermore, the process of analyzing banks' financial reports in order to develop evaluations of their position vis-A -vis the rules will likely be a long and complex process.With each of the major issues, this case presents the rationales for change and the strengths of Basel III's provisions, as well as the weaknesses of the proposed changes.
Swot Analysis of "Basel III: An Evaluation of New Banking Regulations" written by David Blaylock, David W. Conklin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Basel Rules facing as an external strategic factors. Some of the topics covered in Basel III: An Evaluation of New Banking Regulations case study are - Strategic Management Strategies, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Basel III: An Evaluation of New Banking Regulations casestudy better are - – there is backlash against globalization, challanges to central banks by blockchain based private currencies, wage bills are increasing, technology disruption, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China,
geopolitical disruptions, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Basel III: An Evaluation of New Banking Regulations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Basel III: An Evaluation of New Banking Regulations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Basel Rules, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Basel Rules 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 Basel III: An Evaluation of New Banking Regulations can be done for the following purposes –
1. Strategic planning using facts provided in Basel III: An Evaluation of New Banking Regulations case study
2. Improving business portfolio management of Basel Rules
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 Basel Rules
Strengths Basel III: An Evaluation of New Banking Regulations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Basel Rules in Basel III: An Evaluation of New Banking Regulations Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Basel Rules in the sector have low bargaining power. Basel III: An Evaluation of New Banking Regulations has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Basel Rules to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Basel Rules has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Basel Rules to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Basel Rules in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Basel Rules has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Basel Rules 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 Basel III: An Evaluation of New Banking Regulations 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
– Basel Rules has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Basel III: An Evaluation of New Banking Regulations 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.
Diverse revenue streams
– Basel Rules is present in almost all the verticals within the industry. This has provided firm in Basel III: An Evaluation of New Banking Regulations 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Basel Rules digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Basel Rules 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.
Cross disciplinary teams
– Horizontal connected teams at the Basel Rules 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.
Organizational Resilience of Basel Rules
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Basel Rules does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Basel Rules 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 Basel III: An Evaluation of New Banking Regulations - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Basel Rules is one of the leading recruiters in the industry. Managers in the Basel III: An Evaluation of New Banking Regulations are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Basel III: An Evaluation of New Banking Regulations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Basel III: An Evaluation of New Banking Regulations are -
High cash cycle compare to competitors
Basel Rules 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Basel III: An Evaluation of New Banking Regulations, in the dynamic environment Basel Rules has struggled to respond to the nimble upstart competition. Basel Rules has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Basel III: An Evaluation of New Banking Regulations, it seems that the employees of Basel Rules 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Basel III: An Evaluation of New Banking Regulations, is just above the industry average. Basel Rules 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.
Aligning sales with marketing
– It come across in the case study Basel III: An Evaluation of New Banking Regulations 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 Basel III: An Evaluation of New Banking Regulations can leverage the sales team experience to cultivate customer relationships as Basel Rules is planning to shift buying processes online.
Lack of clear differentiation of Basel Rules products
– To increase the profitability and margins on the products, Basel Rules needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Basel III: An Evaluation of New Banking Regulations 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 Basel Rules 's lucrative customers.
Slow to strategic competitive environment developments
– As Basel III: An Evaluation of New Banking Regulations HBR case study mentions - Basel Rules 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.
Interest costs
– Compare to the competition, Basel Rules has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, David Blaylock, David W. Conklin suggests that, Basel Rules 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 Basel Rules supply chain. Even after few cautionary changes mentioned in the HBR case study - Basel III: An Evaluation of New Banking Regulations, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Basel Rules vulnerable to further global disruptions in South East Asia.
Opportunities Basel III: An Evaluation of New Banking Regulations | 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 Basel III: An Evaluation of New Banking Regulations are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Basel Rules is facing challenges because of the dominance of functional experts in the organization. Basel III: An Evaluation of New Banking Regulations 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
– Basel Rules 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 Basel III: An Evaluation of New Banking Regulations - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Basel Rules to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Basel Rules can use these opportunities to build new business models that can help the communities that Basel Rules operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Basel Rules 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.
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. Basel Rules 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. Basel Rules 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.
Developing new processes and practices
– Basel Rules 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.
Manufacturing automation
– Basel Rules 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Basel Rules 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 Basel Rules to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Basel Rules can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Basel III: An Evaluation of New Banking Regulations 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Basel Rules 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.
Better consumer reach
– The expansion of the 5G network will help Basel Rules to increase its market reach. Basel Rules 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.
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 Basel Rules 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Basel Rules 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.
Threats Basel III: An Evaluation of New Banking Regulations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Basel III: An Evaluation of New Banking Regulations are -
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.
Consumer confidence and its impact on Basel Rules 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Basel III: An Evaluation of New Banking Regulations, Basel Rules 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 .
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. Basel Rules needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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. Basel Rules 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.
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 Basel Rules.
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 Basel Rules in the Finance & Accounting sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Basel Rules has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Basel Rules 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.
Shortening product life cycle
– it is one of the major threat that Basel Rules is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Stagnating economy with rate increase
– Basel Rules 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Basel Rules with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Basel Rules business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Basel III: An Evaluation of New Banking Regulations 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 Basel III: An Evaluation of New Banking Regulations 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 Basel III: An Evaluation of New Banking Regulations 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 Basel III: An Evaluation of New Banking Regulations 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 Basel III: An Evaluation of New Banking Regulations 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 Basel Rules needs to make to build a sustainable competitive advantage.
