Case Study Description of RBC - Financing Oil Sands (A)
Under pressure from the Rainforest Action Network to make their lending policies more sustainable, executives at the Royal Bank of Canada who deal with issues of corporate citizenship and sustainability must decide whether to continue financing companies involved in extracting oil from the tar sands of Alberta, Canada. The case asks students to consider the following questions: 1) Should banks lend to any business or industry the government deems to be sustainable? 2) What are the risks of lending to businesses some stakeholders deem unsustainable? 3) How should banks respond when pressured by an interest group? 4) How does a bank decide what is sustainable lending practice? The supplement B case RBC-Financing Oil Sands (B), product number 910M16, is also available.
Authors :: Michael Sider, Jana Seijts, Chandra Sekhar Ramasastry
Swot Analysis of "RBC - Financing Oil Sands (A)" written by Michael Sider, Jana Seijts, Chandra Sekhar Ramasastry includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sands Lending facing as an external strategic factors. Some of the topics covered in RBC - Financing Oil Sands (A) case study are - Strategic Management Strategies, International business, Strategy, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the RBC - Financing Oil Sands (A) casestudy better are - – supply chains are disrupted by pandemic , there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, wage bills are increasing, central banks are concerned over increasing inflation,
increasing commodity prices, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of RBC - Financing Oil Sands (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in RBC - Financing Oil Sands (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sands Lending, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sands Lending 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 RBC - Financing Oil Sands (A) can be done for the following purposes –
1. Strategic planning using facts provided in RBC - Financing Oil Sands (A) case study
2. Improving business portfolio management of Sands Lending
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 Sands Lending
Strengths RBC - Financing Oil Sands (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sands Lending in RBC - Financing Oil Sands (A) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Sands Lending 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.
High brand equity
– Sands Lending has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sands Lending to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Sands Lending has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sands Lending 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.
Training and development
– Sands Lending has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in RBC - Financing Oil Sands (A) 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)
– Sands Lending 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 RBC - Financing Oil Sands (A) - 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
– Sands Lending is one of the leading recruiters in the industry. Managers in the RBC - Financing Oil Sands (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Sands Lending in the sector have low bargaining power. RBC - Financing Oil Sands (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sands Lending to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Sands Lending is one of the most innovative firm in sector. Manager in RBC - Financing Oil Sands (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Sands Lending has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in RBC - Financing Oil Sands (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Sands Lending is present in almost all the verticals within the industry. This has provided firm in RBC - Financing Oil Sands (A) 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 Sands Lending digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sands Lending 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.
Learning organization
- Sands Lending 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 Sands Lending is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in RBC - Financing Oil Sands (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses RBC - Financing Oil Sands (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of RBC - Financing Oil Sands (A) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the RBC - Financing Oil Sands (A) 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 Sands Lending has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study RBC - Financing Oil Sands (A), it seems that the employees of Sands Lending 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.
Skills based hiring
– The stress on hiring functional specialists at Sands Lending 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.
Slow to strategic competitive environment developments
– As RBC - Financing Oil Sands (A) HBR case study mentions - Sands Lending 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.
Products dominated business model
– Even though Sands Lending 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 - RBC - Financing Oil Sands (A) should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Sands Lending, firm in the HBR case study RBC - Financing Oil Sands (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study RBC - Financing Oil Sands (A) 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 Sands Lending 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study RBC - Financing Oil Sands (A), in the dynamic environment Sands Lending has struggled to respond to the nimble upstart competition. Sands Lending has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Sands Lending 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.
Aligning sales with marketing
– It come across in the case study RBC - Financing Oil Sands (A) 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 RBC - Financing Oil Sands (A) can leverage the sales team experience to cultivate customer relationships as Sands Lending is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sands Lending is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study RBC - Financing Oil Sands (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities RBC - Financing Oil Sands (A) | 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 RBC - Financing Oil Sands (A) are -
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 Sands Lending 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.
Developing new processes and practices
– Sands Lending 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.
Learning at scale
– Online learning technologies has now opened space for Sands Lending to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sands Lending is facing challenges because of the dominance of functional experts in the organization. RBC - Financing Oil Sands (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sands Lending can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Sands Lending can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Sands Lending 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.
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 Sands Lending in the consumer business. Now Sands Lending can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Sands Lending 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 RBC - Financing Oil Sands (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sands Lending to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sands Lending can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Sands Lending can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. RBC - Financing Oil Sands (A) 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.
Loyalty marketing
– Sands Lending 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.
Manufacturing automation
– Sands Lending 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.
Threats RBC - Financing Oil Sands (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study RBC - Financing Oil Sands (A) are -
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 Sands Lending business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Sands Lending 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sands Lending with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study RBC - Financing Oil Sands (A), Sands Lending 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 .
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 Sands Lending in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Sands Lending 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.
Technology acceleration in Forth Industrial Revolution
– Sands Lending has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Sands Lending 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sands Lending 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 RBC - Financing Oil Sands (A) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sands Lending 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.
Consumer confidence and its impact on Sands Lending 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.
Shortening product life cycle
– it is one of the major threat that Sands Lending 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.
High dependence on third party suppliers
– Sands Lending 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.
Weighted SWOT Analysis of RBC - Financing Oil Sands (A) 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 RBC - Financing Oil Sands (A) 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 RBC - Financing Oil Sands (A) 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 RBC - Financing Oil Sands (A) 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 RBC - Financing Oil Sands (A) 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 Sands Lending needs to make to build a sustainable competitive advantage.
