Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market
This case examines Dimensional Fund Advisors (DFA)'s decision to enter the retirement market with their new "Dimensional Managed DC" product, a complete retirement solution that aimed to provide investors with what they really wanted: the same standard of living in retirement that they had while working. The case considers the challenges of entering the fiercely competitive retirement market, introduces students to the large literature on the behavioral biases of individual investors, and asks students to evaluate an innovative new financial product designed to automate the process of retirement investing.
Swot Analysis of "Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market" written by Lauren H. Cohen, Christopher Malloy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Retirement Dimensional facing as an external strategic factors. Some of the topics covered in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Retirement Dimensional, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Retirement Dimensional 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market can be done for the following purposes –
1. Strategic planning using facts provided in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market case study
2. Improving business portfolio management of Retirement Dimensional
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 Retirement Dimensional
Strengths Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Retirement Dimensional in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market Harvard Business Review case study are -
Diverse revenue streams
– Retirement Dimensional is present in almost all the verticals within the industry. This has provided firm in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Retirement Dimensional digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Retirement Dimensional 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.
Effective Research and Development (R&D)
– Retirement Dimensional 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Retirement Dimensional 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 Lauren H. Cohen, Christopher Malloy 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.
High brand equity
– Retirement Dimensional has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Retirement Dimensional to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Retirement Dimensional has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Retirement Dimensional has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Retirement Dimensional 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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.
Organizational Resilience of Retirement Dimensional
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Retirement Dimensional does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Retirement Dimensional in the sector have low bargaining power. Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Retirement Dimensional to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Retirement Dimensional 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 Retirement Dimensional is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Finance & Accounting field
– Retirement Dimensional 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 Retirement Dimensional in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market are -
Workers concerns about automation
– As automation is fast increasing in the segment, Retirement Dimensional 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.
Increasing silos among functional specialists
– The organizational structure of Retirement Dimensional is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Retirement Dimensional needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Retirement Dimensional to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market can leverage the sales team experience to cultivate customer relationships as Retirement Dimensional is planning to shift buying processes online.
Products dominated business model
– Even though Retirement Dimensional 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 - Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Retirement Dimensional 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Retirement Dimensional is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Retirement Dimensional products
– To increase the profitability and margins on the products, Retirement Dimensional needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Retirement Dimensional 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, Retirement Dimensional 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. Retirement Dimensional 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Lauren H. Cohen, Christopher Malloy suggests that, Retirement Dimensional 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Retirement Dimensional 's lucrative customers.
Opportunities Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market | 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Retirement Dimensional 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Retirement Dimensional 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.
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. Retirement Dimensional can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Retirement Dimensional 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.
Buying journey improvements
– Retirement Dimensional can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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.
Learning at scale
– Online learning technologies has now opened space for Retirement Dimensional 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.
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. Retirement Dimensional can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Retirement Dimensional 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.
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 Retirement Dimensional in the consumer business. Now Retirement Dimensional can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Retirement Dimensional can use these opportunities to build new business models that can help the communities that Retirement Dimensional operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Retirement Dimensional is facing challenges because of the dominance of functional experts in the organization. Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Retirement Dimensional 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.
Leveraging digital technologies
– Retirement Dimensional 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.
Threats Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Retirement Dimensional.
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 Retirement Dimensional in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Retirement Dimensional 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.
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, Retirement Dimensional 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market .
Consumer confidence and its impact on Retirement Dimensional 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.
Increasing wage structure of Retirement Dimensional
– 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 Retirement Dimensional.
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. Retirement Dimensional 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.
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. Retirement Dimensional can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market, Retirement Dimensional 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. Retirement Dimensional needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Retirement Dimensional 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.
Weighted SWOT Analysis of Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Dimensional Fund Advisors (DFA)'s Entry into the Retirement Market 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 Retirement Dimensional needs to make to build a sustainable competitive advantage.