Swot Analysis of "USAA: Catastrophe Risk Financing" written by Kenneth A. Froot, Mark Seasholes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Catastrophe Usaa facing as an external strategic factors. Some of the topics covered in USAA: Catastrophe Risk Financing case study are - Strategic Management Strategies, Financial markets, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the USAA: Catastrophe Risk Financing casestudy better are - – central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , wage bills are increasing, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of USAA: Catastrophe Risk Financing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in USAA: Catastrophe Risk Financing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Catastrophe Usaa, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Catastrophe Usaa 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 USAA: Catastrophe Risk Financing can be done for the following purposes –
1. Strategic planning using facts provided in USAA: Catastrophe Risk Financing case study
2. Improving business portfolio management of Catastrophe Usaa
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 Catastrophe Usaa
Strengths USAA: Catastrophe Risk Financing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Catastrophe Usaa in USAA: Catastrophe Risk Financing Harvard Business Review case study are -
Learning organization
- Catastrophe Usaa 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 Catastrophe Usaa is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in USAA: Catastrophe Risk Financing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the USAA: Catastrophe Risk Financing 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.
Effective Research and Development (R&D)
– Catastrophe Usaa 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 USAA: Catastrophe Risk Financing - 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
– Catastrophe Usaa is one of the leading recruiters in the industry. Managers in the USAA: Catastrophe Risk Financing are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Catastrophe Usaa has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Catastrophe Usaa to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Catastrophe Usaa in the sector have low bargaining power. USAA: Catastrophe Risk Financing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Catastrophe Usaa to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Catastrophe Usaa
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Catastrophe Usaa does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Catastrophe Usaa is one of the most innovative firm in sector. Manager in USAA: Catastrophe Risk Financing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Catastrophe Usaa has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Catastrophe Usaa 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
– Catastrophe Usaa has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in USAA: Catastrophe Risk Financing 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.
Sustainable margins compare to other players in Finance & Accounting industry
– USAA: Catastrophe Risk Financing firm has clearly differentiated products in the market place. This has enabled Catastrophe Usaa to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Catastrophe Usaa to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Catastrophe Usaa 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 USAA: Catastrophe Risk Financing HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses USAA: Catastrophe Risk Financing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of USAA: Catastrophe Risk Financing are -
High cash cycle compare to competitors
Catastrophe Usaa 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.
Capital Spending Reduction
– Even during the low interest decade, Catastrophe Usaa has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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 Catastrophe Usaa supply chain. Even after few cautionary changes mentioned in the HBR case study - USAA: Catastrophe Risk Financing, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Catastrophe Usaa vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Catastrophe Usaa products
– To increase the profitability and margins on the products, Catastrophe Usaa needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Catastrophe Usaa 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 - USAA: Catastrophe Risk Financing should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study USAA: Catastrophe Risk Financing, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Kenneth A. Froot, Mark Seasholes suggests that, Catastrophe Usaa 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study USAA: Catastrophe Risk Financing, in the dynamic environment Catastrophe Usaa has struggled to respond to the nimble upstart competition. Catastrophe Usaa has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Catastrophe Usaa 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study USAA: Catastrophe Risk Financing, it seems that the employees of Catastrophe Usaa don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Catastrophe Usaa is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study USAA: Catastrophe Risk Financing 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 USAA: Catastrophe Risk Financing | 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 USAA: Catastrophe Risk Financing are -
Loyalty marketing
– Catastrophe Usaa 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Catastrophe Usaa 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.
Better consumer reach
– The expansion of the 5G network will help Catastrophe Usaa to increase its market reach. Catastrophe Usaa 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.
Learning at scale
– Online learning technologies has now opened space for Catastrophe Usaa 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.
Using analytics as competitive advantage
– Catastrophe Usaa 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 USAA: Catastrophe Risk Financing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Catastrophe Usaa to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Catastrophe Usaa can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Catastrophe Usaa 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Catastrophe Usaa 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, USAA: Catastrophe Risk Financing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Catastrophe Usaa can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Catastrophe Usaa has opened avenues for new revenue streams for the organization in the industry. This can help Catastrophe Usaa to build a more holistic ecosystem as suggested in the USAA: Catastrophe Risk Financing case study. Catastrophe Usaa can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Catastrophe Usaa 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 Catastrophe Usaa to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Catastrophe Usaa 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.
Leveraging digital technologies
– Catastrophe Usaa 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 USAA: Catastrophe Risk Financing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study USAA: Catastrophe Risk Financing are -
Regulatory challenges
– Catastrophe Usaa 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.
Stagnating economy with rate increase
– Catastrophe Usaa 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.
Shortening product life cycle
– it is one of the major threat that Catastrophe Usaa is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Catastrophe Usaa business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Catastrophe Usaa 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Catastrophe Usaa 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 USAA: Catastrophe Risk Financing .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study USAA: Catastrophe Risk Financing, Catastrophe Usaa 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 .
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. Catastrophe Usaa can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Catastrophe Usaa has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Catastrophe Usaa 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.
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 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. Catastrophe Usaa needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Catastrophe Usaa.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Catastrophe Usaa 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 USAA: Catastrophe Risk Financing 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 USAA: Catastrophe Risk Financing 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 USAA: Catastrophe Risk Financing 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 USAA: Catastrophe Risk Financing 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 USAA: Catastrophe Risk Financing 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 Catastrophe Usaa needs to make to build a sustainable competitive advantage.
