Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s
As the commercial real estate market began to crash in early 1990, heavily exposed banks like Citibank and Chase Manhattan were left largely undercapitalized. John Reed, Citibank Chairman and CEO, was caught off guard by the sudden market plunge. While Reed struggled to maintain the capital reserve of us his bank further weaknesses within Citi began to emerge. In addition, to missing the coming of the real estate crisis Citi had had poorly managed internal operations, overvalued acquisitions and grown heavy from organizational excess. The poor management left Citi in the care of Federal Regulators, worried about the banks solvency. The case examines the roots of these problems and the steps taken by Reed to return the bank to a well-managed and stable institution.
Swot Analysis of "Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s" written by Julie M. Wulf, Ian McKown Cornell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Citi Reed facing as an external strategic factors. Some of the topics covered in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study are - Strategic Management Strategies, Crisis management, Leadership, Organizational culture, Organizational structure, Reorganization, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s casestudy better are - – increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, technology disruption, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Citi Reed, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s can be done for the following purposes –
1. Strategic planning using facts provided in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study
2. Improving business portfolio management of Citi Reed
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Citi Reed
Strengths Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Citi Reed in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s Harvard Business Review case study are -
Innovation driven organization
– Citi Reed is one of the most innovative firm in sector. Manager in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Leadership & Managing People industry
– Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s firm has clearly differentiated products in the market place. This has enabled Citi Reed to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Citi Reed to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Citi Reed in the sector have low bargaining power. Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Citi Reed to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Citi Reed is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Citi Reed 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 Julie M. Wulf, Ian McKown Cornell 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.
Diverse revenue streams
– Citi Reed is present in almost all the verticals within the industry. This has provided firm in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
Ability to lead change in Leadership & Managing People field
– Citi Reed 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 Citi Reed in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Citi Reed has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Citi Reed 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
– Citi Reed has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
Organizational Resilience of Citi Reed
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Citi Reed does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Citi Reed 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.
Superior customer experience
– The customer experience strategy of Citi Reed in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are -
Products dominated business model
– Even though Citi Reed 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 - Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Citi Reed 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. Citi Reed 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 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 Citi Reed supply chain. Even after few cautionary changes mentioned in the HBR case study - Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Citi Reed vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Citi Reed products
– To increase the profitability and margins on the products, Citi Reed needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, is just above the industry average. Citi Reed 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.
Low market penetration in new markets
– Outside its home market of Citi Reed, firm in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Citi Reed 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 cash cycle compare to competitors
Citi Reed 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it seems that the employees of Citi Reed 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.
No frontier risks strategy
– After analyzing the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Opportunities Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Citi Reed is facing challenges because of the dominance of functional experts in the organization. Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Citi Reed can use these opportunities to build new business models that can help the communities that Citi Reed operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Citi Reed 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. Citi Reed 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Citi Reed in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Citi Reed can develop new processes and procedures in Leadership & Managing People 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.
Leveraging digital technologies
– Citi Reed 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.
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 Citi Reed 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Citi Reed 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, Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Citi Reed in the consumer business. Now Citi Reed can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Citi Reed to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Citi Reed 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.
Creating value in data economy
– The success of analytics program of Citi Reed has opened avenues for new revenue streams for the organization in the industry. This can help Citi Reed to build a more holistic ecosystem as suggested in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study. Citi Reed can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Citi Reed 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.
Threats Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are -
Stagnating economy with rate increase
– Citi Reed 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Citi Reed can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s .
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. Citi Reed 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.
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. Citi Reed needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Citi Reed has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Citi Reed needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Citi Reed 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.
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 Citi Reed in the Leadership & Managing People sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Citi Reed with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Citi Reed
– 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 Citi Reed.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Citi Reed in the Leadership & Managing People industry. The Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, Citi Reed may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Weighted SWOT Analysis of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed needs to make to build a sustainable competitive advantage.
