Case Study Description of Gerry Pasciucco at AIG Financial Products (A)
Gerry Pasciucco was appointed to lead American International Group's Financial Products (AIGFP) group after the government bailout of AIG in 2008 and charged with the task of shutting down the division while minimizing the government's losses. AIGFP's failed trades had threatened to bring down the entire company, and the government had responded by loaning AIG $182 billion in exchange for 79.9% of the company, because it feared that AIG's failure could trigger the collapse of the entire global financial system. Several months into his tenure, the division paid large retention bonuses to all of its professionals according to a contract negotiated before he joined AIGFP. These bonuses were seen by the public as going to the very people whose mistakes resulted in the need for a bailout in the first place and resulted in an unprecedented storm of public outrage, culminating in a Congressional hearing in which AIG's CEO, Ed Liddy, was repeatedly attacked for making the bonus payments. Liddy responded by asking people who had received the largest payments to return the money to the company. Now Pasciucco has to decide how to lead his team through this crisis while grappling with the larger issues of the justice of the retention payments.
Swot Analysis of "Gerry Pasciucco at AIG Financial Products (A)" written by Gautam Mukunda, Thomas J. DeLong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pasciucco Aig facing as an external strategic factors. Some of the topics covered in Gerry Pasciucco at AIG Financial Products (A) case study are - Strategic Management Strategies, Crisis management, Ethics, Government, Leading teams, Marketing, Recession and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Gerry Pasciucco at AIG Financial Products (A) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Gerry Pasciucco at AIG Financial Products (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gerry Pasciucco at AIG Financial Products (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pasciucco Aig, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pasciucco Aig 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 Gerry Pasciucco at AIG Financial Products (A) can be done for the following purposes –
1. Strategic planning using facts provided in Gerry Pasciucco at AIG Financial Products (A) case study
2. Improving business portfolio management of Pasciucco Aig
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 Pasciucco Aig
Strengths Gerry Pasciucco at AIG Financial Products (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pasciucco Aig in Gerry Pasciucco at AIG Financial Products (A) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Gerry Pasciucco at AIG Financial Products (A) 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.
Learning organization
- Pasciucco Aig 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 Pasciucco Aig is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gerry Pasciucco at AIG Financial Products (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Pasciucco Aig 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
– Pasciucco Aig has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pasciucco Aig 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
– Pasciucco Aig has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gerry Pasciucco at AIG Financial Products (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.
Ability to recruit top talent
– Pasciucco Aig is one of the leading recruiters in the industry. Managers in the Gerry Pasciucco at AIG Financial Products (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.
Ability to lead change in Leadership & Managing People field
– Pasciucco Aig 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 Pasciucco Aig in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Pasciucco Aig in the sector have low bargaining power. Gerry Pasciucco at AIG Financial Products (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pasciucco Aig to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Leadership & Managing People industry
– Gerry Pasciucco at AIG Financial Products (A) firm has clearly differentiated products in the market place. This has enabled Pasciucco Aig to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Pasciucco Aig to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Pasciucco Aig 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Pasciucco Aig digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pasciucco Aig 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.
Superior customer experience
– The customer experience strategy of Pasciucco Aig in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Gerry Pasciucco at AIG Financial Products (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gerry Pasciucco at AIG Financial Products (A) are -
High operating costs
– Compare to the competitors, firm in the HBR case study Gerry Pasciucco at AIG Financial Products (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 Pasciucco Aig 's lucrative customers.
Slow to strategic competitive environment developments
– As Gerry Pasciucco at AIG Financial Products (A) HBR case study mentions - Pasciucco Aig 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.
Slow decision making process
– As mentioned earlier in the report, Pasciucco Aig 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. Pasciucco Aig 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.
Capital Spending Reduction
– Even during the low interest decade, Pasciucco Aig 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 star products
– The top 2 products and services of the firm as mentioned in the Gerry Pasciucco at AIG Financial Products (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 Pasciucco Aig has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Gerry Pasciucco at AIG Financial Products (A), 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pasciucco Aig is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Gerry Pasciucco at AIG Financial Products (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.
Need for greater diversity
– Pasciucco Aig 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.
High cash cycle compare to competitors
Pasciucco Aig 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.
Skills based hiring
– The stress on hiring functional specialists at Pasciucco Aig 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.
Products dominated business model
– Even though Pasciucco Aig 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 - Gerry Pasciucco at AIG Financial Products (A) should strive to include more intangible value offerings along with its core products and services.
Opportunities Gerry Pasciucco at AIG Financial Products (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 Gerry Pasciucco at AIG Financial Products (A) are -
Learning at scale
– Online learning technologies has now opened space for Pasciucco Aig 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
– Pasciucco Aig 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 Gerry Pasciucco at AIG Financial Products (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pasciucco Aig to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pasciucco Aig 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 Pasciucco Aig to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pasciucco Aig 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pasciucco Aig can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pasciucco Aig 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, Gerry Pasciucco at AIG Financial Products (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Pasciucco Aig 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.
Buying journey improvements
– Pasciucco Aig can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Gerry Pasciucco at AIG Financial Products (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.
Building a culture of innovation
– managers at Pasciucco Aig 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 Leadership & Managing People segment.
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. Pasciucco Aig 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. Pasciucco Aig 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.
Creating value in data economy
– The success of analytics program of Pasciucco Aig has opened avenues for new revenue streams for the organization in the industry. This can help Pasciucco Aig to build a more holistic ecosystem as suggested in the Gerry Pasciucco at AIG Financial Products (A) case study. Pasciucco Aig can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Pasciucco Aig 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pasciucco Aig can use these opportunities to build new business models that can help the communities that Pasciucco Aig operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Threats Gerry Pasciucco at AIG Financial Products (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gerry Pasciucco at AIG Financial Products (A) are -
Consumer confidence and its impact on Pasciucco Aig 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.
Technology acceleration in Forth Industrial Revolution
– Pasciucco Aig has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Pasciucco Aig 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.
Regulatory challenges
– Pasciucco Aig 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 Leadership & Managing People industry regulations.
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. Pasciucco Aig needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Pasciucco Aig in the Leadership & Managing People sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Pasciucco Aig 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pasciucco Aig 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 Gerry Pasciucco at AIG Financial Products (A) .
High dependence on third party suppliers
– Pasciucco Aig 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.
Shortening product life cycle
– it is one of the major threat that Pasciucco Aig is facing in Leadership & Managing People 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 Pasciucco Aig business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pasciucco Aig with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Pasciucco Aig 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.
Increasing wage structure of Pasciucco Aig
– 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 Pasciucco Aig.
Weighted SWOT Analysis of Gerry Pasciucco at AIG Financial Products (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 Gerry Pasciucco at AIG Financial Products (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 Gerry Pasciucco at AIG Financial Products (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 Gerry Pasciucco at AIG Financial Products (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 Gerry Pasciucco at AIG Financial Products (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 Pasciucco Aig needs to make to build a sustainable competitive advantage.