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 - – increasing household debt because of falling income levels, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, 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 -
Organizational Resilience of Pasciucco Aig
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pasciucco Aig does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
High brand equity
– Pasciucco Aig has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pasciucco Aig to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Strong track record of project management
– Pasciucco Aig is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
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.
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.
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 -
Increasing silos among functional specialists
– The organizational structure of Pasciucco Aig is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Pasciucco Aig needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pasciucco Aig to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gerry Pasciucco at AIG Financial Products (A), in the dynamic environment Pasciucco Aig has struggled to respond to the nimble upstart competition. Pasciucco Aig has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Interest costs
– Compare to the competition, Pasciucco Aig 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.
Lack of clear differentiation of Pasciucco Aig products
– To increase the profitability and margins on the products, Pasciucco Aig needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Low market penetration in new markets
– Outside its home market of Pasciucco Aig, firm in the HBR case study Gerry Pasciucco at AIG Financial Products (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
Aligning sales with marketing
– It come across in the case study Gerry Pasciucco at AIG Financial Products (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Gerry Pasciucco at AIG Financial Products (A) can leverage the sales team experience to cultivate customer relationships as Pasciucco Aig is planning to shift buying processes online.
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 -
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.
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.
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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Pasciucco Aig to increase its market reach. Pasciucco Aig 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.
Developing new processes and practices
– Pasciucco Aig 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.
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.
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 Pasciucco Aig 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.
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. Pasciucco Aig can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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 -
Environmental challenges
– Pasciucco Aig needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pasciucco Aig can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gerry Pasciucco at AIG Financial Products (A), Pasciucco Aig 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 .
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pasciucco Aig 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.
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.
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) .
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.
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.
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.
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.