Sovereign Wealth Funds: For Profits or Politics? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sovereign Wealth Funds: For Profits or Politics?
On March 21, 2008, the U.S. government secured an agreement from two leading sovereign wealth funds (SWFs) to adopt a new set of investment principles to govern the Funds' activities. SWFs, broadly defined as an investment fund owned by a national or a government, were gaining prominence across the globe, especially with their recent investments in troubled U.S. financial firms that had suffered significant losses from the subprime mortgage crisis. Yet SWFs were viewed with suspicions amid concerns that they could have potential political interests behind their investments. Many SWFs also lacked disclosure or transparency regarding their activities or investment goals. Countries such as the United States felt that some kind of international regulation had to be imposed, but would it be possible?
Swot Analysis of "Sovereign Wealth Funds: For Profits or Politics?" written by Laura Alfaro, Renee Kim includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Swfs Sovereign facing as an external strategic factors. Some of the topics covered in Sovereign Wealth Funds: For Profits or Politics? case study are - Strategic Management Strategies, Policy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Sovereign Wealth Funds: For Profits or Politics? casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, wage bills are increasing, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing commodity prices, increasing household debt because of falling income levels,
increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Sovereign Wealth Funds: For Profits or Politics?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sovereign Wealth Funds: For Profits or Politics? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Swfs Sovereign, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Swfs Sovereign 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 Sovereign Wealth Funds: For Profits or Politics? can be done for the following purposes –
1. Strategic planning using facts provided in Sovereign Wealth Funds: For Profits or Politics? case study
2. Improving business portfolio management of Swfs Sovereign
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 Swfs Sovereign
Strengths Sovereign Wealth Funds: For Profits or Politics? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Swfs Sovereign in Sovereign Wealth Funds: For Profits or Politics? Harvard Business Review case study are -
Innovation driven organization
– Swfs Sovereign is one of the most innovative firm in sector. Manager in Sovereign Wealth Funds: For Profits or Politics? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Swfs Sovereign has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Swfs Sovereign to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Swfs Sovereign 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.
Diverse revenue streams
– Swfs Sovereign is present in almost all the verticals within the industry. This has provided firm in Sovereign Wealth Funds: For Profits or Politics? 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.
Analytics focus
– Swfs Sovereign 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 Laura Alfaro, Renee Kim 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.
Superior customer experience
– The customer experience strategy of Swfs Sovereign in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Swfs Sovereign 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 Swfs Sovereign is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sovereign Wealth Funds: For Profits or Politics? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Swfs Sovereign is one of the leading recruiters in the industry. Managers in the Sovereign Wealth Funds: For Profits or Politics? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Swfs Sovereign has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Swfs Sovereign has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Sovereign Wealth Funds: For Profits or Politics? 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Swfs Sovereign digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Swfs Sovereign 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.
Ability to lead change in Leadership & Managing People field
– Swfs Sovereign 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 Swfs Sovereign in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Sovereign Wealth Funds: For Profits or Politics? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sovereign Wealth Funds: For Profits or Politics? are -
High bargaining power of channel partners
– Because of the regulatory requirements, Laura Alfaro, Renee Kim suggests that, Swfs Sovereign 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Swfs Sovereign needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Swfs Sovereign products
– To increase the profitability and margins on the products, Swfs Sovereign needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Swfs Sovereign supply chain. Even after few cautionary changes mentioned in the HBR case study - Sovereign Wealth Funds: For Profits or Politics?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Swfs Sovereign vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Sovereign Wealth Funds: For Profits or Politics? 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 Sovereign Wealth Funds: For Profits or Politics? can leverage the sales team experience to cultivate customer relationships as Swfs Sovereign is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sovereign Wealth Funds: For Profits or Politics?, it seems that the employees of Swfs Sovereign 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.
Need for greater diversity
– Swfs Sovereign 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
Swfs Sovereign 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sovereign Wealth Funds: For Profits or Politics?, in the dynamic environment Swfs Sovereign has struggled to respond to the nimble upstart competition. Swfs Sovereign has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Swfs Sovereign is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sovereign Wealth Funds: For Profits or Politics? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Swfs Sovereign 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.
Opportunities Sovereign Wealth Funds: For Profits or Politics? | 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 Sovereign Wealth Funds: For Profits or Politics? are -
Loyalty marketing
– Swfs Sovereign 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.
Using analytics as competitive advantage
– Swfs Sovereign 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 Sovereign Wealth Funds: For Profits or Politics? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Swfs Sovereign to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Swfs Sovereign is facing challenges because of the dominance of functional experts in the organization. Sovereign Wealth Funds: For Profits or Politics? 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.
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. Swfs Sovereign 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. Swfs Sovereign 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Swfs Sovereign 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 Swfs Sovereign to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Swfs Sovereign can use these opportunities to build new business models that can help the communities that Swfs Sovereign operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Swfs Sovereign 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 Swfs Sovereign 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.
Buying journey improvements
– Swfs Sovereign can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sovereign Wealth Funds: For Profits or Politics? 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Swfs Sovereign 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, Sovereign Wealth Funds: For Profits or Politics?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Swfs Sovereign can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Swfs Sovereign can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Swfs Sovereign 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.
Threats Sovereign Wealth Funds: For Profits or Politics? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sovereign Wealth Funds: For Profits or Politics? are -
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 Swfs Sovereign.
Consumer confidence and its impact on Swfs Sovereign 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.
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.
Shortening product life cycle
– it is one of the major threat that Swfs Sovereign is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Swfs Sovereign 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 Sovereign Wealth Funds: For Profits or Politics? .
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 Swfs Sovereign business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Swfs Sovereign 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.
High dependence on third party suppliers
– Swfs Sovereign 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.
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. Swfs Sovereign 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.
Technology acceleration in Forth Industrial Revolution
– Swfs Sovereign has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Swfs Sovereign 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.
Stagnating economy with rate increase
– Swfs Sovereign 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.
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. Swfs Sovereign can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of Sovereign Wealth Funds: For Profits or Politics? 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 Sovereign Wealth Funds: For Profits or Politics? 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 Sovereign Wealth Funds: For Profits or Politics? 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 Sovereign Wealth Funds: For Profits or Politics? 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 Sovereign Wealth Funds: For Profits or Politics? 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 Swfs Sovereign needs to make to build a sustainable competitive advantage.
