Franklin Templeton India: The Cash Holding Dilemma SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Franklin Templeton India: The Cash Holding Dilemma
Franklin Resources Inc. is one of the largest and most respected global fund houses with a presence in India. The case highlights the structure, investment process and philosophy of its fund management team in India. The case presents the specific issue of fund managers holding large amounts of cash during market downturns. There is one school of thought that attributes lower volatility and better risk-adjusted returns with high cash holdings. The other school of thought believes this approach goes against the philosophy of investment management. It believes people give money to fund managers to invest, not to hold in the form of cash. A fund should always be fully invested or nearly fully invested. The chief investment officer at Franklin Templeton India is of the second school of thought and is faced with the challenge of convincing a team of young analysts and managers of its soundness. He presents a set of data to this team and asks them to analyze performance during periods of market downturns in order to arrive at a conclusion.
Swot Analysis of "Franklin Templeton India: The Cash Holding Dilemma" written by Nupur Pavan Bang, Dhruva Raj Chatterji, Vikram Kuriyan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Franklin Templeton facing as an external strategic factors. Some of the topics covered in Franklin Templeton India: The Cash Holding Dilemma case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Franklin Templeton India: The Cash Holding Dilemma casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, technology disruption, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , geopolitical disruptions, etc
Introduction to SWOT Analysis of Franklin Templeton India: The Cash Holding Dilemma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Franklin Templeton India: The Cash Holding Dilemma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Franklin Templeton, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Franklin Templeton 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 Franklin Templeton India: The Cash Holding Dilemma can be done for the following purposes –
1. Strategic planning using facts provided in Franklin Templeton India: The Cash Holding Dilemma case study
2. Improving business portfolio management of Franklin Templeton
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Franklin Templeton
Strengths Franklin Templeton India: The Cash Holding Dilemma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Franklin Templeton in Franklin Templeton India: The Cash Holding Dilemma Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Franklin Templeton in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Franklin Templeton in the sector have low bargaining power. Franklin Templeton India: The Cash Holding Dilemma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Franklin Templeton to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Franklin Templeton has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Franklin Templeton India: The Cash Holding Dilemma 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.
Learning organization
- Franklin Templeton 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 Franklin Templeton is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Franklin Templeton India: The Cash Holding Dilemma Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Franklin Templeton India: The Cash Holding Dilemma firm has clearly differentiated products in the market place. This has enabled Franklin Templeton to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Franklin Templeton to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Franklin Templeton is one of the leading recruiters in the industry. Managers in the Franklin Templeton India: The Cash Holding Dilemma 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
– Franklin Templeton has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Franklin Templeton 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.
Ability to lead change in Finance & Accounting field
– Franklin Templeton 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 Franklin Templeton in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Franklin Templeton is one of the most innovative firm in sector. Manager in Franklin Templeton India: The Cash Holding Dilemma Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Franklin Templeton 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 Nupur Pavan Bang, Dhruva Raj Chatterji, Vikram Kuriyan 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.
Strong track record of project management
– Franklin Templeton is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Franklin Templeton has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Franklin Templeton India: The Cash Holding Dilemma - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Franklin Templeton India: The Cash Holding Dilemma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Franklin Templeton India: The Cash Holding Dilemma are -
Workers concerns about automation
– As automation is fast increasing in the segment, Franklin Templeton 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.
Increasing silos among functional specialists
– The organizational structure of Franklin Templeton is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Franklin Templeton needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Franklin Templeton to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Franklin Templeton 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.
Lack of clear differentiation of Franklin Templeton products
– To increase the profitability and margins on the products, Franklin Templeton 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 Franklin Templeton supply chain. Even after few cautionary changes mentioned in the HBR case study - Franklin Templeton India: The Cash Holding Dilemma, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Franklin Templeton vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Franklin Templeton 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 Franklin Templeton India: The Cash Holding Dilemma HBR case study mentions - Franklin Templeton 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.
Interest costs
– Compare to the competition, Franklin Templeton 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton has relatively successful track record of launching new products.
Need for greater diversity
– Franklin Templeton 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Franklin Templeton India: The Cash Holding Dilemma, in the dynamic environment Franklin Templeton has struggled to respond to the nimble upstart competition. Franklin Templeton has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Franklin Templeton India: The Cash Holding Dilemma | 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 Franklin Templeton India: The Cash Holding Dilemma are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Franklin Templeton 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, Franklin Templeton India: The Cash Holding Dilemma, 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 Franklin Templeton in the consumer business. Now Franklin Templeton can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Franklin Templeton can use these opportunities to build new business models that can help the communities that Franklin Templeton operates in. Secondly it can use opportunities from government spending in Finance & Accounting 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 Franklin Templeton 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. Franklin Templeton can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Franklin Templeton can develop new processes and procedures in Finance & Accounting 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Franklin Templeton 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. Franklin Templeton 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 Franklin Templeton 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 Franklin Templeton to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Franklin Templeton 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.
Using analytics as competitive advantage
– Franklin Templeton 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 Franklin Templeton India: The Cash Holding Dilemma - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Franklin Templeton to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Franklin Templeton can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Franklin Templeton can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Franklin Templeton 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.
Threats Franklin Templeton India: The Cash Holding Dilemma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Franklin Templeton India: The Cash Holding Dilemma are -
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Franklin Templeton 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 Franklin Templeton India: The Cash Holding Dilemma .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Franklin Templeton can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Franklin Templeton India: The Cash Holding Dilemma, Franklin Templeton may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Consumer confidence and its impact on Franklin Templeton 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.
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. Franklin Templeton 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.
Shortening product life cycle
– it is one of the major threat that Franklin Templeton is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Franklin Templeton 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. Franklin Templeton can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology acceleration in Forth Industrial Revolution
– Franklin Templeton has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Franklin Templeton needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Franklin Templeton in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Franklin Templeton 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.
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 Franklin Templeton business can come under increasing regulations regarding data privacy, data security, etc.
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 Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton India: The Cash Holding Dilemma 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 Franklin Templeton needs to make to build a sustainable competitive advantage.
