Impact America Fund: Challenges of New Fund Formation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Impact America Fund: Challenges of New Fund Formation
In July 2013, Kesha Cash transitioned out of her stable role as co-founder of and fund manager for Jalia Ventures ("Jalia"), an initiative investing in early-stage mission driven "businesses operated by entrepreneurs of color," to launch her own impact venture fund focused on underserved communities. Because Jalia had been funded and supported by Serious Change, L.P., a global impact investment fund, Cash was new to the process of fund formation. She had heard that she needed at least $250,000 over a period of two years to get through the fundraising process but managed to launch the fund with a budget of just over a third of that amount in under two years while taking barely any salary. By December 2014, Impact America Fund (IAF) had its first official close at less than 50 percent of the target fund size-a strategic decision made by Cash to begin investing in order to prove that she could source and close deals on her own. With her initial close, Cash's vision of creating a fund focused on generating real financial returns while improving the wellbeing of underserved communities was realized. Despite her success in bootstrapping the initial fund, Cash had much more work ahead of her. In addition to managing investors and sourcing new deal opportunities, Cash now had to consider how to scale for later funds, and whether to continue to follow the fund's original vision on her own, as she had already proven that she could do, or take on a partner in order to pursue strategic opportunities. Indeed, the real work was just beginning. This case describes the challenges faced in the formation of a sustainable for-profit impact venture capital fund. It covers the origin of the fund; an overview of the fund's structure and terms, investment strategy, early fundraising, and strategic opportunities; as well as a discussion of impact measurement.
Authors :: Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi
Swot Analysis of "Impact America Fund: Challenges of New Fund Formation" written by Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fund Jalia facing as an external strategic factors. Some of the topics covered in Impact America Fund: Challenges of New Fund Formation case study are - Strategic Management Strategies, Venture capital and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Impact America Fund: Challenges of New Fund Formation casestudy better are - – there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing commodity prices, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Impact America Fund: Challenges of New Fund Formation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Impact America Fund: Challenges of New Fund Formation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fund Jalia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fund Jalia 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 Impact America Fund: Challenges of New Fund Formation can be done for the following purposes –
1. Strategic planning using facts provided in Impact America Fund: Challenges of New Fund Formation case study
2. Improving business portfolio management of Fund Jalia
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 Fund Jalia
Strengths Impact America Fund: Challenges of New Fund Formation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fund Jalia in Impact America Fund: Challenges of New Fund Formation Harvard Business Review case study are -
Effective Research and Development (R&D)
– Fund Jalia 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 Impact America Fund: Challenges of New Fund Formation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Fund Jalia is one of the leading recruiters in the industry. Managers in the Impact America Fund: Challenges of New Fund Formation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Fund Jalia 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 Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Fund Jalia is present in almost all the verticals within the industry. This has provided firm in Impact America Fund: Challenges of New Fund Formation 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.
Superior customer experience
– The customer experience strategy of Fund Jalia in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Fund Jalia 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 Fund Jalia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Impact America Fund: Challenges of New Fund Formation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Fund Jalia has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Impact America Fund: Challenges of New Fund Formation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Impact America Fund: Challenges of New Fund Formation 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.
Successful track record of launching new products
– Fund Jalia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fund Jalia 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.
High switching costs
– The high switching costs that Fund Jalia 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
– Fund Jalia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fund Jalia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Fund Jalia has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Impact America Fund: Challenges of New Fund Formation 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.
Weaknesses Impact America Fund: Challenges of New Fund Formation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Impact America Fund: Challenges of New Fund Formation are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Impact America Fund: Challenges of New Fund Formation, is just above the industry average. Fund Jalia needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Fund Jalia 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 - Impact America Fund: Challenges of New Fund Formation should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Fund Jalia 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.
Skills based hiring
– The stress on hiring functional specialists at Fund Jalia 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 Impact America Fund: Challenges of New Fund Formation HBR case study mentions - Fund Jalia 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Impact America Fund: Challenges of New Fund Formation, in the dynamic environment Fund Jalia has struggled to respond to the nimble upstart competition. Fund Jalia 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
– Fund Jalia 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, Fund Jalia 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 bargaining power of channel partners
– Because of the regulatory requirements, Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi suggests that, Fund Jalia 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.
Aligning sales with marketing
– It come across in the case study Impact America Fund: Challenges of New Fund Formation 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 Impact America Fund: Challenges of New Fund Formation can leverage the sales team experience to cultivate customer relationships as Fund Jalia is planning to shift buying processes online.
High cash cycle compare to competitors
Fund Jalia 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.
Opportunities Impact America Fund: Challenges of New Fund Formation | 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 Impact America Fund: Challenges of New Fund Formation are -
Building a culture of innovation
– managers at Fund Jalia 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fund Jalia 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 Fund Jalia to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fund Jalia 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fund Jalia 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, Impact America Fund: Challenges of New Fund Formation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Fund Jalia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Fund Jalia 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.
Buying journey improvements
– Fund Jalia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Impact America Fund: Challenges of New Fund Formation 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.
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 Fund Jalia 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.
Manufacturing automation
– Fund Jalia 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.
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. Fund Jalia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fund Jalia can use these opportunities to build new business models that can help the communities that Fund Jalia operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fund Jalia is facing challenges because of the dominance of functional experts in the organization. Impact America Fund: Challenges of New Fund Formation 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fund Jalia can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Impact America Fund: Challenges of New Fund Formation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Impact America Fund: Challenges of New Fund Formation are -
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.
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 Fund Jalia in the Leadership & Managing People sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Fund Jalia 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, Fund Jalia 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 Impact America Fund: Challenges of New Fund Formation .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Impact America Fund: Challenges of New Fund Formation, Fund Jalia 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 .
Environmental challenges
– Fund Jalia 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. Fund Jalia can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fund Jalia 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.
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 Fund Jalia.
High dependence on third party suppliers
– Fund Jalia 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.
Stagnating economy with rate increase
– Fund Jalia 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.
Consumer confidence and its impact on Fund Jalia 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.
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. Fund Jalia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Fund Jalia 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 Impact America Fund: Challenges of New Fund Formation 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 Impact America Fund: Challenges of New Fund Formation 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 Impact America Fund: Challenges of New Fund Formation 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 Impact America Fund: Challenges of New Fund Formation 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 Impact America Fund: Challenges of New Fund Formation 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 Fund Jalia needs to make to build a sustainable competitive advantage.