Banking on Change: Aligning Culture and Compensation at Morgan Stanley SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Banking on Change: Aligning Culture and Compensation at Morgan Stanley
This case study was prepared as part of a research project on Culture, Conduct, and Governance in Financial Firms. The objective of this project is to compare and contrast the efforts of U.S. and European banks to induce changes in organization culture in the aftermath of the 2008 financial crisis. Since this crisis, wide ranging regulations aimed at improving risk management and bankers' ethics have been promulgated in the United States and in Europe, and more rules are currently under discussion. Academics, regulators, and public officials have proposed many of these measures. At the same time, banks have been implementing their own company-tailored culture change programs. This project and the Morgan Stanley case in particular describes these change programs and banks' experience with them so far-with particular attention being paid to how banks are using compensation and other incentives to change and reinforce organization culture and conduct. One of the central questions of this case is whether or not the voluntary efforts of Morgan Stanley to strengthen their conduct and culture will prove to be "effective" or "adequate" according to bank regulators and the general public. This case lends itself to analysis and discussion in a variety of related graduate-level courses dealing with the management of financial institutions, financial regulation, corporate governance, organization behavior, and corporate accountability and ethics.
Swot Analysis of "Banking on Change: Aligning Culture and Compensation at Morgan Stanley" written by Malcolm S. Salter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Culture Stanley facing as an external strategic factors. Some of the topics covered in Banking on Change: Aligning Culture and Compensation at Morgan Stanley case study are - Strategic Management Strategies, Ethics, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Banking on Change: Aligning Culture and Compensation at Morgan Stanley casestudy better are - – increasing transportation and logistics costs, increasing energy prices, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Banking on Change: Aligning Culture and Compensation at Morgan Stanley
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Banking on Change: Aligning Culture and Compensation at Morgan Stanley case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Culture Stanley, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Culture Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley can be done for the following purposes –
1. Strategic planning using facts provided in Banking on Change: Aligning Culture and Compensation at Morgan Stanley case study
2. Improving business portfolio management of Culture Stanley
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 Culture Stanley
Strengths Banking on Change: Aligning Culture and Compensation at Morgan Stanley | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Culture Stanley in Banking on Change: Aligning Culture and Compensation at Morgan Stanley Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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.
Ability to recruit top talent
– Culture Stanley is one of the leading recruiters in the industry. Managers in the Banking on Change: Aligning Culture and Compensation at Morgan Stanley are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Leadership & Managing People industry
– Banking on Change: Aligning Culture and Compensation at Morgan Stanley firm has clearly differentiated products in the market place. This has enabled Culture Stanley to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Culture Stanley to invest into research and development (R&D) and innovation.
Ability to lead change in Leadership & Managing People field
– Culture Stanley 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 Culture Stanley in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Culture Stanley digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Culture Stanley 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.
Diverse revenue streams
– Culture Stanley is present in almost all the verticals within the industry. This has provided firm in Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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.
Organizational Resilience of Culture Stanley
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Culture Stanley does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Culture Stanley is one of the most innovative firm in sector. Manager in Banking on Change: Aligning Culture and Compensation at Morgan Stanley Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Culture Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Culture Stanley in the sector have low bargaining power. Banking on Change: Aligning Culture and Compensation at Morgan Stanley has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Culture Stanley to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Culture Stanley is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Culture Stanley 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 Culture Stanley is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Banking on Change: Aligning Culture and Compensation at Morgan Stanley Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Banking on Change: Aligning Culture and Compensation at Morgan Stanley | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Banking on Change: Aligning Culture and Compensation at Morgan Stanley are -
High bargaining power of channel partners
– Because of the regulatory requirements, Malcolm S. Salter suggests that, Culture Stanley 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.
Lack of clear differentiation of Culture Stanley products
– To increase the profitability and margins on the products, Culture Stanley needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Culture Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley HBR case study mentions - Culture Stanley 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Banking on Change: Aligning Culture and Compensation at Morgan Stanley, is just above the industry average. Culture Stanley 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.
Capital Spending Reduction
– Even during the low interest decade, Culture Stanley has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Culture Stanley 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Banking on Change: Aligning Culture and Compensation at Morgan Stanley, it seems that the employees of Culture Stanley 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Banking on Change: Aligning Culture and Compensation at Morgan Stanley has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Culture Stanley 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Culture Stanley has relatively successful track record of launching new products.
Products dominated business model
– Even though Culture Stanley 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 - Banking on Change: Aligning Culture and Compensation at Morgan Stanley should strive to include more intangible value offerings along with its core products and services.
Opportunities Banking on Change: Aligning Culture and Compensation at Morgan Stanley | 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley are -
Manufacturing automation
– Culture Stanley 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.
Buying journey improvements
– Culture Stanley can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Culture Stanley can use these opportunities to build new business models that can help the communities that Culture Stanley operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Developing new processes and practices
– Culture Stanley 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.
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 Culture Stanley 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Culture Stanley 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.
Better consumer reach
– The expansion of the 5G network will help Culture Stanley to increase its market reach. Culture Stanley 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.
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. Culture Stanley can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Culture Stanley is facing challenges because of the dominance of functional experts in the organization. Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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.
Building a culture of innovation
– managers at Culture Stanley 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.
Loyalty marketing
– Culture Stanley 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.
Leveraging digital technologies
– Culture Stanley 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Culture Stanley can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Banking on Change: Aligning Culture and Compensation at Morgan Stanley External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Banking on Change: Aligning Culture and Compensation at Morgan Stanley are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Culture Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley .
High dependence on third party suppliers
– Culture Stanley 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.
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. Culture Stanley 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.
Regulatory challenges
– Culture Stanley 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.
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 Culture Stanley in the Leadership & Managing People sector and impact the bottomline of the organization.
Consumer confidence and its impact on Culture Stanley 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Culture Stanley with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Culture Stanley 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. Culture Stanley can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Shortening product life cycle
– it is one of the major threat that Culture Stanley is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Culture Stanley 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Banking on Change: Aligning Culture and Compensation at Morgan Stanley, Culture Stanley 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 .
Weighted SWOT Analysis of Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Banking on Change: Aligning Culture and Compensation at Morgan Stanley 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 Culture Stanley needs to make to build a sustainable competitive advantage.