Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s
As the commercial real estate market began to crash in early 1990, heavily exposed banks like Citibank and Chase Manhattan were left largely undercapitalized. John Reed, Citibank Chairman and CEO, was caught off guard by the sudden market plunge. While Reed struggled to maintain the capital reserve of us his bank further weaknesses within Citi began to emerge. In addition, to missing the coming of the real estate crisis Citi had had poorly managed internal operations, overvalued acquisitions and grown heavy from organizational excess. The poor management left Citi in the care of Federal Regulators, worried about the banks solvency. The case examines the roots of these problems and the steps taken by Reed to return the bank to a well-managed and stable institution.
Swot Analysis of "Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s" written by Julie M. Wulf, Ian McKown Cornell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Citi Reed facing as an external strategic factors. Some of the topics covered in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study are - Strategic Management Strategies, Crisis management, Leadership, Organizational culture, Organizational structure, Reorganization, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing energy prices,
central banks are concerned over increasing inflation, there is backlash against globalization, etc
Introduction to SWOT Analysis of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Citi Reed, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s can be done for the following purposes –
1. Strategic planning using facts provided in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study
2. Improving business portfolio management of Citi Reed
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 Citi Reed
Strengths Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Citi Reed in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s Harvard Business Review case study are -
Analytics focus
– Citi Reed 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 Julie M. Wulf, Ian McKown Cornell 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s firm has clearly differentiated products in the market place. This has enabled Citi Reed to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Citi Reed to invest into research and development (R&D) and innovation.
Organizational Resilience of Citi Reed
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Citi Reed does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Citi Reed 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 Citi Reed is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Citi Reed has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Citi Reed 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 brand equity
– Citi Reed has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Citi Reed to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Citi Reed is present in almost all the verticals within the industry. This has provided firm in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
High switching costs
– The high switching costs that Citi Reed 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.
Superior customer experience
– The customer experience strategy of Citi Reed in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Citi Reed is one of the leading recruiters in the industry. Managers in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Citi Reed has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
Strong track record of project management
– Citi Reed is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it seems that the employees of Citi Reed 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.
Interest costs
– Compare to the competition, Citi Reed 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.
Products dominated business model
– Even though Citi Reed 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 - Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s HBR case study mentions - Citi Reed 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.
No frontier risks strategy
– After analyzing the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Citi Reed, firm in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Citi Reed supply chain. Even after few cautionary changes mentioned in the HBR case study - Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Citi Reed vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s can leverage the sales team experience to cultivate customer relationships as Citi Reed is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, is just above the industry average. Citi Reed 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.
Slow decision making process
– As mentioned earlier in the report, Citi Reed has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Citi Reed even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Julie M. Wulf, Ian McKown Cornell suggests that, Citi Reed 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.
Opportunities Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s | 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s are -
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. Citi Reed can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Citi Reed 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, Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Citi Reed 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 Citi Reed to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Citi Reed 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.
Loyalty marketing
– Citi Reed 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
– Citi Reed 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Citi Reed can use these opportunities to build new business models that can help the communities that Citi Reed operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Building a culture of innovation
– managers at Citi Reed 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Citi Reed can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Citi Reed 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. Citi Reed 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.
Better consumer reach
– The expansion of the 5G network will help Citi Reed to increase its market reach. Citi Reed 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.
Using analytics as competitive advantage
– Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Citi Reed to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Citi Reed has opened avenues for new revenue streams for the organization in the industry. This can help Citi Reed to build a more holistic ecosystem as suggested in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s case study. Citi Reed can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed.
Stagnating economy with rate increase
– Citi Reed 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.
Shortening product life cycle
– it is one of the major threat that Citi Reed is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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, Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s .
High dependence on third party suppliers
– Citi Reed 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. Citi Reed needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Citi Reed with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Citi Reed in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Citi Reed can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Citi Reed 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. Citi Reed can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing wage structure of Citi Reed
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Citi Reed.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s, Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed needs to make to build a sustainable competitive advantage.
