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 - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, wage bills are increasing, increasing energy prices, increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Citi Reed are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
Ability to lead change in Leadership & Managing People field
– Citi Reed 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 Citi Reed in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Operational resilience
– The operational resilience strategy in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Citi Reed digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Citi Reed 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
– 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.
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.
Highly skilled collaborators
– Citi Reed 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 Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
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.
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.
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.
Lack of clear differentiation of Citi Reed products
– To increase the profitability and margins on the products, Citi Reed needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Citi Reed 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.
High cash cycle compare to competitors
Citi Reed 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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 Citi Reed 's lucrative customers.
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.
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.
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 -
Manufacturing automation
– Citi Reed 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Citi Reed 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.
Buying journey improvements
– Citi Reed can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s 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.
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.
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.
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. Citi Reed 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
– 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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Citi Reed 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.
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.
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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Citi Reed 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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Citi Reed has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Citi Reed needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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 .
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. Citi Reed 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.
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 Citi Reed business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.