NeuroEconomics: How Neuroscience Can Inform Economics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of NeuroEconomics: How Neuroscience Can Inform Economics
In the last two decades, Behavioral Economics (the importation of ideas from Psychology to Economics) has become a prominent fixture on the intellectual landscape. In turn, it has spawned the field of 'Neuroeconomics', whereby ideas from Neuroscience are imported into Economics. The study of the human brain and nervous system is beginning to allow for direct measurement of thoughts and feelings; and this, in turn, is challenging our understanding of the relation between mind and action, leading to new theoretical constructs and calling old ones into question. The authors describe the findings to date, covering automatic vs. controlled processes and cognitive vs. affective processes, and their general implications for Economics.
Authors :: George Loewenstein, Colin Camerer, Drazen Prelec
Swot Analysis of "NeuroEconomics: How Neuroscience Can Inform Economics" written by George Loewenstein, Colin Camerer, Drazen Prelec includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Economics Neuroeconomics facing as an external strategic factors. Some of the topics covered in NeuroEconomics: How Neuroscience Can Inform Economics case study are - Strategic Management Strategies, Economics and Finance & Accounting.
Some of the macro environment factors that can be used to understand the NeuroEconomics: How Neuroscience Can Inform Economics casestudy better are - – technology disruption, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, increasing household debt because of falling income levels, geopolitical disruptions,
digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of NeuroEconomics: How Neuroscience Can Inform Economics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in NeuroEconomics: How Neuroscience Can Inform Economics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Economics Neuroeconomics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Economics Neuroeconomics 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 NeuroEconomics: How Neuroscience Can Inform Economics can be done for the following purposes –
1. Strategic planning using facts provided in NeuroEconomics: How Neuroscience Can Inform Economics case study
2. Improving business portfolio management of Economics Neuroeconomics
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Economics Neuroeconomics
Strengths NeuroEconomics: How Neuroscience Can Inform Economics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Economics Neuroeconomics in NeuroEconomics: How Neuroscience Can Inform Economics Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Economics Neuroeconomics in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Economics Neuroeconomics 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.
Learning organization
- Economics Neuroeconomics 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 Economics Neuroeconomics is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in NeuroEconomics: How Neuroscience Can Inform Economics Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Economics Neuroeconomics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in NeuroEconomics: How Neuroscience Can Inform Economics 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.
Innovation driven organization
– Economics Neuroeconomics is one of the most innovative firm in sector. Manager in NeuroEconomics: How Neuroscience Can Inform Economics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Economics Neuroeconomics 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 George Loewenstein, Colin Camerer, Drazen Prelec 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.
Low bargaining power of suppliers
– Suppliers of Economics Neuroeconomics in the sector have low bargaining power. NeuroEconomics: How Neuroscience Can Inform Economics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Economics Neuroeconomics to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Economics Neuroeconomics is one of the leading recruiters in the industry. Managers in the NeuroEconomics: How Neuroscience Can Inform Economics are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the NeuroEconomics: How Neuroscience Can Inform Economics 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 lead change in Finance & Accounting field
– Economics Neuroeconomics 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 Economics Neuroeconomics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Economics Neuroeconomics 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 NeuroEconomics: How Neuroscience Can Inform Economics - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Economics Neuroeconomics is present in almost all the verticals within the industry. This has provided firm in NeuroEconomics: How Neuroscience Can Inform Economics 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.
Weaknesses NeuroEconomics: How Neuroscience Can Inform Economics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of NeuroEconomics: How Neuroscience Can Inform Economics are -
Skills based hiring
– The stress on hiring functional specialists at Economics Neuroeconomics 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.
Need for greater diversity
– Economics Neuroeconomics 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study NeuroEconomics: How Neuroscience Can Inform Economics, is just above the industry average. Economics Neuroeconomics 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, Economics Neuroeconomics 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. Economics Neuroeconomics 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.
Increasing silos among functional specialists
– The organizational structure of Economics Neuroeconomics is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Economics Neuroeconomics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Economics Neuroeconomics to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study NeuroEconomics: How Neuroscience Can Inform Economics 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 NeuroEconomics: How Neuroscience Can Inform Economics can leverage the sales team experience to cultivate customer relationships as Economics Neuroeconomics is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Economics Neuroeconomics 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 operating costs
– Compare to the competitors, firm in the HBR case study NeuroEconomics: How Neuroscience Can Inform Economics 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 Economics Neuroeconomics 's lucrative customers.
High cash cycle compare to competitors
Economics Neuroeconomics 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 NeuroEconomics: How Neuroscience Can Inform Economics, it seems that the employees of Economics Neuroeconomics 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, Economics Neuroeconomics 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.
Opportunities NeuroEconomics: How Neuroscience Can Inform Economics | 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 NeuroEconomics: How Neuroscience Can Inform Economics are -
Using analytics as competitive advantage
– Economics Neuroeconomics 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 NeuroEconomics: How Neuroscience Can Inform Economics - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Economics Neuroeconomics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Economics Neuroeconomics 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.
Creating value in data economy
– The success of analytics program of Economics Neuroeconomics has opened avenues for new revenue streams for the organization in the industry. This can help Economics Neuroeconomics to build a more holistic ecosystem as suggested in the NeuroEconomics: How Neuroscience Can Inform Economics case study. Economics Neuroeconomics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Economics Neuroeconomics 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Economics Neuroeconomics is facing challenges because of the dominance of functional experts in the organization. NeuroEconomics: How Neuroscience Can Inform Economics 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Economics Neuroeconomics can use these opportunities to build new business models that can help the communities that Economics Neuroeconomics operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Economics Neuroeconomics 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.
Manufacturing automation
– Economics Neuroeconomics can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Building a culture of innovation
– managers at Economics Neuroeconomics can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Loyalty marketing
– Economics Neuroeconomics 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Economics Neuroeconomics 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, NeuroEconomics: How Neuroscience Can Inform Economics, 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 Economics Neuroeconomics 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 Economics Neuroeconomics to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Economics Neuroeconomics 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 NeuroEconomics: How Neuroscience Can Inform Economics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study NeuroEconomics: How Neuroscience Can Inform Economics are -
Consumer confidence and its impact on Economics Neuroeconomics 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.
Environmental challenges
– Economics Neuroeconomics 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. Economics Neuroeconomics can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study NeuroEconomics: How Neuroscience Can Inform Economics, Economics Neuroeconomics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Economics Neuroeconomics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Shortening product life cycle
– it is one of the major threat that Economics Neuroeconomics is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Economics Neuroeconomics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Economics Neuroeconomics needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Economics Neuroeconomics 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
– Economics Neuroeconomics has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Economics Neuroeconomics needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Economics Neuroeconomics 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 Finance & Accounting industry regulations.
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. Economics Neuroeconomics 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.
Weighted SWOT Analysis of NeuroEconomics: How Neuroscience Can Inform Economics 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 NeuroEconomics: How Neuroscience Can Inform Economics 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 NeuroEconomics: How Neuroscience Can Inform Economics 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 NeuroEconomics: How Neuroscience Can Inform Economics 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 NeuroEconomics: How Neuroscience Can Inform Economics 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 Economics Neuroeconomics needs to make to build a sustainable competitive advantage.
