The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business
This case describes the difficult times Charles Schwab the company faced after the dot-com bust of the early 2000s. It also describes how Charles Schwab the man returned in July 2004 to take on the CEO position, and the strategic actions he took to fix the problems and refocus the company he founded over 30 years ago. The case shows how he was able to draw on the considerable remaining strengths of the company, not in the least its long-established culture that emphasized doing the right thing for customers. Two years following Schwab's return to the CEO job, the company turned in strong results. With the crisis of the past few years weathered, the case focuses on the challenges the company faces going forward as it pursues its strategy of offering good, consistent, un-conflicted investment advice to increasing numbers of smaller investors.
Swot Analysis of "The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business" written by Robert A. Burgelman, Philip Meza includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Schwab Charles facing as an external strategic factors. Some of the topics covered in The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business case study are - Strategic Management Strategies, Marketing, Strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business casestudy better are - – increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, technology disruption, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies,
cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Schwab Charles, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Schwab Charles 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business can be done for the following purposes –
1. Strategic planning using facts provided in The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business case study
2. Improving business portfolio management of Schwab Charles
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 Schwab Charles
Strengths The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Schwab Charles in The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business Harvard Business Review case study are -
Innovation driven organization
– Schwab Charles is one of the most innovative firm in sector. Manager in The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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)
– Schwab Charles 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Leadership & Managing People industry
– The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business firm has clearly differentiated products in the market place. This has enabled Schwab Charles to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Schwab Charles to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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.
Highly skilled collaborators
– Schwab Charles 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Schwab Charles
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Schwab Charles does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Schwab Charles in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Schwab Charles has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Schwab Charles 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.
Cross disciplinary teams
– Horizontal connected teams at the Schwab Charles 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.
Analytics focus
– Schwab Charles 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 Robert A. Burgelman, Philip Meza 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.
High brand equity
– Schwab Charles has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Schwab Charles to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Leadership & Managing People field
– Schwab Charles 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 Schwab Charles in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business are -
Slow decision making process
– As mentioned earlier in the report, Schwab Charles 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. Schwab Charles 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business, in the dynamic environment Schwab Charles has struggled to respond to the nimble upstart competition. Schwab Charles has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Schwab Charles 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 bargaining power of channel partners
– Because of the regulatory requirements, Robert A. Burgelman, Philip Meza suggests that, Schwab Charles 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.
Increasing silos among functional specialists
– The organizational structure of Schwab Charles is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Schwab Charles needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Schwab Charles to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Schwab Charles is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Schwab Charles, firm in the HBR case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Schwab Charles 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.
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 Schwab Charles supply chain. Even after few cautionary changes mentioned in the HBR case study - The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Schwab Charles vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Schwab Charles 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.
No frontier risks strategy
– After analyzing the HBR case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business, 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.
Opportunities The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business | 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business are -
Leveraging digital technologies
– Schwab Charles 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.
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. Schwab Charles 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, Schwab Charles 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, The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Schwab Charles in the consumer business. Now Schwab Charles can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Schwab Charles has opened avenues for new revenue streams for the organization in the industry. This can help Schwab Charles to build a more holistic ecosystem as suggested in the The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business case study. Schwab Charles can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Schwab Charles 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, Schwab Charles 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
– Schwab Charles 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.
Loyalty marketing
– Schwab Charles 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.
Learning at scale
– Online learning technologies has now opened space for Schwab Charles 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Schwab Charles 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 Schwab Charles to hire the very best people irrespective of their geographical location.
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. Schwab Charles can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Schwab Charles can use these opportunities to build new business models that can help the communities that Schwab Charles operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Threats The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Schwab Charles with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Schwab Charles high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Schwab Charles 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
– Schwab Charles has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Schwab Charles 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.
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. Schwab Charles needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business, Schwab Charles 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 .
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. Schwab Charles can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Schwab Charles
– 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 Schwab Charles.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Schwab Charles 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business .
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 Schwab Charles.
Environmental challenges
– Schwab Charles 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. Schwab Charles can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Schwab Charles 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.
Shortening product life cycle
– it is one of the major threat that Schwab Charles is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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 The Charles Schwab Corporation in 2007: Fixing and Redefining the Core Business 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 Schwab Charles needs to make to build a sustainable competitive advantage.
