SWOT Analysis / TOWS Matrix for Banca Finnat (Italy)
Based on various researches at Oak Spring University , Banca Finnat is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Banca Finnat can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Banca Finnat, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Banca Finnat 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 Banca Finnat can be done for the following purposes –
1. Strategic planning of Banca Finnat
2. Improving business portfolio management of Banca Finnat
3. Assessing feasibility of the new initiative in Italy
4. Making a Investment Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Banca Finnat
Strengths of Banca Finnat | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Banca Finnat are -
Low bargaining power of suppliers
– Suppliers of Banca Finnat in the Financial sector have low bargaining power. Banca Finnat has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Banca Finnat to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Banca Finnat 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.
High brand equity
– Banca Finnat has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Banca Finnat to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Banca Finnat 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 Banca Finnat is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Banca Finnat emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Banca Finnat has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Investment Services industry. Secondly the value chain collaborators of Banca Finnat have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Banca Finnat is one of the most innovative firm in Investment Services sector.
Operational resilience
– The operational resilience strategy of Banca Finnat comprises – understanding the underlying the factors in the Investment Services 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.
Cross disciplinary teams
– Horizontal connected teams at the Banca Finnat 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.
Sustainable margins compare to other players in Investment Services industry
– Banca Finnat has clearly differentiated products in the market place. This has enabled Banca Finnat to fetch slight price premium compare to the competitors in the Investment Services industry. The sustainable margins have also helped Banca Finnat to invest into research and development (R&D) and innovation.
Training and development
– Banca Finnat has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Banca Finnat 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 Investment Services industry. The technology infrastructure of Italy is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Banca Finnat has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Banca Finnat 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.
Weaknesses of Banca Finnat | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Banca Finnat are -
No frontier risks strategy
– From the 10K / annual statement of Banca Finnat, it seems that company is thinking out the frontier risks that can impact Investment Services industry. 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.
High cash cycle compare to competitors
Banca Finnat has a high cash cycle compare to other players in the Investment Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Banca Finnat has some of the most successful models in the Investment Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Banca Finnat should strive to include more intangible value offerings along with its core products and services.
Employees’ less understanding of Banca Finnat strategy
– From the outside it seems that the employees of Banca Finnat 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.
Slow to strategic competitive environment developments
– As Banca Finnat is one of the leading players in the Investment Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Investment Services industry in last five years.
High dependence on Banca Finnat ‘s star products
– The top 2 products and services of Banca Finnat still accounts for major business revenue. This dependence on star products in Investment Services industry has resulted into insufficient focus on developing new products, even though Banca Finnat has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Banca Finnat is slow explore the new channels of communication. These new channels of communication can help Banca Finnat to provide better information regarding Investment Services products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring in Investment Services industry
– The stress on hiring functional specialists at Banca Finnat 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.
High bargaining power of channel partners in Investment Services industry
– because of the regulatory requirements in Italy, Banca Finnat 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 Investment Services industry.
Compensation and incentives
– The revenue per employee of Banca Finnat is just above the Investment Services industry average. It 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.
Increasing silos among functional specialists
– The organizational structure of Banca Finnat is dominated by functional specialists. It is not different from other players in the Investment Services industry, but Banca Finnat needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Banca Finnat to focus more on services in the Investment Services industry rather than just following the product oriented approach.
Banca Finnat Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Banca Finnat are -
Use of Bitcoin and other crypto currencies for transactions in Investment Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Banca Finnat in the Investment Services industry. Now Banca Finnat 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 Banca Finnat has opened avenues for new revenue streams for the organization in Investment Services industry. This can help Banca Finnat to build a more holistic ecosystem for Banca Finnat products in the Investment Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Investment Services industry, but it has also influenced the consumer preferences. Banca Finnat can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Banca Finnat can use the latest technology developments to improve its manufacturing and designing process in Investment Services sector. 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Investment Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Banca Finnat 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. Banca Finnat 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.
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 Banca Finnat 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.
Developing new processes and practices
– Banca Finnat can develop new processes and procedures in Investment Services 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.
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. Banca Finnat can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Banca Finnat 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 Investment Services industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Banca Finnat can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Banca Finnat 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Banca Finnat 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 Banca Finnat to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Banca Finnat is facing challenges because of the dominance of functional experts in the organization. Banca Finnat can utilize new technology in the field of Investment Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Banca Finnat External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Banca Finnat are -
Stagnating economy with rate increase
– Banca Finnat 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 Investment Services industry.
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. Banca Finnat 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.
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 Banca Finnat in the Investment Services sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Investment Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Banca Finnat can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Banca Finnat is facing in Investment Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Banca Finnat may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Investment Services sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Banca Finnat 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 Banca Finnat prominent markets.
High dependence on third party suppliers
– Banca Finnat 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.
Environmental challenges
– Banca Finnat 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. Banca Finnat can take advantage of this fund but it will also bring new competitors in the Investment Services industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Investment Services industry are lowering. It can presents Banca Finnat with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Investment Services sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Banca Finnat in Investment Services industry. The Investment Services 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.
Technology acceleration in Forth Industrial Revolution
– Banca Finnat has witnessed rapid integration of technology during Covid-19 in the Investment Services industry. As one of the leading players in the industry, Banca Finnat needs to keep up with the evolution of technology in the Investment Services 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.
Consumer confidence and its impact on Banca Finnat 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 Investment Services industry and other sectors.
Weighted SWOT Analysis of Banca Finnat Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Banca Finnat 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 Banca Finnat 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 Banca Finnat 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 Banca Finnat 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 Banca Finnat needs to make to build a sustainable competitive advantage.