Bank of Montreal (BMO) SWOT Analysis / TOWS Matrix / MBA Resources
Money Center Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Bank of Montreal (United States)
Based on various researches at Oak Spring University , Bank of Montreal is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing commodity prices,
talent flight as more people leaving formal jobs, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Bank of Montreal can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bank of Montreal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bank of Montreal 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 Bank of Montreal can be done for the following purposes –
1. Strategic planning of Bank of Montreal
2. Improving business portfolio management of Bank of Montreal
3. Assessing feasibility of the new initiative in United States
4. Making a Money Center Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bank of Montreal
Strengths of Bank of Montreal | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bank of Montreal are -
Innovation driven organization
– Bank of Montreal is one of the most innovative firm in Money Center Banks sector.
Sustainable margins compare to other players in Money Center Banks industry
– Bank of Montreal has clearly differentiated products in the market place. This has enabled Bank of Montreal to fetch slight price premium compare to the competitors in the Money Center Banks industry. The sustainable margins have also helped Bank of Montreal to invest into research and development (R&D) and innovation.
Organizational Resilience of Bank of Montreal
– The covid-19 pandemic has put organizational resilience at the centre of everthing Bank of Montreal does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management in the Money Center Banks industry
– Bank of Montreal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Bank of Montreal 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.
High switching costs
– The high switching costs that Bank of Montreal 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.
Analytics focus
– Bank of Montreal 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 Money Center Banks industry. The technology infrastructure of United States 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.
Effective Research and Development (R&D)
– Bank of Montreal has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Bank of Montreal staying ahead in the Money Center Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Bank of Montreal is present in almost all the verticals within the Money Center Banks industry. This has provided Bank of Montreal a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Bank of Montreal has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bank of Montreal to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Bank of Montreal has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Money Center Banks industry. Secondly the value chain collaborators of Bank of Montreal have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy of Bank of Montreal comprises – understanding the underlying the factors in the Money Center Banks 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.
Weaknesses of Bank of Montreal | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bank of Montreal are -
Compensation and incentives
– The revenue per employee of Bank of Montreal is just above the Money Center Banks 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.
No frontier risks strategy
– From the 10K / annual statement of Bank of Montreal, it seems that company is thinking out the frontier risks that can impact Money Center Banks 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 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 Bank of Montreal supply chain. Even after few cautionary changes, Bank of Montreal is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bank of Montreal vulnerable to further global disruptions in South East Asia.
High dependence on Bank of Montreal ‘s star products
– The top 2 products and services of Bank of Montreal still accounts for major business revenue. This dependence on star products in Money Center Banks industry has resulted into insufficient focus on developing new products, even though Bank of Montreal has relatively successful track record of launching new products.
Employees’ less understanding of Bank of Montreal strategy
– From the outside it seems that the employees of Bank of Montreal 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.
High operating costs
– Compare to the competitors, Bank of Montreal has high operating costs in the Money Center Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Bank of Montreal lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the Money Center Banks industry, Bank of Montreal 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
Bank of Montreal has a high cash cycle compare to other players in the Money Center Banks 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 Bank of Montreal has some of the most successful models in the Money Center Banks industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Bank of Montreal should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Bank of Montreal is one of the leading players in the Money Center Banks industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Money Center Banks industry in last five years.
Lack of clear differentiation of Bank of Montreal products
– To increase the profitability and margins on the products, Bank of Montreal needs to provide more differentiated products than what it is currently offering in the marketplace.
Bank of Montreal Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Bank of Montreal are -
Loyalty marketing
– Bank of Montreal 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.
Building a culture of innovation
– managers at Bank of Montreal 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 Money Center Banks industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bank of Montreal is facing challenges because of the dominance of functional experts in the organization. Bank of Montreal can utilize new technology in the field of Money Center Banks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Bank of Montreal has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Money Center Banks sector. This continuous investment in analytics has enabled Bank of Montreal to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bank of Montreal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Bank of Montreal can improve the customer journey of consumers in the Money Center Banks industry by using analytics and artificial intelligence. It 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bank of Montreal 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 Bank of Montreal to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions in Money Center Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Bank of Montreal in the Money Center Banks industry. Now Bank of Montreal can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Bank of Montreal to increase its market reach. Bank of Montreal will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Money Center Banks industry, but it has also influenced the consumer preferences. Bank of Montreal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bank of Montreal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Money Center Banks industry, and it will provide faster access to the consumers.
Manufacturing automation
– Bank of Montreal can use the latest technology developments to improve its manufacturing and designing process in Money Center Banks 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.
Creating value in data economy
– The success of analytics program of Bank of Montreal has opened avenues for new revenue streams for the organization in Money Center Banks industry. This can help Bank of Montreal to build a more holistic ecosystem for Bank of Montreal products in the Money Center Banks industry by providing – data insight services, data privacy related products, data based consulting services, 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, Bank of Montreal can use these opportunities to build new business models that can help the communities that Bank of Montreal operates in. Secondly it can use opportunities from government spending in Money Center Banks sector.
Threats Bank of Montreal External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Bank of Montreal are -
Environmental challenges
– Bank of Montreal 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. Bank of Montreal can take advantage of this fund but it will also bring new competitors in the Money Center Banks industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Money Center Banks industry are lowering. It can presents Bank of Montreal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Money Center Banks sector.
Stagnating economy with rate increase
– Bank of Montreal 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 Money Center Banks industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Bank of Montreal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Money Center Banks 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.
High dependence on third party suppliers
– Bank of Montreal high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Bank of Montreal needs to understand the core reasons impacting the Money Center Banks industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Money Center Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Bank of Montreal can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Regulatory challenges
– Bank of Montreal 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 Money Center Banks industry regulations.
Shortening product life cycle
– it is one of the major threat that Bank of Montreal is facing in Money Center Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Bank of Montreal in the Money Center Banks sector and impact the bottomline of the organization.
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. Bank of Montreal 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 Bank of Montreal Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Bank of Montreal 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 Bank of Montreal 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 Bank of Montreal 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 Bank of Montreal 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 Bank of Montreal needs to make to build a sustainable competitive advantage.