E-TRADE (ETFC) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for E-TRADE (United States)

Based on various researches at Oak Spring University , E-TRADE is operating in a macro-environment that has been destablized by – increasing commodity prices, there is backlash against globalization, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, technology disruption, there is increasing trade war between United States & China, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of E-TRADE

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that E-TRADE can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the E-TRADE, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which E-TRADE 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of E-TRADE can be done for the following purposes –
1. Strategic planning of E-TRADE
2. Improving business portfolio management of E-TRADE
3. Assessing feasibility of the new initiative in United States
4. Making a Investment Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of E-TRADE

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Strengths of E-TRADE | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of E-TRADE are -

Cross disciplinary teams

– Horizontal connected teams at the E-TRADE 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.

Superior customer experience

– The customer experience strategy of E-TRADE in Investment Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Highly skilled collaborators

– E-TRADE 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 E-TRADE have helped the firm to develop new products and bring them quickly to the marketplace.

Low bargaining power of suppliers

– Suppliers of E-TRADE in the Financial sector have low bargaining power. E-TRADE has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps E-TRADE to manage not only supply disruptions but also source products at highly competitive prices.

Ability to lead change in Investment Services

– E-TRADE is one of the leading players in the Investment Services industry in United States. Over the years it has not only transformed the business landscape in the Investment Services industry in United States but also across the existing markets. The ability to lead change has enabled E-TRADE in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Learning organization

- E-TRADE 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 E-TRADE is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at E-TRADE emphasize – knowledge, initiative, and innovation.

Operational resilience

– The operational resilience strategy of E-TRADE 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.

Analytics focus

– E-TRADE 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 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.

Strong track record of project management in the Investment Services industry

– E-TRADE is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Effective Research and Development (R&D)

– E-TRADE has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – E-TRADE staying ahead in the Investment Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– E-TRADE has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled E-TRADE to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– E-TRADE is one of the leading players in the Investment Services industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.

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Weaknesses of E-TRADE | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of E-TRADE are -

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 E-TRADE supply chain. Even after few cautionary changes, E-TRADE is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left E-TRADE vulnerable to further global disruptions in South East Asia.

High cash cycle compare to competitors

E-TRADE 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.

Low market penetration in new markets

– Outside its home market of United States, E-TRADE needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Aligning sales with marketing

– From the outside it seems that E-TRADE needs to have more collaboration between its sales team and marketing team. Sales professionals in the Investment Services industry have deep experience in developing customer relationships. Marketing department at E-TRADE can leverage the sales team experience to cultivate customer relationships as E-TRADE is planning to shift buying processes online.

Increasing silos among functional specialists

– The organizational structure of E-TRADE is dominated by functional specialists. It is not different from other players in the Investment Services industry, but E-TRADE needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help E-TRADE to focus more on services in the Investment Services industry rather than just following the product oriented approach.

Products dominated business model

– Even though E-TRADE 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. E-TRADE should strive to include more intangible value offerings along with its core products and services.

Workers concerns about automation

– As automation is fast increasing in the Investment Services industry, E-TRADE 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 bargaining power of channel partners in Investment Services industry

– because of the regulatory requirements in United States, E-TRADE 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.

High dependence on E-TRADE ‘s star products

– The top 2 products and services of E-TRADE 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 E-TRADE has relatively successful track record of launching new products.

Interest costs

– Compare to the competition, E-TRADE 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.

Ability to respond to the competition

– As the decision making is very deliberative at E-TRADE, in the dynamic environment of Investment Services industry it has struggled to respond to the nimble upstart competition. E-TRADE has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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E-TRADE Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of E-TRADE are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for E-TRADE in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Investment Services industry, and it will provide faster access to the consumers.

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 E-TRADE in the Investment Services industry. Now E-TRADE can target international markets with far fewer capital restrictions requirements than the existing system.

Building a culture of innovation

– managers at E-TRADE 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.

Using analytics as competitive advantage

– E-TRADE has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Investment Services sector. This continuous investment in analytics has enabled E-TRADE to build a competitive advantage using analytics. The analytics driven competitive advantage can help E-TRADE to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Buying journey improvements

– E-TRADE can improve the customer journey of consumers in the Investment Services 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.

Manufacturing automation

– E-TRADE 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects E-TRADE 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

– E-TRADE 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.

Developing new processes and practices

– E-TRADE 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, E-TRADE can use these opportunities to build new business models that can help the communities that E-TRADE operates in. Secondly it can use opportunities from government spending in Investment Services sector.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, E-TRADE 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 E-TRADE to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. E-TRADE 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. E-TRADE 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.

Creating value in data economy

– The success of analytics program of E-TRADE has opened avenues for new revenue streams for the organization in Investment Services industry. This can help E-TRADE to build a more holistic ecosystem for E-TRADE products in the Investment Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.

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Threats E-TRADE External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of E-TRADE are -

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of E-TRADE business can come under increasing regulations regarding data privacy, data security, etc.

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. E-TRADE can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Regulatory challenges

– E-TRADE 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 Investment Services industry regulations.

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 E-TRADE in the Investment Services sector and impact the bottomline of the organization.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for E-TRADE 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.

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 E-TRADE.

Technology acceleration in Forth Industrial Revolution

– E-TRADE has witnessed rapid integration of technology during Covid-19 in the Investment Services industry. As one of the leading players in the industry, E-TRADE 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, E-TRADE 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.

Shortening product life cycle

– it is one of the major threat that E-TRADE is facing in Investment Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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. E-TRADE needs to understand the core reasons impacting the Investment Services industry. This will help it in building a better workplace.

High dependence on third party suppliers

– E-TRADE 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

– E-TRADE 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.

Environmental challenges

– E-TRADE 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. E-TRADE can take advantage of this fund but it will also bring new competitors in the Investment Services industry.

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Weighted SWOT Analysis of E-TRADE Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at E-TRADE 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 E-TRADE 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 E-TRADE 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 E-TRADE 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 E-TRADE needs to make to build a sustainable competitive advantage.

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