SWOT Analysis / TOWS Matrix for HomeTown Bankshares (United States)
Based on various researches at Oak Spring University , HomeTown Bankshares is operating in a macro-environment that has been destablized by – increasing commodity prices, increasing household debt because of falling income levels, there is increasing trade war between United States & China, there is backlash against globalization, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, technology disruption,
increasing energy prices, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of HomeTown Bankshares
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that HomeTown Bankshares can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the HomeTown Bankshares, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which HomeTown Bankshares 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 HomeTown Bankshares can be done for the following purposes –
1. Strategic planning of HomeTown Bankshares
2. Improving business portfolio management of HomeTown Bankshares
3. Assessing feasibility of the new initiative in United States
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of HomeTown Bankshares
Strengths of HomeTown Bankshares | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of HomeTown Bankshares are -
Analytics focus
– HomeTown Bankshares 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 Regional 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.
Training and development
– HomeTown Bankshares 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.
Low bargaining power of suppliers
– Suppliers of HomeTown Bankshares in the Financial sector have low bargaining power. HomeTown Bankshares has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps HomeTown Bankshares to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the HomeTown Bankshares 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.
Diverse revenue streams
– HomeTown Bankshares is present in almost all the verticals within the Regional Banks industry. This has provided HomeTown Bankshares 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.
Ability to recruit top talent
– HomeTown Bankshares is one of the leading players in the Regional Banks 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.
High brand equity
– HomeTown Bankshares has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled HomeTown Bankshares to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Regional Banks
– HomeTown Bankshares is one of the leading players in the Regional Banks industry in United States. Over the years it has not only transformed the business landscape in the Regional Banks industry in United States but also across the existing markets. The ability to lead change has enabled HomeTown Bankshares in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Regional Banks industry
- digital transformation varies from industry to industry. For HomeTown Bankshares digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. HomeTown Bankshares has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Regional Banks industry
– HomeTown Bankshares has clearly differentiated products in the market place. This has enabled HomeTown Bankshares to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped HomeTown Bankshares to invest into research and development (R&D) and innovation.
Organizational Resilience of HomeTown Bankshares
– The covid-19 pandemic has put organizational resilience at the centre of everthing HomeTown Bankshares does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– HomeTown Bankshares has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Regional Banks industry. Secondly the value chain collaborators of HomeTown Bankshares have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of HomeTown Bankshares | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HomeTown Bankshares are -
Workers concerns about automation
– As automation is fast increasing in the Regional Banks industry, HomeTown Bankshares needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, HomeTown Bankshares has high operating costs in the Regional Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract HomeTown Bankshares lucrative customers.
High cash cycle compare to competitors
HomeTown Bankshares has a high cash cycle compare to other players in the Regional 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.
Need for greater diversity
– HomeTown Bankshares 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.
Capital Spending Reduction
– Even during the low interest decade, HomeTown Bankshares has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Regional Banks industry using digital technology.
Aligning sales with marketing
– From the outside it seems that HomeTown Bankshares needs to have more collaboration between its sales team and marketing team. Sales professionals in the Regional Banks industry have deep experience in developing customer relationships. Marketing department at HomeTown Bankshares can leverage the sales team experience to cultivate customer relationships as HomeTown Bankshares is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, HomeTown Bankshares has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Regional Banks industry over the last five years. HomeTown Bankshares 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.
Employees’ less understanding of HomeTown Bankshares strategy
– From the outside it seems that the employees of HomeTown Bankshares 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 dependence on HomeTown Bankshares ‘s star products
– The top 2 products and services of HomeTown Bankshares still accounts for major business revenue. This dependence on star products in Regional Banks industry has resulted into insufficient focus on developing new products, even though HomeTown Bankshares has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, HomeTown Bankshares 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.
Lack of clear differentiation of HomeTown Bankshares products
– To increase the profitability and margins on the products, HomeTown Bankshares needs to provide more differentiated products than what it is currently offering in the marketplace.
HomeTown Bankshares Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of HomeTown Bankshares are -
Building a culture of innovation
– managers at HomeTown Bankshares 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 Regional Banks industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for HomeTown Bankshares 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 HomeTown Bankshares to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help HomeTown Bankshares to increase its market reach. HomeTown Bankshares 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, HomeTown Bankshares 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.
Using analytics as competitive advantage
– HomeTown Bankshares has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Regional Banks sector. This continuous investment in analytics has enabled HomeTown Bankshares to build a competitive advantage using analytics. The analytics driven competitive advantage can help HomeTown Bankshares to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– HomeTown Bankshares 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.
Use of Bitcoin and other crypto currencies for transactions in Regional Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for HomeTown Bankshares in the Regional Banks industry. Now HomeTown Bankshares can target international markets with far fewer capital restrictions requirements than the existing system.
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 HomeTown Bankshares 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, HomeTown Bankshares 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 HomeTown Bankshares to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. HomeTown Bankshares can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Regional Banks industry, but it has also influenced the consumer preferences. HomeTown Bankshares 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, HomeTown Bankshares can use these opportunities to build new business models that can help the communities that HomeTown Bankshares operates in. Secondly it can use opportunities from government spending in Regional Banks sector.
Learning at scale
– Online learning technologies has now opened space for HomeTown Bankshares 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.
Threats HomeTown Bankshares External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of HomeTown Bankshares are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for HomeTown Bankshares in Regional Banks industry. The Regional Banks 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
– HomeTown Bankshares has witnessed rapid integration of technology during Covid-19 in the Regional Banks industry. As one of the leading players in the industry, HomeTown Bankshares needs to keep up with the evolution of technology in the Regional Banks 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.
Environmental challenges
– HomeTown Bankshares 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. HomeTown Bankshares can take advantage of this fund but it will also bring new competitors in the Regional Banks industry.
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.
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 HomeTown Bankshares.
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 HomeTown Bankshares in the Regional Banks sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– HomeTown Bankshares 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 Regional Banks industry.
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. HomeTown Bankshares needs to understand the core reasons impacting the Regional Banks industry. This will help it in building a better workplace.
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 HomeTown Bankshares business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of HomeTown Bankshares
– 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 HomeTown Bankshares.
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.
Consumer confidence and its impact on HomeTown Bankshares 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 Regional Banks industry and other sectors.
High dependence on third party suppliers
– HomeTown Bankshares 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.
Weighted SWOT Analysis of HomeTown Bankshares Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at HomeTown Bankshares 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 HomeTown Bankshares 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 HomeTown Bankshares 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 HomeTown Bankshares 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 HomeTown Bankshares needs to make to build a sustainable competitive advantage.