Royal Bank Of Canada (RY) SWOT Analysis / TOWS Matrix / MBA Resources
S&Ls/Savings Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Royal Bank Of Canada (United States)
Based on various researches at Oak Spring University , Royal Bank Of Canada is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%,
increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Royal Bank Of Canada
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Royal Bank Of Canada can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Royal Bank Of Canada, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Royal Bank Of Canada 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 Royal Bank Of Canada can be done for the following purposes –
1. Strategic planning of Royal Bank Of Canada
2. Improving business portfolio management of Royal Bank Of Canada
3. Assessing feasibility of the new initiative in United States
4. Making a S&Ls/Savings Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Royal Bank Of Canada
Strengths of Royal Bank Of Canada | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Royal Bank Of Canada are -
Sustainable margins compare to other players in S&Ls/Savings Banks industry
– Royal Bank Of Canada has clearly differentiated products in the market place. This has enabled Royal Bank Of Canada to fetch slight price premium compare to the competitors in the S&Ls/Savings Banks industry. The sustainable margins have also helped Royal Bank Of Canada to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Royal Bank Of Canada is present in almost all the verticals within the S&Ls/Savings Banks industry. This has provided Royal Bank Of Canada 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.
Low bargaining power of suppliers
– Suppliers of Royal Bank Of Canada in the Financial sector have low bargaining power. Royal Bank Of Canada has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Royal Bank Of Canada to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in S&Ls/Savings Banks industry
- digital transformation varies from industry to industry. For Royal Bank Of Canada digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Royal Bank Of Canada 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.
Ability to lead change in S&Ls/Savings Banks
– Royal Bank Of Canada is one of the leading players in the S&Ls/Savings Banks industry in United States. Over the years it has not only transformed the business landscape in the S&Ls/Savings Banks industry in United States but also across the existing markets. The ability to lead change has enabled Royal Bank Of Canada in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Royal Bank Of Canada in S&Ls/Savings Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Royal Bank Of Canada
– The covid-19 pandemic has put organizational resilience at the centre of everthing Royal Bank Of Canada does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Royal Bank Of Canada has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Royal Bank Of Canada staying ahead in the S&Ls/Savings Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Royal Bank Of Canada 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.
Learning organization
- Royal Bank Of Canada 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 Royal Bank Of Canada is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Royal Bank Of Canada emphasize – knowledge, initiative, and innovation.
High brand equity
– Royal Bank Of Canada has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Royal Bank Of Canada to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Royal Bank Of Canada 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 S&Ls/Savings 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.
Weaknesses of Royal Bank Of Canada | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal Bank Of Canada are -
Interest costs
– Compare to the competition, Royal Bank Of Canada 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.
High bargaining power of channel partners in S&Ls/Savings Banks industry
– because of the regulatory requirements in United States, Royal Bank Of Canada 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 S&Ls/Savings Banks industry.
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 Royal Bank Of Canada supply chain. Even after few cautionary changes, Royal Bank Of Canada is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Royal Bank Of Canada vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Royal Bank Of Canada 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 S&Ls/Savings Banks industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Royal Bank Of Canada has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the S&Ls/Savings Banks industry over the last five years. Royal Bank Of Canada 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.
Need for greater diversity
– Royal Bank Of Canada 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.
Low market penetration in new markets
– Outside its home market of United States, Royal Bank Of Canada needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Royal Bank Of Canada, in the dynamic environment of S&Ls/Savings Banks industry it has struggled to respond to the nimble upstart competition. Royal Bank Of Canada has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– From the 10K / annual statement of Royal Bank Of Canada, it seems that company is thinking out the frontier risks that can impact S&Ls/Savings 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.
Aligning sales with marketing
– From the outside it seems that Royal Bank Of Canada needs to have more collaboration between its sales team and marketing team. Sales professionals in the S&Ls/Savings Banks industry have deep experience in developing customer relationships. Marketing department at Royal Bank Of Canada can leverage the sales team experience to cultivate customer relationships as Royal Bank Of Canada is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the S&Ls/Savings Banks industry, Royal Bank Of Canada 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.
Royal Bank Of Canada Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Royal Bank Of Canada are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Royal Bank Of Canada can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Royal Bank Of Canada in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the S&Ls/Savings Banks industry, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the S&Ls/Savings Banks industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Royal Bank Of Canada 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. Royal Bank Of Canada 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 Royal Bank Of Canada has opened avenues for new revenue streams for the organization in S&Ls/Savings Banks industry. This can help Royal Bank Of Canada to build a more holistic ecosystem for Royal Bank Of Canada products in the S&Ls/Savings Banks industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Royal Bank Of Canada can use the latest technology developments to improve its manufacturing and designing process in S&Ls/Savings 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.
Leveraging digital technologies
– Royal Bank Of Canada 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.
Buying journey improvements
– Royal Bank Of Canada can improve the customer journey of consumers in the S&Ls/Savings 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.
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 Royal Bank Of Canada 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.
Better consumer reach
– The expansion of the 5G network will help Royal Bank Of Canada to increase its market reach. Royal Bank Of Canada 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.
Use of Bitcoin and other crypto currencies for transactions in S&Ls/Savings Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Royal Bank Of Canada in the S&Ls/Savings Banks industry. Now Royal Bank Of Canada can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Royal Bank Of Canada 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.
Building a culture of innovation
– managers at Royal Bank Of Canada 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 S&Ls/Savings Banks industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Royal Bank Of Canada can use these opportunities to build new business models that can help the communities that Royal Bank Of Canada operates in. Secondly it can use opportunities from government spending in S&Ls/Savings Banks sector.
Threats Royal Bank Of Canada External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Royal Bank Of Canada are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Royal Bank Of Canada in S&Ls/Savings Banks industry. The S&Ls/Savings 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.
High dependence on third party suppliers
– Royal Bank Of Canada 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Royal Bank Of Canada 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 Royal Bank Of Canada prominent markets.
Technology acceleration in Forth Industrial Revolution
– Royal Bank Of Canada has witnessed rapid integration of technology during Covid-19 in the S&Ls/Savings Banks industry. As one of the leading players in the industry, Royal Bank Of Canada needs to keep up with the evolution of technology in the S&Ls/Savings 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.
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. Royal Bank Of Canada 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.
Environmental challenges
– Royal Bank Of Canada 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. Royal Bank Of Canada can take advantage of this fund but it will also bring new competitors in the S&Ls/Savings Banks industry.
Increasing wage structure of Royal Bank Of Canada
– 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 Royal Bank Of Canada.
Shortening product life cycle
– it is one of the major threat that Royal Bank Of Canada is facing in S&Ls/Savings Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Royal Bank Of Canada business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in S&Ls/Savings Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Royal Bank Of Canada can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to S&Ls/Savings Banks industry are lowering. It can presents Royal Bank Of Canada with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the S&Ls/Savings Banks sector.
Regulatory challenges
– Royal Bank Of Canada 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 S&Ls/Savings Banks industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Royal Bank Of Canada may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of S&Ls/Savings Banks sector.
Weighted SWOT Analysis of Royal Bank Of Canada Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Royal Bank Of Canada 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 Royal Bank Of Canada 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 Royal Bank Of Canada 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 Royal Bank Of Canada 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 Royal Bank Of Canada needs to make to build a sustainable competitive advantage.