Securitize SWOT Analysis And Portfolio Analysis Essay

Length: 10 pages Sources: 4 Type: Essay Paper: #17316830 Related Topics: Decision Making, Strategic Management, Market Share, Practical Application Published June 22, 2022
Excerpt from Essay :

Introduction

There are a wide range of tools that business enterprises deploy in an attempt to assess not only their competitive position, but also their performance. Some of the said tools are inclusive of, but they are not limited to; SWOT analysis and portfolio analysis. These tools are of great relevance to both large and small/medium enterprises. They can also be applied to mature businesses as well as businesses that are just starting out. This text concerns itself with Securitize, one of the startups in FinTech. Assuming the role of Securitizes CEO, I will assess the advantages and disadvantages of each of the two approaches identified above (i.e. SWOT analysis and portfolio analysis), and consider how each approach could be applied to the company.

Discussion

Company Background

Over the last few years, a number of startups have mushroomed in FinTech. These are inclusive of, but they are not limited to; Securitize, Coinbase, Opendoor, Paydiant, Spur, Chima, Ripple, etc. Having been founded in the year 2017, Securitize was born out of a mission to decrease friction and create liquidity in the private sector (Securitize, 2022). The founders of the company saw the need to ensure that limited partners had access to both liquidity and automation. In so doing, they sought to deploy blockchain technology. It is important to note that in the past, limited partners have been largely deemed illiquid. One of the stated goals of Securitize happens to be ensuring that all of the digital assets of the world are made digital (Securitize, 2022). Some of the companys key competitors at present are inclusive of, but they are not limited to; Wanchain, Quantstamp, Kadena, and TokenGet. The company is based in San Francisco, CA.

SWOT Analysis

SWOT, as Wheelen, Hunger, Hoffman, and Bamford (2018) indicate, happens to stand for Strengths, Weaknesses, Opportunities, and Threats. It is one of the most widely used tools in strategic management. In the case of Securitize, SWOT analysis would be instrumental in our efforts to assess the competitive position of the enterprise. An assessment of this nature would enable us to come up with, or formulate, a viable and effective strategic plan. The identification of the various Strengths and Weaknesses (highlighted elsewhere in this text) will be of great relevance in the evaluation of the firms internal environment. On the other hand, the identification of the various Opportunities and Threats (also highlighted elsewhere in this text) will be key in the evaluation of the external environment of Securitize.

Benefits

To begin with, and perhaps most obviously, SWOT analysis permits a multilevel analysis (Amason, 2011). This is to say that the tool does not have to be analyzed as a whole for its benefits to be realized. Thus, at Securitize, we could gather key insights about the company or the environment in which it operates by focusing of a specific category, i.e. strength, weakness, opportunity, or threat. However, for a comprehensive view of the competitive position of Securitize, there would be need to make use of all the category in combination.

Secondly, in comparison to other assessment tools such as portfolio analysis and financial ratio analysis, SWOT analysis happens to be a rather easy tool to apply. This is to say that it does not require complex analysis or computations. Thus, Securitizes SWOT analysis could be undertaken by any of the executives (or teams) that the organization already has in place i.e. with no need to hire an external consultant. All that would be required for successful SWOT analysis in the case of Securitize will be knowledge of the various business operations the company is presently engaged in, as well as knowledge of key industry trends. It should also be noted that as a results of the said simplicity, this particular approach is also cost effective. It does not require significant investment in terms of time, human resources, and money.

Third, it would also be prudent to note that SWOT analysis could be deployed on multiple fronts within the company. For instance, we could apply this particular tool to the entire organization or a certain organizational unit. Further, the versatile nature of the approach means that we could apply it to any of Securitizes key business processes with an intention of evaluating viability.

Downsides

In as much as SWOT analysis clearly has certain undeniable advantages, it should be noted that there are also a number of shortcomings that we should be aware of in the deployment of this particular tool. One such shortcoming is the fact that there would be no way of telling which of the elements captured or highlighted within the four categories is of greatest significance. This is to say that the approach would not provide us with clear cut weighing factors to more accurately guide or inform decision making. For this reason, we are likely to have a hard time ranking the various elements in the order of significance. This is more so the case given that for some reason or another, i.e. resource constrains, the company may not be able to address all the elements highlighted, i.e. as could be the case with elements under weaknesses and threats.

Next, it should also be noted that SWOT analysis, as Amason (2011) points out, could be somewhat ambiguous. This, according to the author, is more so the case given that the tool advances what could be referred to as a one-dimensional model that places each identified element under the four categories (152). Thus, in the case of Securitize, each factor would have to be identified as either a strength, weakness, opportunity, or threat. The problem with this is that there are some elements which might not firmly fit under a single category. For instance, the companys global footprint could be considered a strength (as has been indicated elsewhere in this text). However, to some extent, this could also be a threat in terms of high cost of operation.

Third, Amason (2011) also indicates that this particular strategic analysis tool is not immune to subjective analysis. This, according to the author, is especially the case given that the bias of persons participating in the exercise…more so thecase given that to a large extent, the company does not have multiple clearly defined strategic business units.

Secondly, portfolio analysis is largely founded on future estimates. This is to say that in the case of Securitize, there would be need to forecast the future using the relevant data. The downside on this front is that the said data could be inaccurate for one reason or another resulting in erroneous forecasts. Indeed, as Wheelen, Hunger, Hoffman, and Bamford (2018) indicate, portfolio analysis provides an illusion of scientific rigor, when in reality positions are based on subjective judgments (209).

Lastly, portfolio analysis would essentially limit us to the products that Securitize presently offers. This effectively means that the management could end up being oblivious of the various other alternative ventures that could contribute even more to the companys bottom-line.

Practical Application

According to Wilkinson and Kannan (2013), there are a number of portfolio analysis approaches that have been proposed in the past. These are inclusive of Arthur D. little portfolio matrix, Anosoffs product-market growth matrix, market life cycle-competitive strength matrix, the BCG growth share matrix, etc. In the context of Securitize, the most ideal approach to make use of would be the BCG growth share matrix. This, as Wheelen, Hunger, Hoffman, and Bamford (2018) indicate, happens to be one of the most popular portfolio analysis approaches. There are four categories under which products could be placed on this front. These have been identified by Wheelen, Hunger, Hoffman, and Bamford (2018) as question marks, stars, cash cows, and dogs.

To begin with, dogs are representative of low market share and as Wilkinson and Kannan (2013) indicate, the probability of a product in this category to contribute significantly to the bottom line happens to be rather low. Cash cows, on the other hand rake in significant amounts of money with the profits earned in this case being significantly higher than costs incurred in the maintenance of market share. When it comes to stars, Wheelen, Hunger, Hoffman, and Bamford (2018) describe these as products that could be considered market leaders and whose contribution to the bottom line is still significant. However, products in this category are almost near their peak. Lastly, question marks, according to Wheelen, Hunger, Hoffman, and Bamford (2018), are new products with the potential for success, but needing a lot of cash for development (207).

At present, Securitize has two strategic business units: the primary market, and the secondary market. While the primary market largely involves institutional investors funding businesses that are just starting out, the secondary market comprises of digital asset securities trading. Both would be categorized appropriately following further assessment.

Conclusion

In the final analysis, I feel that SWOT analysis would be more beneficial than portfolio analysis. My assertion is on this front founded on the ease of application of this method and the fact that it provides a more accurate picture of crucial factors that could influence the success of the company going forward. In the case of Securitize, portfolio analysis would be an ineffective approach…

Sources Used in Documents:

References


Amason, A. (2011). Strategic Management: From Theory to Practice. Routledge.


Crunchbase (2022). Securitize. https://www.crunchbase.com/organization/securitize-inc


Markets and Markets (2021). Cryptocurrency Market. https://www.marketsandmarkets.com/Market-Reports/cryptocurrency-market-158061641.html


Securitize (2022). About Us. https://securitize.io/about-us#our-story


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