Vanguard SWOT analysis

Essay text:

Strengths ? Mutual fund industry growth leader ? Growing at 30% per year ? Lowest average expense ratio ? 74% of funds earned above average returns (2001) ? Added 800k shareholders accounts (2001) ? Spent $.20 of every $10,000 invested to drum up new business ? Very low employee turnover ? Effectively utilize dashboards to interrogate and integrate real time metrics into staff meetings ? Ability to retain customers and obtain additional investments Weaknesses ? $50 billion in assets leave Vanguard every year ? Net cash flow decreased from 46 to 40 billion from 2001 to 2002 ? Redemption rates rose 2% (2000) ? Marketing research measures were qualitative and not quantitative ? Most brokerage firms do not recommend Vanguard funds to their clients to do lack of sales commissions Opportunities ? Appeal to clients by emphasizing "speed, low expense ratio" ? Pick up 1/3 of any increase in mutual fund assets ? Over 40% of customer transactions were conducted on the internet, increasing cost efficiency (2001) ? Top name in mass-marketed industry despite extremely low advertising spending ? Commissioned major client segmentation study to market more effectively to existing customers (2003) ? Increase amount of data collected on customers to market more effectively to existing and new customers ? Increase brand awareness ? International expansion Threats ? Must attract new business every year to compensate $50 billion loss ? Business must continue to change/adapt to the evolving socio-economic cycle to remain competitive ? Short term investors looking for a quick return ? Cross-over, and Roll-over clients withdrawing large sums of money and re-investing with other financial institutes ? Poor Index/Stock market performance ? Aggressive competition ? International expansion into low populated countries ? Institutional and regulatory barriers