Title:                            Stiff Competition Calls for New Streams of Revenue

Subject Area:          Positioning Strategy, competitive strategy

Region:                      United States

Industry:                   High Frequency Trading (HFT)

Company:                 Tidal Traders

Challenge:                Tidal Traders is faced with an evolving HFT landscape. How can the firm position itself to become a leader in high-frequency bond trading while maintaining superior performance in its established capabilities?

This case analysis outlines a challenge-problem faced by an international High-Frequency Trading (HFT) firm in the financial technology industry. Once the question of entering a new financial space is established, an analysis of the company, market, and industry is formed to place the challenge into context. Then a consulting report is developed which analyzes and contemplates different solutions. Accordingly, a strategy is chosen and recommended to the firm with detailed steps for implementation. This case is designed to recommend an action plan for a company dealing with a rapidly-changing industry. If implemented well, the recommendations will enable the company to sustain a competitive advantage in their industry.

The Consulting Team

• Owen Haiber – Finance and Computer Science
• Matthew Kelly – Finance and Marketing
• Daniela Ponce – Entrepreneurship and Economics
• Zoe Robert – Finance and Sustainability
• Brendan Slattery – Finance

The consulting team for this project is composed of seniors graduating from the D’Amore Mckim Business School. They will earn a degree in business administration, with varying interdisciplinary concentrations and minors. Each team member has been able to connect different aspects of the project to their career interests, whether it was learning to implement a differentiation strategy or researching about the financial technology industry. By analyzing a real challenge faced by an international firm, the team was able to use their diverse backgrounds and individual capabilities to formulate an appropriate strategy and suggest implementation guidelines that will enable the firm to stay competitive in the rapidly-changing HFT industry.

Data Collection & Analysis Methods within the Financial Technology Industry

The case report was completed by using frameworks learned in classes throughout the course of Northeastern University’s business curriculum. To analyze internal and external factors affecting the business in question, the team made use of the PESTEL and SWOT frameworks learned during International Business and reinforced during Strategy in Action. To analyze industry competitors and company capabilities, the team referenced Porter’s Five Forces and the VRIO framework learned in Strategy in Action. In addition, the team was able to collect unbiased and relevant data from company employees, public company documents and online sources.

Findings and Recommendation

• The HFT industry is in the growth stage and Tidal Traders has strong counterparty relationships.
• Tidal Traders has highly developed proprietary algorithms and trading strategies.
• There is a growing pool of diverse STEM talent in the job market.

The team recommends Tidal Traders to diversify their internal capabilities by creating a new business unit to enter the fixed income market enabling them to gain a first mover advantage.