USAA SWOT and PESTLE Analysis

Strength

1. Firmly established in a niche market: USAA serves only the military families of United States which gives them a very big advantage. The Company restricts its products and services to the target group only. When it comes to brand awareness, the $155 billion insurance has beaten all its competitors. According to Raddon research, 83% customers of USAA get additional financial benefits. It was founded in the year 1922 by a group military personnel to insure each other’s cars. It has expanded into home and life insurance and mutual funds. As mentioned above the company only serves military families which gives the company a tremendous focus and lends it a great competitive advantage. Members who are the part of this company use a wide array of services such as credit cards, checking accounts and saving accounts. 2. Technology innovations boosting performance: USAA offers many services including a mix of insurance, financial management, mortgage, and auto loan and banking services, all through virtual networks such as mobile devices and web. Most of the centers of the company are nearer to the military bases which are regulated through remote access technology and videos in order to expand the business at minimum cost. Now USAA is employing advanced technologies to facilitate one to one video, web bandwidth agility, data analytics, contextual web marketing and voice automated response. The online banking sites looks more like an app and the company is attempting to make the mobile phones and tablets to be the banking channels in their own way. In 2020, USAA tested the use of aerial imagery and drones to inspect homes that have been damaged and streamline claims following the pandemic protocols and natural disasters. Using this technology, the company assisted in processing more than 273,000 catastrophe claims in 2020. This enabled members to repair their homes rapidly while ensuring their protection. The remaining section under "Strength" is available only in the 'Complete Report' on purchase.

Weakness

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Opportunity

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Threat

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Political

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Economic

1. Inflationary pressures and higher interest rates in US economy: While the US economy showed signs of recovery despite the several variants of the virus spreading globally, the fiscal push sugarcoated most of the underlying scarring in the economy and pushed prices up to levels last seen in 1982. The CPI index for December 2021 was 7% higher than last year, one of the highest rates of inflation the US has seen in recent years. This raises the question of the Federal Reserve increasing the interest rates. The inflationary pressure on the US economy may impact how products and services are now designed by USAA keeping in mind squeezing of the cost-income ratio. USAA Small Cap Stock Fund (USCAX) is the stock which can be used for investing in a mutual fund portfolio. While it is a fundamentally strong performer over the 5-year and 3-year period, the increase in interest rates by the Federal Reserve of the US may impact how the stock is valued. This impact may be more on this fund since the it is more volatile than the mutual fund market itself. The understanding follows that a lower standard deviation signifies less volatility that the fund experiences. The standard deviation of USCAX over the past three years is 24.42%, higher than the category average of 19.9%. The entire fund’s standard deviation over the past 5 years is 21.28% which is again much higher than the category average of 16.62%. Therefore, a significant quantitative contraction in monetary policy may lead to more impact on the fund. The remaining section under “Economic” is available only in the 'Complete Report' on purchase.

Social

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Technological

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Legal

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Environmental

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