Knight Capital Americas LLC Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Knight Capital Americas LLC Case Solution

Introduction

Knight capital's is probably the biggest US based representative seller and chaperon of KCG possessions. In August, 2012, KCG was confronted with disturbance in its program which drove the organization to lose the pre-tax loss of approximately “$440 million”. The subject of these systems is Knight's break of a "Commission rule", which requires judges or specialists to have controls and strategy set up reasonably planned to limit the dangers associated with their admittance to the business sectors, consolidating the dangers associated with computerized structures and the possibilities of such blunders or errors. (Austin, 2015)

The risks or dangers brought about by unfortunate testing of the product can be moderated through the legitimate and dependable setting of the chiefs and specialized groups. Specialized groups were capable of ensuring that the projects were retested before the execution to keep away from any misfortune.

Situation Analysis

SWOT Analysis

SWOT framework of the company “Knight Capital Americas” can be analyzed to measure the strategic factors and decisions that help it in prospering in its business. The Knight strong geographical presence and product portfolio makes the company highly competitive in the market. To the extent that the qualities are concern, knights likewise have a few shortcomings, which might fill in as a future opportunity, assuming the choices are made by the domestic investigation. Appendix 1 shows the four parts of Knight Capital Americas LLC SWOT analysis.

VRIO Analysis

Appendix 2 shows the VRIO framework of Knights capital Inc.

Porters Five Forces Model

To analyze the external environment of the Knight’s capital, the porter’s model used. Since the Knights have high global presence which is the main strength of the company, but due to poor management system, the knight’s has suffered a lot of loses. This model is used to analyze the knight’s external environment and help the firm to apply the standards according to them. Appendix 3 shows the knights Porters’ five forces model.

PESTLE Analysis

In order to analyze the external environment, such as: demographical and political structure of the firm; the PESTLE model can be utilized. Appendix 4 shows the PESTLE analysis of the knight’s capital.

Question-1

Knight’s Stock Disruption

“Knight Capital group Inc.” is probably the biggest firm that trades stocks to give liquidity to the business sectors, encountered the issue toward the start of exchanging for that day. Since Exchanging errors are quite common so there is a greater responsibility when the slip-ups are brought about by people. The current exchange structure is quite complicated as well as unclear.

In the beginning of the August; it was observed that Knight Capital established the untested software in the environment of production, which contained an out of date work because of a professional neglecting to enter" Retail Liquidity Program (RLP)" code to one of the eight “SMARS PC servers” which was “knight model” for orders. “RLP” code reused a banner that was previously used to initiate the old capacity called ‘Power Peg', which was utilized to move stock expenses higher and lower to affirm the conduct of exchanging calculations a controlled climate. (Kriger, 2014)

Subsequently, orders sent with the reused banner to the server set of the 8 imperfect "Power Peg" code actually displayed on it. For the 212 approaching guardian arranges that were handled by the flawed “Power Peg code”; the company sent huge number of youngster orders, bringing about “4 million executions” in “154 stocks” for in excess of “397 million” offers in roughly 45 minutes. This buying of heavy orders sore the stock prices and hence the Knight capital faced the pre-tax loss of approximately “$440 million”. Due to this reason, on 1^st August, the Knight experienced the tremendous event of software disruption, which caused Knight’s stock pretax prices to crumble. (Arnott, 2010)

Question-2

The main cause of the problem was the sudden decisions of the combination of bad orders and mistiming. The mistiming caused a lot more severity in the issues than they initially were. It could be the possibility that the company started the orders without testing the software. It is very important for the company to measure the following tests and protocols before preceding to orders. This could be the real problem for such big firms like Knight Capital. Moreover, there could be the possibility of the program installed by the IT management was the test program, and they were checking all the measures through it. It might be due to the reason that the test program had the fast trading effects and it was desired to check all the necessary measures without the management’s help.

So the aforementioned factors can be the reason behind the worst usage of program. In order to resolve these issues; the management should ensure with the IT department that the installed programs are working properly and the management first needs to make sure of all the necessary test procedures and protocols associated with it.....................

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Knight Capital Americas LLC Harvard Case Solution & Analysis