Cresto Narang Wealthfront.pdf
at outperforming the market by investing in high-growth potential asset) and is rather based
on quantitative diversification strategies (See Annex A). This means automation would be
able to provide a higher value at a lower cost: this monography will show how.
2 Relevant questions
As we have analysed so far, Wealthfront seems to be a highly innovative company. Despite
that, innovation has not always induced the obtainment of a competitive advantage.
Considering that not many analyses have been performed and not many information are
available on this company, we will apply some theoretical frameworks to determine
whether a competitive advantage exists. In particular, the questions we want to answer are:
What are the external factors that can favour or prevent the obtainment of a
Does artificial intelligence provide a competitive advantage in the asset management
industry? What are Wealthfront’s sources of competitive advantage?
Is the competitive advantage based on innovation?
o What are the sources of innovation?
o What are the factors influencing the pace of innovation diffusion?
o Is this a product or process innovation?
What are Wealthfront’s opportunities and threats?
Can Wealthfront open a Blue Ocean?
3 What Are The External Factors That Can Favour Or Prevent
The Obtainment Of A Competitive Advantage?
3.1 Strategic Analysis Of The External Environment
The analysis was carried out at four levels:
Macro environment: a PESTEL analysis was performed in order to analyse the macro
environment and determine the pivotal variables. In addition, based on the
conclusion of the PESTEL analysis, a scenario analysis was performed.
• Industry: three frameworks were used to analyse the industry, i.e. the lifecycle
analysis, the Porter’s 5+1 forces, and the analysis of the competitive system.
• Competition: a strategic groups analysis was performed.
In addition, a market level analysis was carried out at the end of this document (section 5,
Blue Ocean Analysis)
3.1.1 Macro Environment
Six elements of the macro environment are considered using the PESTEL analysis.