Corporate Inversions: Stanley Works and the Lure of Tax Havens SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Corporate Inversions: Stanley Works and the Lure of Tax Havens
In response to Stanley Work's announcement that it is moving to Bermuda--and the associated jump in market value--a major competitor sets out to determine how the market is valuing the consequences of moving to a tax haven and whether his company should invert to a tax haven. In particular, the competitor's CFO needs to attribute Stanley's stock price movements across several dimensions of potential tax savings (tax savings on foreign operations and on interest payments) to see if there might be something else at play (earnings stripping). In the process, the mechanics and incentives created by the international tax regime are illustrated. To obtain executable spreadsheets (courseware), please contact our customer service department at custserv@hbsp.harvard.edu.
Authors :: Mihir A. Desai, Mark F. Veblen, James R. Hines Jr.
Swot Analysis of "Corporate Inversions: Stanley Works and the Lure of Tax Havens" written by Mihir A. Desai, Mark F. Veblen, James R. Hines Jr. includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tax Haven facing as an external strategic factors. Some of the topics covered in Corporate Inversions: Stanley Works and the Lure of Tax Havens case study are - Strategic Management Strategies, Financial analysis, Financial management, International business, Mergers & acquisitions, Performance measurement, Policy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Corporate Inversions: Stanley Works and the Lure of Tax Havens casestudy better are - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings,
technology disruption, increasing commodity prices, etc
Introduction to SWOT Analysis of Corporate Inversions: Stanley Works and the Lure of Tax Havens
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Corporate Inversions: Stanley Works and the Lure of Tax Havens case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tax Haven, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tax Haven operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Corporate Inversions: Stanley Works and the Lure of Tax Havens can be done for the following purposes –
1. Strategic planning using facts provided in Corporate Inversions: Stanley Works and the Lure of Tax Havens case study
2. Improving business portfolio management of Tax Haven
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tax Haven
Strengths Corporate Inversions: Stanley Works and the Lure of Tax Havens | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tax Haven in Corporate Inversions: Stanley Works and the Lure of Tax Havens Harvard Business Review case study are -
High switching costs
– The high switching costs that Tax Haven has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Tax Haven has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Corporate Inversions: Stanley Works and the Lure of Tax Havens - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Tax Haven is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Tax Haven
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tax Haven does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Tax Haven in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Tax Haven is one of the most innovative firm in sector. Manager in Corporate Inversions: Stanley Works and the Lure of Tax Havens Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Tax Haven are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Tax Haven has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Corporate Inversions: Stanley Works and the Lure of Tax Havens Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Corporate Inversions: Stanley Works and the Lure of Tax Havens Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Finance & Accounting field
– Tax Haven is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Tax Haven in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Finance & Accounting industry
– Corporate Inversions: Stanley Works and the Lure of Tax Havens firm has clearly differentiated products in the market place. This has enabled Tax Haven to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Tax Haven to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Tax Haven is one of the leading recruiters in the industry. Managers in the Corporate Inversions: Stanley Works and the Lure of Tax Havens are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Corporate Inversions: Stanley Works and the Lure of Tax Havens | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Corporate Inversions: Stanley Works and the Lure of Tax Havens are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Corporate Inversions: Stanley Works and the Lure of Tax Havens, in the dynamic environment Tax Haven has struggled to respond to the nimble upstart competition. Tax Haven has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Tax Haven products
– To increase the profitability and margins on the products, Tax Haven needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Tax Haven has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Tax Haven is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Tax Haven needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tax Haven to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Tax Haven has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Corporate Inversions: Stanley Works and the Lure of Tax Havens should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Corporate Inversions: Stanley Works and the Lure of Tax Havens HBR case study mentions - Tax Haven takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Tax Haven, firm in the HBR case study Corporate Inversions: Stanley Works and the Lure of Tax Havens needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Tax Haven has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Mihir A. Desai, Mark F. Veblen, James R. Hines Jr. suggests that, Tax Haven is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Tax Haven has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Capital Spending Reduction
– Even during the low interest decade, Tax Haven has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Corporate Inversions: Stanley Works and the Lure of Tax Havens | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Corporate Inversions: Stanley Works and the Lure of Tax Havens are -
Creating value in data economy
– The success of analytics program of Tax Haven has opened avenues for new revenue streams for the organization in the industry. This can help Tax Haven to build a more holistic ecosystem as suggested in the Corporate Inversions: Stanley Works and the Lure of Tax Havens case study. Tax Haven can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tax Haven can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Corporate Inversions: Stanley Works and the Lure of Tax Havens, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tax Haven in the consumer business. Now Tax Haven can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tax Haven is facing challenges because of the dominance of functional experts in the organization. Corporate Inversions: Stanley Works and the Lure of Tax Havens case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Tax Haven has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Corporate Inversions: Stanley Works and the Lure of Tax Havens - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tax Haven to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tax Haven to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Tax Haven has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Tax Haven can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Corporate Inversions: Stanley Works and the Lure of Tax Havens suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tax Haven can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Tax Haven can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tax Haven can use these opportunities to build new business models that can help the communities that Tax Haven operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Tax Haven can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Tax Haven can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Corporate Inversions: Stanley Works and the Lure of Tax Havens External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Corporate Inversions: Stanley Works and the Lure of Tax Havens are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Tax Haven needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Tax Haven.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Tax Haven business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Corporate Inversions: Stanley Works and the Lure of Tax Havens, Tax Haven may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Consumer confidence and its impact on Tax Haven demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Tax Haven in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Tax Haven needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tax Haven can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Tax Haven will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Tax Haven is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Tax Haven has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tax Haven needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tax Haven with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Corporate Inversions: Stanley Works and the Lure of Tax Havens Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Corporate Inversions: Stanley Works and the Lure of Tax Havens needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Corporate Inversions: Stanley Works and the Lure of Tax Havens is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Corporate Inversions: Stanley Works and the Lure of Tax Havens is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Corporate Inversions: Stanley Works and the Lure of Tax Havens is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Tax Haven needs to make to build a sustainable competitive advantage.