Case Study Description of Kota Fibres, LTD. (v. 1.1)
This is a Darden case study.In January 2001, the chief executive of this small yarn-production company in India must resolve a surprising cash shortage. The task for students is to evaluate the causes of the shortage (using a completed "base-case" forecast given in the case) and assess the usefulness of various possible remedies suggested by company managers. In essence, the company is unable to liquidate a seasonal working capital loan for the requisite 30 days each year. This difficulty arises from two classic causes: (1) secular growth of the company, and (2) declining profitability. Possible remedies include reducing inventory through more efficient transportation and warehousing, reducing credit terms to customers, having raw materials supplied on a just-in-time basis, switching from seasonal to level production, improving profitability, decreasing dividends, and reducing sales growth.
Swot Analysis of "Kota Fibres, LTD. (v. 1.1)" written by Robert F. Bruner, Thien T. Pham includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Remedies Reducing facing as an external strategic factors. Some of the topics covered in Kota Fibres, LTD. (v. 1.1) case study are - Strategic Management Strategies, Forecasting, Operations management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Kota Fibres, LTD. (v. 1.1) casestudy better are - – there is increasing trade war between United States & China, increasing energy prices, increasing government debt because of Covid-19 spendings, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Kota Fibres, LTD. (v. 1.1)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kota Fibres, LTD. (v. 1.1) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Remedies Reducing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Remedies Reducing 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 Kota Fibres, LTD. (v. 1.1) can be done for the following purposes –
1. Strategic planning using facts provided in Kota Fibres, LTD. (v. 1.1) case study
2. Improving business portfolio management of Remedies Reducing
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 Remedies Reducing
Strengths Kota Fibres, LTD. (v. 1.1) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Remedies Reducing in Kota Fibres, LTD. (v. 1.1) Harvard Business Review case study are -
Successful track record of launching new products
– Remedies Reducing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Remedies Reducing has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Remedies Reducing in the sector have low bargaining power. Kota Fibres, LTD. (v. 1.1) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Remedies Reducing to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Remedies Reducing 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.
Organizational Resilience of Remedies Reducing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Remedies Reducing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Remedies Reducing is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert F. Bruner, Thien T. Pham can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Remedies Reducing is one of the most innovative firm in sector. Manager in Kota Fibres, LTD. (v. 1.1) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Remedies Reducing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Remedies Reducing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Remedies Reducing is present in almost all the verticals within the industry. This has provided firm in Kota Fibres, LTD. (v. 1.1) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Operational resilience
– The operational resilience strategy in the Kota Fibres, LTD. (v. 1.1) 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 recruit top talent
– Remedies Reducing is one of the leading recruiters in the industry. Managers in the Kota Fibres, LTD. (v. 1.1) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Kota Fibres, LTD. (v. 1.1) firm has clearly differentiated products in the market place. This has enabled Remedies Reducing to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Remedies Reducing to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Remedies Reducing 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 Kota Fibres, LTD. (v. 1.1) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Kota Fibres, LTD. (v. 1.1) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kota Fibres, LTD. (v. 1.1) are -
No frontier risks strategy
– After analyzing the HBR case study Kota Fibres, LTD. (v. 1.1), it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kota Fibres, LTD. (v. 1.1), is just above the industry average. Remedies Reducing needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Remedies Reducing 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 - Kota Fibres, LTD. (v. 1.1) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Kota Fibres, LTD. (v. 1.1) HBR case study mentions - Remedies Reducing 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.
Lack of clear differentiation of Remedies Reducing products
– To increase the profitability and margins on the products, Remedies Reducing needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Remedies Reducing 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kota Fibres, LTD. (v. 1.1), it seems that the employees of Remedies Reducing don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Kota Fibres, LTD. (v. 1.1), in the dynamic environment Remedies Reducing has struggled to respond to the nimble upstart competition. Remedies Reducing has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Remedies Reducing has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Remedies Reducing 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.
Capital Spending Reduction
– Even during the low interest decade, Remedies Reducing 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 Kota Fibres, LTD. (v. 1.1) | 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 Kota Fibres, LTD. (v. 1.1) are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Remedies Reducing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Remedies Reducing to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Remedies Reducing has opened avenues for new revenue streams for the organization in the industry. This can help Remedies Reducing to build a more holistic ecosystem as suggested in the Kota Fibres, LTD. (v. 1.1) case study. Remedies Reducing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Remedies Reducing can use these opportunities to build new business models that can help the communities that Remedies Reducing operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Manufacturing automation
– Remedies Reducing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Remedies Reducing can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Remedies Reducing to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Remedies Reducing to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Remedies Reducing to increase its market reach. Remedies Reducing will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 Remedies Reducing in the consumer business. Now Remedies Reducing can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Remedies Reducing can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Remedies Reducing 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Remedies Reducing can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Remedies Reducing can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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 Remedies Reducing 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.
Threats Kota Fibres, LTD. (v. 1.1) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kota Fibres, LTD. (v. 1.1) are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Remedies Reducing
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Remedies Reducing.
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. Remedies Reducing needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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. Remedies Reducing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Remedies Reducing has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Remedies Reducing 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.
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 Remedies Reducing in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Remedies Reducing needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Remedies Reducing can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Remedies Reducing 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 Kota Fibres, LTD. (v. 1.1), Remedies Reducing 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Remedies Reducing can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Kota Fibres, LTD. (v. 1.1) .
Shortening product life cycle
– it is one of the major threat that Remedies Reducing is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Remedies Reducing 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Remedies Reducing 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 Kota Fibres, LTD. (v. 1.1) 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 Kota Fibres, LTD. (v. 1.1) 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 Kota Fibres, LTD. (v. 1.1) 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 Kota Fibres, LTD. (v. 1.1) 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 Kota Fibres, LTD. (v. 1.1) 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 Remedies Reducing needs to make to build a sustainable competitive advantage.