Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition
This case is a critical introduction, for business students, to the significance of cash flow statements. First students evaluate the cash flow statements of four "mystery" companies and recommend one for an acquisition. After making a recommendation in class, students are given more information, namely risk assessments and audit opinions, and reevaluate their recommendations. Finally, students learn the surprising identities of the "mystery" companies. Note that students should not view Cases (B) and (C) prior to completing the homework. Cases (B) and (C) are found in the case teaching note that is available only to registered business educators.
Swot Analysis of "Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition" written by Gregory S. Miller, Hal D. White includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mystery Statements facing as an external strategic factors. Some of the topics covered in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition case study are - Strategic Management Strategies, Research & development, Sales, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition casestudy better are - – geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, there is increasing trade war between United States & China, increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing commodity prices,
talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mystery Statements, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mystery Statements 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition case study
2. Improving business portfolio management of Mystery Statements
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 Mystery Statements
Strengths Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mystery Statements in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition Harvard Business Review case study are -
Innovation driven organization
– Mystery Statements is one of the most innovative firm in sector. Manager in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Mystery Statements is one of the leading recruiters in the industry. Managers in the Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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
– Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition firm has clearly differentiated products in the market place. This has enabled Mystery Statements to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Mystery Statements to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Mystery Statements is present in almost all the verticals within the industry. This has provided firm in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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.
High switching costs
– The high switching costs that Mystery Statements 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.
Highly skilled collaborators
– Mystery Statements has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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.
Effective Research and Development (R&D)
– Mystery Statements 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Mystery Statements has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mystery Statements to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Mystery Statements
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mystery Statements does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Mystery Statements has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mystery Statements 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.
Strong track record of project management
– Mystery Statements is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, in the dynamic environment Mystery Statements has struggled to respond to the nimble upstart competition. Mystery Statements has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mystery Statements is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, is just above the industry average. Mystery Statements 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.
Capital Spending Reduction
– Even during the low interest decade, Mystery Statements 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.
Products dominated business model
– Even though Mystery Statements 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 - Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, it seems that the employees of Mystery Statements 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.
Aligning sales with marketing
– It come across in the case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition can leverage the sales team experience to cultivate customer relationships as Mystery Statements is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Mystery Statements supply chain. Even after few cautionary changes mentioned in the HBR case study - Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mystery Statements vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Mystery Statements has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Mystery Statements even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Interest costs
– Compare to the competition, Mystery Statements 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.
Opportunities Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition | 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition are -
Better consumer reach
– The expansion of the 5G network will help Mystery Statements to increase its market reach. Mystery Statements 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mystery Statements can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Mystery Statements 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Mystery Statements can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Mystery Statements in the consumer business. Now Mystery Statements can target international markets with far fewer capital restrictions requirements than the existing system.
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 Mystery Statements 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mystery Statements in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Mystery Statements has opened avenues for new revenue streams for the organization in the industry. This can help Mystery Statements to build a more holistic ecosystem as suggested in the Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition case study. Mystery Statements can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mystery Statements 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 Mystery Statements 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 Mystery Statements to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mystery Statements can use these opportunities to build new business models that can help the communities that Mystery Statements operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Mystery Statements 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. Mystery Statements 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.
Learning at scale
– Online learning technologies has now opened space for Mystery Statements 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.
Threats Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mystery Statements 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition .
Technology acceleration in Forth Industrial Revolution
– Mystery Statements has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Mystery Statements 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.
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. Mystery Statements needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Mystery Statements in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mystery Statements in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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. Mystery Statements can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Mystery Statements can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Mystery Statements 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.
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 Mystery Statements business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Mystery Statements high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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. Mystery Statements 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mystery Statements 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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 Mystery Statements needs to make to build a sustainable competitive advantage.