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 - – wage bills are increasing, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption,
supply chains are disrupted by pandemic , there is increasing trade war between United States & China, 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 -
Superior customer experience
– The customer experience strategy of Mystery Statements in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Mystery Statements has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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.
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.
Learning organization
- Mystery Statements is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Mystery Statements is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Mystery Statements 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.
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.
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.
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 -
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.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Gregory S. Miller, Hal D. White suggests that, Mystery Statements 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.
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.
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.
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.
Lack of clear differentiation of Mystery Statements products
– To increase the profitability and margins on the products, Mystery Statements 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 Mystery Statements 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.
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.
Increasing silos among functional specialists
– The organizational structure of Mystery Statements is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Mystery Statements needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mystery Statements to focus more on services rather than just following the product oriented approach.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mystery Statements 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, Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Using analytics as competitive advantage
– Mystery Statements 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 Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mystery Statements to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Mystery Statements can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mystery Statements is facing challenges because of the dominance of functional experts in the organization. Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition 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.
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.
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.
Developing new processes and practices
– Mystery Statements 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.
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.
Loyalty marketing
– Mystery Statements 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. 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.
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.
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 -
Shortening product life cycle
– it is one of the major threat that Mystery Statements is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Mystery Statements
– 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 Mystery Statements.
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.
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.
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.
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.
Regulatory challenges
– Mystery Statements 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.
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.
Environmental challenges
– Mystery Statements 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. Mystery Statements can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
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.
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 Mystery Statements.
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.