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 - – there is backlash against globalization, increasing household debt because of falling income levels, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs,
central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, 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 -
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.
Ability to lead change in Finance & Accounting field
– Mystery Statements 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 Mystery Statements in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Mystery Statements digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mystery Statements has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
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.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Mystery Statements needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Mystery Statements has relatively successful track record of launching new products.
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.
Need for greater diversity
– Mystery Statements 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 cash cycle compare to competitors
Mystery Statements 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.
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 to strategic competitive environment developments
– As Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition HBR case study mentions - Mystery Statements 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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Mystery Statements 's lucrative customers.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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. Mystery Statements can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cash Flow Statements (A): Financial Due Diligence for a Strategic Acquisition, Mystery Statements 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, 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 .
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.
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.
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.