Arthur Andersen (B): From Waste Management to Enron SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Arthur Andersen (B): From Waste Management to Enron
The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the "new economy" boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.
Authors :: Daniel Diermeier, Robert J. Crawford, Charlotte Snyder
Swot Analysis of "Arthur Andersen (B): From Waste Management to Enron" written by Daniel Diermeier, Robert J. Crawford, Charlotte Snyder includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Andersen Arthur facing as an external strategic factors. Some of the topics covered in Arthur Andersen (B): From Waste Management to Enron case study are - Strategic Management Strategies, Competitive strategy, Crisis management, Leadership, Organizational culture, Public relations and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Arthur Andersen (B): From Waste Management to Enron casestudy better are - – wage bills are increasing, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, there is backlash against globalization, etc
Introduction to SWOT Analysis of Arthur Andersen (B): From Waste Management to Enron
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arthur Andersen (B): From Waste Management to Enron case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Andersen Arthur, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Andersen Arthur 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 Arthur Andersen (B): From Waste Management to Enron can be done for the following purposes –
1. Strategic planning using facts provided in Arthur Andersen (B): From Waste Management to Enron case study
2. Improving business portfolio management of Andersen Arthur
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 Andersen Arthur
Strengths Arthur Andersen (B): From Waste Management to Enron | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Andersen Arthur in Arthur Andersen (B): From Waste Management to Enron Harvard Business Review case study are -
Ability to recruit top talent
– Andersen Arthur is one of the leading recruiters in the industry. Managers in the Arthur Andersen (B): From Waste Management to Enron are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Andersen Arthur has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Andersen Arthur to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Andersen Arthur is one of the most innovative firm in sector. Manager in Arthur Andersen (B): From Waste Management to Enron Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Andersen Arthur in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Andersen Arthur
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Andersen Arthur does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Andersen Arthur digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Andersen Arthur 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 Andersen Arthur 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.
Learning organization
- Andersen Arthur 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 Andersen Arthur is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Arthur Andersen (B): From Waste Management to Enron Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Arthur Andersen (B): From Waste Management to Enron Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Finance & Accounting field
– Andersen Arthur 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 Andersen Arthur in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Andersen Arthur has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Andersen Arthur 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.
Training and development
– Andersen Arthur has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Arthur Andersen (B): From Waste Management to Enron 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.
Weaknesses Arthur Andersen (B): From Waste Management to Enron | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arthur Andersen (B): From Waste Management to Enron are -
Increasing silos among functional specialists
– The organizational structure of Andersen Arthur is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Andersen Arthur needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Andersen Arthur to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Andersen Arthur 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 cash cycle compare to competitors
Andersen Arthur 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.
Aligning sales with marketing
– It come across in the case study Arthur Andersen (B): From Waste Management to Enron 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 Arthur Andersen (B): From Waste Management to Enron can leverage the sales team experience to cultivate customer relationships as Andersen Arthur 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 Andersen Arthur supply chain. Even after few cautionary changes mentioned in the HBR case study - Arthur Andersen (B): From Waste Management to Enron, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Andersen Arthur vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Andersen Arthur 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. Andersen Arthur 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.
Capital Spending Reduction
– Even during the low interest decade, Andersen Arthur 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 Arthur Andersen (B): From Waste Management to Enron, is just above the industry average. Andersen Arthur 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Daniel Diermeier, Robert J. Crawford, Charlotte Snyder suggests that, Andersen Arthur 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.
Low market penetration in new markets
– Outside its home market of Andersen Arthur, firm in the HBR case study Arthur Andersen (B): From Waste Management to Enron needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Andersen Arthur 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.
Opportunities Arthur Andersen (B): From Waste Management to Enron | 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 Arthur Andersen (B): From Waste Management to Enron are -
Leveraging digital technologies
– Andersen Arthur 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Andersen Arthur 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
– Andersen Arthur can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arthur Andersen (B): From Waste Management to Enron suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Andersen Arthur can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Andersen Arthur 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.
Manufacturing automation
– Andersen Arthur 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Andersen Arthur 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, Arthur Andersen (B): From Waste Management to Enron, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Andersen Arthur can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Andersen Arthur is facing challenges because of the dominance of functional experts in the organization. Arthur Andersen (B): From Waste Management to Enron 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 Andersen Arthur 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Andersen Arthur can use these opportunities to build new business models that can help the communities that Andersen Arthur operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Andersen Arthur can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Andersen Arthur has opened avenues for new revenue streams for the organization in the industry. This can help Andersen Arthur to build a more holistic ecosystem as suggested in the Arthur Andersen (B): From Waste Management to Enron case study. Andersen Arthur can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Arthur Andersen (B): From Waste Management to Enron External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Arthur Andersen (B): From Waste Management to Enron are -
Environmental challenges
– Andersen Arthur 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. Andersen Arthur can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Andersen Arthur 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 Arthur Andersen (B): From Waste Management to Enron .
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 Andersen Arthur in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Arthur Andersen (B): From Waste Management to Enron, Andersen Arthur 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Andersen Arthur 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.
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. Andersen Arthur 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.
High dependence on third party suppliers
– Andersen Arthur 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.
Shortening product life cycle
– it is one of the major threat that Andersen Arthur is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Andersen Arthur
– 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 Andersen Arthur.
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. Andersen Arthur 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. Andersen Arthur can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Andersen Arthur business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Arthur Andersen (B): From Waste Management to Enron 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 Arthur Andersen (B): From Waste Management to Enron 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 Arthur Andersen (B): From Waste Management to Enron 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 Arthur Andersen (B): From Waste Management to Enron 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 Arthur Andersen (B): From Waste Management to Enron 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 Andersen Arthur needs to make to build a sustainable competitive advantage.
