Arthur Andersen (C): The Collapse of Arthur Andersen SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Arthur Andersen (C): The Collapse of Arthur Andersen
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 (C): The Collapse of Arthur Andersen" 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 (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
there is increasing trade war between United States & China, increasing commodity prices, etc
Introduction to SWOT Analysis of Arthur Andersen (C): The Collapse of Arthur Andersen
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arthur Andersen (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen can be done for the following purposes –
1. Strategic planning using facts provided in Arthur Andersen (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Andersen Arthur in Arthur Andersen (C): The Collapse of Arthur Andersen Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Andersen Arthur 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.
Effective Research and Development (R&D)
– Andersen Arthur 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 Arthur Andersen (C): The Collapse of Arthur Andersen - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Andersen Arthur is one of the leading recruiters in the industry. Managers in the Arthur Andersen (C): The Collapse of Arthur Andersen are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Low bargaining power of suppliers
– Suppliers of Andersen Arthur in the sector have low bargaining power. Arthur Andersen (C): The Collapse of Arthur Andersen has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Andersen Arthur to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Andersen Arthur 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 Arthur Andersen (C): The Collapse of Arthur Andersen HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Analytics focus
– Andersen Arthur is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Daniel Diermeier, Robert J. Crawford, Charlotte Snyder can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
Sustainable margins compare to other players in Finance & Accounting industry
– Arthur Andersen (C): The Collapse of Arthur Andersen firm has clearly differentiated products in the market place. This has enabled Andersen Arthur to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Andersen Arthur to invest into research and development (R&D) and innovation.
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.
Weaknesses Arthur Andersen (C): The Collapse of Arthur Andersen | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arthur Andersen (C): The Collapse of Arthur Andersen are -
Products dominated business model
– Even though Andersen Arthur 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 - Arthur Andersen (C): The Collapse of Arthur Andersen should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Andersen Arthur is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Arthur Andersen (C): The Collapse of Arthur Andersen can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Arthur Andersen (C): The Collapse of Arthur Andersen, 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 strategic competitive environment developments
– As Arthur Andersen (C): The Collapse of Arthur Andersen HBR case study mentions - Andersen Arthur 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Arthur Andersen (C): The Collapse of Arthur Andersen, 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 operating costs
– Compare to the competitors, firm in the HBR case study Arthur Andersen (C): The Collapse of Arthur Andersen 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 Andersen Arthur 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arthur Andersen (C): The Collapse of Arthur Andersen, in the dynamic environment Andersen Arthur has struggled to respond to the nimble upstart competition. Andersen Arthur has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Arthur Andersen (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen can leverage the sales team experience to cultivate customer relationships as Andersen Arthur is planning to shift buying processes online.
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 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 (C): The Collapse of Arthur Andersen, 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.
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 (C): The Collapse of Arthur Andersen | 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 (C): The Collapse of Arthur Andersen are -
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 (C): The Collapse of Arthur Andersen, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Andersen Arthur can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Andersen Arthur can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arthur Andersen (C): The Collapse of Arthur Andersen 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.
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.
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 Andersen Arthur 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.
Developing new processes and practices
– Andersen Arthur 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.
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.
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 (C): The Collapse of Arthur Andersen 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Andersen Arthur 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 Andersen Arthur to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Andersen Arthur 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 Arthur Andersen (C): The Collapse of Arthur Andersen - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Andersen Arthur to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Threats Arthur Andersen (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Andersen Arthur 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.
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.
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.
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.
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.
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 (C): The Collapse of Arthur Andersen .
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.
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.
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.
Stagnating economy with rate increase
– Andersen Arthur 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 Andersen Arthur 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.
Technology acceleration in Forth Industrial Revolution
– Andersen Arthur has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Andersen Arthur 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 Arthur Andersen (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen 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 (C): The Collapse of Arthur Andersen 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.
