Case Study Description of Callmate Telips - Choice of Accounting Policy
Callmate Telips Telecom Limited (Callmate) was in the telecommunications business in which the regulatory controls were gradually being undone by the government of Pakistan as part of an economic deregulation program. Callmate was the pioneer in the pay phones and prepaid calling card industries in Pakistan and had significant opportunity to develop into a major business entity. The events in the case demonstrate that the company strategy, as well as aggressive share price management, could be dangerous if there were no checks on the directors. All the directors of Callmate were close family members and the audit committee consisted of three of the directors. The external audit firm that audited Callmate was A.F. Ferguson & Co. (Ferguson) and they were an affiliate of Price Waterhouse Coopers International. Ferguson was regarded among the top professional accounting firms in Pakistan. As Callmate was listed on the Karachi Stock Exchange, it was required to publish its financials quarterly after these had been reviewed by Ferguson. The company had received permission during early 1995 to enter into the long distance international market, which was earlier the monopoly of the state firm Pakistan Telecommunication Corporation Limited (PTCL). A disagreement arose between the auditors and the company on the accounting policy related to revenue recognition used in the financials of the half year ended December 2005. This dispute and the company trying to manage its share price led to a number of problems that became public knowledge as the company tried to malign the auditors. The case examines corporate governance by examining the role of the external auditor, the conduct of the board of directors and the regulator of public listed companies. There were a series of events that caused a profitable company to rapidly become a pariah on the stock exchange and be suspended from the exchange.
Swot Analysis of "Callmate Telips - Choice of Accounting Policy" written by Muntazar B. Ahmed includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Callmate Ferguson facing as an external strategic factors. Some of the topics covered in Callmate Telips - Choice of Accounting Policy case study are - Strategic Management Strategies, Corporate governance, Managing people and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Callmate Telips - Choice of Accounting Policy casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, wage bills are increasing, increasing transportation and logistics costs,
technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Callmate Telips - Choice of Accounting Policy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Callmate Telips - Choice of Accounting Policy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Callmate Ferguson, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Callmate Ferguson 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 Callmate Telips - Choice of Accounting Policy can be done for the following purposes –
1. Strategic planning using facts provided in Callmate Telips - Choice of Accounting Policy case study
2. Improving business portfolio management of Callmate Ferguson
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 Callmate Ferguson
Strengths Callmate Telips - Choice of Accounting Policy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Callmate Ferguson in Callmate Telips - Choice of Accounting Policy Harvard Business Review case study are -
High switching costs
– The high switching costs that Callmate Ferguson 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.
Innovation driven organization
– Callmate Ferguson is one of the most innovative firm in sector. Manager in Callmate Telips - Choice of Accounting Policy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Callmate Ferguson digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Callmate Ferguson 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.
Low bargaining power of suppliers
– Suppliers of Callmate Ferguson in the sector have low bargaining power. Callmate Telips - Choice of Accounting Policy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Callmate Ferguson to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Callmate Ferguson has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Callmate Ferguson 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.
Operational resilience
– The operational resilience strategy in the Callmate Telips - Choice of Accounting Policy 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.
Learning organization
- Callmate Ferguson 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 Callmate Ferguson is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Callmate Telips - Choice of Accounting Policy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Callmate Telips - Choice of Accounting Policy firm has clearly differentiated products in the market place. This has enabled Callmate Ferguson to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Callmate Ferguson to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Callmate Ferguson is present in almost all the verticals within the industry. This has provided firm in Callmate Telips - Choice of Accounting Policy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Callmate Ferguson has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Callmate Ferguson to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Callmate Ferguson 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 Callmate Telips - Choice of Accounting Policy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Callmate Ferguson has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Callmate Telips - Choice of Accounting Policy 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 Callmate Telips - Choice of Accounting Policy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Callmate Telips - Choice of Accounting Policy are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Callmate Telips - Choice of Accounting Policy, in the dynamic environment Callmate Ferguson has struggled to respond to the nimble upstart competition. Callmate Ferguson has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Callmate Ferguson is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Callmate Telips - Choice of Accounting Policy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Callmate Ferguson supply chain. Even after few cautionary changes mentioned in the HBR case study - Callmate Telips - Choice of Accounting Policy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Callmate Ferguson vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Callmate Telips - Choice of Accounting Policy HBR case study mentions - Callmate Ferguson 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.
Need for greater diversity
– Callmate Ferguson 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
Callmate Ferguson 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.
Interest costs
– Compare to the competition, Callmate Ferguson has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Lack of clear differentiation of Callmate Ferguson products
– To increase the profitability and margins on the products, Callmate Ferguson needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Callmate Telips - Choice of Accounting Policy, it seems that the employees of Callmate Ferguson 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.
Skills based hiring
– The stress on hiring functional specialists at Callmate Ferguson 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.
Products dominated business model
– Even though Callmate Ferguson 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 - Callmate Telips - Choice of Accounting Policy should strive to include more intangible value offerings along with its core products and services.
Opportunities Callmate Telips - Choice of Accounting Policy | 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 Callmate Telips - Choice of Accounting Policy are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Callmate Ferguson is facing challenges because of the dominance of functional experts in the organization. Callmate Telips - Choice of Accounting Policy 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.
Leveraging digital technologies
– Callmate Ferguson 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Callmate Ferguson can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Callmate Ferguson 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.
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. Callmate Ferguson 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. Callmate Ferguson 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Callmate Ferguson 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.
Manufacturing automation
– Callmate Ferguson 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.
Loyalty marketing
– Callmate Ferguson 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.
Building a culture of innovation
– managers at Callmate Ferguson 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.
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. Callmate Ferguson can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Callmate Ferguson 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, Callmate Telips - Choice of Accounting Policy, 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, Callmate Ferguson can use these opportunities to build new business models that can help the communities that Callmate Ferguson operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Callmate Ferguson in the consumer business. Now Callmate Ferguson can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Callmate Telips - Choice of Accounting Policy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Callmate Telips - Choice of Accounting Policy are -
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. Callmate Ferguson needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Environmental challenges
– Callmate Ferguson 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. Callmate Ferguson can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Callmate Ferguson 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.
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. Callmate Ferguson can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Callmate Ferguson in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Callmate Ferguson
– 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 Callmate Ferguson.
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
– Callmate Ferguson 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 Callmate Ferguson 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.
Technology acceleration in Forth Industrial Revolution
– Callmate Ferguson has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Callmate Ferguson 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.
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 Callmate Ferguson.
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. Callmate Ferguson 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.
Consumer confidence and its impact on Callmate Ferguson 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.
Weighted SWOT Analysis of Callmate Telips - Choice of Accounting Policy 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 Callmate Telips - Choice of Accounting Policy 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 Callmate Telips - Choice of Accounting Policy 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 Callmate Telips - Choice of Accounting Policy 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 Callmate Telips - Choice of Accounting Policy 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 Callmate Ferguson needs to make to build a sustainable competitive advantage.