AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions
Examines the lease vs. buy decision for investments in technology. Addresses pivotal investment decision issues such as varying the length of the lease, the useful life of the equipment, and alignment with the company's overall financial strategy. The scenario is for a real financial services firm that has been disguised for confidentiality reasons. Presents an investment decision: should a company buy or lease technology with a relatively short useful life? The new controller at AMG, a Fortune 500 financial services firm, has been tasked with determining how to finance the acquisition of 7,542 new PCs to be rolled out over the next 12 months. This is a $6.7 million investment decision and the rollout schedule adds significant complexity to the solution. The controller must choose between buying or leasing the computers over 24- or 36-month time frames. Provides a framework for analyzing similar investment decisions. The key learning point is that leasing information technology can be cheaper than buying. This is contradictory to a car lease, which may be familiar from everyday experience. A new car has a potentially long useful life and can retain significant value after several years, hence, intuition is that buying should always be cheaper than leasing. Shows that this is not the case for information technology. Teaches the correct application of the mid-quarter convention within MACRS depreciation for technology, and the implications of operating vs. capital leases and off-balance-sheet financing. In the process, introduces the four tests for a capital lease. Finally, shows how creative analysis techniques can be used to simplify complex decisions. These techniques aid in arriving at a conclusion faster and with less effort.
Authors :: Mark Jeffery, H. Nevin Ekici, Cassidy Shield, Mike Conley
Swot Analysis of "AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions" written by Mark Jeffery, H. Nevin Ekici, Cassidy Shield, Mike Conley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lease Leasing facing as an external strategic factors. Some of the topics covered in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions case study are - Strategic Management Strategies, Financial management, IT, Operations management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions casestudy better are - – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, 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 household debt because of falling income levels, geopolitical disruptions, etc
Introduction to SWOT Analysis of AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lease Leasing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lease Leasing 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions can be done for the following purposes –
1. Strategic planning using facts provided in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions case study
2. Improving business portfolio management of Lease Leasing
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 Lease Leasing
Strengths AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lease Leasing in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions Harvard Business Review case study are -
Successful track record of launching new products
– Lease Leasing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lease Leasing 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 Lease Leasing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Lease Leasing is one of the leading recruiters in the industry. Managers in the AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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
– Lease Leasing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lease Leasing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Lease Leasing is one of the most innovative firm in sector. Manager in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Lease Leasing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lease Leasing 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 Lease Leasing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lease Leasing 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.
Sustainable margins compare to other players in Finance & Accounting industry
– AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions firm has clearly differentiated products in the market place. This has enabled Lease Leasing to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Lease Leasing to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Lease Leasing 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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.
Training and development
– Lease Leasing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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.
Highly skilled collaborators
– Lease Leasing 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions are -
Need for greater diversity
– Lease Leasing 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lease Leasing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, in the dynamic environment Lease Leasing has struggled to respond to the nimble upstart competition. Lease Leasing has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 Lease Leasing 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, is just above the industry average. Lease Leasing 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 Lease Leasing has relatively successful track record of launching new products.
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 Lease Leasing supply chain. Even after few cautionary changes mentioned in the HBR case study - AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lease Leasing vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Lease Leasing 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.
Low market penetration in new markets
– Outside its home market of Lease Leasing, firm in the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions can leverage the sales team experience to cultivate customer relationships as Lease Leasing is planning to shift buying processes online.
Products dominated business model
– Even though Lease Leasing 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 - AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions should strive to include more intangible value offerings along with its core products and services.
Opportunities AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions | 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lease Leasing can use these opportunities to build new business models that can help the communities that Lease Leasing 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 Lease Leasing in the consumer business. Now Lease Leasing can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Lease Leasing 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.
Buying journey improvements
– Lease Leasing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Lease Leasing has opened avenues for new revenue streams for the organization in the industry. This can help Lease Leasing to build a more holistic ecosystem as suggested in the AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions case study. Lease Leasing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lease Leasing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Lease Leasing 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lease Leasing is facing challenges because of the dominance of functional experts in the organization. AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 Lease Leasing 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 Lease Leasing to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lease Leasing 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, AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Lease Leasing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lease Leasing 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.
Using analytics as competitive advantage
– Lease Leasing 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lease Leasing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions are -
High dependence on third party suppliers
– Lease Leasing 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.
Regulatory challenges
– Lease Leasing 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lease Leasing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lease Leasing 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.
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 Lease Leasing in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Lease Leasing 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.
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 Lease Leasing.
Technology acceleration in Forth Industrial Revolution
– Lease Leasing has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Lease Leasing 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.
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. Lease Leasing 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.
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. Lease Leasing 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.
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.
Increasing wage structure of Lease Leasing
– 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 Lease Leasing.
Weighted SWOT Analysis of AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 Lease Leasing needs to make to build a sustainable competitive advantage.