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 - – central banks are concerned over increasing inflation, increasing energy prices, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
there is backlash against globalization, wage bills are increasing, 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 -
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.
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.
Ability to lead change in Finance & Accounting field
– Lease Leasing 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 Lease Leasing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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.
Diverse revenue streams
– Lease Leasing is present in almost all the verticals within the industry. This has provided firm in AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions 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 switching costs
– The high switching costs that Lease Leasing 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.
Strong track record of project management
– Lease Leasing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Low bargaining power of suppliers
– Suppliers of Lease Leasing in the sector have low bargaining power. AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lease Leasing to manage not only supply disruptions but also source products at highly competitive prices.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, it seems that the employees of Lease Leasing 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Mark Jeffery, H. Nevin Ekici, Cassidy Shield, Mike Conley suggests that, Lease Leasing 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.
Capital Spending Reduction
– Even during the low interest decade, Lease Leasing 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.
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 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.
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.
No frontier risks strategy
– After analyzing the HBR case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, 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.
Increasing silos among functional specialists
– The organizational structure of Lease Leasing is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Lease Leasing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lease Leasing to focus more on services rather than just following the product oriented approach.
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.
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 -
Loyalty marketing
– Lease Leasing 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.
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.
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. Lease Leasing can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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. Lease Leasing 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. Lease Leasing 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.
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.
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.
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. Lease Leasing 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 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.
Leveraging digital technologies
– Lease Leasing 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.
Better consumer reach
– The expansion of the 5G network will help Lease Leasing to increase its market reach. Lease Leasing will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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 -
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lease Leasing 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 AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions .
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.
Shortening product life cycle
– it is one of the major threat that Lease Leasing is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions, Lease Leasing 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 .
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.
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.
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. Lease Leasing needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
Environmental challenges
– Lease Leasing 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. Lease Leasing can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.