AMB Property Corporation: Financial Reporting in the REIT Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AMB Property Corporation: Financial Reporting in the REIT Industry
AMB Property Corporation set out to be a leader in corporate governance and financial reporting. The company, a publicly traded real estate investment trust (REIT) that acquires, develops, and owns industrial properties, believed that its governance and reporting practices were among the best in the industry. The implementation of good disclosure practices in the REIT industry was not a simple undertaking. Historically, the real estate industry was dominated by private partnerships and institutional investors who used tax and partnership accounting rather than generally accepted accounting principles (GAAP). As a result, there was a need for new financial terms that were meant to bridge the differences between GAAP and private partnership accounting, notably funds from operations. However, because such industry-specific metrics were not consistently calculated, it was difficult for users of REIT financial statements to compare operating results across companies. Public REITs that used non-GAAP metrics were required to reconcile these metrics to GAAP standards, a process which added significantly to the length of REIT financial reports. In addition, companies were required to apply GAAP accounting standards that were mostly designed for industries other than real estate and had the unintended consequence of making it difficult to evaluate the operating performance of REITs and compare those results across periods. Explores the issue of financial reporting in the REIT industry, including important FASB standards that potentially distort REIT financial results, the use of Funds From Operations as a metric of financial performance, and different approaches for valuing REITs.
Swot Analysis of "AMB Property Corporation: Financial Reporting in the REIT Industry" written by Maureen McNichols, Brian Tayan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reit Gaap facing as an external strategic factors. Some of the topics covered in AMB Property Corporation: Financial Reporting in the REIT Industry case study are - Strategic Management Strategies, Communication, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the AMB Property Corporation: Financial Reporting in the REIT Industry casestudy better are - – wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of AMB Property Corporation: Financial Reporting in the REIT Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AMB Property Corporation: Financial Reporting in the REIT Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reit Gaap, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reit Gaap 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 AMB Property Corporation: Financial Reporting in the REIT Industry can be done for the following purposes –
1. Strategic planning using facts provided in AMB Property Corporation: Financial Reporting in the REIT Industry case study
2. Improving business portfolio management of Reit Gaap
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 Reit Gaap
Strengths AMB Property Corporation: Financial Reporting in the REIT Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reit Gaap in AMB Property Corporation: Financial Reporting in the REIT Industry Harvard Business Review case study are -
Successful track record of launching new products
– Reit Gaap has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Reit Gaap 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.
Ability to lead change in Finance & Accounting field
– Reit Gaap 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 Reit Gaap in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Reit Gaap has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Reit Gaap to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Reit Gaap in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Reit Gaap 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 Reit Gaap is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AMB Property Corporation: Financial Reporting in the REIT Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Reit Gaap 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.
Diverse revenue streams
– Reit Gaap is present in almost all the verticals within the industry. This has provided firm in AMB Property Corporation: Financial Reporting in the REIT Industry 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.
Organizational Resilience of Reit Gaap
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Reit Gaap does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Reit Gaap 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 Reit Gaap digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Reit Gaap 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.
Operational resilience
– The operational resilience strategy in the AMB Property Corporation: Financial Reporting in the REIT Industry 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.
Innovation driven organization
– Reit Gaap is one of the most innovative firm in sector. Manager in AMB Property Corporation: Financial Reporting in the REIT Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses AMB Property Corporation: Financial Reporting in the REIT Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AMB Property Corporation: Financial Reporting in the REIT Industry are -
No frontier risks strategy
– After analyzing the HBR case study AMB Property Corporation: Financial Reporting in the REIT Industry, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Reit Gaap 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.
Low market penetration in new markets
– Outside its home market of Reit Gaap, firm in the HBR case study AMB Property Corporation: Financial Reporting in the REIT Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Reit Gaap products
– To increase the profitability and margins on the products, Reit Gaap needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AMB Property Corporation: Financial Reporting in the REIT Industry, is just above the industry average. Reit Gaap 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Reit Gaap is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AMB Property Corporation: Financial Reporting in the REIT Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Reit Gaap has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Reit Gaap even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Reit Gaap is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Reit Gaap needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Reit Gaap to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Maureen McNichols, Brian Tayan suggests that, Reit Gaap 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.
High cash cycle compare to competitors
Reit Gaap 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 AMB Property Corporation: Financial Reporting in the REIT Industry can leverage the sales team experience to cultivate customer relationships as Reit Gaap is planning to shift buying processes online.
Opportunities AMB Property Corporation: Financial Reporting in the REIT Industry | 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 AMB Property Corporation: Financial Reporting in the REIT Industry are -
Loyalty marketing
– Reit Gaap 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Reit Gaap 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.
Leveraging digital technologies
– Reit Gaap 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.
Buying journey improvements
– Reit Gaap can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AMB Property Corporation: Financial Reporting in the REIT Industry 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Reit Gaap is facing challenges because of the dominance of functional experts in the organization. AMB Property Corporation: Financial Reporting in the REIT Industry 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.
Developing new processes and practices
– Reit Gaap 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, Reit Gaap can use these opportunities to build new business models that can help the communities that Reit Gaap operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Better consumer reach
– The expansion of the 5G network will help Reit Gaap to increase its market reach. Reit Gaap 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Reit Gaap 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 Reit Gaap to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Reit Gaap 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 AMB Property Corporation: Financial Reporting in the REIT Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Reit Gaap to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Reit Gaap 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. Reit Gaap 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.
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. Reit Gaap can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Reit Gaap has opened avenues for new revenue streams for the organization in the industry. This can help Reit Gaap to build a more holistic ecosystem as suggested in the AMB Property Corporation: Financial Reporting in the REIT Industry case study. Reit Gaap can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats AMB Property Corporation: Financial Reporting in the REIT Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AMB Property Corporation: Financial Reporting in the REIT Industry are -
Increasing wage structure of Reit Gaap
– 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 Reit Gaap.
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.
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 Reit Gaap in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Reit Gaap 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.
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. Reit Gaap 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.
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 Reit Gaap 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. Reit Gaap needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Reit Gaap.
Stagnating economy with rate increase
– Reit Gaap 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. Reit Gaap can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Reit Gaap 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.
High dependence on third party suppliers
– Reit Gaap 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Reit Gaap with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of AMB Property Corporation: Financial Reporting in the REIT Industry 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 AMB Property Corporation: Financial Reporting in the REIT Industry 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 Reit Gaap needs to make to build a sustainable competitive advantage.
