Silic (A): Choosing Cost or Fair Value on Adoption of IFRS SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Silic (A): Choosing Cost or Fair Value on Adoption of IFRS
A French real estate firm must choose to report its primary asset (investment property) using either cost or fair-value accounting methods upon adoption of international accounting standards (IAS) in 2005.
Authors :: David F. Hawkins, Vincent Dessain, Andrew Barron
Swot Analysis of "Silic (A): Choosing Cost or Fair Value on Adoption of IFRS" written by David F. Hawkins, Vincent Dessain, Andrew Barron includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fair Silic facing as an external strategic factors. Some of the topics covered in Silic (A): Choosing Cost or Fair Value on Adoption of IFRS case study are - Strategic Management Strategies, Financial management, International business and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Silic (A): Choosing Cost or Fair Value on Adoption of IFRS casestudy better are - – increasing commodity prices, there is backlash against globalization, wage bills are increasing, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google,
increasing energy prices, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Silic (A): Choosing Cost or Fair Value on Adoption of IFRS
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Silic (A): Choosing Cost or Fair Value on Adoption of IFRS case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fair Silic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fair Silic 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS can be done for the following purposes –
1. Strategic planning using facts provided in Silic (A): Choosing Cost or Fair Value on Adoption of IFRS case study
2. Improving business portfolio management of Fair Silic
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 Fair Silic
Strengths Silic (A): Choosing Cost or Fair Value on Adoption of IFRS | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fair Silic in Silic (A): Choosing Cost or Fair Value on Adoption of IFRS Harvard Business Review case study are -
Strong track record of project management
– Fair Silic is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Fair Silic is one of the leading recruiters in the industry. Managers in the Silic (A): Choosing Cost or Fair Value on Adoption of IFRS are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Fair Silic 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 Fair Silic in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Fair Silic has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fair Silic 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.
Organizational Resilience of Fair Silic
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fair Silic does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Fair Silic 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– Silic (A): Choosing Cost or Fair Value on Adoption of IFRS firm has clearly differentiated products in the market place. This has enabled Fair Silic to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Fair Silic to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Fair Silic in the sector have low bargaining power. Silic (A): Choosing Cost or Fair Value on Adoption of IFRS has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fair Silic to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Fair Silic 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Fair Silic is one of the most innovative firm in sector. Manager in Silic (A): Choosing Cost or Fair Value on Adoption of IFRS Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Fair Silic are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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.
Weaknesses Silic (A): Choosing Cost or Fair Value on Adoption of IFRS | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Silic (A): Choosing Cost or Fair Value on Adoption of IFRS are -
Low market penetration in new markets
– Outside its home market of Fair Silic, firm in the HBR case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS, it seems that the employees of Fair Silic 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fair Silic is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS, 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.
Products dominated business model
– Even though Fair Silic 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 - Silic (A): Choosing Cost or Fair Value on Adoption of IFRS should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Fair Silic 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.
Aligning sales with marketing
– It come across in the case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS can leverage the sales team experience to cultivate customer relationships as Fair Silic is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Fair Silic 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. Fair Silic 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.
Slow to strategic competitive environment developments
– As Silic (A): Choosing Cost or Fair Value on Adoption of IFRS HBR case study mentions - Fair Silic 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS, in the dynamic environment Fair Silic has struggled to respond to the nimble upstart competition. Fair Silic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS, is just above the industry average. Fair Silic 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.
Opportunities Silic (A): Choosing Cost or Fair Value on Adoption of IFRS | 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS are -
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 Fair Silic 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.
Creating value in data economy
– The success of analytics program of Fair Silic has opened avenues for new revenue streams for the organization in the industry. This can help Fair Silic to build a more holistic ecosystem as suggested in the Silic (A): Choosing Cost or Fair Value on Adoption of IFRS case study. Fair Silic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fair Silic 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fair Silic 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 Fair Silic to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Fair Silic 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.
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 Fair Silic in the consumer business. Now Fair Silic can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fair Silic 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, Silic (A): Choosing Cost or Fair Value on Adoption of IFRS, 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, Fair Silic can use these opportunities to build new business models that can help the communities that Fair Silic 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 Fair Silic to increase its market reach. Fair Silic 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.
Using analytics as competitive advantage
– Fair Silic 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fair Silic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Fair Silic 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.
Leveraging digital technologies
– Fair Silic 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.
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. Fair Silic 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. Fair Silic 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.
Threats Silic (A): Choosing Cost or Fair Value on Adoption of IFRS External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Silic (A): Choosing Cost or Fair Value on Adoption of IFRS are -
Shortening product life cycle
– it is one of the major threat that Fair Silic 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.
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 Fair Silic business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fair Silic 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.
Consumer confidence and its impact on Fair Silic 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.
High dependence on third party suppliers
– Fair Silic 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.
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 Fair Silic in the Finance & Accounting sector and impact the bottomline of the organization.
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. Fair Silic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Fair Silic has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Fair Silic 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fair Silic with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Fair Silic 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fair Silic 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS .
Weighted SWOT Analysis of Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Silic (A): Choosing Cost or Fair Value on Adoption of IFRS 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 Fair Silic needs to make to build a sustainable competitive advantage.