Case Study Description of Eastboro Machine Tools Corp. (V. 1.1)
This is a Darden case study.In mid September 2001, Jennifer Campbell, the chief financial officer of this large CAD/CAM (computer-aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firm's shareholders or repurchase stock. If Campbell chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate image advertising and change its corporate name to reflect its new outlook. Serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. Can follow a treatment of the Miller Modigliani dividend irrelevance theorem and serve to highlight practical considerations in setting dividend policy.
Swot Analysis of "Eastboro Machine Tools Corp. (V. 1.1)" written by Robert F. Bruner, Casey S. Opitz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dividend Payout facing as an external strategic factors. Some of the topics covered in Eastboro Machine Tools Corp. (V. 1.1) case study are - Strategic Management Strategies, Financial markets, Growth strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Eastboro Machine Tools Corp. (V. 1.1) casestudy better are - – increasing government debt because of Covid-19 spendings, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , geopolitical disruptions, there is backlash against globalization,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Eastboro Machine Tools Corp. (V. 1.1)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Eastboro Machine Tools Corp. (V. 1.1) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dividend Payout, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dividend Payout 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 Eastboro Machine Tools Corp. (V. 1.1) can be done for the following purposes –
1. Strategic planning using facts provided in Eastboro Machine Tools Corp. (V. 1.1) case study
2. Improving business portfolio management of Dividend Payout
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dividend Payout
Strengths Eastboro Machine Tools Corp. (V. 1.1) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dividend Payout in Eastboro Machine Tools Corp. (V. 1.1) Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Eastboro Machine Tools Corp. (V. 1.1) firm has clearly differentiated products in the market place. This has enabled Dividend Payout to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Dividend Payout to invest into research and development (R&D) and innovation.
Innovation driven organization
– Dividend Payout is one of the most innovative firm in sector. Manager in Eastboro Machine Tools Corp. (V. 1.1) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Dividend Payout 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 Eastboro Machine Tools Corp. (V. 1.1) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Dividend Payout is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Dividend Payout 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.
Low bargaining power of suppliers
– Suppliers of Dividend Payout in the sector have low bargaining power. Eastboro Machine Tools Corp. (V. 1.1) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dividend Payout to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Dividend Payout 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.
Training and development
– Dividend Payout has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Eastboro Machine Tools Corp. (V. 1.1) 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
– Dividend Payout has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dividend Payout 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.
High brand equity
– Dividend Payout has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dividend Payout to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Dividend Payout is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert F. Bruner, Casey S. Opitz can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Dividend Payout is one of the leading recruiters in the industry. Managers in the Eastboro Machine Tools Corp. (V. 1.1) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Eastboro Machine Tools Corp. (V. 1.1) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Eastboro Machine Tools Corp. (V. 1.1) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Dividend Payout 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.
Capital Spending Reduction
– Even during the low interest decade, Dividend Payout 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.
Increasing silos among functional specialists
– The organizational structure of Dividend Payout is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Dividend Payout needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dividend Payout to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert F. Bruner, Casey S. Opitz suggests that, Dividend Payout 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.
Aligning sales with marketing
– It come across in the case study Eastboro Machine Tools Corp. (V. 1.1) 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 Eastboro Machine Tools Corp. (V. 1.1) can leverage the sales team experience to cultivate customer relationships as Dividend Payout is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Eastboro Machine Tools Corp. (V. 1.1) 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 Dividend Payout 's lucrative customers.
Need for greater diversity
– Dividend Payout has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Eastboro Machine Tools Corp. (V. 1.1) 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 Dividend Payout has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Eastboro Machine Tools Corp. (V. 1.1), it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Skills based hiring
– The stress on hiring functional specialists at Dividend Payout 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.
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 Dividend Payout supply chain. Even after few cautionary changes mentioned in the HBR case study - Eastboro Machine Tools Corp. (V. 1.1), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dividend Payout vulnerable to further global disruptions in South East Asia.
Opportunities Eastboro Machine Tools Corp. (V. 1.1) | 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 Eastboro Machine Tools Corp. (V. 1.1) are -
Better consumer reach
– The expansion of the 5G network will help Dividend Payout to increase its market reach. Dividend Payout 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.
Manufacturing automation
– Dividend Payout can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dividend Payout 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Dividend Payout in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Dividend Payout 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.
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 Dividend Payout 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.
Loyalty marketing
– Dividend Payout 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.
Learning at scale
– Online learning technologies has now opened space for Dividend Payout 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.
Creating value in data economy
– The success of analytics program of Dividend Payout has opened avenues for new revenue streams for the organization in the industry. This can help Dividend Payout to build a more holistic ecosystem as suggested in the Eastboro Machine Tools Corp. (V. 1.1) case study. Dividend Payout can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Dividend Payout 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 Eastboro Machine Tools Corp. (V. 1.1) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dividend Payout 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 Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dividend Payout 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. Dividend Payout 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dividend Payout can use these opportunities to build new business models that can help the communities that Dividend Payout operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Developing new processes and practices
– Dividend Payout can develop new processes and procedures in Strategy & Execution 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.
Threats Eastboro Machine Tools Corp. (V. 1.1) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Eastboro Machine Tools Corp. (V. 1.1) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dividend Payout 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 Eastboro Machine Tools Corp. (V. 1.1) .
Increasing wage structure of Dividend Payout
– 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 Dividend Payout.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dividend Payout can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Dividend Payout is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Eastboro Machine Tools Corp. (V. 1.1), Dividend Payout may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Stagnating economy with rate increase
– Dividend Payout 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.
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. Dividend Payout 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.
Technology acceleration in Forth Industrial Revolution
– Dividend Payout has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Dividend Payout needs to keep up with the evolution of technology in the Strategy & Execution 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dividend Payout in the Strategy & Execution industry. The Strategy & Execution 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
– Dividend Payout 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
– Dividend Payout 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 Strategy & Execution industry regulations.
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.
Weighted SWOT Analysis of Eastboro Machine Tools Corp. (V. 1.1) 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 Eastboro Machine Tools Corp. (V. 1.1) 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 Eastboro Machine Tools Corp. (V. 1.1) 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 Eastboro Machine Tools Corp. (V. 1.1) 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 Eastboro Machine Tools Corp. (V. 1.1) 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 Dividend Payout needs to make to build a sustainable competitive advantage.
