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 - – supply chains are disrupted by pandemic , there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies,
increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Superior customer experience
– The customer experience strategy of Dividend Payout in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous 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.
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.
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.
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.
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.
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.
Ability to lead change in Strategy & Execution field
– Dividend Payout 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 Dividend Payout in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Dividend Payout 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 Dividend Payout is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Eastboro Machine Tools Corp. (V. 1.1) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
High cash cycle compare to competitors
Dividend Payout 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.
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.
Low market penetration in new markets
– Outside its home market of Dividend Payout, firm in the HBR case study Eastboro Machine Tools Corp. (V. 1.1) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Dividend Payout has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dividend Payout is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Eastboro Machine Tools Corp. (V. 1.1) 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 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.
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.
Slow decision making process
– As mentioned earlier in the report, Dividend Payout 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. Dividend Payout 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.
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 -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dividend Payout can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Dividend Payout can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Dividend Payout can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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 Dividend Payout in the consumer business. Now Dividend Payout can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dividend Payout is facing challenges because of the dominance of functional experts in the organization. Eastboro Machine Tools Corp. (V. 1.1) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dividend Payout 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 Dividend Payout to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
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 -
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.
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.
Environmental challenges
– Dividend Payout 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. Dividend Payout can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dividend Payout 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 Dividend Payout.
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.
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.
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.
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.
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 Dividend Payout 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. Dividend Payout needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 .
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.