Case Study Description of WorldCom, Inc.: Two Views
This case is available in only hard copy format (HBP does not have digital distribution rights to the content). As a result, a digital Educator Copy of the case is not available through this web site.Financial analysis is one way to detect WorldCom's fraudulent accounting. This case presents two perspectives of WorldCom: the company as viewed by security analysts and the inside view of the accounting fraud. Also looks at the company's acquisition accounting to assess potential for abuse. Teaching Purpose: To assess the probability of accounting risk.
Swot Analysis of "WorldCom, Inc.: Two Views" written by David F. Hawkins includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Accounting Worldcom facing as an external strategic factors. Some of the topics covered in WorldCom, Inc.: Two Views case study are - Strategic Management Strategies, Ethics, Financial analysis, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the WorldCom, Inc.: Two Views casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, technology disruption, wage bills are increasing,
increasing government debt because of Covid-19 spendings, geopolitical disruptions, etc
Introduction to SWOT Analysis of WorldCom, Inc.: Two Views
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in WorldCom, Inc.: Two Views case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Accounting Worldcom, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Accounting Worldcom 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 WorldCom, Inc.: Two Views can be done for the following purposes –
1. Strategic planning using facts provided in WorldCom, Inc.: Two Views case study
2. Improving business portfolio management of Accounting Worldcom
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 Accounting Worldcom
Strengths WorldCom, Inc.: Two Views | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Accounting Worldcom in WorldCom, Inc.: Two Views Harvard Business Review case study are -
High brand equity
– Accounting Worldcom has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Accounting Worldcom to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Accounting Worldcom has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in WorldCom, Inc.: Two Views 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.
Analytics focus
– Accounting Worldcom 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 David F. Hawkins 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.
Successful track record of launching new products
– Accounting Worldcom has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Accounting Worldcom 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.
Low bargaining power of suppliers
– Suppliers of Accounting Worldcom in the sector have low bargaining power. WorldCom, Inc.: Two Views has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Accounting Worldcom to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Accounting Worldcom is one of the most innovative firm in sector. Manager in WorldCom, Inc.: Two Views Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Accounting Worldcom digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Accounting Worldcom 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.
Cross disciplinary teams
– Horizontal connected teams at the Accounting Worldcom 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.
Effective Research and Development (R&D)
– Accounting Worldcom 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 WorldCom, Inc.: Two Views - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the WorldCom, Inc.: Two Views 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.
Highly skilled collaborators
– Accounting Worldcom 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 WorldCom, Inc.: Two Views HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Accounting Worldcom 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.
Weaknesses WorldCom, Inc.: Two Views | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of WorldCom, Inc.: Two Views are -
Workers concerns about automation
– As automation is fast increasing in the segment, Accounting Worldcom 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.
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 Accounting Worldcom supply chain. Even after few cautionary changes mentioned in the HBR case study - WorldCom, Inc.: Two Views, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Accounting Worldcom vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Accounting Worldcom 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study WorldCom, Inc.: Two Views, it seems that the employees of Accounting Worldcom 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.
Increasing silos among functional specialists
– The organizational structure of Accounting Worldcom is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Accounting Worldcom needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Accounting Worldcom to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study WorldCom, Inc.: Two Views 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 Accounting Worldcom 's lucrative customers.
Lack of clear differentiation of Accounting Worldcom products
– To increase the profitability and margins on the products, Accounting Worldcom needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Accounting Worldcom has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study WorldCom, Inc.: Two Views, in the dynamic environment Accounting Worldcom has struggled to respond to the nimble upstart competition. Accounting Worldcom has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, David F. Hawkins suggests that, Accounting Worldcom 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.
Slow to strategic competitive environment developments
– As WorldCom, Inc.: Two Views HBR case study mentions - Accounting Worldcom 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.
Opportunities WorldCom, Inc.: Two Views | 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 WorldCom, Inc.: Two Views 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 Accounting Worldcom 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.
Learning at scale
– Online learning technologies has now opened space for Accounting Worldcom 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.
Building a culture of innovation
– managers at Accounting Worldcom can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Loyalty marketing
– Accounting Worldcom 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.
Developing new processes and practices
– Accounting Worldcom 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.
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 Accounting Worldcom in the consumer business. Now Accounting Worldcom 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, Accounting Worldcom is facing challenges because of the dominance of functional experts in the organization. WorldCom, Inc.: Two Views 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Accounting Worldcom 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, WorldCom, Inc.: Two Views, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Accounting Worldcom 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 Accounting Worldcom has opened avenues for new revenue streams for the organization in the industry. This can help Accounting Worldcom to build a more holistic ecosystem as suggested in the WorldCom, Inc.: Two Views case study. Accounting Worldcom can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Accounting Worldcom can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Accounting Worldcom can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Accounting Worldcom can use these opportunities to build new business models that can help the communities that Accounting Worldcom operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats WorldCom, Inc.: Two Views External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study WorldCom, Inc.: Two Views are -
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. Accounting Worldcom needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Accounting Worldcom 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.
Increasing wage structure of Accounting Worldcom
– 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 Accounting Worldcom.
High dependence on third party suppliers
– Accounting Worldcom 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.
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. Accounting Worldcom 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 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study WorldCom, Inc.: Two Views, Accounting Worldcom may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Accounting Worldcom 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.
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 Accounting Worldcom in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Accounting Worldcom 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 Finance & Accounting industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Accounting Worldcom 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 WorldCom, Inc.: Two Views .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Accounting Worldcom with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Accounting Worldcom 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. Accounting Worldcom can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of WorldCom, Inc.: Two Views 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 WorldCom, Inc.: Two Views 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 WorldCom, Inc.: Two Views 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 WorldCom, Inc.: Two Views 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 WorldCom, Inc.: Two Views 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 Accounting Worldcom needs to make to build a sustainable competitive advantage.
