North West Company: Analyzing Financial Performance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of North West Company: Analyzing Financial Performance
In June 2015, a new analyst at an investment fund company had to review the financial performance of a potential investment target, the North West Company Inc. (NWC), and make a recommendation. NWC was a food retailer operating in underserved markets. The company operated retail locations in Western and Northern Canada, Alaska, the South Pacific, and the Caribbean, reporting total sales of CA$1.6 billion in 2014. Twelve years after NWC's initial push outside of Canada, international sales accounted for 35.8 per cent of the company's business. Whereas rivalry among competitors and consumer choice defined the mainstream Canadian market, food retail in Northern Canadian markets was characterized by limited offerings, high prices, and few competitors.The analyst's report needed to include an assessment of NWC's profitability, liquidity, and financial structure. The analyst was particularly interested in NWC's international operations; although international expansion carried with it the potential for significant revenue growth, she wondered whether the profit potential was as great as that of NWC's operations in Northern and Western Canada. She also knew that if NWC did choose to expand its international operations, it would require significant capital investment. Was NWC a good investment opportunity? Jennifer Alex is affiliated with St. Francis Xavier University. Mark MacIsaac is affiliated with St. Francis Xavier University. Neil Maltby is affiliated with St. Francis Xavier University.
Authors :: Jennifer Alex, Mark MacIsaac, Neil Maltby
Swot Analysis of "North West Company: Analyzing Financial Performance" written by Jennifer Alex, Mark MacIsaac, Neil Maltby includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nwc Nwc's facing as an external strategic factors. Some of the topics covered in North West Company: Analyzing Financial Performance case study are - Strategic Management Strategies, Financial management, Performance measurement and Finance & Accounting.
Some of the macro environment factors that can be used to understand the North West Company: Analyzing Financial Performance casestudy better are - – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, technology disruption, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of North West Company: Analyzing Financial Performance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in North West Company: Analyzing Financial Performance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nwc Nwc's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nwc Nwc's 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 North West Company: Analyzing Financial Performance can be done for the following purposes –
1. Strategic planning using facts provided in North West Company: Analyzing Financial Performance case study
2. Improving business portfolio management of Nwc Nwc's
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 Nwc Nwc's
Strengths North West Company: Analyzing Financial Performance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nwc Nwc's in North West Company: Analyzing Financial Performance Harvard Business Review case study are -
Diverse revenue streams
– Nwc Nwc's is present in almost all the verticals within the industry. This has provided firm in North West Company: Analyzing Financial Performance case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Finance & Accounting field
– Nwc Nwc's 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 Nwc Nwc's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Nwc Nwc's 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 North West Company: Analyzing Financial Performance - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Nwc Nwc's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nwc Nwc's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Nwc Nwc's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nwc Nwc's 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.
Sustainable margins compare to other players in Finance & Accounting industry
– North West Company: Analyzing Financial Performance firm has clearly differentiated products in the market place. This has enabled Nwc Nwc's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Nwc Nwc's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Nwc Nwc's 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.
Learning organization
- Nwc Nwc's 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 Nwc Nwc's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in North West Company: Analyzing Financial Performance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Nwc Nwc's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Nwc Nwc's 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.
Innovation driven organization
– Nwc Nwc's is one of the most innovative firm in sector. Manager in North West Company: Analyzing Financial Performance 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 Nwc Nwc's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nwc Nwc's 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.
Weaknesses North West Company: Analyzing Financial Performance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of North West Company: Analyzing Financial Performance are -
Skills based hiring
– The stress on hiring functional specialists at Nwc Nwc's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nwc Nwc's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study North West Company: Analyzing Financial Performance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the North West Company: Analyzing Financial Performance 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 Nwc Nwc's has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Jennifer Alex, Mark MacIsaac, Neil Maltby suggests that, Nwc Nwc's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Nwc Nwc's 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 Nwc Nwc's supply chain. Even after few cautionary changes mentioned in the HBR case study - North West Company: Analyzing Financial Performance, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nwc Nwc's vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Nwc Nwc's 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 - North West Company: Analyzing Financial Performance should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study North West Company: Analyzing Financial Performance, 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.
High cash cycle compare to competitors
Nwc Nwc's 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.
Lack of clear differentiation of Nwc Nwc's products
– To increase the profitability and margins on the products, Nwc Nwc's needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Nwc Nwc's 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. Nwc Nwc's 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 North West Company: Analyzing Financial Performance | 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 North West Company: Analyzing Financial Performance are -
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. Nwc Nwc's 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. Nwc Nwc's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nwc Nwc's 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, North West Company: Analyzing Financial Performance, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Nwc Nwc's to increase its market reach. Nwc Nwc's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nwc Nwc's is facing challenges because of the dominance of functional experts in the organization. North West Company: Analyzing Financial Performance 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.
Creating value in data economy
– The success of analytics program of Nwc Nwc's has opened avenues for new revenue streams for the organization in the industry. This can help Nwc Nwc's to build a more holistic ecosystem as suggested in the North West Company: Analyzing Financial Performance case study. Nwc Nwc's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nwc Nwc's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Nwc Nwc's 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.
Manufacturing automation
– Nwc Nwc's 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.
Developing new processes and practices
– Nwc Nwc's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nwc Nwc's 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Nwc Nwc's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nwc Nwc's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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. Nwc Nwc's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats North West Company: Analyzing Financial Performance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study North West Company: Analyzing Financial Performance are -
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.
Increasing wage structure of Nwc Nwc's
– 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 Nwc Nwc's.
Consumer confidence and its impact on Nwc Nwc's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nwc Nwc's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study North West Company: Analyzing Financial Performance, Nwc Nwc's 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 .
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. Nwc Nwc's 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.
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.
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 Nwc Nwc's.
Technology acceleration in Forth Industrial Revolution
– Nwc Nwc's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Nwc Nwc's 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.
Regulatory challenges
– Nwc Nwc's 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.
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 Nwc Nwc's 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 Nwc Nwc's 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.
Stagnating economy with rate increase
– Nwc Nwc's 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.
Weighted SWOT Analysis of North West Company: Analyzing Financial Performance 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 North West Company: Analyzing Financial Performance 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 North West Company: Analyzing Financial Performance 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 North West Company: Analyzing Financial Performance 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 North West Company: Analyzing Financial Performance 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 Nwc Nwc's needs to make to build a sustainable competitive advantage.