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 - – wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , 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%, geopolitical disruptions,
there is increasing trade war between United States & China, increasing household debt because of falling income levels, 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 -
Ability to recruit top talent
– Nwc Nwc's is one of the leading recruiters in the industry. Managers in the North West Company: Analyzing Financial Performance are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Nwc Nwc's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in North West Company: Analyzing Financial Performance 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.
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.
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.
Highly skilled collaborators
– Nwc Nwc's 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 North West Company: Analyzing Financial Performance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Nwc Nwc's 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
– 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.
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 -
Capital Spending Reduction
– Even during the low interest decade, Nwc Nwc's 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 Nwc Nwc's is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Nwc Nwc's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nwc Nwc's to focus more on services rather than just following the product oriented approach.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study North West Company: Analyzing Financial Performance, is just above the industry average. Nwc Nwc's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Low market penetration in new markets
– Outside its home market of Nwc Nwc's, firm in the HBR case study North West Company: Analyzing Financial Performance needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study North West Company: Analyzing Financial Performance, it seems that the employees of Nwc Nwc's 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.
Aligning sales with marketing
– It come across in the case study North West Company: Analyzing Financial Performance 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 North West Company: Analyzing Financial Performance can leverage the sales team experience to cultivate customer relationships as Nwc Nwc's is planning to shift buying processes online.
Interest costs
– Compare to the competition, Nwc Nwc's 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.
Need for greater diversity
– Nwc Nwc's 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.
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 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.
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 -
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.
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.
Building a culture of innovation
– managers at Nwc Nwc's 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nwc Nwc's 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 Nwc Nwc's to hire the very best people irrespective of their geographical location.
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.
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.
Leveraging digital technologies
– Nwc Nwc's 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nwc Nwc's can use these opportunities to build new business models that can help the communities that Nwc Nwc's operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
Loyalty marketing
– Nwc Nwc's 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.
Buying journey improvements
– Nwc Nwc's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. North West Company: Analyzing Financial Performance suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 -
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.
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. Nwc Nwc's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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 .
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.
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.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nwc Nwc's 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 Nwc Nwc's is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
High dependence on third party suppliers
– Nwc Nwc's 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 Nwc Nwc's business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
