Case Study Description of KPMG Peat Marwick: The Shadow Partner
KPMG Peat Marwick executives needed to decide whether to fund full development of "The Shadow Partner," the name coined to describe a worldwide information network that would link all KPMG professionals to each other and to a wealth of data bases and information services. Partners, by sharing and gathering information through the network, would be able to use the entire company's knowledge and experience to serve clients. Many partners felt that implementation of the shadow partner was vital, as clients had greater demands and competition in the accounting industry had escalated. Other partners questioned the necessity of the shadow partner. The firm had committed to establishing a technology committee to investigate shadow partner design and cost. Since the firm was a partnership, the partners eventually had to decide whether, and to what extent, to support shadow partner implementation.
Swot Analysis of "KPMG Peat Marwick: The Shadow Partner" written by Robert G. Eccles, Julie Gladstone includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shadow Partner facing as an external strategic factors. Some of the topics covered in KPMG Peat Marwick: The Shadow Partner case study are - Strategic Management Strategies, Decision making, IT, Joint ventures, Knowledge management, Networking, Project management, Strategy execution and Technology & Operations.
Some of the macro environment factors that can be used to understand the KPMG Peat Marwick: The Shadow Partner casestudy better are - – increasing commodity prices, increasing energy prices, there is increasing trade war between United States & China, increasing household debt because of falling income levels, there is backlash against globalization, supply chains are disrupted by pandemic , wage bills are increasing,
talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of KPMG Peat Marwick: The Shadow Partner
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in KPMG Peat Marwick: The Shadow Partner case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shadow Partner, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner can be done for the following purposes –
1. Strategic planning using facts provided in KPMG Peat Marwick: The Shadow Partner case study
2. Improving business portfolio management of Shadow Partner
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shadow Partner
Strengths KPMG Peat Marwick: The Shadow Partner | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shadow Partner in KPMG Peat Marwick: The Shadow Partner Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Shadow Partner in the sector have low bargaining power. KPMG Peat Marwick: The Shadow Partner has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shadow Partner to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Shadow Partner in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the KPMG Peat Marwick: The Shadow Partner 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.
Strong track record of project management
– Shadow Partner is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner - 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 switching costs
– The high switching costs that Shadow Partner 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Shadow Partner digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shadow Partner 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.
Highly skilled collaborators
– Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Shadow Partner is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert G. Eccles, Julie Gladstone can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Technology & Operations field
– Shadow Partner 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 Shadow Partner in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Shadow Partner is one of the most innovative firm in sector. Manager in KPMG Peat Marwick: The Shadow Partner Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Shadow Partner has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in KPMG Peat Marwick: The Shadow Partner 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.
Weaknesses KPMG Peat Marwick: The Shadow Partner | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of KPMG Peat Marwick: The Shadow Partner are -
High cash cycle compare to competitors
Shadow Partner 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.
Products dominated business model
– Even though Shadow Partner 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 - KPMG Peat Marwick: The Shadow Partner should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study KPMG Peat Marwick: The Shadow Partner, in the dynamic environment Shadow Partner has struggled to respond to the nimble upstart competition. Shadow Partner has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study KPMG Peat Marwick: The Shadow Partner, it seems that the employees of Shadow Partner 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.
Interest costs
– Compare to the competition, Shadow Partner 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert G. Eccles, Julie Gladstone suggests that, Shadow Partner 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.
Low market penetration in new markets
– Outside its home market of Shadow Partner, firm in the HBR case study KPMG Peat Marwick: The Shadow Partner needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shadow Partner is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study KPMG Peat Marwick: The Shadow Partner can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As KPMG Peat Marwick: The Shadow Partner HBR case study mentions - Shadow Partner 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.
High operating costs
– Compare to the competitors, firm in the HBR case study KPMG Peat Marwick: The Shadow Partner 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 Shadow Partner 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Shadow Partner is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Shadow Partner needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shadow Partner to focus more on services rather than just following the product oriented approach.
Opportunities KPMG Peat Marwick: The Shadow Partner | 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 KPMG Peat Marwick: The Shadow Partner are -
Developing new processes and practices
– Shadow Partner can develop new processes and procedures in Technology & Operations 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shadow Partner in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shadow Partner 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 Shadow Partner 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, Shadow Partner 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.
Building a culture of innovation
– managers at Shadow Partner 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 Technology & Operations segment.
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 Shadow Partner in the consumer business. Now Shadow Partner can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Shadow Partner 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.
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. Shadow Partner can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shadow Partner can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Shadow Partner has opened avenues for new revenue streams for the organization in the industry. This can help Shadow Partner to build a more holistic ecosystem as suggested in the KPMG Peat Marwick: The Shadow Partner case study. Shadow Partner can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Shadow Partner can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
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 Shadow Partner 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.
Buying journey improvements
– Shadow Partner can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. KPMG Peat Marwick: The Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study KPMG Peat Marwick: The Shadow Partner are -
Stagnating economy with rate increase
– Shadow Partner 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.
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. Shadow Partner needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner .
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.
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 Shadow Partner in the Technology & Operations sector and impact the bottomline 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 KPMG Peat Marwick: The Shadow Partner, Shadow Partner may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Environmental challenges
– Shadow Partner 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. Shadow Partner can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Technology acceleration in Forth Industrial Revolution
– Shadow Partner has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Shadow Partner needs to keep up with the evolution of technology in the Technology & Operations 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.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shadow Partner can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Shadow Partner 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.
Shortening product life cycle
– it is one of the major threat that Shadow Partner is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Shadow Partner 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shadow Partner with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of KPMG Peat Marwick: The Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner 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 KPMG Peat Marwick: The Shadow Partner 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 Shadow Partner needs to make to build a sustainable competitive advantage.
