Dividend Policy at SRF Limited: Buyback of Shares SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dividend Policy at SRF Limited: Buyback of Shares
In April 2012, a chartered accountant and financial analyst for the manufacturing firm SRF Limited was asked by her chief financial officer to analyze the company's cash dividend and share repurchase policy and provide recommendations for the next 12 to 24 months. SRF Limited was a a??38 billion multi-business entity. Having completed its third round of share buyback at a??380 per share, SRF Limited paid an interim and consistent dividend of a??7 per share. The company had engaged in a series of share buybacks since 2006. In light of India's falling economic growth and pessimistic global economic outlook, the company needed to know if it would be able to maintain its growth. Should the company go ahead with another round of share buybacks and increasing dividends? Kulbir Singh is affiliated with Institute of Management Technology, Nagpur.
Authors :: Kulbir Singh, David J. Sharp, S. Ramanna Vishwanath
Swot Analysis of "Dividend Policy at SRF Limited: Buyback of Shares" written by Kulbir Singh, David J. Sharp, S. Ramanna Vishwanath includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Srf Share facing as an external strategic factors. Some of the topics covered in Dividend Policy at SRF Limited: Buyback of Shares case study are - Strategic Management Strategies, Manufacturing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Dividend Policy at SRF Limited: Buyback of Shares casestudy better are - – increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing energy prices, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, wage bills are increasing, etc
Introduction to SWOT Analysis of Dividend Policy at SRF Limited: Buyback of Shares
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dividend Policy at SRF Limited: Buyback of Shares case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Srf Share, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Srf Share 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 Dividend Policy at SRF Limited: Buyback of Shares can be done for the following purposes –
1. Strategic planning using facts provided in Dividend Policy at SRF Limited: Buyback of Shares case study
2. Improving business portfolio management of Srf Share
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 Srf Share
Strengths Dividend Policy at SRF Limited: Buyback of Shares | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Srf Share in Dividend Policy at SRF Limited: Buyback of Shares Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Srf Share in the sector have low bargaining power. Dividend Policy at SRF Limited: Buyback of Shares has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Srf Share to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Srf Share has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dividend Policy at SRF Limited: Buyback of Shares 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.
Effective Research and Development (R&D)
– Srf Share 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 Dividend Policy at SRF Limited: Buyback of Shares - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Srf Share 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 Srf Share in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Srf Share
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Srf Share does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Srf Share has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Srf Share to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Srf Share has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Srf Share 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.
Ability to recruit top talent
– Srf Share is one of the leading recruiters in the industry. Managers in the Dividend Policy at SRF Limited: Buyback of Shares are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Srf Share 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.
Innovation driven organization
– Srf Share is one of the most innovative firm in sector. Manager in Dividend Policy at SRF Limited: Buyback of Shares Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Dividend Policy at SRF Limited: Buyback of Shares 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.
Analytics focus
– Srf Share 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 Kulbir Singh, David J. Sharp, S. Ramanna Vishwanath 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.
Weaknesses Dividend Policy at SRF Limited: Buyback of Shares | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dividend Policy at SRF Limited: Buyback of Shares are -
Increasing silos among functional specialists
– The organizational structure of Srf Share is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Srf Share needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Srf Share to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Srf Share 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.
Capital Spending Reduction
– Even during the low interest decade, Srf Share 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.
Need for greater diversity
– Srf Share 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.
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 Srf Share supply chain. Even after few cautionary changes mentioned in the HBR case study - Dividend Policy at SRF Limited: Buyback of Shares, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Srf Share vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dividend Policy at SRF Limited: Buyback of Shares, it seems that the employees of Srf Share 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Kulbir Singh, David J. Sharp, S. Ramanna Vishwanath suggests that, Srf Share 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dividend Policy at SRF Limited: Buyback of Shares 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 Srf Share has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Srf Share 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.
No frontier risks strategy
– After analyzing the HBR case study Dividend Policy at SRF Limited: Buyback of Shares, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Dividend Policy at SRF Limited: Buyback of Shares, is just above the industry average. Srf Share 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.
Opportunities Dividend Policy at SRF Limited: Buyback of Shares | 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 Dividend Policy at SRF Limited: Buyback of Shares 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. Srf Share 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. Srf Share 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Srf Share is facing challenges because of the dominance of functional experts in the organization. Dividend Policy at SRF Limited: Buyback of Shares 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 Srf Share has opened avenues for new revenue streams for the organization in the industry. This can help Srf Share to build a more holistic ecosystem as suggested in the Dividend Policy at SRF Limited: Buyback of Shares case study. Srf Share can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Srf Share can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Srf Share 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.
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 Srf Share 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
– Srf Share 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.
Leveraging digital technologies
– Srf Share 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Srf Share 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.
Manufacturing automation
– Srf Share 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Srf Share can use these opportunities to build new business models that can help the communities that Srf Share operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Srf Share 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 Srf Share to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Srf Share 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.
Threats Dividend Policy at SRF Limited: Buyback of Shares External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dividend Policy at SRF Limited: Buyback of Shares are -
Increasing wage structure of Srf Share
– 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 Srf Share.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Srf Share with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Srf Share 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.
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 Srf Share in the Finance & Accounting sector and impact the bottomline of the organization.
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 Srf Share.
Environmental challenges
– Srf Share 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. Srf Share can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Srf Share 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.
Shortening product life cycle
– it is one of the major threat that Srf Share is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Srf Share 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 Dividend Policy at SRF Limited: Buyback of Shares .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dividend Policy at SRF Limited: Buyback of Shares, Srf Share 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 .
High dependence on third party suppliers
– Srf Share 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.
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.
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. Srf Share can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Dividend Policy at SRF Limited: Buyback of Shares 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 Dividend Policy at SRF Limited: Buyback of Shares 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 Dividend Policy at SRF Limited: Buyback of Shares 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 Dividend Policy at SRF Limited: Buyback of Shares 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 Dividend Policy at SRF Limited: Buyback of Shares 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 Srf Share needs to make to build a sustainable competitive advantage.