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 - – central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China,
increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, 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 -
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.
Strong track record of project management
– Srf Share 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
– 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Dividend Policy at SRF Limited: Buyback of Shares firm has clearly differentiated products in the market place. This has enabled Srf Share to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Srf Share to invest into research and development (R&D) and innovation.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Srf Share digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Srf Share 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.
Superior customer experience
– The customer experience strategy of Srf Share 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
– 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.
Cross disciplinary teams
– Horizontal connected teams at the Srf Share 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.
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.
Highly skilled collaborators
– Srf Share 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 Dividend Policy at SRF Limited: Buyback of Shares HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Slow to strategic competitive environment developments
– As Dividend Policy at SRF Limited: Buyback of Shares HBR case study mentions - Srf Share 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.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Srf Share 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. Srf Share 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.
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.
Products dominated business model
– Even though Srf Share 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 - Dividend Policy at SRF Limited: Buyback of Shares should strive to include more intangible value offerings along with its core products and services.
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.
Lack of clear differentiation of Srf Share products
– To increase the profitability and margins on the products, Srf Share needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Dividend Policy at SRF Limited: Buyback of Shares, in the dynamic environment Srf Share has struggled to respond to the nimble upstart competition. Srf Share has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, 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.
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 -
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Srf Share to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Srf Share can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Srf Share to increase its market reach. Srf Share 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.
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 Srf Share in the consumer business. Now Srf Share can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Srf Share can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dividend Policy at SRF Limited: Buyback of Shares 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 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 -
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.
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.
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.
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. Srf Share needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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 .
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.
Technology acceleration in Forth Industrial Revolution
– Srf Share has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Srf Share 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.
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.
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 .
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.
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 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.
