Case Study Description of Lynchburg Foundry: The Ductile Dilemma
Two castings plants produce ductile iron return as a byproduct of the manufacturing process. The two plants, Lynchburg and Archer Creek, can use all of their byproduct in the production of subsequent castings. A third plant, Radford, makes cast-iron pipe. It produces only about 12% iron return (versus 40% to 50% for the other two plants) and also could use more. Since iron return used in the pipe plant substitutes for high-cost pig iron, it appears that a transfer could be worthwhile, because in the castings plants, the iron return substitutes for a lower-cost mix of pig iron and steel scrap. The central issue in the case then is this: Should ductile iron return be transferred from the Lynchburg and Archer Creek castings plants to the Radford pipe plant? The economic analysis shows there is a substantial savings to the company if the iron return is transferred. The question then becomes, at what price? This is really a question of how to divide the company's savings between the three plants, each of which is a cost center. Related to this question are a number of other issues: (1) the effect on plant performance, (2) the effect on decisions to discontinue, modernize, or expand the plants, (3) the effect on castings and pipe price, and (4) the effect on plant management morale and performance. At present, 3,500 tons of ductile iron return are being transferred from Lynchburg to Radford because the pieces are too large to be economically remelted at Lynchburg. The only cost Radford pays is freight. This is over half the potential 6,000 tons of iron return that it is feasible to transfer. An issue to consider is whether this iron return, which cannot be used at Lynchburg, should have the same transfer price as the iron return Lynchburg can use.
Swot Analysis of "Lynchburg Foundry: The Ductile Dilemma" written by E. Richard Brownlee II includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Iron Lynchburg facing as an external strategic factors. Some of the topics covered in Lynchburg Foundry: The Ductile Dilemma case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Lynchburg Foundry: The Ductile Dilemma casestudy better are - – challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, geopolitical disruptions,
customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Lynchburg Foundry: The Ductile Dilemma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lynchburg Foundry: The Ductile Dilemma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Iron Lynchburg, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Iron Lynchburg 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 Lynchburg Foundry: The Ductile Dilemma can be done for the following purposes –
1. Strategic planning using facts provided in Lynchburg Foundry: The Ductile Dilemma case study
2. Improving business portfolio management of Iron Lynchburg
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 Iron Lynchburg
Strengths Lynchburg Foundry: The Ductile Dilemma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Iron Lynchburg in Lynchburg Foundry: The Ductile Dilemma Harvard Business Review case study are -
Innovation driven organization
– Iron Lynchburg is one of the most innovative firm in sector. Manager in Lynchburg Foundry: The Ductile Dilemma Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Iron Lynchburg 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 E. Richard Brownlee II 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.
Effective Research and Development (R&D)
– Iron Lynchburg 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 Lynchburg Foundry: The Ductile Dilemma - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Iron Lynchburg 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.
Training and development
– Iron Lynchburg has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lynchburg Foundry: The Ductile Dilemma 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 Iron Lynchburg digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Iron Lynchburg 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.
High switching costs
– The high switching costs that Iron Lynchburg 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.
Low bargaining power of suppliers
– Suppliers of Iron Lynchburg in the sector have low bargaining power. Lynchburg Foundry: The Ductile Dilemma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Iron Lynchburg to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Iron Lynchburg is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Iron Lynchburg is present in almost all the verticals within the industry. This has provided firm in Lynchburg Foundry: The Ductile Dilemma 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.
Superior customer experience
– The customer experience strategy of Iron Lynchburg in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Lynchburg Foundry: The Ductile Dilemma firm has clearly differentiated products in the market place. This has enabled Iron Lynchburg to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Iron Lynchburg to invest into research and development (R&D) and innovation.
Weaknesses Lynchburg Foundry: The Ductile Dilemma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lynchburg Foundry: The Ductile Dilemma are -
Need for greater diversity
– Iron Lynchburg 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.
Slow decision making process
– As mentioned earlier in the report, Iron Lynchburg 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. Iron Lynchburg 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Lynchburg Foundry: The Ductile Dilemma 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 Iron Lynchburg 's lucrative customers.
High cash cycle compare to competitors
Iron Lynchburg 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 Iron Lynchburg 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 - Lynchburg Foundry: The Ductile Dilemma should strive to include more intangible value offerings along with its core products and services.
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 Iron Lynchburg supply chain. Even after few cautionary changes mentioned in the HBR case study - Lynchburg Foundry: The Ductile Dilemma, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Iron Lynchburg vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Iron Lynchburg, firm in the HBR case study Lynchburg Foundry: The Ductile Dilemma needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Lynchburg Foundry: The Ductile Dilemma HBR case study mentions - Iron Lynchburg 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Lynchburg Foundry: The Ductile Dilemma 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 Iron Lynchburg has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Iron Lynchburg 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.
Capital Spending Reduction
– Even during the low interest decade, Iron Lynchburg 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.
Opportunities Lynchburg Foundry: The Ductile Dilemma | 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 Lynchburg Foundry: The Ductile Dilemma are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Iron Lynchburg can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Lynchburg Foundry: The Ductile Dilemma, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Iron Lynchburg to increase its market reach. Iron Lynchburg 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Iron Lynchburg 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 Iron Lynchburg to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Iron Lynchburg 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.
Loyalty marketing
– Iron Lynchburg 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.
Using analytics as competitive advantage
– Iron Lynchburg has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Lynchburg Foundry: The Ductile Dilemma - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Iron Lynchburg to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Iron Lynchburg 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Iron Lynchburg can use these opportunities to build new business models that can help the communities that Iron Lynchburg operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Iron Lynchburg has opened avenues for new revenue streams for the organization in the industry. This can help Iron Lynchburg to build a more holistic ecosystem as suggested in the Lynchburg Foundry: The Ductile Dilemma case study. Iron Lynchburg can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Iron Lynchburg in the consumer business. Now Iron Lynchburg can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Iron Lynchburg 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.
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. Iron Lynchburg can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Iron Lynchburg 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.
Threats Lynchburg Foundry: The Ductile Dilemma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lynchburg Foundry: The Ductile Dilemma are -
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 Iron Lynchburg in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Iron Lynchburg 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. Iron Lynchburg can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Iron Lynchburg will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lynchburg Foundry: The Ductile Dilemma, Iron Lynchburg 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 .
Regulatory challenges
– Iron Lynchburg needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Stagnating economy with rate increase
– Iron Lynchburg 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.
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 Iron Lynchburg business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Iron Lynchburg 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.
Shortening product life cycle
– it is one of the major threat that Iron Lynchburg is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Iron Lynchburg needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Iron Lynchburg.
Technology acceleration in Forth Industrial Revolution
– Iron Lynchburg has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Iron Lynchburg 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.
Weighted SWOT Analysis of Lynchburg Foundry: The Ductile Dilemma 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 Lynchburg Foundry: The Ductile Dilemma 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 Lynchburg Foundry: The Ductile Dilemma 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 Lynchburg Foundry: The Ductile Dilemma 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 Lynchburg Foundry: The Ductile Dilemma 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 Iron Lynchburg needs to make to build a sustainable competitive advantage.
