Case Study Description of Behavioral Time Discounting
Many decisions involve trade-offs between present and future costs and benefits. We procrastinate difficult tasks, and we forgo larger rewards for smaller ones if we can get them sooner. Why do we change our minds about the value of upcoming events? The traditional discounting model, which predicts how individuals discount future consequences and resolve trade-offs between present and future costs and benefits, does not account for this observed behavior. The behavioral discounting model presented in this technical note accounts for observed behaviors by incorporating patterns of overall high discounting, magnitude effects, and decreasing impatience.
Swot Analysis of "Behavioral Time Discounting" written by Manel Baucells includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Discounting Observed facing as an external strategic factors. Some of the topics covered in Behavioral Time Discounting case study are - Strategic Management Strategies, Decision making, Financial management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Behavioral Time Discounting casestudy better are - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, geopolitical disruptions, technology disruption, increasing energy prices, there is backlash against globalization, increasing transportation and logistics costs,
increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Behavioral Time Discounting
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Behavioral Time Discounting case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Discounting Observed, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Discounting Observed 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 Behavioral Time Discounting can be done for the following purposes –
1. Strategic planning using facts provided in Behavioral Time Discounting case study
2. Improving business portfolio management of Discounting Observed
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Discounting Observed
Strengths Behavioral Time Discounting | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Discounting Observed in Behavioral Time Discounting Harvard Business Review case study are -
Ability to recruit top talent
– Discounting Observed is one of the leading recruiters in the industry. Managers in the Behavioral Time Discounting are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Discounting Observed is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Discounting Observed is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Behavioral Time Discounting Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Discounting Observed 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.
Organizational Resilience of Discounting Observed
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Discounting Observed does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Discounting Observed 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
– Discounting Observed is one of the most innovative firm in sector. Manager in Behavioral Time Discounting Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Discounting Observed 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 Behavioral Time Discounting - 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 brand equity
– Discounting Observed has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Discounting Observed to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Behavioral Time Discounting 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.
Training and development
– Discounting Observed has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Behavioral Time Discounting 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.
Successful track record of launching new products
– Discounting Observed has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Discounting Observed 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.
Superior customer experience
– The customer experience strategy of Discounting Observed in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Behavioral Time Discounting | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Behavioral Time Discounting are -
High cash cycle compare to competitors
Discounting Observed 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.
Aligning sales with marketing
– It come across in the case study Behavioral Time Discounting that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Behavioral Time Discounting can leverage the sales team experience to cultivate customer relationships as Discounting Observed is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Behavioral Time Discounting 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 Discounting Observed 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Discounting Observed 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Behavioral Time Discounting 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 Discounting Observed has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Discounting Observed 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. Discounting Observed 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Behavioral Time Discounting, it seems that the employees of Discounting Observed 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.
No frontier risks strategy
– After analyzing the HBR case study Behavioral Time Discounting, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Lack of clear differentiation of Discounting Observed products
– To increase the profitability and margins on the products, Discounting Observed needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Behavioral Time Discounting HBR case study mentions - Discounting Observed 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.
Low market penetration in new markets
– Outside its home market of Discounting Observed, firm in the HBR case study Behavioral Time Discounting needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Behavioral Time Discounting | 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 Behavioral Time Discounting are -
Using analytics as competitive advantage
– Discounting Observed 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 Behavioral Time Discounting - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Discounting Observed to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Discounting Observed 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 Discounting Observed 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, Discounting Observed 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Discounting Observed can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Discounting Observed can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Behavioral Time Discounting 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.
Leveraging digital technologies
– Discounting Observed 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Discounting Observed is facing challenges because of the dominance of functional experts in the organization. Behavioral Time Discounting 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.
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 Discounting Observed 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.
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. Discounting Observed can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Discounting Observed can develop new processes and procedures in Leadership & Managing People 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 Discounting Observed in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Manufacturing automation
– Discounting Observed can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Discounting Observed 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. Discounting Observed 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.
Threats Behavioral Time Discounting External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Behavioral Time Discounting are -
Technology acceleration in Forth Industrial Revolution
– Discounting Observed has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Discounting Observed needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High 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. Discounting Observed needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Behavioral Time Discounting, Discounting Observed may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Regulatory challenges
– Discounting Observed 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 Leadership & Managing People industry regulations.
Stagnating economy with rate increase
– Discounting Observed 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.
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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Discounting Observed can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Discounting Observed.
Consumer confidence and its impact on Discounting Observed demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Discounting Observed
– 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 Discounting Observed.
Environmental challenges
– Discounting Observed 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. Discounting Observed can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 Discounting Observed in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Discounting Observed 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 Behavioral Time Discounting .
Weighted SWOT Analysis of Behavioral Time Discounting 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 Behavioral Time Discounting 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 Behavioral Time Discounting 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 Behavioral Time Discounting 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 Behavioral Time Discounting 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 Discounting Observed needs to make to build a sustainable competitive advantage.