Berkshire Partners: Purchase of Rival Company (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Berkshire Partners: Purchase of Rival Company (A)
Berkshire Partners, a private equity firm in Boston, was pleased with their recent investment in the Holmes Group, a home comfort consumer electronics company. The portfolio company was exceeding key financial targets and Berkshire Partners was confident that it would be another successful investment. Holmes' management team then suggested acquiring a kitchen electronics company, the Rival Company. The management of Holmes believed that Rival would complement their existing portfolio of products and it was the perfect time to buy due to a depressed stock price caused by declining earnings. The investment team at Berkshire now had to decide if the possible returns from an investment in Rival were enough to risk the successful investment in Holmes, or if Rival could be acquired without risking Berkshire's investment in Holmes.
Authors :: Nabil N. El-Hage, Andre Baillargeon, Stephen Parks
Swot Analysis of "Berkshire Partners: Purchase of Rival Company (A)" written by Nabil N. El-Hage, Andre Baillargeon, Stephen Parks includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Holmes Berkshire facing as an external strategic factors. Some of the topics covered in Berkshire Partners: Purchase of Rival Company (A) case study are - Strategic Management Strategies, Financial management, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Berkshire Partners: Purchase of Rival Company (A) casestudy better are - – increasing energy prices, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, there is backlash against globalization, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, geopolitical disruptions, etc
Introduction to SWOT Analysis of Berkshire Partners: Purchase of Rival Company (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Berkshire Partners: Purchase of Rival Company (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Holmes Berkshire, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) can be done for the following purposes –
1. Strategic planning using facts provided in Berkshire Partners: Purchase of Rival Company (A) case study
2. Improving business portfolio management of Holmes Berkshire
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 Holmes Berkshire
Strengths Berkshire Partners: Purchase of Rival Company (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Holmes Berkshire in Berkshire Partners: Purchase of Rival Company (A) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Holmes Berkshire in the sector have low bargaining power. Berkshire Partners: Purchase of Rival Company (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Holmes Berkshire to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Holmes Berkshire
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Holmes Berkshire does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Holmes Berkshire 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 Holmes Berkshire is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Berkshire Partners: Purchase of Rival Company (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Holmes Berkshire 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
– Holmes Berkshire is one of the leading recruiters in the industry. Managers in the Berkshire Partners: Purchase of Rival Company (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Holmes Berkshire has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Berkshire Partners: Purchase of Rival Company (A) 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.
Analytics focus
– Holmes Berkshire 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 Nabil N. El-Hage, Andre Baillargeon, Stephen Parks 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)
– Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) - 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
– Holmes Berkshire 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
– Holmes Berkshire is present in almost all the verticals within the industry. This has provided firm in Berkshire Partners: Purchase of Rival Company (A) 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Holmes Berkshire digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Holmes Berkshire has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Berkshire Partners: Purchase of Rival Company (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Berkshire Partners: Purchase of Rival Company (A) are -
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 Holmes Berkshire supply chain. Even after few cautionary changes mentioned in the HBR case study - Berkshire Partners: Purchase of Rival Company (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Holmes Berkshire vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Holmes Berkshire, firm in the HBR case study Berkshire Partners: Purchase of Rival Company (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Holmes Berkshire has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Holmes Berkshire is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Holmes Berkshire needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Holmes Berkshire to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Holmes Berkshire is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Berkshire Partners: Purchase of Rival Company (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Berkshire Partners: Purchase of Rival Company (A) 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 Berkshire Partners: Purchase of Rival Company (A) can leverage the sales team experience to cultivate customer relationships as Holmes Berkshire is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Holmes Berkshire 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.
Slow decision making process
– As mentioned earlier in the report, Holmes Berkshire 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. Holmes Berkshire 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.
Slow to strategic competitive environment developments
– As Berkshire Partners: Purchase of Rival Company (A) HBR case study mentions - Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) 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 Holmes Berkshire has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Berkshire Partners: Purchase of Rival Company (A), in the dynamic environment Holmes Berkshire has struggled to respond to the nimble upstart competition. Holmes Berkshire has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Berkshire Partners: Purchase of Rival Company (A) | 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 Berkshire Partners: Purchase of Rival Company (A) are -
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 Holmes Berkshire in the consumer business. Now Holmes Berkshire can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Holmes Berkshire 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.
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. Holmes Berkshire 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. Holmes Berkshire 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.
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. Holmes Berkshire can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Holmes Berkshire 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Holmes Berkshire can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Holmes Berkshire 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 Holmes Berkshire to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Holmes Berkshire to increase its market reach. Holmes Berkshire 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.
Creating value in data economy
– The success of analytics program of Holmes Berkshire has opened avenues for new revenue streams for the organization in the industry. This can help Holmes Berkshire to build a more holistic ecosystem as suggested in the Berkshire Partners: Purchase of Rival Company (A) case study. Holmes Berkshire can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Holmes Berkshire can use these opportunities to build new business models that can help the communities that Holmes Berkshire operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Holmes Berkshire can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Holmes Berkshire 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.
Using analytics as competitive advantage
– Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Holmes Berkshire to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Berkshire Partners: Purchase of Rival Company (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Berkshire Partners: Purchase of Rival Company (A) are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Berkshire Partners: Purchase of Rival Company (A), Holmes Berkshire 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 .
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. Holmes Berkshire 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.
High dependence on third party suppliers
– Holmes Berkshire 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.
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 Holmes Berkshire.
Consumer confidence and its impact on Holmes Berkshire 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.
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.
Shortening product life cycle
– it is one of the major threat that Holmes Berkshire 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, Holmes Berkshire 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 Berkshire Partners: Purchase of Rival Company (A) .
Regulatory challenges
– Holmes Berkshire 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.
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 Holmes Berkshire in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Holmes Berkshire 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. Holmes Berkshire can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Holmes Berkshire with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Holmes Berkshire business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Berkshire Partners: Purchase of Rival Company (A) 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 Berkshire Partners: Purchase of Rival Company (A) 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 Berkshire Partners: Purchase of Rival Company (A) 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 Berkshire Partners: Purchase of Rival Company (A) 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 Berkshire Partners: Purchase of Rival Company (A) 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 Holmes Berkshire needs to make to build a sustainable competitive advantage.
