Houston We Have A Problem: They Paid Themselves Bonuses! SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Houston We Have A Problem: They Paid Themselves Bonuses!
It was June of 2006, and Amanda Walsh, interim CFO, was soundly criticizing herself for not seeing the bigger picture of what had gone on during the previous 18 months at Vanderville Plastics Company (VPC). Two prior years' financials were still in "draft" form with auditors' statements showing that the firm might not be a going concern. Peter Giroux, the CFO who hired her, had kept Amanda from having any interaction with the company vice presidents, the board, or the owners, maintained a tight grip on both the human resources and payroll operations, and refused to provide details when she questioned him about any aspect of the financial operations. Then, in January of 2006, close to a million dollars in bonuses were paid to senior management and employees, despite the company's precarious cash flow position. Not long after the bonus payment Peter resigned unexpectedly. Today's phone call from Ken Duffy, one of the owners, made all the pieces fit together. Duffy had called for clarification about the sudden decrease in the company's accrued liabilities. The call ended abruptly when Amanda told him that bonuses were paid for performance in the previous 2005 fiscal year. His shocked reaction on the phone made it clear that the owners had not authorized the bonus payments. Amanda started to think about the succession of events since she came to VPC to better understand what this all meant, what was likely to happen next, and what she should do. The case exposes students to the day-to-day life of a professional accountant employed in a small business. COSO considers opportunistic behavior from senior management to secure incentive compensation by using adjusting journal entries the most likely way for fraud to occur. Looking at the events surrounding the payout as they unfold through in the day-to-day life of Amanda should help students develop the professional judgment and skepticism required to better interpret the oral assertions made by management, assess the RMM resulting from fraud, and provide recommendations to improve a client organization's control environment and fraud risk management practices related to incentive compensation and management override of controls.
Swot Analysis of "Houston We Have A Problem: They Paid Themselves Bonuses!" written by Pascale Lapointe-Antunes, Deborah McPhee includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amanda Duffy facing as an external strategic factors. Some of the topics covered in Houston We Have A Problem: They Paid Themselves Bonuses! case study are - Strategic Management Strategies, Compensation, Ethics, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Houston We Have A Problem: They Paid Themselves Bonuses! casestudy better are - – geopolitical disruptions, there is backlash against globalization, wage bills are increasing, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion,
increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Houston We Have A Problem: They Paid Themselves Bonuses!
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Houston We Have A Problem: They Paid Themselves Bonuses! case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amanda Duffy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amanda Duffy 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 Houston We Have A Problem: They Paid Themselves Bonuses! can be done for the following purposes –
1. Strategic planning using facts provided in Houston We Have A Problem: They Paid Themselves Bonuses! case study
2. Improving business portfolio management of Amanda Duffy
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 Amanda Duffy
Strengths Houston We Have A Problem: They Paid Themselves Bonuses! | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amanda Duffy in Houston We Have A Problem: They Paid Themselves Bonuses! Harvard Business Review case study are -
Learning organization
- Amanda Duffy 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 Amanda Duffy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Houston We Have A Problem: They Paid Themselves Bonuses! Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Amanda Duffy in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Amanda Duffy in the sector have low bargaining power. Houston We Have A Problem: They Paid Themselves Bonuses! has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Amanda Duffy to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Amanda Duffy
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amanda Duffy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Amanda Duffy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amanda Duffy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Amanda Duffy 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 Pascale Lapointe-Antunes, Deborah McPhee 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Houston We Have A Problem: They Paid Themselves Bonuses! firm has clearly differentiated products in the market place. This has enabled Amanda Duffy to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Amanda Duffy to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Amanda Duffy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amanda Duffy 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.
Diverse revenue streams
– Amanda Duffy is present in almost all the verticals within the industry. This has provided firm in Houston We Have A Problem: They Paid Themselves Bonuses! 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.
Cross disciplinary teams
– Horizontal connected teams at the Amanda Duffy 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.
High switching costs
– The high switching costs that Amanda Duffy 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.
Effective Research and Development (R&D)
– Amanda Duffy 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 Houston We Have A Problem: They Paid Themselves Bonuses! - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Houston We Have A Problem: They Paid Themselves Bonuses! | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Houston We Have A Problem: They Paid Themselves Bonuses! are -
Skills based hiring
– The stress on hiring functional specialists at Amanda Duffy 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 Amanda Duffy is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Amanda Duffy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Amanda Duffy to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Houston We Have A Problem: They Paid Themselves Bonuses! 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 Amanda Duffy 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Houston We Have A Problem: They Paid Themselves Bonuses!, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Amanda Duffy products
– To increase the profitability and margins on the products, Amanda Duffy needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Houston We Have A Problem: They Paid Themselves Bonuses! 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 Amanda Duffy has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Amanda Duffy 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 bargaining power of channel partners
– Because of the regulatory requirements, Pascale Lapointe-Antunes, Deborah McPhee suggests that, Amanda Duffy is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on 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 Amanda Duffy supply chain. Even after few cautionary changes mentioned in the HBR case study - Houston We Have A Problem: They Paid Themselves Bonuses!, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Amanda Duffy vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Houston We Have A Problem: They Paid Themselves Bonuses!, is just above the industry average. Amanda Duffy 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, Amanda Duffy 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 Houston We Have A Problem: They Paid Themselves Bonuses! | 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 Houston We Have A Problem: They Paid Themselves Bonuses! are -
Better consumer reach
– The expansion of the 5G network will help Amanda Duffy to increase its market reach. Amanda Duffy 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.
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. Amanda Duffy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amanda Duffy is facing challenges because of the dominance of functional experts in the organization. Houston We Have A Problem: They Paid Themselves Bonuses! 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.
Manufacturing automation
– Amanda Duffy can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amanda Duffy can use these opportunities to build new business models that can help the communities that Amanda Duffy operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Building a culture of innovation
– managers at Amanda Duffy 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.
Developing new processes and practices
– Amanda Duffy 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.
Learning at scale
– Online learning technologies has now opened space for Amanda Duffy 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.
Loyalty marketing
– Amanda Duffy 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amanda Duffy 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 Amanda Duffy to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Amanda Duffy 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.
Buying journey improvements
– Amanda Duffy can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Houston We Have A Problem: They Paid Themselves Bonuses! 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
– Amanda Duffy 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.
Threats Houston We Have A Problem: They Paid Themselves Bonuses! External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Houston We Have A Problem: They Paid Themselves Bonuses! are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amanda Duffy 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 Houston We Have A Problem: They Paid Themselves Bonuses! .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amanda Duffy 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amanda Duffy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Amanda Duffy 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Amanda Duffy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Amanda Duffy has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Amanda Duffy 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.
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 Amanda Duffy.
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 Amanda Duffy business can come under increasing regulations regarding data privacy, data security, 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. Amanda Duffy needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– Amanda Duffy 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.
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.
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.
Stagnating economy with rate increase
– Amanda Duffy 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.
Weighted SWOT Analysis of Houston We Have A Problem: They Paid Themselves Bonuses! 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 Houston We Have A Problem: They Paid Themselves Bonuses! 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 Houston We Have A Problem: They Paid Themselves Bonuses! 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 Houston We Have A Problem: They Paid Themselves Bonuses! 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 Houston We Have A Problem: They Paid Themselves Bonuses! 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 Amanda Duffy needs to make to build a sustainable competitive advantage.
