Case Study Description of Fortune Minerals - Adoption of IFRS
The controller of a publicly traded mining company must make a series of recommendations the chief executive officer and chief financial officer of the company as the company prepares to adopt international financial reporting standards (IFRS). Major decisions revolve around accounting for the company's fixed assets and mining properties. Specifically whether to capitalize or expense certain items, whether to record certain assets at their values of historical costs, the company's depreciation policy and other issues around impairments of capital assets. The controller also considers the recent IASB discussion paper on accounting for extractive resources and possible implications to the company going forward.
Swot Analysis of "Fortune Minerals - Adoption of IFRS" written by Melissa Jean, Chris Sturby includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Controller Ifrs facing as an external strategic factors. Some of the topics covered in Fortune Minerals - Adoption of IFRS case study are - Strategic Management Strategies, Financial management, International business and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Fortune Minerals - Adoption of IFRS casestudy better are - – increasing government debt because of Covid-19 spendings, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing household debt because of falling income levels,
central banks are concerned over increasing inflation, increasing energy prices, etc
Introduction to SWOT Analysis of Fortune Minerals - Adoption of IFRS
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fortune Minerals - Adoption of IFRS case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Controller Ifrs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Controller Ifrs 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 Fortune Minerals - Adoption of IFRS can be done for the following purposes –
1. Strategic planning using facts provided in Fortune Minerals - Adoption of IFRS case study
2. Improving business portfolio management of Controller Ifrs
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 Controller Ifrs
Strengths Fortune Minerals - Adoption of IFRS | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Controller Ifrs in Fortune Minerals - Adoption of IFRS Harvard Business Review case study are -
Highly skilled collaborators
– Controller Ifrs 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 Fortune Minerals - Adoption of IFRS HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Controller Ifrs 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 Controller Ifrs is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fortune Minerals - Adoption of IFRS Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Controller Ifrs 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 Controller Ifrs 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.
Diverse revenue streams
– Controller Ifrs is present in almost all the verticals within the industry. This has provided firm in Fortune Minerals - Adoption of IFRS 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.
High brand equity
– Controller Ifrs has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Controller Ifrs to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Fortune Minerals - Adoption of IFRS firm has clearly differentiated products in the market place. This has enabled Controller Ifrs to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Controller Ifrs to invest into research and development (R&D) and innovation.
Organizational Resilience of Controller Ifrs
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Controller Ifrs does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Fortune Minerals - Adoption of IFRS 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.
Effective Research and Development (R&D)
– Controller Ifrs 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 Fortune Minerals - Adoption of IFRS - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Controller Ifrs has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fortune Minerals - Adoption of IFRS 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.
Ability to recruit top talent
– Controller Ifrs is one of the leading recruiters in the industry. Managers in the Fortune Minerals - Adoption of IFRS are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Fortune Minerals - Adoption of IFRS | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fortune Minerals - Adoption of IFRS are -
High cash cycle compare to competitors
Controller Ifrs 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.
Skills based hiring
– The stress on hiring functional specialists at Controller Ifrs 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.
No frontier risks strategy
– After analyzing the HBR case study Fortune Minerals - Adoption of IFRS, 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.
Increasing silos among functional specialists
– The organizational structure of Controller Ifrs is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Controller Ifrs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Controller Ifrs to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fortune Minerals - Adoption of IFRS, it seems that the employees of Controller Ifrs 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Fortune Minerals - Adoption of IFRS 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 Controller Ifrs 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fortune Minerals - Adoption of IFRS, in the dynamic environment Controller Ifrs has struggled to respond to the nimble upstart competition. Controller Ifrs has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Controller Ifrs products
– To increase the profitability and margins on the products, Controller Ifrs needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Fortune Minerals - Adoption of IFRS HBR case study mentions - Controller Ifrs 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 bargaining power of channel partners
– Because of the regulatory requirements, Melissa Jean, Chris Sturby suggests that, Controller Ifrs 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.
Low market penetration in new markets
– Outside its home market of Controller Ifrs, firm in the HBR case study Fortune Minerals - Adoption of IFRS needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Fortune Minerals - Adoption of IFRS | 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 Fortune Minerals - Adoption of IFRS are -
Creating value in data economy
– The success of analytics program of Controller Ifrs has opened avenues for new revenue streams for the organization in the industry. This can help Controller Ifrs to build a more holistic ecosystem as suggested in the Fortune Minerals - Adoption of IFRS case study. Controller Ifrs can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Controller Ifrs 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. Controller Ifrs 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Controller Ifrs is facing challenges because of the dominance of functional experts in the organization. Fortune Minerals - Adoption of IFRS 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.
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 Controller Ifrs in the consumer business. Now Controller Ifrs can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Controller Ifrs 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, Fortune Minerals - Adoption of IFRS, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Controller Ifrs can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fortune Minerals - Adoption of IFRS 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.
Better consumer reach
– The expansion of the 5G network will help Controller Ifrs to increase its market reach. Controller Ifrs 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.
Manufacturing automation
– Controller Ifrs 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Controller Ifrs 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 Controller Ifrs to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Controller Ifrs can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Controller Ifrs 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.
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. Controller Ifrs can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Controller Ifrs 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.
Threats Fortune Minerals - Adoption of IFRS External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fortune Minerals - Adoption of IFRS are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Controller Ifrs with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Controller Ifrs 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 Fortune Minerals - Adoption of IFRS .
Technology acceleration in Forth Industrial Revolution
– Controller Ifrs has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Controller Ifrs 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.
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 Fortune Minerals - Adoption of IFRS, Controller Ifrs 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 .
Stagnating economy with rate increase
– Controller Ifrs 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 Controller Ifrs business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Controller Ifrs
– 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 Controller Ifrs.
High dependence on third party suppliers
– Controller Ifrs 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.
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 Controller Ifrs in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Controller Ifrs is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Controller Ifrs 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.
Environmental challenges
– Controller Ifrs 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. Controller Ifrs can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Fortune Minerals - Adoption of IFRS 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 Fortune Minerals - Adoption of IFRS 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 Fortune Minerals - Adoption of IFRS 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 Fortune Minerals - Adoption of IFRS 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 Fortune Minerals - Adoption of IFRS 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 Controller Ifrs needs to make to build a sustainable competitive advantage.
