Accounting for Faulty Ignition Switches at General Motors Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of Accounting for Faulty Ignition Switches at General Motors Company
On January 31, 2014, the chief executive officer (CEO) of General Motors (GM), a major automaker located in Detroit, Michigan, must decide whether to issue a recall based on a defect that had been found through an internal safety committee investigation. The ignition switch of certain GM small car models manufactured between 2005 and 2007 was prone to being nudged out of the run position, causing the driver to lose control as the engine would switch off mid-drive, disabling power steering and preventing air bags from being deployed in the case of a collision. If she decided to issue a recall, the CEO needed to consider which car models to include, as well as whether to offer any additional compensation to drivers. Not only would a recall have potential legal and public relations repercussions, but it would present the company with potential future costs. She needed to consider the accounting implications of these contingencies.
Swot Analysis of "Accounting for Faulty Ignition Switches at General Motors Company" written by Darren Henderson, Julia Cutt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Recall Ignition facing as an external strategic factors. Some of the topics covered in Accounting for Faulty Ignition Switches at General Motors Company case study are - Strategic Management Strategies, Crisis management, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Accounting for Faulty Ignition Switches at General Motors Company casestudy better are - – talent flight as more people leaving formal jobs, there is backlash against globalization, increasing transportation and logistics costs, technology disruption, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models,
customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Accounting for Faulty Ignition Switches at General Motors Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Accounting for Faulty Ignition Switches at General Motors Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Recall Ignition, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company can be done for the following purposes –
1. Strategic planning using facts provided in Accounting for Faulty Ignition Switches at General Motors Company case study
2. Improving business portfolio management of Recall Ignition
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 Recall Ignition
Strengths Accounting for Faulty Ignition Switches at General Motors Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Recall Ignition in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study are -
Organizational Resilience of Recall Ignition
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Recall Ignition does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Recall Ignition has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Recall Ignition to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Recall Ignition is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Recall Ignition in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Recall Ignition 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 Recall Ignition is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Accounting for Faulty Ignition Switches at General Motors Company firm has clearly differentiated products in the market place. This has enabled Recall Ignition to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Recall Ignition to invest into research and development (R&D) and innovation.
Strong track record of project management
– Recall Ignition is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Recall Ignition in the sector have low bargaining power. Accounting for Faulty Ignition Switches at General Motors Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Recall Ignition to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Recall Ignition are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Recall Ignition has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Accounting for Faulty Ignition Switches at General Motors Company 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.
Highly skilled collaborators
– Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Recall Ignition is one of the leading recruiters in the industry. Managers in the Accounting for Faulty Ignition Switches at General Motors Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Recall Ignition 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.
Weaknesses Accounting for Faulty Ignition Switches at General Motors Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Accounting for Faulty Ignition Switches at General Motors Company are -
High cash cycle compare to competitors
Recall Ignition 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.
Slow to strategic competitive environment developments
– As Accounting for Faulty Ignition Switches at General Motors Company HBR case study mentions - Recall Ignition 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Recall Ignition needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Recall Ignition 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Accounting for Faulty Ignition Switches at General Motors Company 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 Recall Ignition has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company can leverage the sales team experience to cultivate customer relationships as Recall Ignition is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Recall Ignition 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.
Interest costs
– Compare to the competition, Recall Ignition has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Accounting for Faulty Ignition Switches at General Motors Company, in the dynamic environment Recall Ignition has struggled to respond to the nimble upstart competition. Recall Ignition has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Recall Ignition has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Accounting for Faulty Ignition Switches at General Motors Company should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Recall Ignition, firm in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Accounting for Faulty Ignition Switches at General Motors Company | 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 Accounting for Faulty Ignition Switches at General Motors Company are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Recall Ignition 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 Recall Ignition to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Recall Ignition 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.
Leveraging digital technologies
– Recall Ignition 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.
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. Recall Ignition can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Recall Ignition 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Recall Ignition is facing challenges because of the dominance of functional experts in the organization. Accounting for Faulty Ignition Switches at General Motors Company 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.
Using analytics as competitive advantage
– Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Recall Ignition to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Recall Ignition can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Recall Ignition 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.
Manufacturing automation
– Recall Ignition 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.
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. Recall Ignition 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. Recall Ignition 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Recall Ignition can use these opportunities to build new business models that can help the communities that Recall Ignition operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Recall Ignition to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Accounting for Faulty Ignition Switches at General Motors Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company are -
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.
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 Recall Ignition in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Recall Ignition 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.
Technology acceleration in Forth Industrial Revolution
– Recall Ignition has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Recall Ignition 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.
Increasing wage structure of Recall Ignition
– 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 Recall Ignition.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Recall Ignition 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 Recall Ignition 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. Recall Ignition needs to understand the core reasons impacting the Finance & Accounting 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 Accounting for Faulty Ignition Switches at General Motors Company, Recall Ignition may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Regulatory challenges
– Recall Ignition 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.
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.
Consumer confidence and its impact on Recall Ignition 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.
Shortening product life cycle
– it is one of the major threat that Recall Ignition is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Recall Ignition needs to make to build a sustainable competitive advantage.
