Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies
A special purpose acquisition company (SPAC) is a blank check company that becomes incorporated and goes public with the intention of merging with or acquiring an undetermined company with the proceeds from an initial public offering (IPO). This process is often referred to as a "reverse IPO," as the company collects investor capital before acquiring, merging, or even selecting a target company. Because there are no assets or operations at the time of investment, investors are essentially wagering on the potential future performance of a management team. The optionality embedded within a SPAC allows public investors to enter into a unique and sometimes profitable investment vehicle that appears to have limited downside risk. However, SPACs actually pose numerous risks that may not be self-evident to all but the sophisticated investor. With a total of 228 SPACs raising $35.8 billion of capital since 2003, this increasingly popular investment vehicle warrants further discussion of these underlying risks.
Swot Analysis of "Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies" written by David P. Stowell, Deepa Pai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Spac Spacs facing as an external strategic factors. Some of the topics covered in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies case study are - Strategic Management Strategies, IPO and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies casestudy better are - – technology disruption, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Spac Spacs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Spac Spacs 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies can be done for the following purposes –
1. Strategic planning using facts provided in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies case study
2. Improving business portfolio management of Spac Spacs
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 Spac Spacs
Strengths Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Spac Spacs in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Spac Spacs in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Spac Spacs digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Spac Spacs 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.
Organizational Resilience of Spac Spacs
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Spac Spacs 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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.
Strong track record of project management
– Spac Spacs 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
– Spac Spacs is present in almost all the verticals within the industry. This has provided firm in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 switching costs
– The high switching costs that Spac Spacs 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.
High brand equity
– Spac Spacs has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Spac Spacs to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Spac Spacs has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Spac Spacs has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Spac Spacs has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Spac Spacs 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 David P. Stowell, Deepa Pai 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.
Ability to recruit top talent
– Spac Spacs is one of the leading recruiters in the industry. Managers in the Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies are -
Slow decision making process
– As mentioned earlier in the report, Spac Spacs 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. Spac Spacs 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.
Products dominated business model
– Even though Spac Spacs 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 - Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Spac Spacs 's lucrative customers.
Lack of clear differentiation of Spac Spacs products
– To increase the profitability and margins on the products, Spac Spacs needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, David P. Stowell, Deepa Pai suggests that, Spac Spacs 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 cash cycle compare to competitors
Spac Spacs 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Spac Spacs 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.
Increasing silos among functional specialists
– The organizational structure of Spac Spacs is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Spac Spacs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Spac Spacs to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies, in the dynamic environment Spac Spacs has struggled to respond to the nimble upstart competition. Spac Spacs has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Spac Spacs supply chain. Even after few cautionary changes mentioned in the HBR case study - Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Spac Spacs vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Spac Spacs 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.
Opportunities Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies | 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Spac Spacs 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
– Spac Spacs 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.
Leveraging digital technologies
– Spac Spacs 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. Spac Spacs can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Spac Spacs can use these opportunities to build new business models that can help the communities that Spac Spacs operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Better consumer reach
– The expansion of the 5G network will help Spac Spacs to increase its market reach. Spac Spacs 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Spac Spacs can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Spac Spacs has opened avenues for new revenue streams for the organization in the industry. This can help Spac Spacs to build a more holistic ecosystem as suggested in the Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies case study. Spac Spacs can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Spac Spacs 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Spac Spacs to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Spac Spacs is facing challenges because of the dominance of functional experts in the organization. Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Spac Spacs can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Spac Spacs 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. Spac Spacs 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. Spac Spacs can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies are -
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.
Shortening product life cycle
– it is one of the major threat that Spac Spacs is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies, Spac Spacs 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 .
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.
Stagnating economy with rate increase
– Spac Spacs can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology acceleration in Forth Industrial Revolution
– Spac Spacs has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Spac Spacs 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Spac Spacs with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Spac Spacs 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 Spac Spacs 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.
High dependence on third party suppliers
– Spac Spacs 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Spac Spacs 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies .
Consumer confidence and its impact on Spac Spacs 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.
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. Spac Spacs can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Technical Note: No Assets, No Products, No Business Plan: Risks Associated with Special Purpose Acquisition Companies 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 Spac Spacs needs to make to build a sustainable competitive advantage.
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