Case Study Description of Berkshire Hathaway Inc.-Intercorporate Investments (B)
This case can be used as a supplement to "Berkshire Hathaway Inc.-Intercorporate Investments (A). Students are presented with hypothetical data related to one of Berkshire Hathaway's investments and asked to compare the financial statement impacts of the investment if it is classified as an available-for-sale security with the impacts if classified as a trading security.
Swot Analysis of "Berkshire Hathaway Inc.-Intercorporate Investments (B)" written by Luann J. Lynch includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Berkshire Intercorporate facing as an external strategic factors. Some of the topics covered in Berkshire Hathaway Inc.-Intercorporate Investments (B) case study are - Strategic Management Strategies, Financial markets and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Berkshire Hathaway Inc.-Intercorporate Investments (B) casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, increasing commodity prices, central banks are concerned over increasing inflation, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Berkshire Hathaway Inc.-Intercorporate Investments (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Berkshire Hathaway Inc.-Intercorporate Investments (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Berkshire Intercorporate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Berkshire Intercorporate operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Berkshire Hathaway Inc.-Intercorporate Investments (B) can be done for the following purposes –
1. Strategic planning using facts provided in Berkshire Hathaway Inc.-Intercorporate Investments (B) case study
2. Improving business portfolio management of Berkshire Intercorporate
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 Berkshire Intercorporate
Strengths Berkshire Hathaway Inc.-Intercorporate Investments (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Berkshire Intercorporate in Berkshire Hathaway Inc.-Intercorporate Investments (B) Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Berkshire Hathaway Inc.-Intercorporate Investments (B) firm has clearly differentiated products in the market place. This has enabled Berkshire Intercorporate to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Berkshire Intercorporate to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Berkshire Intercorporate digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Berkshire Intercorporate 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.
Analytics focus
– Berkshire Intercorporate 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 Luann J. Lynch 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.
Organizational Resilience of Berkshire Intercorporate
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Berkshire Intercorporate does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Finance & Accounting field
– Berkshire Intercorporate 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 Berkshire Intercorporate in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Berkshire Intercorporate has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Berkshire Hathaway Inc.-Intercorporate Investments (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Berkshire Intercorporate has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Berkshire Intercorporate 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.
Ability to recruit top talent
– Berkshire Intercorporate is one of the leading recruiters in the industry. Managers in the Berkshire Hathaway Inc.-Intercorporate Investments (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Berkshire Intercorporate is present in almost all the verticals within the industry. This has provided firm in Berkshire Hathaway Inc.-Intercorporate Investments (B) 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.
Learning organization
- Berkshire Intercorporate 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 Berkshire Intercorporate is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Berkshire Hathaway Inc.-Intercorporate Investments (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Berkshire Intercorporate is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Berkshire Intercorporate 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 Berkshire Hathaway Inc.-Intercorporate Investments (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Berkshire Hathaway Inc.-Intercorporate Investments (B) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Berkshire Intercorporate is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Berkshire Hathaway Inc.-Intercorporate Investments (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Berkshire Intercorporate 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.
Capital Spending Reduction
– Even during the low interest decade, Berkshire Intercorporate 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.
Interest costs
– Compare to the competition, Berkshire Intercorporate 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.
Lack of clear differentiation of Berkshire Intercorporate products
– To increase the profitability and margins on the products, Berkshire Intercorporate needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Berkshire Intercorporate is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Berkshire Intercorporate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Berkshire Intercorporate to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B), 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.
Need for greater diversity
– Berkshire Intercorporate has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B), it seems that the employees of Berkshire Intercorporate 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Berkshire Hathaway Inc.-Intercorporate Investments (B) 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 Berkshire Intercorporate has relatively successful track record of launching new products.
Products dominated business model
– Even though Berkshire Intercorporate 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 - Berkshire Hathaway Inc.-Intercorporate Investments (B) should strive to include more intangible value offerings along with its core products and services.
Opportunities Berkshire Hathaway Inc.-Intercorporate Investments (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Berkshire Hathaway Inc.-Intercorporate Investments (B) are -
Creating value in data economy
– The success of analytics program of Berkshire Intercorporate has opened avenues for new revenue streams for the organization in the industry. This can help Berkshire Intercorporate to build a more holistic ecosystem as suggested in the Berkshire Hathaway Inc.-Intercorporate Investments (B) case study. Berkshire Intercorporate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Berkshire Intercorporate can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Berkshire Hathaway Inc.-Intercorporate Investments (B) 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.
Developing new processes and practices
– Berkshire Intercorporate 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.
Building a culture of innovation
– managers at Berkshire Intercorporate 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Berkshire Intercorporate is facing challenges because of the dominance of functional experts in the organization. Berkshire Hathaway Inc.-Intercorporate Investments (B) 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.
Leveraging digital technologies
– Berkshire Intercorporate 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.
Using analytics as competitive advantage
– Berkshire Intercorporate has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Berkshire Hathaway Inc.-Intercorporate Investments (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Berkshire Intercorporate to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Berkshire Intercorporate 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.
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 Berkshire Intercorporate 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Berkshire Intercorporate 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.
Loyalty marketing
– Berkshire Intercorporate 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 Berkshire Intercorporate 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 Berkshire Intercorporate 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 Berkshire Intercorporate can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Berkshire Hathaway Inc.-Intercorporate Investments (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B) are -
Consumer confidence and its impact on Berkshire Intercorporate 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.
Regulatory challenges
– Berkshire Intercorporate 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.
Increasing wage structure of Berkshire Intercorporate
– 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 Berkshire Intercorporate.
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 Berkshire Intercorporate in the Finance & Accounting sector and impact the bottomline of the organization.
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. Berkshire Intercorporate can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Berkshire Intercorporate needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Berkshire Intercorporate will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Berkshire Intercorporate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Berkshire Intercorporate has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Berkshire Intercorporate 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.
High dependence on third party suppliers
– Berkshire Intercorporate 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.
Shortening product life cycle
– it is one of the major threat that Berkshire Intercorporate is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Berkshire Intercorporate can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B) .
Weighted SWOT Analysis of Berkshire Hathaway Inc.-Intercorporate Investments (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Berkshire Hathaway Inc.-Intercorporate Investments (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Berkshire Hathaway Inc.-Intercorporate Investments (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Berkshire Hathaway Inc.-Intercorporate Investments (B) 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 Berkshire Intercorporate needs to make to build a sustainable competitive advantage.