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 - – competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, 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 -
Effective Research and Development (R&D)
– Berkshire Intercorporate 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 Berkshire Hathaway Inc.-Intercorporate Investments (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Training and development
– Berkshire Intercorporate has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Berkshire Hathaway Inc.-Intercorporate Investments (B) 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
– 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.
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.
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.
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.
Innovation driven organization
– Berkshire Intercorporate is one of the most innovative firm in sector. Manager in Berkshire Hathaway Inc.-Intercorporate Investments (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Berkshire Intercorporate has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Berkshire Intercorporate to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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 -
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B), is just above the industry average. Berkshire Intercorporate needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Berkshire Intercorporate 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. Berkshire Intercorporate 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.
Slow to strategic competitive environment developments
– As Berkshire Hathaway Inc.-Intercorporate Investments (B) HBR case study mentions - Berkshire Intercorporate 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 cash cycle compare to competitors
Berkshire Intercorporate 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.
Aligning sales with marketing
– It come across in the case study Berkshire Hathaway Inc.-Intercorporate Investments (B) 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 Berkshire Hathaway Inc.-Intercorporate Investments (B) can leverage the sales team experience to cultivate customer relationships as Berkshire Intercorporate is planning to shift buying processes online.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Berkshire Hathaway Inc.-Intercorporate Investments (B) 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 Berkshire Intercorporate 's lucrative customers.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Berkshire Intercorporate 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.
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.
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 -
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.
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.
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 Berkshire Intercorporate in the consumer business. Now Berkshire Intercorporate can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Berkshire Intercorporate can use these opportunities to build new business models that can help the communities that Berkshire Intercorporate operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
Better consumer reach
– The expansion of the 5G network will help Berkshire Intercorporate to increase its market reach. Berkshire Intercorporate 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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Berkshire Intercorporate 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.
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. Berkshire Intercorporate can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Berkshire Intercorporate 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, Berkshire Hathaway Inc.-Intercorporate Investments (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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 -
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Berkshire Hathaway Inc.-Intercorporate Investments (B), Berkshire Intercorporate 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 .
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.
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.
Stagnating economy with rate increase
– Berkshire Intercorporate 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 Berkshire Intercorporate business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Berkshire Intercorporate 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.
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) .
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Berkshire Intercorporate.
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.
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.
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.
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.