Case Study Description of Measuring Impairment at Dofasco
In December 2008, the ArcelorMittal Dofasco (Dofasco) accounting team was facing a significant challenge. In the past few years, Dofasco had undergone significant ownership changes, and when the firm had first been acquired the market had placed a premium share value on the Dofasco subsidiary. In light of a recent economic downturn, the accounting team was required to reassess the values assigned to the subsidiary's net assets. Dismal forecasted earnings for the operations indicated a potential impairment of the operation's assets under international financial reporting standards (IFRS). The team began with a review of the original fair value estimates, subsequent purchase price and its allocation to various tangible and intangible assets and liabilities. It was discovered the evaluator's fair value assessments for the various intangibles had relied on an income approach, using projected EBITDA derived from each intangible to determine its value. The team wondered how the revised EBITDA projections would change the recoverable value of Dofasco's intangible assets and therefore discover the implications of the current economic situation on the value of intangible assets recognized at Dofasco's acquisition.
Swot Analysis of "Measuring Impairment at Dofasco" written by Mary-Jane Mastrandrea includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dofasco Intangible facing as an external strategic factors. Some of the topics covered in Measuring Impairment at Dofasco case study are - Strategic Management Strategies, Financial analysis, Intellectual property and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Measuring Impairment at Dofasco casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing transportation and logistics costs, geopolitical disruptions, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs,
increasing government debt because of Covid-19 spendings, technology disruption, etc
Introduction to SWOT Analysis of Measuring Impairment at Dofasco
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Measuring Impairment at Dofasco case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dofasco Intangible, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dofasco Intangible 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 Measuring Impairment at Dofasco can be done for the following purposes –
1. Strategic planning using facts provided in Measuring Impairment at Dofasco case study
2. Improving business portfolio management of Dofasco Intangible
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 Dofasco Intangible
Strengths Measuring Impairment at Dofasco | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dofasco Intangible in Measuring Impairment at Dofasco Harvard Business Review case study are -
Diverse revenue streams
– Dofasco Intangible is present in almost all the verticals within the industry. This has provided firm in Measuring Impairment at Dofasco 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.
Ability to recruit top talent
– Dofasco Intangible is one of the leading recruiters in the industry. Managers in the Measuring Impairment at Dofasco are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Dofasco Intangible is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Dofasco Intangible 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 Mary-Jane Mastrandrea 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Dofasco Intangible digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dofasco Intangible 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
– Dofasco Intangible 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 Dofasco Intangible in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Dofasco Intangible 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.
Low bargaining power of suppliers
– Suppliers of Dofasco Intangible in the sector have low bargaining power. Measuring Impairment at Dofasco has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dofasco Intangible to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Dofasco Intangible has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dofasco Intangible to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Dofasco Intangible in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Dofasco Intangible is one of the most innovative firm in sector. Manager in Measuring Impairment at Dofasco Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Dofasco Intangible 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 Measuring Impairment at Dofasco - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Measuring Impairment at Dofasco | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Measuring Impairment at Dofasco are -
Lack of clear differentiation of Dofasco Intangible products
– To increase the profitability and margins on the products, Dofasco Intangible 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, Mary-Jane Mastrandrea suggests that, Dofasco Intangible 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dofasco Intangible is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Measuring Impairment at Dofasco can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Dofasco Intangible 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. Dofasco Intangible 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.
No frontier risks strategy
– After analyzing the HBR case study Measuring Impairment at Dofasco, 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.
Skills based hiring
– The stress on hiring functional specialists at Dofasco Intangible 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.
Products dominated business model
– Even though Dofasco Intangible 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 - Measuring Impairment at Dofasco should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Dofasco Intangible 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.
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 Dofasco Intangible supply chain. Even after few cautionary changes mentioned in the HBR case study - Measuring Impairment at Dofasco, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dofasco Intangible vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Dofasco Intangible 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 Dofasco Intangible is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Dofasco Intangible needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dofasco Intangible to focus more on services rather than just following the product oriented approach.
Opportunities Measuring Impairment at Dofasco | 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 Measuring Impairment at Dofasco are -
Loyalty marketing
– Dofasco Intangible 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.
Manufacturing automation
– Dofasco Intangible 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.
Using analytics as competitive advantage
– Dofasco Intangible 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 Measuring Impairment at Dofasco - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dofasco Intangible 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 Dofasco Intangible 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.
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. Dofasco Intangible 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 Dofasco Intangible 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.
Leveraging digital technologies
– Dofasco Intangible 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dofasco Intangible is facing challenges because of the dominance of functional experts in the organization. Measuring Impairment at Dofasco 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.
Better consumer reach
– The expansion of the 5G network will help Dofasco Intangible to increase its market reach. Dofasco Intangible 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.
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 Dofasco Intangible in the consumer business. Now Dofasco Intangible can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Dofasco Intangible can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Measuring Impairment at Dofasco 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.
Learning at scale
– Online learning technologies has now opened space for Dofasco Intangible 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dofasco Intangible 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 Dofasco Intangible to hire the very best people irrespective of their geographical location.
Threats Measuring Impairment at Dofasco External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Measuring Impairment at Dofasco are -
Technology acceleration in Forth Industrial Revolution
– Dofasco Intangible has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Dofasco Intangible 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.
Stagnating economy with rate increase
– Dofasco Intangible 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.
Shortening product life cycle
– it is one of the major threat that Dofasco Intangible is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Dofasco Intangible needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Dofasco Intangible 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dofasco Intangible with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Consumer confidence and its impact on Dofasco Intangible 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.
Increasing wage structure of Dofasco Intangible
– 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 Dofasco Intangible.
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 Dofasco Intangible.
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 Dofasco Intangible in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Dofasco Intangible needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Dofasco Intangible can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Dofasco Intangible 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 Measuring Impairment at Dofasco 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 Measuring Impairment at Dofasco 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 Measuring Impairment at Dofasco 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 Measuring Impairment at Dofasco 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 Measuring Impairment at Dofasco 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 Dofasco Intangible needs to make to build a sustainable competitive advantage.