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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing commodity prices, technology disruption, geopolitical disruptions, increasing transportation and logistics costs,
competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, 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 -
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.
Organizational Resilience of Dofasco Intangible
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dofasco Intangible 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
– 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.
Operational resilience
– The operational resilience strategy in the Measuring Impairment at Dofasco 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.
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.
Training and development
– Dofasco Intangible has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Measuring Impairment at Dofasco 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
– 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.
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.
Successful track record of launching new products
– Dofasco Intangible has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dofasco Intangible 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.
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.
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.
Learning organization
- Dofasco Intangible 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 Dofasco Intangible is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Measuring Impairment at Dofasco Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
Slow to strategic competitive environment developments
– As Measuring Impairment at Dofasco HBR case study mentions - Dofasco Intangible 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.
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.
Need for greater diversity
– Dofasco Intangible 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Measuring Impairment at Dofasco, in the dynamic environment Dofasco Intangible has struggled to respond to the nimble upstart competition. Dofasco Intangible has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Low market penetration in new markets
– Outside its home market of Dofasco Intangible, firm in the HBR case study Measuring Impairment at Dofasco needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Dofasco Intangible 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.
Aligning sales with marketing
– It come across in the case study Measuring Impairment at Dofasco 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 Measuring Impairment at Dofasco can leverage the sales team experience to cultivate customer relationships as Dofasco Intangible is planning to shift buying processes online.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Measuring Impairment at Dofasco 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 Dofasco Intangible has relatively successful track record of launching new products.
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 -
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Dofasco Intangible can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dofasco Intangible can use these opportunities to build new business models that can help the communities that Dofasco Intangible operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Dofasco Intangible 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dofasco Intangible 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
– 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.
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.
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.
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.
Building a culture of innovation
– managers at Dofasco Intangible 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dofasco Intangible can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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 -
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.
Regulatory challenges
– Dofasco Intangible 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Measuring Impairment at Dofasco, Dofasco Intangible 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dofasco Intangible in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology 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.
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.
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.
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 Dofasco Intangible business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
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.
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.