Taxing Situations: Two Cases on Income Taxes and Financial Reporting SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Taxing Situations: Two Cases on Income Taxes and Financial Reporting
Two whimsical situations are described to provide illustrations of situations where income taxes paid differ from the income tax expense that might be included in financial reports. In addition to illustrating that financial reported income may differ from taxable income, the case contains data, to allow students to discover the reasons for and nature of a deferred tax account.
Authors :: William J. Bruns Jr., Susan S. Harmeling
Swot Analysis of "Taxing Situations: Two Cases on Income Taxes and Financial Reporting" written by William J. Bruns Jr., Susan S. Harmeling includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Income Situations facing as an external strategic factors. Some of the topics covered in Taxing Situations: Two Cases on Income Taxes and Financial Reporting case study are - Strategic Management Strategies, Financial management, Policy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Taxing Situations: Two Cases on Income Taxes and Financial Reporting casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, geopolitical disruptions, technology disruption, increasing commodity prices, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google,
there is increasing trade war between United States & China, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Taxing Situations: Two Cases on Income Taxes and Financial Reporting
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taxing Situations: Two Cases on Income Taxes and Financial Reporting case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Income Situations, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Income Situations 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting can be done for the following purposes –
1. Strategic planning using facts provided in Taxing Situations: Two Cases on Income Taxes and Financial Reporting case study
2. Improving business portfolio management of Income Situations
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 Income Situations
Strengths Taxing Situations: Two Cases on Income Taxes and Financial Reporting | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Income Situations in Taxing Situations: Two Cases on Income Taxes and Financial Reporting Harvard Business Review case study are -
Strong track record of project management
– Income Situations 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 Income Situations 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.
Operational resilience
– The operational resilience strategy in the Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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.
Highly skilled collaborators
– Income Situations 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Income Situations
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Income Situations does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Income Situations has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Income Situations digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Income Situations 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.
Cross disciplinary teams
– Horizontal connected teams at the Income Situations are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Income Situations is present in almost all the verticals within the industry. This has provided firm in Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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.
Superior customer experience
– The customer experience strategy of Income Situations in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Taxing Situations: Two Cases on Income Taxes and Financial Reporting firm has clearly differentiated products in the market place. This has enabled Income Situations to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Income Situations to invest into research and development (R&D) and innovation.
Analytics focus
– Income Situations 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 William J. Bruns Jr., Susan S. Harmeling 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.
Weaknesses Taxing Situations: Two Cases on Income Taxes and Financial Reporting | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taxing Situations: Two Cases on Income Taxes and Financial Reporting are -
No frontier risks strategy
– After analyzing the HBR case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting, 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.
High cash cycle compare to competitors
Income Situations 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.
Low market penetration in new markets
– Outside its home market of Income Situations, firm in the HBR case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Income Situations has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Income Situations is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Income Situations needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Income Situations to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting, it seems that the employees of Income Situations 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, Income Situations 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.
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 Income Situations supply chain. Even after few cautionary changes mentioned in the HBR case study - Taxing Situations: Two Cases on Income Taxes and Financial Reporting, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Income Situations vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Taxing Situations: Two Cases on Income Taxes and Financial Reporting HBR case study mentions - Income Situations 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 Income Situations products
– To increase the profitability and margins on the products, Income Situations needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Income Situations 's lucrative customers.
Opportunities Taxing Situations: Two Cases on Income Taxes and Financial Reporting | 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting are -
Better consumer reach
– The expansion of the 5G network will help Income Situations to increase its market reach. Income Situations 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.
Building a culture of innovation
– managers at Income Situations 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Income Situations 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, Taxing Situations: Two Cases on Income Taxes and Financial Reporting, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Income Situations can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Income Situations can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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. Income Situations can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Income Situations has opened avenues for new revenue streams for the organization in the industry. This can help Income Situations to build a more holistic ecosystem as suggested in the Taxing Situations: Two Cases on Income Taxes and Financial Reporting case study. Income Situations can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Income Situations can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Income Situations 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
– Income Situations 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Income Situations can use these opportunities to build new business models that can help the communities that Income Situations operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Income Situations can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Income Situations 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Income Situations is facing challenges because of the dominance of functional experts in the organization. Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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.
Threats Taxing Situations: Two Cases on Income Taxes and Financial Reporting External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Taxing Situations: Two Cases on Income Taxes and Financial Reporting, Income Situations may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– Income Situations 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. Income Situations can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Income Situations can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Income Situations 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting .
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 Income Situations in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Income Situations
– 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 Income Situations.
Technology acceleration in Forth Industrial Revolution
– Income Situations has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Income Situations 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.
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 Income Situations business can come under increasing regulations regarding data privacy, data security, etc.
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 Income Situations.
Consumer confidence and its impact on Income Situations 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
– Income Situations 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.
Weighted SWOT Analysis of Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Taxing Situations: Two Cases on Income Taxes and Financial Reporting 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 Income Situations needs to make to build a sustainable competitive advantage.