The Talbots, Inc., and Subsidiaries: Accounting for Goodwill SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Talbots, Inc., and Subsidiaries: Accounting for Goodwill
When students have the English-language PDF of this Brief Case in a coursepack, they will also have the option to purchase an audio version.In 2006, Talbots, Inc., a specialty women's retailer, purchased a competitor, J. Jill. The transaction created a large goodwill account along with accounts for trademarks and other intangible assets. Using prevailing accounting standards (Statement of Financial Accounting Standards No. 142), Talbots determined that the goodwill was not impaired in its Fiscal Year 2007 and it was carried forward at its purchase cost. However, one year later Talbots found the goodwill impaired, along with the trademarks and some store assets acquired from J. Jill in 2006, and these impairments were deducted from revenues in Fiscal Year 2008. Case includes financial statements.
Swot Analysis of "The Talbots, Inc., and Subsidiaries: Accounting for Goodwill" written by William J. Bruns Jr. includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Talbots Goodwill facing as an external strategic factors. Some of the topics covered in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The Talbots, Inc., and Subsidiaries: Accounting for Goodwill casestudy better are - – wage bills are increasing, technology disruption, increasing energy prices, increasing commodity prices, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of The Talbots, Inc., and Subsidiaries: Accounting for Goodwill
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Talbots Goodwill, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Talbots Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill can be done for the following purposes –
1. Strategic planning using facts provided in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill case study
2. Improving business portfolio management of Talbots Goodwill
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 Talbots Goodwill
Strengths The Talbots, Inc., and Subsidiaries: Accounting for Goodwill | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Talbots Goodwill in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– The Talbots, Inc., and Subsidiaries: Accounting for Goodwill firm has clearly differentiated products in the market place. This has enabled Talbots Goodwill to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Talbots Goodwill to invest into research and development (R&D) and innovation.
Innovation driven organization
– Talbots Goodwill is one of the most innovative firm in sector. Manager in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Talbots Goodwill in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Talbots Goodwill is one of the leading recruiters in the industry. Managers in the The Talbots, Inc., and Subsidiaries: Accounting for Goodwill are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Talbots Goodwill 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.
Diverse revenue streams
– Talbots Goodwill is present in almost all the verticals within the industry. This has provided firm in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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
– Talbots Goodwill has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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.
Organizational Resilience of Talbots Goodwill
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Talbots Goodwill does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Talbots Goodwill 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.
Operational resilience
– The operational resilience strategy in the The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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.
Learning organization
- Talbots Goodwill 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 Talbots Goodwill is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Talbots, Inc., and Subsidiaries: Accounting for Goodwill Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Talbots Goodwill has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Talbots Goodwill 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.
Weaknesses The Talbots, Inc., and Subsidiaries: Accounting for Goodwill | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Talbots, Inc., and Subsidiaries: Accounting for Goodwill are -
Low market penetration in new markets
– Outside its home market of Talbots Goodwill, firm in the HBR case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Talbots Goodwill 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.
No frontier risks strategy
– After analyzing the HBR case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill, 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.
Slow to strategic competitive environment developments
– As The Talbots, Inc., and Subsidiaries: Accounting for Goodwill HBR case study mentions - Talbots Goodwill 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 operating costs
– Compare to the competitors, firm in the HBR case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 Talbots Goodwill 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill, in the dynamic environment Talbots Goodwill has struggled to respond to the nimble upstart competition. Talbots Goodwill has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill can leverage the sales team experience to cultivate customer relationships as Talbots Goodwill is planning to shift buying processes online.
Lack of clear differentiation of Talbots Goodwill products
– To increase the profitability and margins on the products, Talbots Goodwill needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill, it seems that the employees of Talbots Goodwill 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.
Capital Spending Reduction
– Even during the low interest decade, Talbots Goodwill 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.
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 Talbots Goodwill supply chain. Even after few cautionary changes mentioned in the HBR case study - The Talbots, Inc., and Subsidiaries: Accounting for Goodwill, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Talbots Goodwill vulnerable to further global disruptions in South East Asia.
Opportunities The Talbots, Inc., and Subsidiaries: Accounting for Goodwill | 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill are -
Developing new processes and practices
– Talbots Goodwill 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.
Using analytics as competitive advantage
– Talbots Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Talbots Goodwill to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Talbots Goodwill 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.
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. Talbots Goodwill 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. Talbots Goodwill 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Talbots Goodwill is facing challenges because of the dominance of functional experts in the organization. The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 Talbots Goodwill 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.
Building a culture of innovation
– managers at Talbots Goodwill 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.
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. Talbots Goodwill 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 Talbots Goodwill has opened avenues for new revenue streams for the organization in the industry. This can help Talbots Goodwill to build a more holistic ecosystem as suggested in the The Talbots, Inc., and Subsidiaries: Accounting for Goodwill case study. Talbots Goodwill can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Talbots Goodwill 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.
Leveraging digital technologies
– Talbots Goodwill 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.
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. Talbots Goodwill can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Talbots Goodwill 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.
Threats The Talbots, Inc., and Subsidiaries: Accounting for Goodwill External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Talbots Goodwill 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.
High dependence on third party suppliers
– Talbots Goodwill 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.
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. Talbots Goodwill can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Talbots Goodwill.
Technology acceleration in Forth Industrial Revolution
– Talbots Goodwill has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Talbots Goodwill 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Talbots, Inc., and Subsidiaries: Accounting for Goodwill, Talbots Goodwill 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 .
Increasing wage structure of Talbots Goodwill
– 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 Talbots Goodwill.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Talbots Goodwill with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Talbots Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill .
Environmental challenges
– Talbots Goodwill 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. Talbots Goodwill can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Talbots Goodwill business can come under increasing regulations regarding data privacy, data security, etc.
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.
Weighted SWOT Analysis of The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 The Talbots, Inc., and Subsidiaries: Accounting for Goodwill 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 Talbots Goodwill needs to make to build a sustainable competitive advantage.