It was September 2013, and NOWaccount Network Corporation (NOWA®) co-founders John Hayes and Lara Hodgson were putting the final touches on the presentation deck for their annual shareholders' meeting. Along with co-founder Stacey Abrams, the pair had designed NOW's business model three years ago, and the company was at a critical juncture. NOW offered a program-called NOWaccount-that provided working capital to small businesses by converting their trade receivables almost immediately into cash. Founded in December 2010, Atlanta, Georgia-based NOW was serving clients in nine states. With 2013 year-to-date revenue of roughly $100,000, NOW was financed with $2.5 million of founder, and friends and family equity. NOW's wholly-owned, not-for-profit special purpose entity (SPE), Trade Credit Guaranty Corporation (TCGC), purchased approved receivables, funding 90% of the invoice face values by electronic transfers into clients' bank accounts. As of September 2013, TCGC had purchased more than $13 million of small business trade receivables from more than 40 clients. Once TCGC reached a scale of approximately $150 million of funds in use for receivable purchases, the co-founders planned to tap into the securitization market for capital by issuing asset-backed securities (ABS), collateralized by a pool of receivables, much like the credit card industry. ABS would provide TCGC ongoing capital at a lower cost. The question the co-founders confronted was whether they should get to the $150 million securitization threshold by piecing together smaller pools of capital from credit unions and possibly smaller banks (a slower approach but one that did not involve dilution because it was all debt finance), or by accepting larger chunks of capital from a major global bank and a private equity firm, getting them much closer to the threshold but at the cost of significant dilution (35%) as these financiers were also looking for a combination of equity and warrants in NOW. As they prepared to discuss their options at the shareholders' meeting, Hayes and Hodgson considered each option's trade-offs in timing, cost, control, and execution risk.
Authors :: Ramana Nanda, William A. Sahlman, Lauren Barley
Swot Analysis of "NOWaccount" written by Ramana Nanda, William A. Sahlman, Lauren Barley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tcgc Nowaccount facing as an external strategic factors. Some of the topics covered in NOWaccount case study are - Strategic Management Strategies, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the NOWaccount casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing commodity prices, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , geopolitical disruptions,
challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in NOWaccount case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tcgc Nowaccount, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tcgc Nowaccount 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 NOWaccount can be done for the following purposes –
1. Strategic planning using facts provided in NOWaccount case study
2. Improving business portfolio management of Tcgc Nowaccount
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 Tcgc Nowaccount
Strengths NOWaccount | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tcgc Nowaccount in NOWaccount Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Tcgc Nowaccount in the sector have low bargaining power. NOWaccount has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tcgc Nowaccount to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Tcgc Nowaccount 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 Tcgc Nowaccount is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in NOWaccount Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Tcgc Nowaccount digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tcgc Nowaccount 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.
High switching costs
– The high switching costs that Tcgc Nowaccount 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.
Successful track record of launching new products
– Tcgc Nowaccount has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tcgc Nowaccount 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.
Innovation driven organization
– Tcgc Nowaccount is one of the most innovative firm in sector. Manager in NOWaccount 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 Tcgc Nowaccount in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Tcgc Nowaccount is present in almost all the verticals within the industry. This has provided firm in NOWaccount 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.
High brand equity
– Tcgc Nowaccount has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tcgc Nowaccount to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Tcgc Nowaccount 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 Ramana Nanda, William A. Sahlman, Lauren Barley 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.
Effective Research and Development (R&D)
– Tcgc Nowaccount 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 NOWaccount - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Tcgc Nowaccount
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tcgc Nowaccount does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses NOWaccount | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of NOWaccount are -
Need for greater diversity
– Tcgc Nowaccount 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tcgc Nowaccount is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study NOWaccount can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Tcgc Nowaccount 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.
Products dominated business model
– Even though Tcgc Nowaccount 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 - NOWaccount should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study NOWaccount, in the dynamic environment Tcgc Nowaccount has struggled to respond to the nimble upstart competition. Tcgc Nowaccount has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Ramana Nanda, William A. Sahlman, Lauren Barley suggests that, Tcgc Nowaccount 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.
Lack of clear differentiation of Tcgc Nowaccount products
– To increase the profitability and margins on the products, Tcgc Nowaccount needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Tcgc Nowaccount is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Tcgc Nowaccount needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tcgc Nowaccount to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Tcgc Nowaccount has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Tcgc Nowaccount 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. Tcgc Nowaccount 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.
High operating costs
– Compare to the competitors, firm in the HBR case study NOWaccount 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 Tcgc Nowaccount 's lucrative customers.
Opportunities NOWaccount | 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 NOWaccount are -
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 Tcgc Nowaccount in the consumer business. Now Tcgc Nowaccount can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Tcgc Nowaccount 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.
Leveraging digital technologies
– Tcgc Nowaccount 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.
Better consumer reach
– The expansion of the 5G network will help Tcgc Nowaccount to increase its market reach. Tcgc Nowaccount 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.
Loyalty marketing
– Tcgc Nowaccount 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.
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 Tcgc Nowaccount 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tcgc Nowaccount is facing challenges because of the dominance of functional experts in the organization. NOWaccount 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.
Manufacturing automation
– Tcgc Nowaccount 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.
Building a culture of innovation
– managers at Tcgc Nowaccount 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.
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. Tcgc Nowaccount can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tcgc Nowaccount 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 Tcgc Nowaccount to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Tcgc Nowaccount has opened avenues for new revenue streams for the organization in the industry. This can help Tcgc Nowaccount to build a more holistic ecosystem as suggested in the NOWaccount case study. Tcgc Nowaccount can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Tcgc Nowaccount can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. NOWaccount 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.
Threats NOWaccount External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study NOWaccount 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 Tcgc Nowaccount.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Tcgc Nowaccount will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Tcgc Nowaccount 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.
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. Tcgc Nowaccount needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– Tcgc Nowaccount 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.
Environmental challenges
– Tcgc Nowaccount 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. Tcgc Nowaccount can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Tcgc Nowaccount in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study NOWaccount, Tcgc Nowaccount 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 .
Consumer confidence and its impact on Tcgc Nowaccount 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 Tcgc Nowaccount
– 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 Tcgc Nowaccount.
Technology acceleration in Forth Industrial Revolution
– Tcgc Nowaccount has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tcgc Nowaccount 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.
Weighted SWOT Analysis of NOWaccount 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 NOWaccount 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 NOWaccount 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 NOWaccount 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 NOWaccount 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 Tcgc Nowaccount needs to make to build a sustainable competitive advantage.