Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation
Katka Suvarinova, a financial analyst at Southern Cross LLC, and a recent MBA graduate, has been asked to prepare an analysis of Big 5 Sporting Goods Corporation's recent financial performance, as well as an analysis of its accounting methods. Big 5 was a West Coast chain of sports equipment and apparel outlets, with 398 stores at the end of 2010. After Deutsche Bank's investment report maintained a hold rating and established a new target price of $13 per share for Big 5, Southern Cross decided to look at the company as a possible addition to its shorts portfolio. The shorts fund included companies that Southern Cross believed were headed for substantial stock price declines based on fundamental analysis. Southern Cross's portfolio manager had asked Suvarinova to pay close attention to the company's accounting methods, and particularly indicators that the company had significant off-balance sheet debt, which was not uncommon in the retailing industry. Retail companies often leased many of their stores, rather than buying the outlets with borrowed funds. From her MBA program, Suvarinova recalled that under U.S. Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), some leases were not reported as debt on a company's balance sheet.
Swot Analysis of "Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation" written by Graeme Rankine includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Suvarinova Southern facing as an external strategic factors. Some of the topics covered in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation casestudy better are - – geopolitical disruptions, increasing government debt because of Covid-19 spendings, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Suvarinova Southern, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Suvarinova Southern 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation can be done for the following purposes –
1. Strategic planning using facts provided in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation case study
2. Improving business portfolio management of Suvarinova Southern
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 Suvarinova Southern
Strengths Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Suvarinova Southern in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation Harvard Business Review case study are -
Training and development
– Suvarinova Southern has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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.
Strong track record of project management
– Suvarinova Southern 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 brand equity
– Suvarinova Southern has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Suvarinova Southern to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Suvarinova Southern digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Suvarinova Southern 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 Suvarinova Southern 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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.
Diverse revenue streams
– Suvarinova Southern is present in almost all the verticals within the industry. This has provided firm in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Suvarinova Southern in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Suvarinova Southern 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.
Ability to lead change in Finance & Accounting field
– Suvarinova Southern 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 Suvarinova Southern in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Suvarinova Southern is one of the most innovative firm in sector. Manager in Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Suvarinova Southern is one of the leading recruiters in the industry. Managers in the Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation are -
Slow to strategic competitive environment developments
– As Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation HBR case study mentions - Suvarinova Southern 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.
Skills based hiring
– The stress on hiring functional specialists at Suvarinova Southern has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, Suvarinova Southern 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. Suvarinova Southern 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation, is just above the industry average. Suvarinova Southern needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation, in the dynamic environment Suvarinova Southern has struggled to respond to the nimble upstart competition. Suvarinova Southern has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Suvarinova Southern 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.
Interest costs
– Compare to the competition, Suvarinova Southern 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.
Lack of clear differentiation of Suvarinova Southern products
– To increase the profitability and margins on the products, Suvarinova Southern needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation, 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.
Aligning sales with marketing
– It come across in the case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation can leverage the sales team experience to cultivate customer relationships as Suvarinova Southern is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation, it seems that the employees of Suvarinova Southern 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.
Opportunities Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation | 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation are -
Using analytics as competitive advantage
– Suvarinova Southern 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Suvarinova Southern to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Suvarinova Southern 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, Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Suvarinova Southern 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. Suvarinova Southern 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. Suvarinova Southern 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.
Better consumer reach
– The expansion of the 5G network will help Suvarinova Southern to increase its market reach. Suvarinova Southern 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.
Learning at scale
– Online learning technologies has now opened space for Suvarinova Southern 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Suvarinova Southern 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Suvarinova Southern is facing challenges because of the dominance of functional experts in the organization. Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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.
Creating value in data economy
– The success of analytics program of Suvarinova Southern has opened avenues for new revenue streams for the organization in the industry. This can help Suvarinova Southern to build a more holistic ecosystem as suggested in the Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation case study. Suvarinova Southern can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Suvarinova Southern 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 Suvarinova Southern to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Suvarinova Southern 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.
Developing new processes and practices
– Suvarinova Southern 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.
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. Suvarinova Southern can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation are -
High dependence on third party suppliers
– Suvarinova Southern 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. Suvarinova Southern can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Suvarinova Southern needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Suvarinova Southern is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Suvarinova Southern
– 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 Suvarinova Southern.
Consumer confidence and its impact on Suvarinova Southern 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Suvarinova Southern 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation .
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.
Regulatory challenges
– Suvarinova Southern 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.
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.
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 Suvarinova Southern in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Suvarinova Southern with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Suvarinova Southern 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.
Weighted SWOT Analysis of Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation 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 Suvarinova Southern needs to make to build a sustainable competitive advantage.
