Case Study Description of Practical Regression: Fixed Effects Models
This is the fifth in a series of lecture notes which, if tied together into a textbook, might be entitled "Practical Regression." The purpose of the notes is to supplement the theoretical content of most statistics texts with practical advice based on nearly three decades of experience of the author, combined with over one hundred years of experience of colleagues who have offered guidance. As the title "Practical Regression" suggests, these notes are a guide to performing regression in practice. This technical note discusses fixed effects models. Though a unified example, the note shows how omitted variable bias can plague estimates in cross-section regressions and how focusing attention on intragroup ("within") variation over time can allow for identification of regression coefficients that are free of potential bias. The note demontrates the mathematical principles behind fixed effects modeling and also explains why, in some cases, it may be preferable not to include fixed effects.
Swot Analysis of "Practical Regression: Fixed Effects Models" written by David Dranove includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Regression Fixed facing as an external strategic factors. Some of the topics covered in Practical Regression: Fixed Effects Models case study are - Strategic Management Strategies, Financial management, Market research and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Practical Regression: Fixed Effects Models casestudy better are - – there is backlash against globalization, increasing energy prices, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, technology disruption, increasing government debt because of Covid-19 spendings, wage bills are increasing,
customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Practical Regression: Fixed Effects Models
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Practical Regression: Fixed Effects Models case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Regression Fixed, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Regression Fixed 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 Practical Regression: Fixed Effects Models can be done for the following purposes –
1. Strategic planning using facts provided in Practical Regression: Fixed Effects Models case study
2. Improving business portfolio management of Regression Fixed
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 Regression Fixed
Strengths Practical Regression: Fixed Effects Models | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Regression Fixed in Practical Regression: Fixed Effects Models Harvard Business Review case study are -
Learning organization
- Regression Fixed 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 Regression Fixed is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Practical Regression: Fixed Effects Models Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Regression Fixed 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 Practical Regression: Fixed Effects Models - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Regression Fixed has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Regression Fixed to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Practical Regression: Fixed Effects Models firm has clearly differentiated products in the market place. This has enabled Regression Fixed to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Regression Fixed to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Regression Fixed 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 Regression Fixed 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
– Regression Fixed 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 Regression Fixed in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Regression Fixed is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Practical Regression: Fixed Effects Models Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Regression Fixed 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 David Dranove 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.
Highly skilled collaborators
– Regression Fixed 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 Practical Regression: Fixed Effects Models HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Regression Fixed digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Regression Fixed 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.
Weaknesses Practical Regression: Fixed Effects Models | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Practical Regression: Fixed Effects Models are -
High bargaining power of channel partners
– Because of the regulatory requirements, David Dranove suggests that, Regression Fixed is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on 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 Regression Fixed supply chain. Even after few cautionary changes mentioned in the HBR case study - Practical Regression: Fixed Effects Models, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Regression Fixed vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Regression Fixed 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.
Increasing silos among functional specialists
– The organizational structure of Regression Fixed is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Regression Fixed needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Regression Fixed to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Practical Regression: Fixed Effects Models, 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.
Low market penetration in new markets
– Outside its home market of Regression Fixed, firm in the HBR case study Practical Regression: Fixed Effects Models needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Regression Fixed products
– To increase the profitability and margins on the products, Regression Fixed needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Practical Regression: Fixed Effects Models 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 Regression Fixed has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Regression Fixed 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.
Aligning sales with marketing
– It come across in the case study Practical Regression: Fixed Effects Models 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 Practical Regression: Fixed Effects Models can leverage the sales team experience to cultivate customer relationships as Regression Fixed is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Practical Regression: Fixed Effects Models, in the dynamic environment Regression Fixed has struggled to respond to the nimble upstart competition. Regression Fixed has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Practical Regression: Fixed Effects Models | 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 Practical Regression: Fixed Effects Models are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Regression Fixed in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Regression Fixed to increase its market reach. Regression Fixed 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.
Developing new processes and practices
– Regression Fixed 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.
Loyalty marketing
– Regression Fixed 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Regression Fixed can use these opportunities to build new business models that can help the communities that Regression Fixed operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Regression Fixed 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.
Creating value in data economy
– The success of analytics program of Regression Fixed has opened avenues for new revenue streams for the organization in the industry. This can help Regression Fixed to build a more holistic ecosystem as suggested in the Practical Regression: Fixed Effects Models case study. Regression Fixed can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Regression Fixed 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 Practical Regression: Fixed Effects Models - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Regression Fixed to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Regression Fixed 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.
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. Regression Fixed 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. Regression Fixed 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Regression Fixed 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, Practical Regression: Fixed Effects Models, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Regression Fixed 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Regression Fixed can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Practical Regression: Fixed Effects Models External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Practical Regression: Fixed Effects Models are -
Stagnating economy with rate increase
– Regression Fixed 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.
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 Regression Fixed business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Regression Fixed is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Regression Fixed in the Finance & Accounting sector and impact the bottomline of the organization.
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. Regression Fixed 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.
Regulatory challenges
– Regression Fixed 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.
Consumer confidence and its impact on Regression Fixed 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Regression Fixed in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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. Regression Fixed can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
High dependence on third party suppliers
– Regression Fixed 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Practical Regression: Fixed Effects Models, Regression Fixed 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 .
Weighted SWOT Analysis of Practical Regression: Fixed Effects Models 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 Practical Regression: Fixed Effects Models 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 Practical Regression: Fixed Effects Models 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 Practical Regression: Fixed Effects Models 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 Practical Regression: Fixed Effects Models 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 Regression Fixed needs to make to build a sustainable competitive advantage.