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Practical Regression: Introduction to Endogeneity: Omitted Variable Bias SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Practical Regression: Introduction to Endogeneity: Omitted Variable Bias


This is the fourth 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 introduces the concept of endogeneity bias with specific coverage of omitted variable bias. Students who read this note will understand why omitting key predictors can sometimes bias the coefficients of included variables. The note illustrates omitted variable bias by means of an extended example and offers practical advice for model building that balances the desire for parsimony developed in a previous note with the need to limit omitted variable bias.

Authors :: David Dranove

Topics :: Finance & Accounting

Tags :: Financial management, Market research, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Practical Regression: Introduction to Endogeneity: Omitted Variable Bias" written by David Dranove includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bias Omitted facing as an external strategic factors. Some of the topics covered in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, increasing commodity prices, wage bills are increasing, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc



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Introduction to SWOT Analysis of Practical Regression: Introduction to Endogeneity: Omitted Variable Bias


SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bias Omitted, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bias Omitted 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: Introduction to Endogeneity: Omitted Variable Bias can be done for the following purposes –
1. Strategic planning using facts provided in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias case study
2. Improving business portfolio management of Bias Omitted
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 Bias Omitted




Strengths Practical Regression: Introduction to Endogeneity: Omitted Variable Bias | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Bias Omitted in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias Harvard Business Review case study are -

High brand equity

– Bias Omitted has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bias Omitted 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: Introduction to Endogeneity: Omitted Variable Bias firm has clearly differentiated products in the market place. This has enabled Bias Omitted to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Bias Omitted to invest into research and development (R&D) and innovation.

Strong track record of project management

– Bias Omitted is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Organizational Resilience of Bias Omitted

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bias Omitted does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Diverse revenue streams

– Bias Omitted is present in almost all the verticals within the industry. This has provided firm in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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.

Operational resilience

– The operational resilience strategy in the Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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.

Training and development

– Bias Omitted has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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.

Innovation driven organization

– Bias Omitted is one of the most innovative firm in sector. Manager in Practical Regression: Introduction to Endogeneity: Omitted Variable Bias Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Analytics focus

– Bias Omitted 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.

Ability to recruit top talent

– Bias Omitted is one of the leading recruiters in the industry. Managers in the Practical Regression: Introduction to Endogeneity: Omitted Variable Bias are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Superior customer experience

– The customer experience strategy of Bias Omitted in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

High switching costs

– The high switching costs that Bias Omitted 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.






Weaknesses Practical Regression: Introduction to Endogeneity: Omitted Variable Bias | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Practical Regression: Introduction to Endogeneity: Omitted Variable Bias are -

Skills based hiring

– The stress on hiring functional specialists at Bias Omitted 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.

High cash cycle compare to competitors

Bias Omitted 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.

Products dominated business model

– Even though Bias Omitted 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 - Practical Regression: Introduction to Endogeneity: Omitted Variable Bias should strive to include more intangible value offerings along with its core products and services.

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 Bias Omitted supply chain. Even after few cautionary changes mentioned in the HBR case study - Practical Regression: Introduction to Endogeneity: Omitted Variable Bias, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bias Omitted vulnerable to further global disruptions in South East Asia.

Aligning sales with marketing

– It come across in the case study Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias can leverage the sales team experience to cultivate customer relationships as Bias Omitted is planning to shift buying processes online.

High operating costs

– Compare to the competitors, firm in the HBR case study Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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 Bias Omitted 's lucrative customers.

Workers concerns about automation

– As automation is fast increasing in the segment, Bias Omitted 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bias Omitted is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Practical Regression: Introduction to Endogeneity: Omitted Variable Bias can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Practical Regression: Introduction to Endogeneity: Omitted Variable Bias, is just above the industry average. Bias Omitted 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.

Capital Spending Reduction

– Even during the low interest decade, Bias Omitted 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.

Need for greater diversity

– Bias Omitted 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.




Opportunities Practical Regression: Introduction to Endogeneity: Omitted Variable Bias | 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: Introduction to Endogeneity: Omitted Variable Bias are -

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. Bias Omitted 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. Bias Omitted 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Bias Omitted 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bias Omitted 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 Bias Omitted to hire the very best people irrespective of their geographical location.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Bias Omitted 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: Introduction to Endogeneity: Omitted Variable Bias, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. Bias Omitted can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Building a culture of innovation

– managers at Bias Omitted 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.

Loyalty marketing

– Bias Omitted 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.

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 Bias Omitted in the consumer business. Now Bias Omitted can target international markets with far fewer capital restrictions requirements than the existing system.

Manufacturing automation

– Bias Omitted 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.

Using analytics as competitive advantage

– Bias Omitted 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: Introduction to Endogeneity: Omitted Variable Bias - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bias Omitted to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Leveraging digital technologies

– Bias Omitted 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.

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. Bias Omitted can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bias Omitted can use these opportunities to build new business models that can help the communities that Bias Omitted operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.




Threats Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias are -

Technology acceleration in Forth Industrial Revolution

– Bias Omitted has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Bias Omitted 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.

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 Bias Omitted.

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. Bias Omitted can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Increasing wage structure of Bias Omitted

– 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 Bias Omitted.

Stagnating economy with rate increase

– Bias Omitted 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.

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. Bias Omitted 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.

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 Practical Regression: Introduction to Endogeneity: Omitted Variable Bias, Bias Omitted 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 .

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bias Omitted with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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. Bias Omitted needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.

Consumer confidence and its impact on Bias Omitted 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.

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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Bias Omitted 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 Practical Regression: Introduction to Endogeneity: Omitted Variable Bias .




Weighted SWOT Analysis of Practical Regression: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias 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: Introduction to Endogeneity: Omitted Variable Bias 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 Bias Omitted needs to make to build a sustainable competitive advantage.



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