Case Study Description of Reducing Delinquent Accounts Receivable
In April 2014, the accounts receivable exceeding 90 days were causing a cash-flow problem for Wolf Distributing, which distributes the Berserker Rage energy drink in the Chicagoland area. Christine Taylor, the company's chief operating officer, had tried a number of traditional methods to monitor and address this problem, but she had made little progress. She decided to use three basic statistical analysis tools-Pareto diagrams, scatter plots, and run charts-to help her better grasp the problem.
Swot Analysis of "Reducing Delinquent Accounts Receivable" written by Jack Boepple includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Receivable Accounts facing as an external strategic factors. Some of the topics covered in Reducing Delinquent Accounts Receivable case study are - Strategic Management Strategies, Financial analysis, Financial management, Operations management, Product development and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Reducing Delinquent Accounts Receivable casestudy better are - – technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, increasing energy prices, there is increasing trade war between United States & China,
customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, etc
Introduction to SWOT Analysis of Reducing Delinquent Accounts Receivable
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reducing Delinquent Accounts Receivable case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Receivable Accounts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Receivable Accounts 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 Reducing Delinquent Accounts Receivable can be done for the following purposes –
1. Strategic planning using facts provided in Reducing Delinquent Accounts Receivable case study
2. Improving business portfolio management of Receivable Accounts
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 Receivable Accounts
Strengths Reducing Delinquent Accounts Receivable | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Receivable Accounts in Reducing Delinquent Accounts Receivable Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Receivable Accounts 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.
Training and development
– Receivable Accounts has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reducing Delinquent Accounts Receivable 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.
High switching costs
– The high switching costs that Receivable Accounts 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.
Ability to recruit top talent
– Receivable Accounts is one of the leading recruiters in the industry. Managers in the Reducing Delinquent Accounts Receivable are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Receivable Accounts has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Receivable Accounts 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.
High brand equity
– Receivable Accounts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Receivable Accounts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Receivable Accounts 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 Receivable Accounts is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Reducing Delinquent Accounts Receivable Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Reducing Delinquent Accounts Receivable firm has clearly differentiated products in the market place. This has enabled Receivable Accounts to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Receivable Accounts to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Receivable Accounts 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 Reducing Delinquent Accounts Receivable - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Reducing Delinquent Accounts Receivable 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.
Ability to lead change in Finance & Accounting field
– Receivable Accounts 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 Receivable Accounts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Receivable Accounts is present in almost all the verticals within the industry. This has provided firm in Reducing Delinquent Accounts Receivable 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.
Weaknesses Reducing Delinquent Accounts Receivable | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reducing Delinquent Accounts Receivable are -
High operating costs
– Compare to the competitors, firm in the HBR case study Reducing Delinquent Accounts Receivable 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 Receivable Accounts 's lucrative customers.
Products dominated business model
– Even though Receivable Accounts 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 - Reducing Delinquent Accounts Receivable 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 Receivable Accounts supply chain. Even after few cautionary changes mentioned in the HBR case study - Reducing Delinquent Accounts Receivable, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Receivable Accounts vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Receivable Accounts 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.
Interest costs
– Compare to the competition, Receivable Accounts 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.
No frontier risks strategy
– After analyzing the HBR case study Reducing Delinquent Accounts Receivable, 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.
Capital Spending Reduction
– Even during the low interest decade, Receivable Accounts has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Receivable Accounts 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.
Increasing silos among functional specialists
– The organizational structure of Receivable Accounts is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Receivable Accounts needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Receivable Accounts to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Receivable Accounts, firm in the HBR case study Reducing Delinquent Accounts Receivable needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Receivable Accounts 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. Receivable Accounts 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.
Opportunities Reducing Delinquent Accounts Receivable | 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 Reducing Delinquent Accounts Receivable are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Receivable Accounts is facing challenges because of the dominance of functional experts in the organization. Reducing Delinquent Accounts Receivable 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Receivable Accounts can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Receivable Accounts 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 Reducing Delinquent Accounts Receivable - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Receivable Accounts to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Receivable Accounts in the consumer business. Now Receivable Accounts can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Receivable Accounts 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.
Manufacturing automation
– Receivable Accounts 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Receivable Accounts 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 Receivable Accounts 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, Receivable Accounts 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, Reducing Delinquent Accounts Receivable, 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 Receivable Accounts 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.
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 Receivable Accounts 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.
Creating value in data economy
– The success of analytics program of Receivable Accounts has opened avenues for new revenue streams for the organization in the industry. This can help Receivable Accounts to build a more holistic ecosystem as suggested in the Reducing Delinquent Accounts Receivable case study. Receivable Accounts can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Receivable Accounts 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
– Receivable Accounts 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.
Threats Reducing Delinquent Accounts Receivable External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reducing Delinquent Accounts Receivable are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Receivable Accounts with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Receivable Accounts is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Receivable Accounts needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Receivable Accounts.
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. Receivable Accounts 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 acceleration in Forth Industrial Revolution
– Receivable Accounts has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Receivable Accounts 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Receivable Accounts 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 Reducing Delinquent Accounts Receivable .
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 Receivable Accounts business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Receivable Accounts can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Receivable Accounts 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 Receivable Accounts 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.
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 Receivable Accounts in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Reducing Delinquent Accounts Receivable 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 Reducing Delinquent Accounts Receivable 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 Reducing Delinquent Accounts Receivable 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 Reducing Delinquent Accounts Receivable 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 Reducing Delinquent Accounts Receivable 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 Receivable Accounts needs to make to build a sustainable competitive advantage.