California's Budget Crises, Tax Reform, and Domestic and International Tax Competition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of California's Budget Crises, Tax Reform, and Domestic and International Tax Competition
How do (and how should) governments design fiscal policies to compete in a globalized economy while meeting internal policy priorities including redistribution? In 2009, Governor Arnold Schwarzenegger repeatedly declared fiscal emergencies as California's state budget deficit reached all-time highs. The Governor and legislative leaders established the Commission on the Twenty-first Century Economy to recommend tax reforms that would improve the state's fiscal health and competitiveness. But when the Commission issued its recommendations, many of which were consistent with domestic and international trends in taxation, legislative leaders were highly critical and the prospects for reform dimmed. The case describes the political and economic contributors to California's persistent fiscal deficits and the reforms recommended by the Commission. It summarizes recent trends in taxation by U.S. states and OECD nations, relating the empirical trends to tax theory. Finally, it engages the issue of inter-jurisdictional tax competition from both positive and normative perspectives. Instructors may also obtain a Teaching Note, written by this case's author, that provides suggestions for using this case effectively in the classroom.
Swot Analysis of "California's Budget Crises, Tax Reform, and Domestic and International Tax Competition" written by Matthew C. Weinzierl, Jacob Kuipers includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tax California's facing as an external strategic factors. Some of the topics covered in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition case study are - Strategic Management Strategies, Competition, Economy, Global strategy, Globalization, Policy, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the California's Budget Crises, Tax Reform, and Domestic and International Tax Competition casestudy better are - – challanges to central banks by blockchain based private currencies, increasing energy prices, increasing commodity prices, there is backlash against globalization, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, geopolitical disruptions,
competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of California's Budget Crises, Tax Reform, and Domestic and International Tax Competition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tax California's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tax California's 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition can be done for the following purposes –
1. Strategic planning using facts provided in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition case study
2. Improving business portfolio management of Tax California's
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 Tax California's
Strengths California's Budget Crises, Tax Reform, and Domestic and International Tax Competition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tax California's in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition Harvard Business Review case study are -
High brand equity
– Tax California's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tax California's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Tax California's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 Tax California's 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.
Cross disciplinary teams
– Horizontal connected teams at the Tax California's 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.
Organizational Resilience of Tax California's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tax California's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Tax California's 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Tax California's is one of the most innovative firm in sector. Manager in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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.
Sustainable margins compare to other players in Finance & Accounting industry
– California's Budget Crises, Tax Reform, and Domestic and International Tax Competition firm has clearly differentiated products in the market place. This has enabled Tax California's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Tax California's to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Tax California's is present in almost all the verticals within the industry. This has provided firm in California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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.
Successful track record of launching new products
– Tax California's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tax California's 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.
Low bargaining power of suppliers
– Suppliers of Tax California's in the sector have low bargaining power. California's Budget Crises, Tax Reform, and Domestic and International Tax Competition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tax California's to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses California's Budget Crises, Tax Reform, and Domestic and International Tax Competition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of California's Budget Crises, Tax Reform, and Domestic and International Tax Competition are -
Skills based hiring
– The stress on hiring functional specialists at Tax California's 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 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 Tax California's supply chain. Even after few cautionary changes mentioned in the HBR case study - California's Budget Crises, Tax Reform, and Domestic and International Tax Competition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tax California's vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition, it seems that the employees of Tax California's 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.
Lack of clear differentiation of Tax California's products
– To increase the profitability and margins on the products, Tax California's needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition, is just above the industry average. Tax California's 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.
Aligning sales with marketing
– It come across in the case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition can leverage the sales team experience to cultivate customer relationships as Tax California's is planning to shift buying processes online.
Interest costs
– Compare to the competition, Tax California's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Tax California's 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. Tax California's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Matthew C. Weinzierl, Jacob Kuipers suggests that, Tax California's 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 operating costs
– Compare to the competitors, firm in the HBR case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 Tax California's 's lucrative customers.
Opportunities California's Budget Crises, Tax Reform, and Domestic and International Tax Competition | 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition are -
Better consumer reach
– The expansion of the 5G network will help Tax California's to increase its market reach. Tax California's 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.
Manufacturing automation
– Tax California's 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.
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. Tax California's 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. Tax California's 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.
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 Tax California's 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.
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. Tax California's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Tax California's 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.
Creating value in data economy
– The success of analytics program of Tax California's has opened avenues for new revenue streams for the organization in the industry. This can help Tax California's to build a more holistic ecosystem as suggested in the California's Budget Crises, Tax Reform, and Domestic and International Tax Competition case study. Tax California's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Tax California's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tax California's 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, California's Budget Crises, Tax Reform, and Domestic and International Tax Competition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tax California's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tax California's is facing challenges because of the dominance of functional experts in the organization. California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tax California's 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 Tax California's to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tax California's 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.
Threats California's Budget Crises, Tax Reform, and Domestic and International Tax Competition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study California's Budget Crises, Tax Reform, and Domestic and International Tax Competition are -
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.
Consumer confidence and its impact on Tax California's 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.
Environmental challenges
– Tax California's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tax California's can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tax California's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tax California's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Tax California's business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Tax California's 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.
Increasing wage structure of Tax California's
– 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 Tax California's.
Shortening product life cycle
– it is one of the major threat that Tax California's 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 Tax California's in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Tax California's 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.
Technology acceleration in Forth Industrial Revolution
– Tax California's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tax California's 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 Tax California's.
Weighted SWOT Analysis of California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 California's Budget Crises, Tax Reform, and Domestic and International Tax Competition 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 Tax California's needs to make to build a sustainable competitive advantage.
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