Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies

This is a Darden case study.This technical note presents an overview of the process by which an analyst can assess the financial policy of a firm. It defines several dimensions of financial policy, offers three benchmarks against which to evaluate the policy, and reviews the FRICTO framework with which to assess proposals for future financial policy.

Authors :: Robert F. Bruner, Sean Carr, Katherine L. Updike

Topics :: Finance & Accounting

Tags :: Financial management, Strategic planning, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies" written by Robert F. Bruner, Sean Carr, Katherine L. Updike includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Policy Fricto facing as an external strategic factors. Some of the topics covered in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies case study are - Strategic Management Strategies, Financial management, Strategic planning and Finance & Accounting.

Some of the macro environment factors that can be used to understand the Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies casestudy better are - – technology disruption, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, wage bills are increasing, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc

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Introduction to SWOT Analysis of Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Policy Fricto, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Policy Fricto 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies can be done for the following purposes –
1. Strategic planning using facts provided in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies case study
2. Improving business portfolio management of Policy Fricto
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 Policy Fricto

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Strengths Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Policy Fricto in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies Harvard Business Review case study are -

Innovation driven organization

– Policy Fricto is one of the most innovative firm in sector. Manager in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Organizational Resilience of Policy Fricto

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

Diverse revenue streams

– Policy Fricto is present in almost all the verticals within the industry. This has provided firm in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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.

Training and development

– Policy Fricto has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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.

Ability to lead change in Finance & Accounting field

– Policy Fricto 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 Policy Fricto in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

High switching costs

– The high switching costs that Policy Fricto 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.

Highly skilled collaborators

– Policy Fricto 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Effective Research and Development (R&D)

– Policy Fricto 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Low bargaining power of suppliers

– Suppliers of Policy Fricto in the sector have low bargaining power. Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Policy Fricto to manage not only supply disruptions but also source products at highly competitive prices.

Analytics focus

– Policy Fricto 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 Robert F. Bruner, Sean Carr, Katherine L. Updike 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.

Strong track record of project management

– Policy Fricto 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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.

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Weaknesses Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies are -

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Policy Fricto has relatively successful track record of launching new products.

Capital Spending Reduction

– Even during the low interest decade, Policy Fricto 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.

Workers concerns about automation

– As automation is fast increasing in the segment, Policy Fricto 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.

High bargaining power of channel partners

– Because of the regulatory requirements, Robert F. Bruner, Sean Carr, Katherine L. Updike suggests that, Policy Fricto 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.

No frontier risks strategy

– After analyzing the HBR case study Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies, 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies, it seems that the employees of Policy Fricto 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.

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 Policy Fricto supply chain. Even after few cautionary changes mentioned in the HBR case study - Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Policy Fricto vulnerable to further global disruptions in South East Asia.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Policy Fricto is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

High operating costs

– Compare to the competitors, firm in the HBR case study Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Policy Fricto 's lucrative customers.

Slow decision making process

– As mentioned earlier in the report, Policy Fricto 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. Policy Fricto 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.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies, in the dynamic environment Policy Fricto has struggled to respond to the nimble upstart competition. Policy Fricto has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Opportunities Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies | 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies are -

Remote work and new talent hiring opportunities

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

Lowering marketing communication costs

– 5G expansion will open new opportunities for Policy Fricto 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.

Leveraging digital technologies

– Policy Fricto 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.

Manufacturing automation

– Policy Fricto 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

– Policy Fricto 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Policy Fricto to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Better consumer reach

– The expansion of the 5G network will help Policy Fricto to increase its market reach. Policy Fricto 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.

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

Building a culture of innovation

– managers at Policy Fricto 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.

Creating value in data economy

– The success of analytics program of Policy Fricto has opened avenues for new revenue streams for the organization in the industry. This can help Policy Fricto to build a more holistic ecosystem as suggested in the Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies case study. Policy Fricto can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Policy Fricto can use these opportunities to build new business models that can help the communities that Policy Fricto operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Policy Fricto is facing challenges because of the dominance of functional experts in the organization. Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Policy Fricto can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

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. Policy Fricto 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. Policy Fricto 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.

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Threats Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies are -

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 Policy Fricto.

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 Policy Fricto business can come under increasing regulations regarding data privacy, data security, etc.

Consumer confidence and its impact on Policy Fricto 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.

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.

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 Policy Fricto in the Finance & Accounting sector and impact the bottomline of the organization.

High dependence on third party suppliers

– Policy Fricto 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.

Barriers of entry lowering

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

Technology acceleration in Forth Industrial Revolution

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

Stagnating economy with rate increase

– Policy Fricto 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Policy Fricto 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.

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. Policy Fricto 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.

Increasing wage structure of Policy Fricto

– 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 Policy Fricto.

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.

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Weighted SWOT Analysis of Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies 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 Policy Fricto needs to make to build a sustainable competitive advantage.

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