Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?
When students have the English-language PDF of this Brief Case in a coursepack, they will also have the option to purchase an audio version.At Merrimack Tractors and Mowers in 2008, product manufacturing costs are increasing faster than competitors' costs, and as a result earnings are likely to fall below those reported in 2007. The company president and the company controller have discussed this problem, and the controller has mentioned that if the company changed from LIFO to FIFO it might be possible to maintain earnings growth in 2008. He prepares a memo to the president explaining how inventory flow assumptions work and provides pro-forma income statements that show that, for one product (reel mower units), adopting FIFO would allow Merrimack to report higher income in 2008 than it did in 2007, but higher income taxes would have to be paid.
Authors :: William J. Bruns Jr., Sharon Bruns, Susan S. Harmeling
Swot Analysis of "Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?" written by William J. Bruns Jr., Sharon Bruns, Susan S. Harmeling includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merrimack Fifo facing as an external strategic factors. Some of the topics covered in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? case study are - Strategic Management Strategies, Financial management, Operations management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, technology disruption,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merrimack Fifo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merrimack Fifo 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? can be done for the following purposes –
1. Strategic planning using facts provided in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? case study
2. Improving business portfolio management of Merrimack Fifo
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 Merrimack Fifo
Strengths Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merrimack Fifo in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Merrimack Fifo 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.
Operational resilience
– The operational resilience strategy in the Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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.
Effective Research and Development (R&D)
– Merrimack Fifo 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Finance & Accounting industry
– Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? firm has clearly differentiated products in the market place. This has enabled Merrimack Fifo to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Merrimack Fifo to invest into research and development (R&D) and innovation.
Strong track record of project management
– Merrimack Fifo 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 Merrimack Fifo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merrimack Fifo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Merrimack Fifo 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 William J. Bruns Jr., Sharon Bruns, Susan S. Harmeling can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Merrimack Fifo 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Merrimack Fifo 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 lead change in Finance & Accounting field
– Merrimack Fifo 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 Merrimack Fifo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Merrimack Fifo is one of the leading recruiters in the industry. Managers in the Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Fifo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, is just above the industry average. Merrimack Fifo 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.
No frontier risks strategy
– After analyzing the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Fifo has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Merrimack Fifo 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 bargaining power of channel partners
– Because of the regulatory requirements, William J. Bruns Jr., Sharon Bruns, Susan S. Harmeling suggests that, Merrimack Fifo 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.
Capital Spending Reduction
– Even during the low interest decade, Merrimack Fifo 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.
Slow to strategic competitive environment developments
– As Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? HBR case study mentions - Merrimack Fifo takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? can leverage the sales team experience to cultivate customer relationships as Merrimack Fifo is planning to shift buying processes online.
Interest costs
– Compare to the competition, Merrimack Fifo 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, Merrimack Fifo 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. Merrimack Fifo 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Merrimack Fifo 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.
Opportunities Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? | 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? are -
Building a culture of innovation
– managers at Merrimack Fifo 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.
Learning at scale
– Online learning technologies has now opened space for Merrimack Fifo 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.
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. Merrimack Fifo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Merrimack Fifo 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merrimack Fifo 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.
Creating value in data economy
– The success of analytics program of Merrimack Fifo has opened avenues for new revenue streams for the organization in the industry. This can help Merrimack Fifo to build a more holistic ecosystem as suggested in the Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? case study. Merrimack Fifo can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Merrimack Fifo in the consumer business. Now Merrimack Fifo can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Merrimack Fifo to increase its market reach. Merrimack Fifo 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.
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. Merrimack Fifo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Merrimack Fifo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Merrimack Fifo 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merrimack Fifo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merrimack Fifo can use these opportunities to build new business models that can help the communities that Merrimack Fifo operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? are -
Regulatory challenges
– Merrimack Fifo 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.
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 Merrimack Fifo.
Technology acceleration in Forth Industrial Revolution
– Merrimack Fifo has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Merrimack Fifo 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.
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. Merrimack Fifo needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merrimack Fifo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, Merrimack Fifo 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 .
Consumer confidence and its impact on Merrimack Fifo 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.
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. Merrimack Fifo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merrimack Fifo 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? .
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. Merrimack Fifo 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.
High dependence on third party suppliers
– Merrimack Fifo 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.
Weighted SWOT Analysis of Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Fifo needs to make to build a sustainable competitive advantage.
