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 - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, technology disruption, challanges to central banks by blockchain based private currencies,
competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, 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 -
High brand equity
– Merrimack Fifo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merrimack Fifo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Successful track record of launching new products
– Merrimack Fifo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merrimack Fifo 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.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Merrimack Fifo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merrimack Fifo has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
Innovation driven organization
– Merrimack Fifo is one of the most innovative firm in sector. Manager in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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 -
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Merrimack Fifo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Merrimack Fifo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merrimack Fifo to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Merrimack Fifo, firm in the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, in the dynamic environment Merrimack Fifo has struggled to respond to the nimble upstart competition. Merrimack Fifo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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.
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.
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.
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.
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. Merrimack Fifo 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. Merrimack Fifo 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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merrimack Fifo 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, Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Merrimack Fifo 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 Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merrimack Fifo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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 Merrimack Fifo 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.
Leveraging digital technologies
– Merrimack Fifo 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.
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.
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.
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.
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 -
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.
Increasing wage structure of Merrimack Fifo
– 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 Merrimack Fifo.
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 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.
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.
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 .
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 Merrimack Fifo in the Finance & Accounting sector and impact the bottomline 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.
Stagnating economy with rate increase
– Merrimack Fifo 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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Merrimack Fifo is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.