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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, 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 -
Low bargaining power of suppliers
– Suppliers of Merrimack Fifo in the sector have low bargaining power. Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merrimack Fifo to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
Learning organization
- Merrimack Fifo is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Merrimack Fifo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
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.
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.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?, it seems that the employees of Merrimack Fifo 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.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? 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 Merrimack Fifo 's lucrative customers.
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.
Lack of clear differentiation of Merrimack Fifo products
– To increase the profitability and margins on the products, Merrimack Fifo needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
High cash cycle compare to competitors
Merrimack Fifo has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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 -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Merrimack Fifo 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 Merrimack Fifo to hire the very best people irrespective of their geographical location.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merrimack Fifo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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 .
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.
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.
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.
Environmental challenges
– Merrimack Fifo 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. Merrimack Fifo 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 Merrimack Fifo 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.
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? .
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.
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.
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.