The Role of Accounting Information in Revenue Management SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Role of Accounting Information in Revenue Management
Revenue management (RM) uses differential pricing and other techniques to manage customer demand for a company's products and services. It judiciously trades off yield and spoilage, and brings rational approaches to pricing for goods and/or services with a limited shelf life. Because many types of businesses find that growing revenue has a disproportionate impact on operating profits, firms that know and manage their customer base often achieve better bottom-line results by growing revenue rather than by cost-cutting. Initially developed as a marketing tool for pricing airline tickets, today's numerous RM applications can benefit from accounting tools that help assess whether applications will enhance operating profit and monitor their success in doing so. Knowledge of a firm's cost structure, operating leverage in particular, and when to treat RM adjustments as special orders, are the principal accounting linchpins. Opportunity cost variances and insights from the theory of constraints contribute to effective revenue management/profit enhancement programs. Use of proper accounting information and analytic techniques can help a tolerated union of necessity between RM programs and firm strategy become a desirable marriage of mutual choice.
Swot Analysis of "The Role of Accounting Information in Revenue Management" written by Ronald J. Huefner, James A. Largay includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rm Revenue facing as an external strategic factors. Some of the topics covered in The Role of Accounting Information in Revenue Management case study are - Strategic Management Strategies, Costs, Pricing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The Role of Accounting Information in Revenue Management casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, wage bills are increasing, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
Introduction to SWOT Analysis of The Role of Accounting Information in Revenue Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Role of Accounting Information in Revenue Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rm Revenue, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rm Revenue 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 The Role of Accounting Information in Revenue Management can be done for the following purposes –
1. Strategic planning using facts provided in The Role of Accounting Information in Revenue Management case study
2. Improving business portfolio management of Rm Revenue
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 Rm Revenue
Strengths The Role of Accounting Information in Revenue Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rm Revenue in The Role of Accounting Information in Revenue Management Harvard Business Review case study are -
Highly skilled collaborators
– Rm Revenue 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 The Role of Accounting Information in Revenue Management HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Rm Revenue in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Rm Revenue has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Role of Accounting Information in Revenue Management 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.
Diverse revenue streams
– Rm Revenue is present in almost all the verticals within the industry. This has provided firm in The Role of Accounting Information in Revenue Management 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.
Sustainable margins compare to other players in Finance & Accounting industry
– The Role of Accounting Information in Revenue Management firm has clearly differentiated products in the market place. This has enabled Rm Revenue to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Rm Revenue to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Rm Revenue is one of the leading recruiters in the industry. Managers in the The Role of Accounting Information in Revenue Management are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Rm Revenue 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 Rm Revenue 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 Rm Revenue digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Rm Revenue 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.
Organizational Resilience of Rm Revenue
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rm Revenue does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Rm Revenue 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.
Analytics focus
– Rm Revenue 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 Ronald J. Huefner, James A. Largay 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.
High brand equity
– Rm Revenue has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Rm Revenue to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses The Role of Accounting Information in Revenue Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Role of Accounting Information in Revenue Management are -
Lack of clear differentiation of Rm Revenue products
– To increase the profitability and margins on the products, Rm Revenue needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As The Role of Accounting Information in Revenue Management HBR case study mentions - Rm Revenue 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Role of Accounting Information in Revenue Management 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 Rm Revenue has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Role of Accounting Information in Revenue Management, is just above the industry average. Rm Revenue 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.
Increasing silos among functional specialists
– The organizational structure of Rm Revenue is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Rm Revenue needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Rm Revenue to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Rm Revenue 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 cash cycle compare to competitors
Rm Revenue 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.
Interest costs
– Compare to the competition, Rm Revenue 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.
No frontier risks strategy
– After analyzing the HBR case study The Role of Accounting Information in Revenue Management, 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 operating costs
– Compare to the competitors, firm in the HBR case study The Role of Accounting Information in Revenue Management 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 Rm Revenue 's lucrative customers.
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 Rm Revenue supply chain. Even after few cautionary changes mentioned in the HBR case study - The Role of Accounting Information in Revenue Management, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Rm Revenue vulnerable to further global disruptions in South East Asia.
Opportunities The Role of Accounting Information in Revenue Management | 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 The Role of Accounting Information in Revenue Management are -
Building a culture of innovation
– managers at Rm Revenue 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.
Developing new processes and practices
– Rm Revenue 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.
Leveraging digital technologies
– Rm Revenue 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.
Using analytics as competitive advantage
– Rm Revenue 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 The Role of Accounting Information in Revenue Management - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Rm Revenue to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Rm Revenue 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Rm Revenue 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.
Better consumer reach
– The expansion of the 5G network will help Rm Revenue to increase its market reach. Rm Revenue 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.
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. Rm Revenue 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. Rm Revenue 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Rm Revenue can use these opportunities to build new business models that can help the communities that Rm Revenue operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Buying journey improvements
– Rm Revenue can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Role of Accounting Information in Revenue Management 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rm Revenue 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, The Role of Accounting Information in Revenue Management, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Rm Revenue can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Rm Revenue can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats The Role of Accounting Information in Revenue Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Role of Accounting Information in Revenue Management are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Role of Accounting Information in Revenue Management, Rm Revenue 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 .
High dependence on third party suppliers
– Rm Revenue 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.
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 Rm Revenue.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Rm Revenue 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 The Role of Accounting Information in Revenue Management .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Rm Revenue with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Rm Revenue 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.
Stagnating economy with rate increase
– Rm Revenue 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.
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. Rm Revenue 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.
Shortening product life cycle
– it is one of the major threat that Rm Revenue is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Rm Revenue
– 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 Rm Revenue.
Environmental challenges
– Rm Revenue 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. Rm Revenue can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Rm Revenue needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of The Role of Accounting Information in Revenue Management 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 The Role of Accounting Information in Revenue Management 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 The Role of Accounting Information in Revenue Management 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 The Role of Accounting Information in Revenue Management 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 The Role of Accounting Information in Revenue Management 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 Rm Revenue needs to make to build a sustainable competitive advantage.
