Accounting for Faulty Ignition Switches at General Motors Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Accounting for Faulty Ignition Switches at General Motors Company
On January 31, 2014, the chief executive officer (CEO) of General Motors (GM), a major automaker located in Detroit, Michigan, must decide whether to issue a recall based on a defect that had been found through an internal safety committee investigation. The ignition switch of certain GM small car models manufactured between 2005 and 2007 was prone to being nudged out of the run position, causing the driver to lose control as the engine would switch off mid-drive, disabling power steering and preventing air bags from being deployed in the case of a collision. If she decided to issue a recall, the CEO needed to consider which car models to include, as well as whether to offer any additional compensation to drivers. Not only would a recall have potential legal and public relations repercussions, but it would present the company with potential future costs. She needed to consider the accounting implications of these contingencies.
Swot Analysis of "Accounting for Faulty Ignition Switches at General Motors Company" written by Darren Henderson, Julia Cutt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Recall Ignition facing as an external strategic factors. Some of the topics covered in Accounting for Faulty Ignition Switches at General Motors Company case study are - Strategic Management Strategies, Crisis management, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Accounting for Faulty Ignition Switches at General Motors Company casestudy better are - – increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, there is backlash against globalization, supply chains are disrupted by pandemic , technology disruption, challanges to central banks by blockchain based private currencies,
geopolitical disruptions, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Accounting for Faulty Ignition Switches at General Motors Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Accounting for Faulty Ignition Switches at General Motors Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Recall Ignition, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company can be done for the following purposes –
1. Strategic planning using facts provided in Accounting for Faulty Ignition Switches at General Motors Company case study
2. Improving business portfolio management of Recall Ignition
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 Recall Ignition
Strengths Accounting for Faulty Ignition Switches at General Motors Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Recall Ignition in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Recall Ignition in the sector have low bargaining power. Accounting for Faulty Ignition Switches at General Motors Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Recall Ignition to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Recall Ignition
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Recall Ignition does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Recall Ignition is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Recall Ignition has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to lead change in Finance & Accounting field
– Recall Ignition 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 Recall Ignition in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Recall Ignition is one of the most innovative firm in sector. Manager in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Recall Ignition is one of the leading recruiters in the industry. Managers in the Accounting for Faulty Ignition Switches at General Motors Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Recall Ignition 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Accounting for Faulty Ignition Switches at General Motors Company firm has clearly differentiated products in the market place. This has enabled Recall Ignition to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Recall Ignition to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Recall Ignition is present in almost all the verticals within the industry. This has provided firm in Accounting for Faulty Ignition Switches at General Motors Company 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.
Weaknesses Accounting for Faulty Ignition Switches at General Motors Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Accounting for Faulty Ignition Switches at General Motors Company are -
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 Recall Ignition supply chain. Even after few cautionary changes mentioned in the HBR case study - Accounting for Faulty Ignition Switches at General Motors Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Recall Ignition vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Recall Ignition has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Accounting for Faulty Ignition Switches at General Motors Company should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Recall Ignition is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Recall Ignition needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Recall Ignition to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Accounting for Faulty Ignition Switches at General Motors Company 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 Recall Ignition has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company, it seems that the employees of Recall Ignition 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.
Slow to strategic competitive environment developments
– As Accounting for Faulty Ignition Switches at General Motors Company HBR case study mentions - Recall Ignition 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 operating costs
– Compare to the competitors, firm in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company 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 Recall Ignition 's lucrative customers.
Lack of clear differentiation of Recall Ignition products
– To increase the profitability and margins on the products, Recall Ignition needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Darren Henderson, Julia Cutt suggests that, Recall Ignition 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Recall Ignition is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Accounting for Faulty Ignition Switches at General Motors Company can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Accounting for Faulty Ignition Switches at General Motors Company, in the dynamic environment Recall Ignition has struggled to respond to the nimble upstart competition. Recall Ignition has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Accounting for Faulty Ignition Switches at General Motors Company | 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 Accounting for Faulty Ignition Switches at General Motors Company are -
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 Recall Ignition in the consumer business. Now Recall Ignition can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Recall Ignition can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Accounting for Faulty Ignition Switches at General Motors Company 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.
Creating value in data economy
– The success of analytics program of Recall Ignition has opened avenues for new revenue streams for the organization in the industry. This can help Recall Ignition to build a more holistic ecosystem as suggested in the Accounting for Faulty Ignition Switches at General Motors Company case study. Recall Ignition can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Recall Ignition 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 Recall Ignition 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.
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. Recall Ignition can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Recall Ignition can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Recall Ignition can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Recall Ignition 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.
Better consumer reach
– The expansion of the 5G network will help Recall Ignition to increase its market reach. Recall Ignition 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Recall Ignition is facing challenges because of the dominance of functional experts in the organization. Accounting for Faulty Ignition Switches at General Motors Company case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Recall Ignition 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 Recall Ignition 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.
Threats Accounting for Faulty Ignition Switches at General Motors Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company are -
Consumer confidence and its impact on Recall Ignition 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.
Increasing wage structure of Recall Ignition
– 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 Recall Ignition.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Recall Ignition 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 Accounting for Faulty Ignition Switches at General Motors Company .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Recall Ignition business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Recall Ignition 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.
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 Recall Ignition in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Recall Ignition 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.
Environmental challenges
– Recall Ignition 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. Recall Ignition can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Recall Ignition with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Recall Ignition can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 Recall Ignition.
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. Recall Ignition 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.
Weighted SWOT Analysis of Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Recall Ignition needs to make to build a sustainable competitive advantage.