Accounting for Faulty Ignition Switches at General Motors Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – technology disruption, there is increasing trade war between United States & China, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, central banks are concerned over increasing inflation, 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 -
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.
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.
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.
High brand equity
– Recall Ignition has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Recall Ignition to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Successful track record of launching new products
– Recall Ignition has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Recall Ignition 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.
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.
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.
Superior customer experience
– The customer experience strategy of Recall Ignition in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Recall Ignition 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 Recall Ignition is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Accounting for Faulty Ignition Switches at General Motors Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
Need for greater diversity
– Recall Ignition has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Recall Ignition 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.
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.
Slow decision making process
– As mentioned earlier in the report, Recall Ignition 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. Recall Ignition 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.
Low market penetration in new markets
– Outside its home market of Recall Ignition, firm in the HBR case study Accounting for Faulty Ignition Switches at General Motors Company needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
High cash cycle compare to competitors
Recall Ignition 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Recall Ignition 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.
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.
No frontier risks strategy
– After analyzing the HBR case study Accounting for Faulty Ignition Switches at General Motors Company, 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 Accounting for Faulty Ignition Switches at General Motors Company 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 Accounting for Faulty Ignition Switches at General Motors Company can leverage the sales team experience to cultivate customer relationships as Recall Ignition is planning to shift buying processes online.
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 -
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.
Loyalty marketing
– Recall Ignition 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 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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Recall Ignition 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, Accounting for Faulty Ignition Switches at General Motors Company, 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
– 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.
Developing new processes and practices
– Recall Ignition 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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Recall Ignition 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 Recall Ignition to hire the very best people irrespective of their geographical location.
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.
Leveraging digital technologies
– Recall Ignition 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.
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 -
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.
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.
Shortening product life cycle
– it is one of the major threat that Recall Ignition is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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. Recall Ignition needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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.
Stagnating economy with rate increase
– Recall Ignition 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.
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.
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 .
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.