On the Use of Capital Efficiency Metrics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of On the Use of Capital Efficiency Metrics
This note describes capital efficiency metrics including RONA, ROIC, and EVA. This note is intended to be used with the case "Boeing 737 Industrial Footprint: The Wichita Decision," HBS No. 612-036.
Swot Analysis of "On the Use of Capital Efficiency Metrics" written by Willy Shih, Margaret Pierson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Metrics Roic facing as an external strategic factors. Some of the topics covered in On the Use of Capital Efficiency Metrics case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the On the Use of Capital Efficiency Metrics casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, geopolitical disruptions,
increasing commodity prices, there is backlash against globalization, etc
Introduction to SWOT Analysis of On the Use of Capital Efficiency Metrics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in On the Use of Capital Efficiency Metrics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Metrics Roic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Metrics Roic 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 On the Use of Capital Efficiency Metrics can be done for the following purposes –
1. Strategic planning using facts provided in On the Use of Capital Efficiency Metrics case study
2. Improving business portfolio management of Metrics Roic
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 Metrics Roic
Strengths On the Use of Capital Efficiency Metrics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Metrics Roic in On the Use of Capital Efficiency Metrics Harvard Business Review case study are -
Successful track record of launching new products
– Metrics Roic has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Metrics Roic has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Finance & Accounting field
– Metrics Roic 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 Metrics Roic in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Metrics Roic is one of the most innovative firm in sector. Manager in On the Use of Capital Efficiency Metrics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Metrics Roic in the sector have low bargaining power. On the Use of Capital Efficiency Metrics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Metrics Roic to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Metrics Roic is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Metrics Roic in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Metrics Roic 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 On the Use of Capital Efficiency Metrics - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Metrics Roic is present in almost all the verticals within the industry. This has provided firm in On the Use of Capital Efficiency Metrics 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Metrics Roic digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Metrics Roic has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Metrics Roic 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.
Training and development
– Metrics Roic has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in On the Use of Capital Efficiency Metrics 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 recruit top talent
– Metrics Roic is one of the leading recruiters in the industry. Managers in the On the Use of Capital Efficiency Metrics are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses On the Use of Capital Efficiency Metrics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of On the Use of Capital Efficiency Metrics are -
Lack of clear differentiation of Metrics Roic products
– To increase the profitability and margins on the products, Metrics Roic needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Metrics Roic is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study On the Use of Capital Efficiency Metrics can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the On the Use of Capital Efficiency Metrics 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 Metrics Roic has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study On the Use of Capital Efficiency Metrics, is just above the industry average. Metrics Roic 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.
Low market penetration in new markets
– Outside its home market of Metrics Roic, firm in the HBR case study On the Use of Capital Efficiency Metrics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Metrics Roic 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study On the Use of Capital Efficiency Metrics, in the dynamic environment Metrics Roic has struggled to respond to the nimble upstart competition. Metrics Roic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Metrics Roic 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.
Products dominated business model
– Even though Metrics Roic 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 - On the Use of Capital Efficiency Metrics should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study On the Use of Capital Efficiency Metrics 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 Metrics Roic 's lucrative customers.
High cash cycle compare to competitors
Metrics Roic 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.
Opportunities On the Use of Capital Efficiency Metrics | 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 On the Use of Capital Efficiency Metrics are -
Using analytics as competitive advantage
– Metrics Roic 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 On the Use of Capital Efficiency Metrics - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Metrics Roic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Metrics Roic can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. On the Use of Capital Efficiency Metrics 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Metrics Roic can use these opportunities to build new business models that can help the communities that Metrics Roic operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Metrics Roic 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Metrics Roic is facing challenges because of the dominance of functional experts in the organization. On the Use of Capital Efficiency Metrics 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
– Metrics Roic 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.
Creating value in data economy
– The success of analytics program of Metrics Roic has opened avenues for new revenue streams for the organization in the industry. This can help Metrics Roic to build a more holistic ecosystem as suggested in the On the Use of Capital Efficiency Metrics case study. Metrics Roic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Metrics Roic can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Metrics Roic to increase its market reach. Metrics Roic 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. Metrics Roic 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. Metrics Roic 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Metrics Roic 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.
Building a culture of innovation
– managers at Metrics Roic 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.
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 Metrics Roic 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.
Threats On the Use of Capital Efficiency Metrics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study On the Use of Capital Efficiency Metrics 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. Metrics Roic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Metrics Roic business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Metrics Roic 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Metrics Roic 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 On the Use of Capital Efficiency Metrics .
Stagnating economy with rate increase
– Metrics Roic 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.
Regulatory challenges
– Metrics Roic 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.
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 Metrics Roic.
Increasing wage structure of Metrics Roic
– 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 Metrics Roic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Metrics Roic 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study On the Use of Capital Efficiency Metrics, Metrics Roic 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Metrics Roic with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Metrics Roic 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.
Weighted SWOT Analysis of On the Use of Capital Efficiency Metrics 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 On the Use of Capital Efficiency Metrics 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 On the Use of Capital Efficiency Metrics 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 On the Use of Capital Efficiency Metrics 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 On the Use of Capital Efficiency Metrics 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 Metrics Roic needs to make to build a sustainable competitive advantage.
