Swot Analysis of "AOL Time Warner (B): Recognition of Goodwill Impairment" written by Ron Kasznik, Brian Tayan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Goodwill Impairment facing as an external strategic factors. Some of the topics covered in AOL Time Warner (B): Recognition of Goodwill Impairment case study are - Strategic Management Strategies, Budgeting, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the AOL Time Warner (B): Recognition of Goodwill Impairment casestudy better are - – talent flight as more people leaving formal jobs, wage bills are increasing, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of AOL Time Warner (B): Recognition of Goodwill Impairment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AOL Time Warner (B): Recognition of Goodwill Impairment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Goodwill Impairment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment can be done for the following purposes –
1. Strategic planning using facts provided in AOL Time Warner (B): Recognition of Goodwill Impairment case study
2. Improving business portfolio management of Goodwill Impairment
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 Goodwill Impairment
Strengths AOL Time Warner (B): Recognition of Goodwill Impairment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Goodwill Impairment in AOL Time Warner (B): Recognition of Goodwill Impairment Harvard Business Review case study are -
Analytics focus
– Goodwill Impairment 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 Ron Kasznik, Brian Tayan 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.
Highly skilled collaborators
– Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Goodwill Impairment is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Goodwill Impairment is one of the most innovative firm in sector. Manager in AOL Time Warner (B): Recognition of Goodwill Impairment Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Goodwill Impairment 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 Goodwill Impairment is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AOL Time Warner (B): Recognition of Goodwill Impairment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Goodwill Impairment has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AOL Time Warner (B): Recognition of Goodwill Impairment 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Goodwill Impairment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Goodwill Impairment 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.
High switching costs
– The high switching costs that Goodwill Impairment has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the AOL Time Warner (B): Recognition of Goodwill Impairment Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Goodwill Impairment has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Goodwill Impairment to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– AOL Time Warner (B): Recognition of Goodwill Impairment firm has clearly differentiated products in the market place. This has enabled Goodwill Impairment to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Goodwill Impairment to invest into research and development (R&D) and innovation.
Weaknesses AOL Time Warner (B): Recognition of Goodwill Impairment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AOL Time Warner (B): Recognition of Goodwill Impairment are -
High cash cycle compare to competitors
Goodwill Impairment 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.
Slow to strategic competitive environment developments
– As AOL Time Warner (B): Recognition of Goodwill Impairment HBR case study mentions - Goodwill Impairment 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.
Aligning sales with marketing
– It come across in the case study AOL Time Warner (B): Recognition of Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment can leverage the sales team experience to cultivate customer relationships as Goodwill Impairment is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Ron Kasznik, Brian Tayan suggests that, Goodwill Impairment 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.
Low market penetration in new markets
– Outside its home market of Goodwill Impairment, firm in the HBR case study AOL Time Warner (B): Recognition of Goodwill Impairment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Goodwill Impairment 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AOL Time Warner (B): Recognition of Goodwill Impairment, in the dynamic environment Goodwill Impairment has struggled to respond to the nimble upstart competition. Goodwill Impairment has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Goodwill Impairment 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.
High operating costs
– Compare to the competitors, firm in the HBR case study AOL Time Warner (B): Recognition of Goodwill Impairment 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 Goodwill Impairment 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Goodwill Impairment 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. Goodwill Impairment even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AOL Time Warner (B): Recognition of Goodwill Impairment 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 Goodwill Impairment has relatively successful track record of launching new products.
Opportunities AOL Time Warner (B): Recognition of Goodwill Impairment | 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 AOL Time Warner (B): Recognition of Goodwill Impairment are -
Creating value in data economy
– The success of analytics program of Goodwill Impairment has opened avenues for new revenue streams for the organization in the industry. This can help Goodwill Impairment to build a more holistic ecosystem as suggested in the AOL Time Warner (B): Recognition of Goodwill Impairment case study. Goodwill Impairment can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Goodwill Impairment 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 Goodwill Impairment to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Goodwill Impairment 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.
Building a culture of innovation
– managers at Goodwill Impairment 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.
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. Goodwill Impairment can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Goodwill Impairment in the consumer business. Now Goodwill Impairment can target international markets with far fewer capital restrictions requirements than the existing system.
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. Goodwill Impairment can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Goodwill Impairment 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, AOL Time Warner (B): Recognition of Goodwill Impairment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Goodwill Impairment 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.
Manufacturing automation
– Goodwill Impairment can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Goodwill Impairment can use these opportunities to build new business models that can help the communities that Goodwill Impairment operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Goodwill Impairment 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Goodwill Impairment is facing challenges because of the dominance of functional experts in the organization. AOL Time Warner (B): Recognition of Goodwill Impairment 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.
Threats AOL Time Warner (B): Recognition of Goodwill Impairment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AOL Time Warner (B): Recognition of Goodwill Impairment are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Goodwill Impairment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment .
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. Goodwill Impairment can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Goodwill Impairment has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Goodwill Impairment needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Goodwill Impairment 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Goodwill Impairment 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.
Shortening product life cycle
– it is one of the major threat that Goodwill Impairment is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Goodwill Impairment business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Goodwill Impairment 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. Goodwill Impairment can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Goodwill Impairment 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.
Stagnating economy with rate increase
– Goodwill Impairment 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.
Increasing wage structure of Goodwill Impairment
– 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 Goodwill Impairment.
Weighted SWOT Analysis of AOL Time Warner (B): Recognition of Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment 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 Goodwill Impairment needs to make to build a sustainable competitive advantage.
