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 - – geopolitical disruptions, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models,
technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
Low bargaining power of suppliers
– Suppliers of Goodwill Impairment in the sector have low bargaining power. AOL Time Warner (B): Recognition of Goodwill Impairment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Goodwill Impairment to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Goodwill Impairment in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous 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.
Ability to recruit top talent
– Goodwill Impairment is one of the leading recruiters in the industry. Managers in the AOL Time Warner (B): Recognition of Goodwill Impairment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Ability to lead change in Finance & Accounting field
– Goodwill Impairment 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 Goodwill Impairment in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Goodwill Impairment
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Goodwill Impairment does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Successful track record of launching new products
– Goodwill Impairment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Goodwill Impairment 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.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AOL Time Warner (B): Recognition of Goodwill Impairment, is just above the industry average. Goodwill Impairment 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.
Lack of clear differentiation of Goodwill Impairment products
– To increase the profitability and margins on the products, Goodwill Impairment needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Skills based hiring
– The stress on hiring functional specialists at Goodwill Impairment 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.
Increasing silos among functional specialists
– The organizational structure of Goodwill Impairment is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Goodwill Impairment needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Goodwill Impairment to focus more on services rather than just following the product oriented approach.
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 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.
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 Goodwill Impairment supply chain. Even after few cautionary changes mentioned in the HBR case study - AOL Time Warner (B): Recognition of Goodwill Impairment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Goodwill Impairment vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Goodwill Impairment is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AOL Time Warner (B): Recognition of Goodwill Impairment can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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 -
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Goodwill Impairment in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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.
Using analytics as competitive advantage
– Goodwill Impairment 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 AOL Time Warner (B): Recognition of Goodwill Impairment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Goodwill Impairment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Developing new processes and practices
– Goodwill Impairment 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Goodwill Impairment 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 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Goodwill Impairment can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 -
Consumer confidence and its impact on Goodwill Impairment 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.
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.
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.
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.
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 .
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AOL Time Warner (B): Recognition of Goodwill Impairment, Goodwill Impairment 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 .
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 Goodwill Impairment in the Finance & Accounting sector and impact the bottomline of the organization.
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.
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.