The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction
Trends emerging in recent years, such as divestitures, spin-offs and class action suits, make an understanding of valuation of companies with ongoing operations imperative, not only for investors, but also for managers and for a company's directors. The discounted cash flow method to valuation that is discussed in this note will be a guide, first, to business managers in their attempt to follow value maximizing strategies; second, to portfolio managers and security analysts in their effort to discover the true economic value of a company and its equity; and third, to investment bankers in their advisory role of companies involved in merger transactions and restructuring. This note will not demonstrate how to value companies in financial distress; in such cases, a contingent claims valuation will be more appropriate. The discounted cash flow valuation method is demonstrated through the valuation of a Canadian company using actual financial data.
Swot Analysis of "The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction" written by George Athanassakos includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Valuation Discounted facing as an external strategic factors. Some of the topics covered in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction case study are - Strategic Management Strategies, Financial analysis, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, there is backlash against globalization, technology disruption, increasing energy prices, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs,
increasing commodity prices, geopolitical disruptions, etc
Introduction to SWOT Analysis of The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Valuation Discounted, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Valuation Discounted 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction can be done for the following purposes –
1. Strategic planning using facts provided in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction case study
2. Improving business portfolio management of Valuation Discounted
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 Valuation Discounted
Strengths The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Valuation Discounted in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction Harvard Business Review case study are -
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Valuation Discounted digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Valuation Discounted 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 Valuation Discounted 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
– Valuation Discounted has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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.
High switching costs
– The high switching costs that Valuation Discounted 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.
Sustainable margins compare to other players in Finance & Accounting industry
– The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction firm has clearly differentiated products in the market place. This has enabled Valuation Discounted to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Valuation Discounted to invest into research and development (R&D) and innovation.
Ability to lead change in Finance & Accounting field
– Valuation Discounted 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 Valuation Discounted in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Valuation Discounted in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Valuation Discounted is one of the most innovative firm in sector. Manager in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Valuation Discounted is present in almost all the verticals within the industry. This has provided firm in The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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.
Analytics focus
– Valuation Discounted 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 George Athanassakos 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.
Successful track record of launching new products
– Valuation Discounted has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Valuation Discounted 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.
Strong track record of project management
– Valuation Discounted is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction are -
Low market penetration in new markets
– Outside its home market of Valuation Discounted, firm in the HBR case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Valuation Discounted 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.
Interest costs
– Compare to the competition, Valuation Discounted 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.
Increasing silos among functional specialists
– The organizational structure of Valuation Discounted is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Valuation Discounted needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Valuation Discounted to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Valuation Discounted 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. Valuation Discounted 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Valuation Discounted is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Valuation Discounted has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction, is just above the industry average. Valuation Discounted 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.
Skills based hiring
– The stress on hiring functional specialists at Valuation Discounted 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.
Need for greater diversity
– Valuation Discounted 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 bargaining power of channel partners
– Because of the regulatory requirements, George Athanassakos suggests that, Valuation Discounted 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.
Opportunities The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction | 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Valuation Discounted 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.
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 Valuation Discounted 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.
Loyalty marketing
– Valuation Discounted 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 Valuation Discounted 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.
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 Valuation Discounted in the consumer business. Now Valuation Discounted can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Valuation Discounted 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Valuation Discounted to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Valuation Discounted can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Valuation Discounted 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Valuation Discounted 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.
Better consumer reach
– The expansion of the 5G network will help Valuation Discounted to increase its market reach. Valuation Discounted 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Valuation Discounted 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 Valuation Discounted to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Valuation Discounted 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.
Buying journey improvements
– Valuation Discounted can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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.
Threats The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction are -
Stagnating economy with rate increase
– Valuation Discounted 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 Valuation Discounted in the Finance & Accounting sector and impact the bottomline 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 Valuation Discounted.
Environmental challenges
– Valuation Discounted 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. Valuation Discounted can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Valuation Discounted can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Valuation Discounted 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction .
Shortening product life cycle
– it is one of the major threat that Valuation Discounted is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Valuation Discounted has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Valuation Discounted 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.
Consumer confidence and its impact on Valuation Discounted 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.
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.
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 Valuation Discounted business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Valuation Discounted 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.
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. Valuation Discounted will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 Valuation Discounted needs to make to build a sustainable competitive advantage.
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