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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Strategy / MBA Resources
Case Study SWOT Analysis Solution
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 - – there is increasing trade war between United States & China, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions,
increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, 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 -
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.
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.
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.
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.
High brand equity
– Valuation Discounted has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Valuation Discounted to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
Ability to recruit top talent
– Valuation Discounted is one of the leading recruiters in the industry. Managers in the The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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.
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.
Highly skilled collaborators
– Valuation Discounted 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 Valuation Discounted has relatively successful track record of launching new products.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction, it seems that the employees of Valuation Discounted don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
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.
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.
Lack of clear differentiation of Valuation Discounted products
– To increase the profitability and margins on the products, Valuation Discounted needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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 The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction can leverage the sales team experience to cultivate customer relationships as Valuation Discounted is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Valuation Discounted 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 - The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction should strive to include more intangible value offerings along with its core products and services.
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 -
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.
Developing new processes and practices
– Valuation Discounted 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Valuation Discounted can use these opportunities to build new business models that can help the communities that Valuation Discounted operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
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.
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. Valuation Discounted can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Valuation Discounted has opened avenues for new revenue streams for the organization in the industry. This can help Valuation Discounted to build a more holistic ecosystem as suggested in the The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction case study. Valuation Discounted can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Valuation Discounted is facing challenges because of the dominance of functional experts in the organization. The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction 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.
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.
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.
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. Valuation Discounted 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. Valuation Discounted 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.
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.
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 -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Valuation Discounted needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Valuation Discounted 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.
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.
Regulatory challenges
– Valuation Discounted 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.
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 .
Increasing wage structure of Valuation Discounted
– 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 Valuation Discounted.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Valuation Discounted with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction, Valuation Discounted 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 Valuation Discounted in the Finance & Accounting sector and impact the bottomline of the organization.
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.
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.
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.
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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