Provident Life and Accident Insurance: The Acquisition of Paul Revere SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Provident Life and Accident Insurance: The Acquisition of Paul Revere
Provident Life & Accident Insurance Co. has made an initial bid to acquire a primary competitor, Paul Revere, from conglomerate, Textron. The due diligence process uncovers a significant block of problematic disability insurance policies. Provident is forced to assess the negative impact of this discovery on its initial valuation and revise its bid. In the process, the divergent views of the evolution of these policies by the bidder and seller have to be translated through discounted cash flow analysis into appropriate bid prices. Finally, this DCF analysis, in combination with multiples analysis, is used in negotiations with Textron and public shareholders.
Authors :: Mihir A. Desai, Mark F. Veblen, Frank Williamson
Swot Analysis of "Provident Life and Accident Insurance: The Acquisition of Paul Revere" written by Mihir A. Desai, Mark F. Veblen, Frank Williamson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Provident Textron facing as an external strategic factors. Some of the topics covered in Provident Life and Accident Insurance: The Acquisition of Paul Revere case study are - Strategic Management Strategies, Financial analysis, Financial management, Mergers & acquisitions, Performance measurement and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Provident Life and Accident Insurance: The Acquisition of Paul Revere casestudy better are - – geopolitical disruptions, there is backlash against globalization, technology disruption, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
increasing energy prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Provident Life and Accident Insurance: The Acquisition of Paul Revere
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Provident Life and Accident Insurance: The Acquisition of Paul Revere case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Provident Textron, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Provident Textron 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere can be done for the following purposes –
1. Strategic planning using facts provided in Provident Life and Accident Insurance: The Acquisition of Paul Revere case study
2. Improving business portfolio management of Provident Textron
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 Provident Textron
Strengths Provident Life and Accident Insurance: The Acquisition of Paul Revere | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Provident Textron in Provident Life and Accident Insurance: The Acquisition of Paul Revere Harvard Business Review case study are -
Learning organization
- Provident Textron 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 Provident Textron is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Provident Life and Accident Insurance: The Acquisition of Paul Revere Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Provident Textron in the sector have low bargaining power. Provident Life and Accident Insurance: The Acquisition of Paul Revere has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Provident Textron to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Provident Textron 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Provident Textron 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 Mihir A. Desai, Mark F. Veblen, Frank Williamson 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.
Innovation driven organization
– Provident Textron is one of the most innovative firm in sector. Manager in Provident Life and Accident Insurance: The Acquisition of Paul Revere Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Provident Life and Accident Insurance: The Acquisition of Paul Revere 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.
Cross disciplinary teams
– Horizontal connected teams at the Provident Textron 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.
High brand equity
– Provident Textron has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Provident Textron to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Provident Textron is present in almost all the verticals within the industry. This has provided firm in Provident Life and Accident Insurance: The Acquisition of Paul Revere case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Provident Textron digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Provident Textron 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.
Training and development
– Provident Textron has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Provident Life and Accident Insurance: The Acquisition of Paul Revere 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Provident Life and Accident Insurance: The Acquisition of Paul Revere firm has clearly differentiated products in the market place. This has enabled Provident Textron to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Provident Textron to invest into research and development (R&D) and innovation.
Weaknesses Provident Life and Accident Insurance: The Acquisition of Paul Revere | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Provident Life and Accident Insurance: The Acquisition of Paul Revere are -
High cash cycle compare to competitors
Provident Textron 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.
Aligning sales with marketing
– It come across in the case study Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere can leverage the sales team experience to cultivate customer relationships as Provident Textron is planning to shift buying processes online.
Interest costs
– Compare to the competition, Provident Textron 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 Provident Textron is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Provident Textron needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Provident Textron to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Textron 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Provident Life and Accident Insurance: The Acquisition of Paul Revere, in the dynamic environment Provident Textron has struggled to respond to the nimble upstart competition. Provident Textron has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Provident Textron, firm in the HBR case study Provident Life and Accident Insurance: The Acquisition of Paul Revere needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Provident Textron 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
– Provident Textron 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.
Lack of clear differentiation of Provident Textron products
– To increase the profitability and margins on the products, Provident Textron needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Mihir A. Desai, Mark F. Veblen, Frank Williamson suggests that, Provident Textron 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere | 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Provident Textron is facing challenges because of the dominance of functional experts in the organization. Provident Life and Accident Insurance: The Acquisition of Paul Revere 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.
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. Provident Textron can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Provident Textron 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Provident Textron to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Provident Textron can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Provident Textron 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.
Developing new processes and practices
– Provident Textron 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.
Learning at scale
– Online learning technologies has now opened space for Provident Textron to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 Provident Textron in the consumer business. Now Provident Textron can target international markets with far fewer capital restrictions requirements than the existing system.
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 Provident Textron 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.
Creating value in data economy
– The success of analytics program of Provident Textron has opened avenues for new revenue streams for the organization in the industry. This can help Provident Textron to build a more holistic ecosystem as suggested in the Provident Life and Accident Insurance: The Acquisition of Paul Revere case study. Provident Textron can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Provident Textron 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.
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. Provident Textron 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. Provident Textron 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.
Building a culture of innovation
– managers at Provident Textron 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.
Threats Provident Life and Accident Insurance: The Acquisition of Paul Revere External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Provident Life and Accident Insurance: The Acquisition of Paul Revere are -
Shortening product life cycle
– it is one of the major threat that Provident Textron is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Provident Textron can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Provident Textron in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Provident Textron 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. Provident Textron can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
Consumer confidence and its impact on Provident Textron 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.
Regulatory challenges
– Provident Textron needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Provident Textron.
High dependence on third party suppliers
– Provident Textron high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of Provident Textron
– 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 Provident Textron.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Provident Textron 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere .
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 Provident Textron business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Provident Textron with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Life and Accident Insurance: The Acquisition of Paul Revere 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 Provident Textron needs to make to build a sustainable competitive advantage.
